METEORO, el al vs CREATIVE CREATURES INC GR No.

171275 2009 FACTS: - Creative Creatures hired Victor Meteoro and the rest of the petitioners on various dates as artists, carpenters, and welders, tasked to design, create, assem le, set-up, and dismantle props, and provide sound effects to Creative!s various TV programs and movies" - #n $%%%, Meteoro and the others filed a complaint against Creative for non-pa&ment of la or standards incentives with the '()*-+C," An inspection was conducted" - Creative claimed that the petitioners were onl& contractual workers, and as such, no emplo&er-emplo&ee relationship e-isted" Thus, the '()* could not have e-ercised .urisdiction over the case, for it had none" - #t added that the petitioners were free-lance individuals, performing special services with skills and e-pertise inherentl& e-clusive to them like actors, actresses, directors, producers, and script writers, such that the& were treated as special t&pes of workers" - /etitioners, on the other hand, aver that the& were emplo&ees ecause the elements of an emplo&er-emplo&ee relationship e-isted" 0 - Su se1uentl&, petitioners filed a complaint for illegal dismissal against Creative, with pra&er for pa&ment of overtime pa&, premium pa& for holida& and rest da&, holida& pa&, service incentive leave pa&, $2th month pa&, and attorne&!s fees efore the +),C" - A few months after, '()* ,egional 'irector Ma-imo 3alu&ot )im issued an order directing Creative to pa& petitioners" - (n appeal, '()* Secretar& /atricia Sto" Tomas upheld the '()* ,egional 'irector!s findings" She stated that the Secretar& of )a or or his dul& authori4ed representative is allowed to use his visitorial and enforcement powers to give effect to la or legislation, regardless of the amount involved" - (n appeal, the CA dismissed the case against Creative for lack of .urisdiction" /etition for review on certiorari #SS5*: 67+ the '()*-+C, properl& e-ercised its .urisdiction over the case" 8*)': +(" The '()* Secretar& and her authori4ed representatives, such as the '()*-+C, 'irector, have .urisdiction to enforce compliance with la or standards laws under the road visitorial and enforcement powers conferred & Article $9: of the )a or Code, and e-panded & ,A +o" ;;2<" 3ut this notwithstanding, the power of the ,egional 'irector to hear and decide mone& claims is not a solute" The last sentence of Article $9: = > of the )a or Code, otherwise known as the e-ception clause, provides an instance when the ,egional 'irector or his representatives ma& e divested of .urisdiction over a la or standards case" 5nderprevailing .urisprudence, the so-called e-ception clause has the following elements, all of which must concur: (a) That the emplo&er contests the findings of the la or regulations officer and raises issues thereon?

(b) (c)

That in order to resolve such issues, there is a need to e-amine evidentiar& matters? and That such matters are not verifia le in the normal course of inspection #n the instant case, Creative registered its o .ection to the findings of the la or inspector at the earliest opportunit&" #t is clear that Creative contested and continues to contest the findings and conclusions of the la or inspector" Also, the 1uestion of whether or not petitioners were independent contractors7pro.ect emplo&ees7free-lance workers is a 1uestion of fact that necessitates the e-amination of evidentiar& matters not verifia le in the course of inspection" Veril&, the ,egional 'irector and the Secretar& of )a or are divested of .urisdiction to decide the case, and the +),C is the agenc& clothed with authorit& to do so" /etition denied for lack of merit" CA decision affirmed"

To contest means to raise 1uestions as to the amounts complained of or the a sence of violation of la or standards laws? or, issues as to the complainants right to la or standards enefits" ,aising lack of .urisdiction alone is not the contest contemplated & the e-ception clause" #t is necessar& that the emplo&er contest the findings of the la or regulations officer during the hearing or after receipt of the notice of inspection results" More importantl&, the ke& re1uirement for the ,egional 'irector and the '()* Secretar& to e divested of .urisdiction is that the evidentiar& matters e not verifia le in the course of inspection" 6here the evidence presented was verifia le in the normal course of inspection, even if presented elatedl& & the emplo&er, the ,egional 'irector, and later the '()* Secretar&, ma& still e-amine it? and these officers are not divested of .urisdiction to decide the case

