NESTOR J. BALLADARES, ET. AL. VS.

PEAK VENTURES CORPORATION AND

YANGCOMARKET OWNERS ASSOCIATIONG.R. No. 161794, June 16, 2009
FACTS: Balladares and co-petitioners were hired as security guards by Peak Ventures
and were assigned at the premises of Yangco Market. They filed a complaint for
underpayment of wages against Peak Ventures with the DOLE. The Regional Director
of DOLE rendered judgment in favor of petitioners and ruled that Peak Ventures and
Yangco Market are solidarily liable to petitioners, said decision was upheld by Secretary
of Labor. On certiorari, the Court of Appeals, ruled that Regional Director has no
jurisdiction over the case because the claims of each petitioners exceeded PHP5,000,
therefore power to adjudicate such claims belong to the Labor Arbiter.
ISSUE: Whether the Regional Director correctly assume jurisdiction over the case?
RULING: Yes, under Art. 128 of the Labor Code on Visitorial and Enforcement Powers.
The Regional Director correctly assume jurisdiction over the case. The complaint
involved underpayment of wages. In order to verify the allegations in the complaint,
DOLE conducted an inspection which yielded proof of violations of labor standards. By
nature of the complaint and from the result of the inspection the authority of the DOLE
under Art. 128 of Labor Code came into play regardless of monetary value of claims
involved. The Secretary of Labor or his duly authorized representatives is now
empowered to hear and decide in summary proceeding, any matter involving the
recovery of amount of wages and other monetary claims arising out of employeremployee relationship at the time of inspections, even if the amount of money claims
exceed PHP5000.
The Regional Director correctly assumed jurisdiction over the money claims of
petitioners even if the claims exceeded PHP5,000. Said jurisdiction was in accordance
with Art. 128(b) of the Labor Code and the case does not fall under the exception
clause. We must take note that the doctrine in the Servando case is no longer
controlling upon the amendment of Art. 128 by RA 7730, Secretary of Labor or his duly
authorized representative is now empowered to hear and decide money claims arising
out of employer-employee relationship at the time of inspection. In this case, Peak
Ventures did not contest the findings of Regional Director, it even admitted before the
Court of Appeals that petitioners were not paid correct wages and as a defense tried to
pass the buck to Yangco Market, therefore the case does not fall under the exceptions
provided in Art. 128 (b) of the Labor Code which would have divested Regional Director
of jurisdiction over the case.

Meteoro v. Creative Creatures

FACTS: Creative Creatures hired Victor Meteoro and the rest of the petitioners on
various dates as artists, carpenters, and welders, tasked to design, create, assemble,
set-up, and dismantle props, and provide sound effects to Creatives various TV
programs and movies. In 1999, Meteoro and the others filed a complaint against
Creative for non-payment of labor standards incentives with the DOLE-NCR. An
inspection was conducted. Creative claimed that the petitioners were only contractual
workers, and as such, no employer-employee relationship existed. Thus, the DOLE
could not have exercised jurisdiction over the case, for it had none. It added that the
petitioners were free-lance individuals, performing special services with skills and
expertise inherently exclusive to them like actors, actresses, directors, producers, and
script writers, such that they were treated as special types of workers. Petitioners, on
the other hand, aver that they were employees because the elements of an employeremployee relationship existed. Subsequently, petitioners filed a complaint for illegal
dismissal against Creative, with prayer for payment of overtime pay, premium pay for
holiday and rest day, holiday pay, service incentive leave pay, 13th month pay,
and attorneys fees before the NLRC. A few months after, DOLE Regional Director
Maximo Baluyot Lim issued an order directing Creative to pay petitioners. On appeal,
DOLE Secretary Patricia Sto. Tomas upheld the DOLE Regional Directors findings.
She stated that the Secretary of Labor or his duly authorized representative is allowed
to use his visitorial and enforcement powers to give effect to labor legislation regardless
of the amount involved. On appeal, the CA dismissed the case against Creative for lack
of jurisdiction. Petition for review on certiorari.
ISSUE: Whether the DOLE-NCR properly exercised its jurisdiction over the case.
HELD: NO. The DOLE Secretary and her authorized representatives, such as the
DOLE-NCR Director, have jurisdiction to enforce compliance with labor standards laws
under the broad visitorial and enforcement powers conferred by Article 128 of the Labor
Code, and expanded by RA No. 7730. But this notwithstanding, the power of the
Regional Director to hear and decide money claims 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.
In the instant case, Creative registered its objection to the findings of the labor inspector
at the earliest opportunity. It is clear that Creative contested and continues to contest

the findings and conclusions of the labor inspector. Also, the question of 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 course of inspection. Verily, the Regional Director and the Secretary of Labor
are divested of jurisdiction to decide the case, and the NLRC is the agency clothed with
authority to do so. Petition denied for lack of merit. CA decision affirmed.
To contest means to raise questions as to the amounts complained of or the absence of
violation of labor standards laws; or, issues as to the complainants right to labor
standards benefits. Raising lack of jurisdiction alone is not the contest contemplated by
the exception clause. 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.
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.