.R. No. 101250 November 20, 1992 CAOS MEDICAL CENTER, INC. and AVELYN B. ANTONIO, petitioners, vs.

HON. CRESENCIO B. TRAJANO (Undersecretary of Labor) and EMMA TRAZO, HELEN ALLOREZ (ALBORES), NIMFA SANTOS, JOY CASAMAYOR, ARACELI ZAMORA, CORAZON IYOG, MARIA FE TIMSON, JOAN GELBOLINGO, ERLINDA REYES, SUSAN MALACAD, VIRGINIA BUERA, GLORIA RUIZ, LELA MAE TABANAO, JULIETO TRAZO, VERGENIO FLORENTINO, ALBERT DABALOS, NAILA LU, GEORGINA JUSTIMBASTE, CATHERINE PARAS, EVANGELISTA AQUINO, NIMFA RODRIGUEZ, FELIPE DATULAYTA, CORAZON DINO, DOMINGA CHATTO, MARIA FE UY, ABUNDIO CHATTO, LUZVIMINDA CHATTO, ELEN BARINGUE, ANTONIO ESTENZO and PRINCE PARAISO, respondents. In Brokeshire Memorial Hospital, Inc. vs. Minister of Labor and Employment, 182 SCRA 5, we ruled that the Regional Directors shall exercise jurisdiction when the following requisites concur: (a) the claim is presented by an employed in domestic or household service, or househelper under the Code; (b) the claimant, no longer being employed, does not seek reinstatement; and (c) the aggregate money claim of the employee or househelper does not exceed P5,000.00. It was under these legal and jurisprudential milieu that Servando's Incorporated vs. Secretary of Labor and Employment (184 SCRA 664) was decided. The Court upheld therein the adjudicative powers of Regional Directors over money claims arising from employer-employee relationship when the conditions enumerated in theBrokeshire case are present.

NESTOR J. BALLADARES, ROLDAN L. GUANIZO, ARNULFO E. MERTO, GERONIMO G. GOBUYAN, EDGARDO O. AVILA, and EDUARD F. RAMOS, JR., Petitioners, - versus PEAK VENTURES CORPORATION/ EL TIGRE SECURITY AND INVESTIGATION AGENCY and YANGCO MARKET OWNERS ASSOCIATION/LAO TI SIOK BEE, Respondents.

G.R. No. 161794 Present: YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: June 16, 2009

This Court has held in a plethora of cases[19] that reliance on the Servando ruling is no longer tenable in view of the enactment of R.A. No. 7730, amending Article 128 (b) of the Labor Code. The Secretary of Labor or his duly authorized representatives is now empowered to hear and decide, in a summary proceeding, any matter involving the recovery of any amount of wages and other monetary claims arising out of employer-employee relations at the time of the inspection, even if the amount of the money claim exceeds P5,000.00. In Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, [20] the Court elucidated:
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) x x x The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary x x x thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officer or industrial safety engineer made in the course of inspection. This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we sustained the jurisdiction of the DOLE Regional Director and held that :the visitorial and enforcement powers of the DOLE Regional director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000.

In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results.

It bears stressing that this petition clearly involves a labor standards case, and it is in keeping with the law that the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the DOLE exists to insure its expeditious delivery to him free of charge.[25] We, therefore, sustain the jurisdiction of the DOLE Regional Director in this case. In order to do away with the jurisdictional limitations imposed by the Servando ruling and to finally settle any lingering doubts on the extent of the visitorial and enforcement powers of the Secretary of Labor and Employment, R.A. 7730 was enacted, amending Article 128 (b) to its present formulation, so as to free it from the jurisdictional restrictions found in Articles 129 and 217. This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested of jurisdiction over a labor standards case. Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.[24]

In the present case, the CA aptly applied the exception clause. At the earliest opportunity, respondent registered its objection to the findings of the labor inspector. The labor inspector, in fact, noted in its report that respondent alleged that petitioners were contractual workers and/or independent and talent workers without control or supervision and also supplied with tools and apparatus pertaining to their job.[25] In its position paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional Directors jurisdiction to entertain the matter before it, primarily because of the absence of an employer-employee relationship. Finally, it raised the same arguments before the Secretary of Labor and the appellate court. It is, therefore, clear that respondent contested and continues to contest the findings and conclusions of the labor inspector. To resolve the issue raised by respondent, that is, the existence of an employer-employee relationship, there is need to examine evidentiary matters. The following elements constitute the reliable yardstick to determine such relationship: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct.[26] There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status. [27] These pieces of evidence are readily available, as they are in the possession of either the employee or the employer; and they may easily be looked into by the labor inspector (in the course of inspection) when confronted with the question of the existence or absence of an employer-employee relationship. Some businessmen, however, try to avoid an employer-employee relationship from arising in their enterprises, because that juridical relation spawns obligations connected with workmens compensation, social security, medicare, termination pay, and unionism.[28] Thus, in addition to the above-mentioned documents, other pieces of evidence are considered in ascertaining the true nature of the parties relationship. This is especially true in determining the element of control. The most important index of an employer-employee relationship is the so-called control test, that is, whether the employer controls or has reserved the