THIRD DIVISION VICTOR METEORO, REY CAGA, IMMY CORONE!, COSME TAMOR, "E!I#ES !ATONERO, ENRI$UE SA!A%AR, MAY!A !A$UI, OR!Y &ANUA, &ERNARDO MADRID, ARIE! REYES, A!"REDO REYES, AVIER TIMERESA, ARMANDO MACA, R., RO!ANDO "A!$UERA, OSE &ENITE%, RODO!"O TIMERESA, RO!ANDO !UCENA, NOE! SU&TINIENTE, GUI!!ERMA $UIMADO, &ENIGNO REGA!ADO, RANDY DE!A CRU%, UVY MACA, AM&ROSIO CANARIA, R., "E!ICIANO 'A ARO, 'ETER &ADIANA, DANI!O ORDAN, DENNIS EDIESCA, OGI! AVI!A, A&RAHAM &URCE, ONO"RE VINAS, DENNIS VITARA, ARIE! GA!U'O a() A!&ERT AUSTERO, /etitioners, - versus /romulgated: CREATIVE CREATURES, INC., ,espondent" Cul& $2, 9<<% G.R. No. 171275

/resent: @+A,*S-SA+T#AA(, J., Chairperson, C8#C(-+ABA,#(, V*)ASC(, C,", +AC85,A, and /*,A)TA, JJ.

-------------------------------------------------------------------------------------DECISION NACHURA, J.*

Assailed in this petition for review on certiorari are the Court of Appeals 'ecision D$E dated Ma& 2$, 9<<F and ,esolutionD9E dated Canuar& 9;, 9<<G in CA-A"," S/ +o" ;G%H9" The facts of the case are as follows: ,espondent is a domestic corporation engaged in the usiness of producing, providing, or procuring the production of set designs and set construction services for television e-hi itions, concerts, theatrical performances, motion pictures and the like" #t primaril& caters to the production design re1uirements of A3S-C3+ 3roadcasting Corporation in Metro Manila and nationwide" D2E (n the other hand, petitioners were hired & respondent on various dates as artists, carpenters and welders" The& were tasked to design, create, assem le, set-up and dismantle props, and provide sound effects to respondent!s various TV programs and movies" DHE Sometime in Fe ruar& and March $%%%, petitioners filed their respective complaints for non-pa&ment of night shift differential pa&, overtime pa&, holida& pa&, $2 th month pa&, premium pa& for Sunda&s and7or rest da&s, service incentive leave pa&, paternit& leave pa&, educational assistance, rice enefits, and illegal and7or unauthori4ed deductions from salaries against respondent, efore the 'epartment of )a or and *mplo&ment ='()*>, +ational Capital ,egion =+C,>" Their complaints were consolidated and docketed as +C,<<-%%<9-#S-<$$" DFE After the inspection conducted at respondent!s premises, the la or inspector noted that Ithe records were not made availa le at the time of the inspection?J that respondent claimed that petitioners were contractual emplo&ees and7or independent talent workers? and that petitioners were re1uired to punch their cards" DGE #n its position paper, respondent argued that the '()*-+C, had no .urisdiction over the complaint of the petitioners ecause of the a sence of an emplo&er-emplo&ee relationship" #t added that petitioners were free-lance individuals, performing special services with skills and e-pertise inherentl& e-clusive to them like actors, actresses, directors, producers, and script writers, such that the& were treated as special t&pes of workers" D;E /etitioners, on the other hand, averred that the& were emplo&ees of respondent, as the elements of an emplo&er-emplo&ee relationship e-isted" Meanwhile, on April $9, $%%%, petitioners filed a complaint for illegal dismissal against petitioner, with pra&er for pa&ment of overtime pa&, premium pa& for holida& and rest da&, holida& pa&, service incentive leave pa&, $2 th month

