RAJAH HUMABON HOTEL, INC., RAJAH SOLIMAN HOTEL, INC. AND/OR PETER PO, PETITIONERS, VS. HON. CRESENCIANO B. TRAJANO, AS UNDERSECRETARY OF DEPARTMENT OF LABOR AND EMPLOYMENT, WENC…

For redress in regard to underpaid wages and non­-payment of
benefits, the herein respondents-employees turned to the regional director of
the Department of Labor and Employment. The jurisdictional competence of such official is, however, disputed and
challenged by the employers in the instant petition who contend that it is the
labor arbiter who may properly entertain the grievance.

Subsequent to the institution by herein private respondents on
March 14, 1989 of the initial pleading with Regional Office No. 7 of the
Department of Labor and Employment stationed at Cebu City, herein petitioners
were instructed to allow the inspection of the employment records of private
respondents on April 4, 1989. However,
no inspection could be done on that date on account of the picket staged by
other workers at petitioners’ premises which prevented the inspectors’ entry
thereat.

At the re-scheduled examination after the closure of petitioners’
business on April 16, 1989, instead of presenting the payrolls and daily time
records of private respondents, petitioner Peter Po submitted a motion to
dismiss on the supposition that the regional director has no jurisdiction over
the case because the employer-employee relationship had been severed as a
result of the closure of petitioners’ business, apart from the fact that each
of the claims of private respondents exceeded the jurisdictional limit of
P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations Law.

Private respondents opposed the motion by advancing the
proposition that in addition to the money claims, they were also asking for
enforcement of labor standard laws which they assert to be within the authority
of the regional director. Petitioners
reacted via a reply by reiterating their previous stance on the labor
arbiter’s jurisdiction.

Petitioners’ formal plea in avoidance did not merit the regional
director’s approval who observed in the process of sustaining his competencia
on September 25, 1989 that:

… since this case was filed at the time where employer-employee
relationship still existed the subsequent termination of the complainants’
employment does not divest this Office of its jurisdiction to hear this case on
the merits thru summary investigation, for the separation of the complainants
is a scheme to elude the inspection of the payrolls and daily time records in
order that no complete relief can be laid down by this Office. Respondent was given a chance to contest the
claims of the complainants for violations of labor standards laws thru summary
investigation on two occasions but instead filed a Motion to Dismiss which is
not meritorious considering that this Office has original and exclusive
jurisdiction to conduct summary investigation on the merits of the case. The complainants executed individual
affidavits to support their claims and after a careful perusal of the same it
was noted that respondent has been found to have violated the following, to
wit:

1. Underpayment of minimum wage covering the
period from December 14, 1987 to March 31, 1989 in the aggregate amount of TWO
HUNDRED EIGHTY SEVEN THOUSAND ONE HUNDRED FORTY ONE AND 55/100 (P287,141.55);
and

2. Non-payment of service incentive leave for
the years 1987 to 1988 in the aggregate amount of THREE THOUSAND EIGHT HUNDRED
FORTY PESOS (P3,840.00).

WHEREFORE, in the light of the foregoing circumstances,
respondents’ Motion to Dismiss is hereby DENIED and further, respondents RAJAH
SOLIMAN AND/OR MR. PETER PO AND RAJAH HUMABON HOTEL AND/OR MR. PETER PO are
hereby ordered to pay the complainants the aggregate amount of TWO HUNDRED
NINETY THOUSAND NINE HUNDRED EIGHTY TWO PESOS & 55/100 (P290,982.55)
representing underpayment of minimum wage for the period from December 14, 1987
to March 31, 1989 and service incentive leave for the years 1987 and 1988
within ten (10) calendar days upon receipt of this Order, broken down as
follows:

(pp. 28-30, Rollo)

The foregoing findings were affirmed, both on the aspect of the
regional director’s authority and the awards, when the propriety thereof was
raised on appeal to the Department of Labor and Employment, thus:

We cannot agree with the respondents’ claim that the subsequent
severance of employer-employee relationship between the parties divested the
Regional Director of his jurisdiction over the case. It is settled that in labor standards cases the employer-employee
relationship at least must exist at the time of the filing of the
complaint. Any supervening termination
of such relationship is immaterial. Thus, the Regional Director continues to have jurisdiction over the case
until he finally disposes of the same.

In the case at bar, the records show that the complainants filed
their complaint on March 14, 1989. It
was only on April 16, 1989 that they ceased as employees of the respondents
when the latter closed down its business. There is no question then that at the time the complainants filed their
complaints, the employer-employee relationship between the parties still
existed. Hence, jurisdiction over this
case was validly acquired by and remained with the Regional Director.

