Albay I Electric Cooperative, Inc. vs. Martinez, Sr.

The Regional Director of the Department of Labor and Employment lacks jurisdiction to hear and decide an employee's claim for salary differentials and 13th month pay where the aggregate money claim exceeds P5,000; such claims fall within the exclusive original jurisdiction of the Labor Arbiter, and the Regional Director's visitorial power under Article 128 of the Labor Code cannot be invoked to adjudicate them.

Petitioner Albay I Electric Cooperative, Inc. (ALECO I) is an electric cooperative that engaged private respondents Conrado S. Buban and Bonagua in its Commercial Services Department and Service Center. The controversy arises against the statutory backdrop of the Labor Code, as amended by Republic Act No. 6715, which divides adjudicative authority over employee money claims between the Regional Director of the Department of Labor and Employment and the Labor Arbiter and limits the Regional Director's adjudicative power to claims not exceeding P5,000 per employee. The case also implicates the Regional Director's visitorial power under Article 128 of the Labor Code.

Private respondents Conrado S. Buban and Bonagua were designated by Israel Garcia, petitioner's Acting General Manager, as acting manager (Commercial Services Department) and supervisor (Service Center), respectively, of Albay I Electric Cooperative, Inc. (ALECO I) on August 15, 1988. Garcia allegedly made the appointments after his own appointment had been recalled by the National Electrification Administration (NEA) through Office Order No. 454 issued on August 10, 1988, effective immediately. On August 27, 1988, the Board of Directors of ALECO I considered the appointments of Buban and Bonagua as null and void. In a Memorandum dated June 7, 1989, Romulo Maristaza, Chief of the Legal Service Office of the NEA, considered the appointments defective because there were serious doubts as to their validity.

On August 15, 1989, private respondents filed a complaint with the Office of the Regional Director, Department of Labor and Employment, Regional Office No. 5, Legazpi City, for recovery of salary differentials corresponding to their new positions. They claimed that because they had held their respective positions for more than one year, their status should be classified as permanent and they should be paid the corresponding salaries.

Petitioner moved to dismiss the complaint for lack of jurisdiction. On September 11, 1989, the Regional Director issued an Order requiring petitioner to pay Bonagua P11,962.31 and Buban P12,593.36, corresponding to underpayment of wages for their new positions.

On September 19, 1989, petitioner filed a notice of appeal and Memorandum of Appeal. Instead of giving due course to the appeal, the Med-Arbiter denied it and directed the parties to present evidence. In its position paper, petitioner assailed the order denying its appeal and argued that because the amount claimed by private respondents exceeded P5,000, the Regional Director had no jurisdiction to entertain the complaint.

On September 3, 1990, the Regional Director issued another Order requiring petitioner to pay Bonagua P9,259.72 and Buban P38,243.21, corresponding to their salary differentials and 13th month pay. The Regional Director also held that because the complainants were allowed to discharge their functions for more than one year without objection or adverse action on the part of petitioner, this amounted to acquiescence and implied approval of their appointments. The Regional Director found that Buban and Bonagua had been issued appointment papers on February 9, 1988 and March 22, 1988, respectively. A writ of execution was issued on September 26, 1990, prompting petitioner to file this special civil action for certiorari.

• Jurisdictional Amount: Petitioner maintained that because each private respondent's money claim exceeded P5,000, the complaint fell outside the jurisdiction of the Regional Director and should properly be heard by the Labor Arbiter.
• Denial of Appeal: Petitioner assailed the Med-Arbiter's denial of its appeal and argued that the Regional Director had no jurisdiction to entertain the complaint in the first instance.

• Visitorial Power: Public respondent argued that under his visitorial power, the P5,000 jurisdictional limit does not apply, citing Brokenshire Memorial Hospital, Inc. vs. Minister of Labor and Employment.
• Expeditious Relief: Public respondent added that the purpose of the law is to afford workers expeditious delivery of what legally belongs to them, so the P5,000 limit need not apply.
• Labor Standard Cases: Private respondents submitted that the Regional Director has the power and authority in complaints for inspection cases to hear and decide labor standard cases where an employer-employee relationship still exists between the parties, and that the law does not impose a minimum claim for relief under Article 128 of the Labor Code.
• Solicitor General's Manifestation: In his Manifestation in Lieu of Comment, the Solicitor General submitted that the claims for unpaid wages properly fall under the exclusive and original jurisdiction of the Labor Arbiter because the money claims exceeded P5,000, and that the Regional Director ordered payment of salary differentials not in connection with his visitorial powers but in the adjudication of the claims.

• Jurisdiction over Money Claims: Whether the Regional Director of the Department of Labor and Employment has jurisdiction to hear and decide private respondents' claims for salary differentials and 13th month pay where each claim exceeds P5,000.
• Visitorial Power: Whether the Regional Director may exercise his visitorial power under Article 128 of the Labor Code to adjudicate such claims notwithstanding the P5,000 jurisdictional limit.
• Effect of Lack of Jurisdiction: Whether the Regional Director's Orders dated September 11, 1989 and September 3, 1990, the writ of execution dated September 26, 1990, and the denial of petitioner's appeal are valid when issued without jurisdiction.