pa& and attorne&!s fees efore the +ational )a or ,elations Commission =+),C>" The case was docketed as +),C-+C, Case +o" <<-<H-<HHF%-%"D:E (n (cto er $$, $%%%, '()* ,egional 'irector Ma-imo 3agu&ot )im issued an (rder D%E directing respondent to pa& petitioners the total amount of /9,G%H,;<%"<<" The dispositive portion of the (rder reads as follows: 68*,*F(,*, premises considered, this (ffice finds merit in the complaint" Accordingl&, ,espondent Creative Creatures, #nc" and7or Mr" *dmond T&, is here & ordered to pa& thirt& three =22> Complainants, within ten =$<> da&s from receipt hereof, the total amount of T6( M#))#(+ S#K 85+',*' +#+*T@ F(5, T8(5SA+' S*V*+ 85+',*' +#+* /*S(S =/9,G%H,;<%"<<> representing unpaid $2th month pa&, vacation and sick leave enefits, regular holida& pa&, rest da& and holida& premiums, overtime pa&, educational allowance, and rice allowance presented as follows: ---Failure to pa& Complainants within the given period will constrain this (ffice to issue a 6,#T (F *K*C5T#(+ for the immediate enforcement of this order" S( (,'*,*'"D$<E The ,egional 'irector sustained petitioners! claim on the e-istence of an emplo&er-emplo&ee relationship using the determinants set forth & the )a or Code, specificall&, the elements of control and supervision, power of dismissal, pa&ment of wages, and the selection and engagement of emplo&ees" 8e added that since the petitioners had worked for more than one &ear doing the same routine work, the& were regular emplo&ees with respect to the activit& in which the& were emplo&ed" )astl&, he upheld the '()*-+C,!s .urisdiction to hear and determine cases in violation of la or standards law"D$$E (n appeal, then '()* Secretar& /atricia A" Sto" Tomas affirmed the findings of the '()* ,egional 'irector" D$9E #n upholding the .urisdiction of the '()*-+C,, she e-plained that the Secretar& of )a or or his dul& authori4ed representative is allowed to use his visitorial and enforcement powers to give effect to la or legislation, regardless of the amount involved, pursuant to Article $9: of the )a or Code, as amended & ,epu lic Act =,"A"> +o" ;;2<" For failure to o tain a favora le decision, respondent elevated the matter to the Court of Appeals in CA-A"," S/ +o" ;G%H9" (n Ma& 2$, 9<<F, the appellate court rendered the assailed decision, the dispositive portion of which reads: +HERE"ORE, premises considered, the instant petition is GRANTED. For lack of .urisdiction, the (rders dated (cto er $:, 9<<9 and Fe ruar& F, 9<<2, issued & respondent Secretar& are here & declared +5)) and V(#'" 8owever, in view of the filing of a similar case efore the +),C, referral of the instant case to the +),C for appropriate determination is no longer necessar&" SO ORDERED.D$2E 6hile recogni4ing the visitorial and mone& claims, the appellate court noted 'irector> ma& e divested of .urisdiction" of emplo&er-emplo&ee relationship, there enforcement powers of the ,egional 'irector and his .urisdiction to entertain that Article $9: of the )a or Code provides an instance when he =,egional The CA pointed out that respondent had consistentl& disputed the e-istence & placing the case e&ond the .urisdiction of the ,egional 'irector"

/etitioners now come efore this Court in this petition for review on certiorari raising the lone issue of: 6hether or not the Court of Appeals committed an error when it ruled that the instant case falls within the e-ception clause of Article $9: = > of the )a or Code, as amended, and in annulling and setting aside the (rders of the Secretar& of )a or which affirmed the (rder of the ,egional 'irector of '()*-+C, awarding the claims of the petitioners for enefits under the )a or Standards laws, namel&, $2th month enefit, overtime pa&, night shift differentials, premium on rest da&s, vacation and sick leave and other enefits accorded to emplo&ees of the respondenDtE in the e-ercise of its visitorial powers pursuant to Article $9: = > of the )a or Code as amended" D$HE #n fine, we are tasked to determine which od&7tri unal has .urisdiction over petitioners! mone& claims --- the '()* Secretar& or his dul& authori4ed representative, or the +),C" 6e sustain the appellate court!s conclusion that the instant case falls within the e-clusive .urisdiction of the +),C" The '()* Secretar& and her authori4ed representatives, such as the '()*-+C, ,egional 'irector, have .urisdiction to enforce compliance with la or standards laws under the road visitorial and enforcement powers conferred & Article $9: of the )a or Code, and e-panded & ,epu lic Act =,"A"> +o" ;;2<, D$FE to wit:D$GE

Art" $9:" Visitorial and Enforcement Power 0 =a> The Secretar& of )a or or his dul& authori4ed representatives, including la officers, shall have access to emplo&er!s records and premises at an&time of the whenever work is eing undertaken therein, and the right to cop& therefrom, to emplo&ee and investigate an& fact, condition or matter which ma& e necessar& violations or which ma& aid in the enforcement of this Code and of an& la or law, wage and regulations issued pursuant thereto" or regulation da& or night 1uestion an& to determine order or rules

