G.R. No. 82805 and G.R. No. 83225, June 29, 1989
BRIAD AGRO DEVELOPMENT CORPORATION, petitioner, vs. HON. DIONISIO DELA SERNA, et al., respondents. L.M. CAMUS ENGINEERING CORPORATION, petitioner, vs. THE HON. SECRETARY OF LABOR, et al., respondents.

FACTS

These consolidated cases challenge the jurisdiction of the Department of Labor and Employment (DOLE) Regional Directors to adjudicate money claims. In G.R. No. 82805 , Briad Agro Development Corporation was ordered by Regional Director Filomeno Balbin to pay its employees over P5 million for unpaid wages, ECOLA, holiday pay, service incentive leave, and 13th-month pay. The order was issued after the company repeatedly failed to present employment records during inspections and conferences. Briad appealed to the NLRC, arguing that under the Court’s ruling in Zambales Base Metals, money claims fall under the exclusive jurisdiction of Labor Arbiters, not Regional Directors.
In G.R. No. 83225, Regional Director David Kong ordered L.M. Camus Engineering Corporation to pay its employees for unpaid ECOLA, 13th-month pay, and holiday pay. The order followed the company’s failure to comply with a subpoena duces tecum to produce employment records. The NLRC affirmed both orders, citing Executive Order No. 111, which amended the Labor Code and purportedly empowered Regional Directors to hear and decide money claims.

ISSUE

The core issue is whether DOLE Regional Directors possess the jurisdiction to hear and decide employees’ money claims, or if such jurisdiction is exclusively vested in Labor Arbiters under Article 217 of the Labor Code.

RULING

The Supreme Court ruled that Regional Directors lack jurisdiction to adjudicate money claims; such power resides exclusively with Labor Arbiters. The Court clarified the distinction between the enforcement and adjudicatory functions of the DOLE. Regional Directors exercise visitorial and enforcement powers under Article 128(b) of the Labor Code, allowing them to conduct inspections and order the payment of unpaid wages and other benefits based on uncontested findings during routine checks. This power is summary and non-litigious.
However, when the employer contests the findings or raises claims that require evidentiary hearings to resolve factual issues—such as the existence of an employer-employee relationship, the precise computation of claims, or the validity of defenses—the case ceases to be a simple enforcement matter. It becomes a dispute necessitating adjudication, which falls under the exclusive original jurisdiction of Labor Arbiters as mandated by Article 217. Executive Order No. 111 did not alter this fundamental jurisdictional delineation. Consequently, the orders issued by the Regional Directors in these cases were void for having been rendered without jurisdiction. The cases were remanded to the appropriate Labor Arbiters for proper proceedings.