• Jurisdiction over Money Claims: No. The Regional Director lacked jurisdiction because each private respondent's aggregate claim exceeded P5,000; under Articles 129 and 217 of the Labor Code, as amended by Republic Act No. 6715, such claims fall within the exclusive original jurisdiction of the Labor Arbiter.
• Visitorial Power: No. The visitorial power under Article 128 cannot be construed to include the power to hear and decide employee money claims exceeding P5,000, as that would render Articles 129 and 217(a)(6) meaningless.
• Effect of Lack of Jurisdiction: The Orders and writ are null and void. When a tribunal acts without or in excess of jurisdiction, all its decisions, orders, and processes are without force and effect, and the denial of petitioner's appeal cannot cure the jurisdictional defect.

• Jurisdiction over Money Claims: Article 129 of the Labor Code, as amended by Republic Act No. 6715, empowers the Regional Director, through summary proceeding and after due notice, to hear and decide recovery of wages and other monetary claims and benefits arising from employer-employee relations, provided the complaint does not include a claim for reinstatement and the aggregate money claims of each employee or househelper do not exceed P5,000. Article 217 vests Labor Arbiters with original and exclusive jurisdiction over all other claims arising from employer-employee relations involving an amount exceeding P5,000, whether or not accompanied by a claim for reinstatement. The claims of Bonagua and Buban were for salary differentials and 13th month pay; the Regional Director ordered payment of P11,962.31 and P12,593.36, and later P9,259.72 and P38,243.21, each exceeding P5,000. Jurisdiction therefore lay exclusively and originally with the Labor Arbiter. Brokenshire did not support public respondent's position because it did not confer unlimited jurisdiction on the Regional Director; it qualified that jurisdiction with three 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 househelper does not exceed P5,000. In the absence of any of these requisites, the Labor Arbiter has exclusive original jurisdiction over all claims arising from employer-employee relations, other than claims for employees compensation, social security, medicare, and maternity benefits. The P5,000 limit was exceeded, so the Regional Director acted without jurisdiction. The fact that the employer contested the propriety of the salary differentials should also have alerted the Regional Director to exercise restraint; when the employer contests the findings, the case must be referred to the Labor Arbiter because the question is factual and cannot be resolved in the summary proceedings attendant to the visitorial power. The Regional Director's finding that appointment papers were issued on February 9, 1988 and March 22, 1988 did not cure the lack of jurisdiction, because the amount of each claim ousted him of jurisdiction by operation of law.
• Visitorial Power: Article 128 vests the Regional Director with visitorial power to inspect the employer's premises and examine records and, if violations of labor standard provisions are found, to order compliance after due notice and hearing and issue a writ of execution. That power, however, may not be exercised where the employer contests the labor regulation officers' findings and raises issues that cannot be resolved without considering evidentiary matters not verifiable in the normal course of inspection; in such a case, the matter must be referred to the Labor Arbiter. Servando's Inc. vs. Secretary of Labor and Employment held that construing the visitorial power as including the power to hear and decide employee claims for wages exceeding P5,000 would emasculate and render meaningless Articles 217(a)(6) and 129 of the Labor Code, which confer exclusive jurisdiction on the Labor Arbiter over such claims. To sustain the contrary view would allow all employee claims, regardless of amount, to be heard and determined by the Secretary of Labor under the visitorial power, contrary to legislative intent. The summary nature of visitorial proceedings justifies the P5,000 limit; claims exceeding that amount are substantial and should be heard by the Labor Arbiter under more formal rules of evidence. Article 129 would become a useless surplusage if Article 128 were construed to permit adjudication of all claims. Private respondents therefore could not invoke the visitorial power to sustain the Regional Director's orders.
• Effect of Lack of Jurisdiction: Because the Regional Director acted beyond the scope of his jurisdiction in taking cognizance of the case at the first instance, all orders and processes subsequently issued by him were without force and effect. The denial of petitioner's appeal could not cure the jurisdictional defect. It is a rule that when a tribunal acts in excess or lack of jurisdiction, all decisions, orders, and processes emanating therefrom are null and void. The assailed Orders dated September 11, 1989 and September 3, 1990, and the writ of execution dated September 26, 1990, were accordingly set aside, and each claim was referred to the proper Labor Arbiter for appropriate determination.