right to control the employee, not only as to the result of the work to be done, but also as to the means and methods by which the same is to be accomplished.[29] In the case at bar, whether or not petitioners were independent contractors/project employees/free lance workers is a question of fact that necessitates the examination of evidentiary matters not verifiable in the normal course of inspection. Indeed, the contracts of independent services, as well as the check vouchers, were kept and maintained in or about the premises of the workplace and were, therefore, verifiable in the course of inspection. However, respondent likewise claimed that petitioners were not precluded from working outside the service contracts they had entered into with it (respondent); and that there were instances when petitioners abandoned their service contracts with the respondent, because they had to work on another project with a different company. Undoubtedly, the resolution of these issues requires the examination of evidentiary matters not verifiable in the normal course of inspection. Verily, the Regional Director and the Secretary of Labor are divested of jurisdiction to decide the case. We would like to emphasize that to contest means to raise questions as to the amounts complained of or the absence of violation of labor standards laws; or, as in the instant case, issues as to the complainants right to labor standards benefits. To be sure, raising lack of jurisdiction alone is not the contest contemplated by the exception clause.[30] It is necessary that the employer contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results.[31] More importantly, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters be not verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine it; and these officers are not divested of jurisdiction to decide the case.[32]

In sum, respondent contested the findings of the labor inspector during and after the inspection and raised issues the resolution of which necessitated the

examination of evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional Director was divested of jurisdiction and should have endorsed the case to the appropriate Arbitration Branch of the NLRC. [33] Considering, however, that an illegal dismissal case had been filed by petitioners wherein the existence or absence of an employer-employee relationship was also raised, the CA correctly ruled that such endorsement was no longer necessary. WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated May 31, 2005 and its Resolution dated January 27, 2006 in CA-G.R. SP No. 76942, are AFFIRMED. SO ORDERED.

JURISDICTION Okol v. Slimmers FACTS: Leslie Okol, a Vice President of Slimmers World, was terminated from employment after an incident with the Bureau of Customs regarding equipment belonging to/consigned to Slimmers World. As such, Okolfiled a complaint with the Arbitration branch of the NLRC against Slimmers World for illegal suspension,illegal dismissal, unpaid commissions, damages, and attorneys fees, with prayer for reinstatement andpayment of backwages. Slimmers World filed a Motion to Dismiss the case, asserting that the NLRC had nojurisdiction over the subject matter of the complaint. Slimmers Worlds motion was sustained, with the laborarbiter ruling that since Okol was the vice president at the time of her dismissal, being a corporate officer, thedispute was an intra-corporate controversy falling outside the jurisdiction of the arbitration branch. Onappeal, the NLRC reversed the LA decision and ordered Slimmers World to reinstate Okol. The CAsubsequently set aside the NLRC decision and ruled that the case was an intra-corporate controversy, andfalls within the jurisdiction of the regular courts pursuant to RA 8799. ISSUE 1: Whether Okol was an employee or corporate officer of Slimmers World.Okol was a CORPORATE OFFICER at the time of her dismissal. According to the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as the officers of thecorporation, The general

management of the corporation shall be vested in a board of five directors whoshall be stockholders and who shall be elected annually by the stockholders and who shall serve until theelection and qualification of their successors and Like the Chairman of the Board and the President, the VicePresident shall be elected by the Board of Directors from [its] own members. The Vice President shall bevested with all the powers and authority and is required to perform all the duties of the President during theabsence of the latter for any cause. The Vice President will perform such duties as the Board of Directors mayimpose upon him from time to time. This clearly shows that Okol was a director and officer of SlimmersWorld. An office is created by the charter of the corporation and the officer is elected by the directors andstockholders. On the other hand, an employee usually occupies no office and generally is employednot by action of the directors or stockholders but by the managing officer of the corporation who alsodetermines the compensation to be paid to such employee.ISSUE 2: W/N the NLRC has jurisdiction over the illegal dismissal case filed by Okol.NO. Since it has been shown that Okol was a corporate officer, her charges of illegal suspension, illegaldismissal, unpaid commissions, reinstatement and backwages against Slimmers World fall squarely withinthe ambit of intracorporate disputes. A corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of remunerationinvolving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplationof the Corporate Code. The determination of the rights of a director and corporate officer dismissed from hisemployment as well as the corresponding liability of a corporation, if any, is an intracorporate disputesubject to the jurisdiction of the regular courts. y Prior to its amendment, Section 5 of PD 902-A provided that intra-corporate disputes fall within thejurisdiction of the SEC. Subsection 5.2, Section 5 of RA 8799, transferred to RTCs the SECsjurisdiction over all cases listed in Section 5 of PD 902-