= > +otwithstanding the provisions of Article $9% and 9$; of this Code to the contrar&, and in cases where the relationship of emplo&er-emplo&ee relation still e-ists, the Secretar& of )a or and *mplo&ment or his dul& authori4ed representatives shall have the power to issue compliance orders to give effect to the la or standards provisions of this Code and other la or legislation ased on the findings of la or emplo&ment and enforcement officers or industrial safet& engineers made in the course of inspection" The Secretar& or his dul& authori4ed representatives shall issue writs of e-ecution, to the appropriate authorit& for the enforcement of their orders, e-cept in cases where the emplo&er contests the findings of the la or emplo&ment and enforcement officer and raises issues supported & documentar& proofs which were not considered in the course of inspection" ---As it is now worded, and as consistentl& held in a num er of cases, D$;E the visitorial and enforcement powers of the Secretar&, e-ercised through his representatives, encompass compliance with all la or standards laws and other la or legislation, regardless of the amount of the claims filed & workers" #t is well to note that the ,egional 'irector!s visitorial and enforcement powers have undergone a series of amendments" Confusion was engendered with the promulgation of the decision in Servandos Inc. v. Secretary of Labor and Employment.D$:E #n that case, this Court held that to harmoni4e Articles 9$; =a> =G>, D$%E $9%,D9<E and $9: of the )a or Code, the Secretar& of )a or should e deemed as clothed with plenar& visitorial powers to order the inspection of all esta lishments where la or is emplo&ed, and to look into all possi le violations of la or laws and regulations? ut the power to hear and decide emplo&ees! claims e-ceeding /F,<<<"<< for each emplo&ee should e left to the )a or Ar iter as the e-clusive repositor& of the power to hear and decide such claims" Curisprudence, however, rendered the Servando ruling inapplica le" #n Guico, Jr. v. uisumbin!,D9$E "llied Investi!ation #ureau, Inc. v. Sec. of Labor ,D99E and $irineo #owlin! Pla%a, Inc. v. Sensin! ,D92E we had occasion to e-plain that while it is true that under Articles $9% and 9$; of the )a or Code, the )a or Ar iter has .urisdiction to hear and decide cases where the aggregate mone& claim of each emplo&ee e-ceeds /F,<<<"<<, these provisions of law do not contemplate or cover the visitorial and enforcement powers of the Secretar& of )a or or his dul& authori4ed representatives" Thus, we upheld the .urisdiction of the ,egional 'irector, notwithstanding the fact that the amount awarded e-ceeded /F,<<<"<< per emplo&ee" #n order to do awa& with the .urisdictional limitations imposed & the Servando ruling and to finall& settle an& lingering dou ts on the e-tent of the visitorial and enforcement powers of the Secretar& of )a or and *mplo&ment, ,"A" ;;2< was enacted, amending Article $9: = > to its present formulation, so as to free it from the .urisdictional restrictions found in Articles $9% and 9$;" This notwithstanding, the power of the ,egional 'irector to hear and decide the monetar& claims of emplo&ees is not a solute" The last sentence of Article $9: = > of the )a or Code, otherwise known as the Ie-ception clause,J provides an instance when the ,egional 'irector or his representatives ma& e divested of .urisdiction over a la or standards case" 5nder prevailing .urisprudence, the so-called Ie-ception clauseJ has the following elements, all of which must concur: =a> that the emplo&er contests the findings of the la or regulations officer and raises issues thereon? = > that in order to resolve such issues, there is a need to e-amine evidentiar& matters? and =c> that such matters are not verifia le in the normal course of inspection" D9HE #n the present case, the CA aptl& applied the Ie-ception clause"J At the earliest opportunit&, respondent registered its o .ection to the findings of the la or inspector" The la or inspector, in fact, noted in its report that Irespondent alleged that petitioners were contractual workers and7or independent and talent workers without control or supervision and also supplied with tools and apparatus pertaining to their .o "J D9FE #n its position paper, respondent again insisted that petitioners were not its emplo&ees" #t then 1uestioned the ,egional 'irector!s .urisdiction to