Likewise, we find without merit respondents’ contention that
jurisdiction over this case belongs to the Labor Arbiter because complainants’
money claim exceeded P5,000.00.

It should be emphasized that the provision of par. 6, Art. 217,
refers only to simple money claims of domestic workers. In this case, respondents’ employers are not
domestic workers. Thus, the foregoing
provision should not be made to apply to them. Also, in the Brokenshire Memorial Hospital case (G.R. No, 74621,
February 7, 1990), the Supreme Court adopted the view taken by Mr. Justice
Andres Narvasa in his separate opinion in the Briad Agro Dev.
Corp. vs. Hon. Dionisio C. dela Serna
(G.R. No. 82805, June 29, 1989) case, the pertinent portion of which reads as
follows, to wit:

“If the amount involved does not exceed P5,000.00 the Regional
Director undeniably has jurisdiction. But even if the amount of the claim exceeds P5,000.00 the claim is not
on that account necessarily removed from the Regional Director’s competence. In respect thereof, he may still exercise the
visitorial and enforcement powers vested in him by Article 128 of the Labor
Code, as amended, supra; that is to say he may still direct his labor
regulations officers or industrial safety engineers to inspect the employer’s
premises and examine his records; and if the Officers should find that there
have been violations of labor standards provisions the Regional Director may,
after due notice and hearing, order compliance by the employer therewith and
issue writ of execution to the appropriate authority for the enforcement
thereof.”

In the present case, records show that the complainants were still
respondents’ employees at the time the complaint was filed and that respondents
have not contested the findings of the labor inspector. It is clear, therefore, that jurisdiction
here belongs to the Regional Director.

Finally, we find that respondents here were given ample opportunity
to contest the claims of the complainants. As the records bear out, two (2) summary investigations were conducted
in this case where the respondents appeared and actively defended
themselves. Obviously, the respondent
were not deprive of their right to due process of law. (pp. 35-37, Rollo)

Petitioners’ subsequent motion for re-evaluation failed to elicit
the desired response. Hence, the
petition at bar.

On July 3, 1991, a temporary restraining order was issued
enjoining respondents from implementing the assailed orders of the Department
of Labor and Employment until further intructions from the Court (p. 43,
Rollo).

Petitioners asseverate that with the severance of
employer-employee relations, the claims of private respondents have become
simple monetary demands which should instead be ventilated with the labor
arbiter, pursuant to the doctrine enunciated in Maternity Children’s
Hospital vs. Secretary of Labor (174 SCRA
632; 651 [1989]) and the concurring opinion of then Justice, now Chief Justice
Narvasa in Briad Agro Development Corp. vs. Dela
Serna (174 SCRA 524 [1989]).

Shifting the disquisition to the pertinent provisions of Republic
Act No. 6715, petitioners invoke Articles 129 and 217 of the Labor code which,
respectively, read:

ART. 129. Recovery of
wages, simple money claims and other benefits. – Upon complaint of any interested party, the regional director of the
Department of Labor and Employment or any of the duly authorized hearing
officers of the Department is empowered, through summary proceeding and after
due notice, to hear and decide any matter involving the recovery of wages and
other monetary claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household service or househelper
under this Code, arising from employer-employee relations: Provided, That such complaint does not
include a claim for reinstatement, Provided further, that the aggregate money
claims of each employee or househelper does not exceed five thousand pesos
(P5,000,00). The regional director or
hearing officer shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any
employee or househelper pursuant to this Article shall be held in a special
deposit account by, and shall be paid on order of, the Secretary of Labor and
Employment or the regional director directly to the employee or househelper
concerned. Any such sum not paid to the
employee or househelper, because he cannot be located after diligent and reasonable
effort to locate him within a period of three (3) years, shall be held as a
special fund of the Department of Labor and Employment to be used exclusively
for the amelioration and benefit of workers.

Any decision or resolution of the regional director or hearing
officer pursuant to this provision may be appealed on the same grounds provided
in Article 223 of this Code, within five (5) calendar days from receipt of a
copy of said decision or resolution, to the National Labor Relations Commission
which shall resolve the appeal within ten (10) calendar days from the
submission of the last pleading required or allowed under its rules.

The Secretary of Labor and Employment or his duly authorized
representative may supervise the payment of unpaid wages and other monetary
claims and benefits, including legal interest, found owing to any employee or
househelper under this Code.