• Regional Director's Limited Adjudicative Jurisdiction over Money Claims — Under Article 129 of the Labor Code, as amended by Republic Act No. 6715, the Regional Director may hear and decide recovery of wages and other monetary claims arising from employer-employee relations only through summary proceeding and only if the complaint does not include reinstatement and the aggregate money claims of each employee do not exceed P5,000. Claims exceeding that amount fall under the exclusive original jurisdiction of the Labor Arbiter under Article 217(a)(6). Because each private respondent's claim for salary differentials and 13th month pay exceeded P5,000, the Regional Director lacked jurisdiction.
• Requisites for Regional Director's Adjudicative Power (Brokenshire Requisites) — The Court, construing Brokenshire Memorial Hospital, Inc. vs. Minister of Labor and Employment, held that the Regional Director's adjudicative power over employee claims requires: (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 househelper does not exceed P5,000. In the absence of any of these requisites, the Labor Arbiter has exclusive original jurisdiction over all claims arising from employer-employee relations, except claims for employees compensation, social security, medicare, and maternity benefits. The third requisite was absent here.
• Visitorial Power Does Not Include Adjudication of Claims Exceeding P5,000 — The Regional Director's visitorial power under Article 128 of the Labor Code permits inspection of employer premises and records and, upon finding labor standard violations, ordering compliance after due notice and hearing. It does not authorize the Regional Director to hear and decide employee claims for wages exceeding P5,000 per employee. To construe it otherwise would emasculate Articles 129 and 217(a)(6) and allow all employee claims, regardless of amount, to be heard under the visitorial power. Where the employer contests the findings and raises issues requiring evidentiary matters not verifiable in the normal course of inspection, the case must be referred to the Labor Arbiter.
• Nullity of Acts Issued Without or in Excess of Jurisdiction — When a tribunal acts without or in excess of jurisdiction, all decisions, orders, and processes emanating therefrom are null and void. Because the Regional Director acted without jurisdiction over the claims, the Orders dated September 11, 1989 and September 3, 1990, and the writ of execution dated September 26, 1990, were set aside and declared null and void.

• "Clearly, the jurisdiction over the instant dispute lies exclusively and originally with the Labor Arbiter, the claims being in excess of P5,000.00 each." — States the ratio decidendi on the jurisdictional amount and the exclusive original jurisdiction of the Labor Arbiter.
• "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 employee's claims (exceeding P5,000.00 for each employee)." — Defines the limit of the visitorial power and explains why it cannot be used to adjudicate claims exceeding P5,000.
• "Since the amount claimed by each respondent exceeded the P5,000.00 jurisdictional limit conferred upon public respondent, the latter acted without jurisdiction in ordering petitioner to pay private respondents' claim for salary differentials and 13th month pay (Midland Insurance Corporation v. Secretary of Labor and Employment, 214 SCRA 578 [1992])." — Applies the jurisdictional rule to the Regional Director's orders.
• "It is a rule that when a tribunal acts in excess or lack of jurisdiction, all decisions, orders and processes emanating thereform are null and void." — States the consequence of the Regional Director's lack of jurisdiction over the assailed orders and writ.

• Brokenshire Memorial Hospital, Inc. vs. Minister of Labor and Employment, 182 SCRA 5 [1990] — Cited by public respondent for the proposition that the P5,000 limit does not necessarily remove a claim from the Regional Director's competence. The Court held the reliance misplaced: Brokenshire did not confer unlimited jurisdiction but qualified the Regional Director's adjudicative power with three requisites, including that the aggregate claim not exceed P5,000.
• Servando's Inc. vs. Secretary of Labor and Employment, 198 SCRA 156 [1991] — Followed. The Court quoted it for the rule that construing the visitorial power as including authority to hear and decide claims exceeding P5,000 would emasculate Articles 217(a)(6) and 129; such claims are reserved to the Labor Arbiter.
• Midland Insurance Corporation vs. Secretary of Labor and Employment, 214 SCRA 578 [1992] — Cited to support the conclusion that because each claim exceeded P5,000, the Regional Director acted without jurisdiction in ordering payment of salary differentials and 13th month pay.

• Article 129, Labor Code, as amended by Republic Act No. 6715 — Empowers the Regional Director, through summary proceeding and after due notice, to hear and decide recovery of wages and other monetary claims and benefits arising from employer-employee relations, provided the complaint does not include reinstatement and the aggregate money claims of each employee or househelper do not exceed P5,000. The Court applied this provision to hold that the Regional Director's jurisdiction is limited to claims not exceeding P5,000.
• Article 217, Labor Code, as amended by Republic Act No. 6715 — Vests Labor Arbiters with original and exclusive jurisdiction over all claims arising from employer-employee relations involving an amount exceeding P5,000, whether or not accompanied by a claim for reinstatement, except claims for employees compensation, social security, medicare, and maternity benefits. The Court applied Article 217(a)(6) to hold that the Labor Arbiter had exclusive original jurisdiction over private respondents' claims.
• Article 128, Labor Code — Vests the Secretary of Labor and the Regional Director with visitorial power to inspect employer premises and records and to order compliance with labor standard provisions after due notice and hearing. The Court held that this power cannot be used to adjudicate employee money claims exceeding P5,000, and that contested findings requiring evidentiary matters not verifiable in the normal course of inspection must be referred to the Labor Arbiter.
• Republic Act No. 6715 — Amended the Labor Code and conferred adjudicative powers on Regional Directors and Labor Arbiters while fixing the P5,000 jurisdictional limit. The Court relied on the amendments in defining the jurisdictional boundary between the Regional Director and the Labor Arbiter.

Feliciano, Romero, Melo, and Vitug, JJ.