entertain the matter efore it, primaril& ecause of the a sence of an emplo&er-emplo&ee relationship" Finall&, it raised the same arguments efore the Secretar& of )a or and the appellate court" #t is, therefore, clear that respondent contested and continues to contest the findings and conclusions of the la or inspector" To resolve the issue raised & respondent, that is, the e-istence of an emplo&er-emplo&ee relationship, there is need to e-amine evidentiar& matters" The following elementsconstitute the relia le &ardstick to determine such relationship: =a> the selection and engagement of the emplo&ee? = > the pa&ment of wages? =c> the power of dismissal? and =d> the emplo&er!s power to control the emplo&ee!s conduct" D9GE There is no hard and fast rule designed to esta lish the aforesaid elements" An& competent and relevant evidence to prove the relationship ma& e admitted" #dentification cards, cash vouchers, social securit& registration, appointment letters or emplo&ment contracts, pa&rolls, organi4ation charts, and personnel lists, serve as evidence of emplo&ee status" D9;E These pieces of evidence are readil& availa le, as the& are in the possession of either the emplo&ee or the emplo&er? and the& ma& easil& e looked into & the la or inspector =in the course of inspection> when confronted with the 1uestion of the e-istence or a sence of an emplo&er-emplo&ee relationship" Some usinessmen, however, tr& to avoid an emplo&er-emplo&ee relationship from arising in their enterprises, ecause that .uridical relation spawns o ligations connected with workmen!s compensation, social securit&, medicare, termination pa&, and unionism"D9:E Thus, in addition to the a ove-mentioned documents, other pieces of evidence are considered in ascertaining the true nature of the parties! relationship" This is especiall& true in determining the element of Icontrol"J The most important inde- of an emplo&er-emplo&ee relationship is the so-called Icontrol test,J that is, whether the emplo&er controls or has reserved the right to control the emplo&ee, not onl& as to the result of the work to e done, ut also as to the means and methods & which the same is to e accomplished" D9%E #n the case at ar, whether or not petitioners were independent contractors7pro.ect emplo&ees7free lance workers is a 1uestion of fact that necessitates the e-amination of evidentiar& matters not verifia le in the normal course of inspection" #ndeed, the contracts of independent services, as well as the check vouchers, were kept and maintained in or a out the premises of the workplace and were, therefore, verifia le in the course of inspection" 8owever, respondent likewise claimed that petitioners were not precluded from working outside the service contracts the& had entered into with it =respondent>? and that there were instances when petitioners a andoned their service contracts with the respondent, ecause the& had to work on another pro.ect with a different compan&" 5ndou tedl&, the resolution of these issues re1uires the e-amination of evidentiar& matters not verifia le in the normal course of inspection" Veril&, the ,egional 'irector and the Secretar& of )a or are divested of .urisdiction to decide the case" 6e would like to emphasi4e that Ito contestJ means to raise 1uestions as to the amounts complained of or the a sence of violation of la or standards laws? or, as in the instant case, issues as to the complainants! right to la or standards enefits" To e sure, raising lack of .urisdiction alone is not the IcontestJ contemplated & the e-ception clause"D2<E #t is necessar& that the emplo&er contest the findings of the la or regulations officer during the hearing or after receipt of the notice of inspection results" D2$E More importantl&, the ke& re1uirement for the ,egional 'irector and the '()* Secretar& to e divested of .urisdiction is that the evidentiar& matters e not verifia le in the course of inspection" 6here the evidence presented was verifia le in the normal course of inspection, even if presented elatedl& & the emplo&er, the ,egional 'irector, and later the '()* Secretar&, ma& still e-amine it? and these officers are not divested of .urisdiction to decide the case"D29E

#n sum, respondent contested the findings of the la or inspector during and after the inspection and raised issues the resolution of which necessitated the e-amination of evidentiar& matters not verifia le in the normal course of inspection" 8ence, the ,egional 'irector was divested of .urisdiction and should have endorsed the case to the appropriate Ar itration 3ranch of the +),C"D22E Considering, however, that an illegal dismissal case had een filed & petitioners wherein the e-istence or a sence of an emplo&er-emplo&ee relationship was also raised, the CA correctl& ruled that such endorsement was no longer necessar&" +HERE"ORE, premises considered, the petition is DENIED for lack of merit" The Court of Appeals 'ecision dated Ma& 2$, 9<<F and its ,esolution dated Canuar& 9;, 9<<G in CA-A"," S/ +o" ;G%H9, are A""IRMED" SO ORDERED"