ART.  217. Jurisdiction of Labor Arbiters and the
Commission. – (a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or
non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for
reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and
other forms of damages arising from the employer-employee relations.

5. Cases arising from any violation of Article
264 of this Code, including questions involving the legality of strikes and
lockouts;

6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.

(b)  The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or
implementation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed
of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements.

to stress the argument that the authority
of the Regional Director is limited upon the concurrence of three conditions,
to wit:

a)    the claim is prosecuted by an employee or a
person employed in domestic or household service or by a household helper;

b)    The claimant, who is no longer employed,
does not seek reinstatement; and

c)    The aggregate money claim of the employee or
househelper does not exceed P5,000.00.

At the opposite side of the controversy is private respondents’ thesis
that the regional director acted well within his domain considering that
petitioners did not controvert private respondents’ claims. Private respondents also cite Executive
Order No. 111 particularly that portion which amended Article 128(b) of
the Labor Code, thus:

ART. 128. Visitorial and enforcement power. – (a) x x x.

(b) The provisions of Article 217 of this Code
to the contrary notwithstanding and in cases where the relationship of
employer-employee still exists, the Minister of Labor and Employment or his
duly authorized representatives shall have the power to order and administer,
after due notice and hearing, compliance with the labor standards provisions of
this Code and other labor legislation based on the findings of labor regulation
officers or industrial safety engineers made in the course of inspection, and
to issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the
labor regulation officer and raises issues which cannot be resolved without
considering evidentiary matters that are not verifiable in the normal course of
inspection. x x x

For its part, the Office of the Solicitor General initially
insisted that private respondents were still employees of petitioners but
nonetheless prayed that the petition be given due course inasmuch as the money
claims in favor of private respondents were all in excess of the P5,000 limit
fixed by R.A. 6715 (p. 7, Comment; p. 65 Rollo).

Resolution of the problem as to who between the regional director
and the labor arbiter has jurisdiction over the complaint of private
respondents hinges on a determination of which is the applicable law to the
complaint, Executive Order No. 111 or Republic Act No. 6715.

When Executive Order No. 111 was promulgated on December 24, 1986
(Maternity Children’s Hospital vs. Secretary
of Labor, 174 SCRA 632; 638 [1989]) Section 2 thereof which
amended Article 128 (b) of the Labor Code was interpreted in Briad Agro
Development Corporation vs. Dela Serna (174
SCRA 524; 532 [1989]) as giving concurrent jurisdiction to both the Secretary
of Labor (or the various regional directors) and the labor arbiters over money
claims among the other cases mentioned by Article 217 of the Labor Code.

Article 128(b) of the Labor Code, as amended, said Justice
Medialdea in the Maternity Children’s Hospital case
“merely confirms/ reiterates the enforcement/adjudication
authority of the Regional Director over uncontested money claims in
cases where an employer-employee relationship
still exists.” (supra, at p. 646.)

With the enactment of Republic Act No. 6715, which took effect on
March 21, 1989 or seven days after the complaint at bar was filed on March 14,
1989, Articles 129 and 217 of the Labor Code, inter alia, were
amended and – as a consequence of the subsequent law, the decision in Briad
Agro Development Corporation vs. Dela Serna
(174 SCRA 524 [1989]) was reconsidered on November 9, 1989 (179 SCRA 269; 274),
thus:

Republic Act No. 6715, like its predecessors, Executive Order No.
111 and Article 217, as amended, has retroactive application. Thus, when this new law divested Regional
Directors of the power to hear money claims, the divestment affected pending
litigations. It also affected this
particular case. (Note that under par.
6, where the claim does not exceed P5,000.00, regional directors have
jurisdiction.)

In Garcia vs. Martinez, we categorically held
that amendments relative to the jurisdiction of labor arbiters (under
Presidential Decree No. 1367, divesting the labor arbiter of jurisdiction)
partake of the nature of curative statutes, thus:

It now appears that at the time this case was decided the lower
court had jurisdiction over Velasco’s complaint although at the time it was
filed said court was not clothed with such jurisdiction. The lack of jurisdiction was cured by the
issuance of the amendatory decree which is in the nature of a curative statute
with retrospective application to a pending proceeding, like Civil Case No.
9657 (See 82 C.J.S. 1004).

Garcia has since been uniformly applied in subsequent
cases. Thus, in Calderon v.
Court of Appeals, reiterated that “PD No. 1367 [is]
curative and retrospective in nature.

The Decision of this case, finally, acknowledged the retrospective
characteristics of Executive Order No. 111.

The Court hastens to state that it is not reversing itself, but
merely applying the new law.

(at pp. 274-275.)

Following the consistent doctrine announced by this Court in South
Motorists Enterprises vs. Tosoc (181 SCRA 386
[1990]), Brokenshire Memorial
Hospital Inc. vs. Minister of Labor and
Employment (182 SCRA 5 [1990]), Servando’s Inc. vs.
Secretary of Labor and Employment (184 SCRA
664 [1990]); 198 SCRA 156 [1991], Baritua vs. Secretary of
the Department of Labor and Employment
(204 SCRA 332 [1991]), and lately in Midland Insurance Corporation
vs. Secretary of Labor and Employment
(214 SCRA 578 [1992]), there is no doubt that the regional directors under Republic
Act No. 6715, can try money claims only if the following requisites concur:

1. The claim is presented by an employee or person employed in
domestic or household service, or househelper under the code;

2. The claimant, no longer being employed, does not seek
reinstatement; and

3. The aggregate money claim of the employee or housekeeper does
not exceed five thousand pesos (P5,000.00).

The principle of continuous jurisdiction of the regional
director, as applied by the Secretary of Labor to the suit filed by herein
private respondents on March 14, 1989 prior to the effectivity of Republic Act
No. 6715, is therefore incorrect. While
a subsequent law can not generally produce a retroactive effect as to affect
pending litigation (Article 4, New Civil Code), it is an equally
accepted axiom in statutory construction that:

Where at the time an action is filed in court the latter has no
jurisdiction over the subject matter thereof but a subsequent statute clothes
it with jurisdiction before the action is decided, the statute is in the nature
of a curative law with retroactive operation to pending proceedings and cures
the defect of lack of jurisdiction of the court at the commencement of the
action. (Abad vs. Phil.
American General Ins. Co., Inc., 108 SCRA 717
[1981]; Garcia vs. Martinez, 90 SCRA 331 [1979]; Calderon
vs. Court of Appeals, 100 SCRA 459 [1980]; Agpalo,
Statutory Construction, 1986 ed., p. 273).”

Verily, further discussion on the retrospective operation of
Republic Act No. 6715 to the cause initiated by herein private respondents on
March 14, 1989 is now a futile exercise in exegesis considering that the
application of the recent legislation to pending cases have been recognized in
the South Motorist case (181 SCRA 386; 388 [1990]), along with
other kindred cases, especially so when private respondents explicitly
acknowledged in their Comment that curative statutes have long been considered
valid (p. 5 thereof; p. 53, Rollo; Article 1431, New Civil Code; Section
4, Rule 129; Section 2(a), Rule 131,
Revised Rules on Evidence).

A simple examination of the labor arbiter’s impugned order dated
September 25, 1989 (pp. 29-30, Rollo) readily shows that the aggregate claims
of each of the twenty-five employees of petitioner are above the amount of
P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case (Fermin
vs. Secretary of Labor and Employment,
215 SCRA 10 [1992]); Caños Medical Center, Inc. vs.
Trajano, 215 SCRA 828 [1992]).

On the supposed restrictive application of Article 217 (6) of the
Labor Code only to domestic workers, it may be recalled that the Department of
Labor and Employment emphasized that said proviso is inapplicable to
private respondents since the latter are not domestic workers. But the prefatory statement of Article 217
speaks loudly about the original and exclusive jurisdiction of the labor
arbiters over all workers, whether agricultural or non-agricultural,
subject to particular cases specified therein, Moreover, Paragraph 6 of the
same legal provision is not confined solely to domestic workers:

6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for reinstatement.

Private respondents’ disquisition postulate the view that the
grant in Article 217 to the labor arbiter of original and exclusive
jurisdiction over claims in excess of P5,000 does not operate to oust the
regional director of visitorial and enforcement powers vis-a-vis labor
standard infractions under Article 128 (b) involving amounts exceeding such
sum. It should, however, be recalled
that Justice Padilla already clarified this point in the process of harmonizing
Articles 128 (b), 129 and 217(6) of the Labor Code on June 5, 1991 in Servando’s
Inc. vs. Secretary of Labor and Employment
(198 SCRA 156 [1991]), thus:

A careful consideration of the above-quoted three (3) provisions of
the Labor Code leads the Court to reiterate its ruling that the exclusive
jurisdiction to hear and decide employees’ claims arising from employer-employee
relations, exceeding the aggregate amount of P5,000.00 for each employee, is
vested in the Labor Arbiter (Article 217 (a) (6). This exclusive jurisdiction of the Labor Arbiter is
confirmed by the provisions of Article 129 which excludes from the jurisdiction
of the Regional Director or any hearing officer of the Department of Labor the
power to hear and decide claims of employees arising from employer-employee
relations exceeding the amount of P5,000.00 for each employee.

To construe the visitorial power of the Secretary of Labor to order
and enforce compliance with labor laws as including the power to hear and
decide cases involving employees’ claims for wages, arising from
employer-employee relations, even if the amount of said claims exceed
P5,000.00 for each employee, would, in our considered opinion, emasculate and
render meaningless, if not useless, the provisions of Article 217 (a) (6) and
Article 129 of the Labor Code which, as above-pointed out, confer exclusive
jurisdiction on the Labor Arbiter to hear and decide such employees’ claims
(exceeding P5,000,00 for each employee). To sustain the respondents’ position would, in effect, sanction a
situation where all employees’ claims, regardless of amount, can be heard and
determined by the Secretary of Labor under his visitorial power. This does not, however, appear to be the
legislative intent.

We further hold that to harmonize the above-quoted three (3)
provisions of the Labor Code, the Secretary of Labor should be held as
possessed of his plenary visitorial powers to order the inspection of all
establishments where labor is employed, to look into all possible violations of
labor laws and regulations but the power to hear and decide employees’ claims
exceeding P5,000.00 for each employee should be left to the Labor Arbiter as
the exclusive repository of the power to hear and decide such
claims. In other words, the inspection
conducted by the Secretary of Labor, through labor regulation officers or
industrial safety engineers, may yield findings of violations of labor standard
under labor laws; the Secretary of Labor may order compliance with said labor
standards, if necessary, through appropriate writs of execution but when the
findings disclose an employee claim of over P5,000.00, the matter should be
referred to the Labor Arbiter in recognition of his exclusive
jurisdiction over such claims.

Nor is this position devoid of sound reason or purpose, because –

1. The proceedings before the Secretary of
Labor (or his agents) exercising his visitorial powers is summary in nature. On the other hand, proceedings before the
Labor Arbiters are more formal and in accord with rules of evidence. When the employee’s claim is less than
P5,000.00, a summary procedure for its settlement can be justified, but not
when a claim is more or less substantial, from the standpoint of both employee
and management, for which reason, an employee’s claim exceeding P5,000.00 is
placed within the exclusive jurisdiction of the Labor Arbiter to hear
and decide.

2. Article 129 of the Labor Code expressly
provides that “upon complaint of any interested
party,” the Regional Director (and, consequently, the Secretary of Labor
to whom appeals from the Regional Director are taken) is empowered to hear and
decide simple money claims, i.e. those that do not exceed P5,000.00 for each
employee, employing for this purpose a summary procedure. If Article 128 (b) of the Labor Code were to
be construed as empowering the Secretary of Labor, under his visitorial power,
to hear and decide all types of employee’s claims, including those
exceeding P5,000.00 for each employee,
employing for this purpose a summary procedure, then, Article 129 (limiting the
Regional Director’s jurisdiction to a claim not exceeding P5,000.00) becomes a
useless surplusage in the Labor Code.

3. Besides, it would seem that as the law
(Article 129) limits the jurisdiction of the Regional Director (and, therefore,
the Secretary of Labor on appeal from the Regional Director) to “complaints of
any interested party” seeking an amount of not more than P5,000.00, for each
employee, it cannot be that, because of the absence of any complaint from any
interested party, the Secretary of Labor under his visitorial power, is motu
proprio empowered to hear and decide employee’s claim of more than
P5,000.00, for each employee.

(at pp. 160-162.)

To recapitulate, and to arrest the similar nagging problem in the
future, it must be stressed anew that regional directors can assume authority
only upon the concurrence of these requisites:

1.  The claim is presented by an employee or
person employed in domestic or household service, or househelper under the
code;

2.  The claimant, no longer being employed, does
not seek reinstatement; and

3.  The aggregate money claim of the employee or
housekeeper does not exceed five thousand pesos (P5,000.00).

WHEREFORE, the petition is hereby GRANTED. The challenged orders of October 18, 1990
and May 2, 1991 of the Department of Labor and Employment, through
Undersecretary Cresencio T. Trajano, are hereby set aside. Public respondent is directed to refer the
workers’ money claims to the appropriate Labor Arbiter for proper
disposition. The temporary restraining
order issued on July 3, 1991 is hereby made permanent. No special pronouncement is made as to costs.

SO ORDERED.

Bidin, Romero, and
Vitug, JJ., concur.

Feliciano, J., (Chairman), on
leave.