G.R. No.
205688, July 04, 2018 segregator/mixer of softdrinks, Altoveros was required to
VALENTINO S. LINGAT AND APRONIANO
ALTOVEROS, Petitioners, v. COCA-COLA BOTTLERS
PHILIPPINES, INC., MONTE DAPPLES TRADING, AND DAVID
LYONS,* Respondents.
DEL CASTILLO, J.:[**]
This Petition for Review on Certiorari assails the July 4, 2012
Decision1 of the Court of Appeals (CA) in CA-G.R SP No. 112829,
which modified the July 7, 2009 Decision2 of the National Labor
Relations Commission (NLRC) in NLRC LAC No. 03-000855-09.
Also challenged is the January 16, 2013 CA Resolution3 which
denied petitioners Valentino S. Lingat (Lingat) and Aproniano
Altoveros' (Altoveros) (petitioners) Motion for Reconsideration.
Factual Antecedents
On May 5, 2008, petitioners filed a Complaint4 for illegal dismissal,
moral and exemplary damages, and attorney's fees against Coca-
Cola Bottlers Phils., Inc. (CCBPI), Monte Dapples Trading Corp.
(MDTC), and David Lyons (Lyons) (respondents).
Petitioners averred in their Position Paper5 and Reply6 that, in
August 1993 and January 1996, CCBPI employed Lingat and
Altoveros as plant driver and forklift operator, and
segregator/mixer respectively. They added that they had
continually worked for CCBPI until their illegal dismissal in April
2005 (Lingat) and December 2005 (Altoveros).
According to petitioners, they were regular employees of CCBPI
because it engaged them to perform tasks necessary and desirable
in its business or trade. They explained that CCBPI made them
part of its operations, and without them its products would not
reach its clients. They asserted that their work was the link
between CCBPI and its sales force.
Petitioners alleged that CCBPI engaged Lingat primarily as a plant
driver but he also worked as forklift operator. In particular, he
drove CCBPI's truck loaded with softdrinks and its other products,
and thereafter, returned the empty bottles as well as the unsold
softdrinks back to the plant of CCBPI. On the other hand, as
segregate softdrinks based on the orders of the customers.
Altoveros declared, that when a customer needed cases of
softdrinks, such need was relayed to him since no sales personnel
was allowed in the loading area.
Petitioners further stated, that after becoming regular employees
(as they had been employed for more than a year), and by way of
a modus operandi, CCBPI transferred them from one agency to
another. These agencies included Lipercon Services, Inc., People
Services, Inc., Interserve Management and Manpower Resources,
Inc. The latest agency to where they were transferred was MDTC.
They claimed that such transfer was a scheme to avoid their
regularization in CCBPI.
In addition, petitioners stressed that the aforesaid agencies were
labor-only contractors which did not have any equipment,
machinery, and work premises for warehousing purposes. They
insisted that CCBPI owned the warehouse where they worked; the
supervisors thereat were CCBPI’s employees; and petitioners
themselves worked for CCBPI, not for any agency. In fine, they
maintained that they were regular employees of CCBPI because:
[Petitioners] worked within the premises of [CCBPI,] use the
equipment, the facilities, cater on [its] products, [and served] the
Sales Forces x x x. In other words, while at work, [petitioners]
were under the direction, control and supervision of respondent
Coca-Cola's regular employees. The situation calls for the over-all
control of the operations by Coca-Cola employees as [petitioners]
perform[ed] their work with x x x Coca-Cola and [its] premises. x
x x7
Finally, petitioners argued that CCBPI dismissed them after it
found out that they were "overstaying." As such, they posited that
they were illegally dismissed as their termination was without
cause and due process of law.
For their part, CCBPI and Lyons, its President/Chief Executive
Officer, countered in their Position Paper8 and Reply9 that this case
must be dismissed because the Labor Arbiter (LA) lacked
jurisdiction, there being no employer-employee relationship
between the parties.
CCBPI and Lyons declared that CCBPI was engaged in the business 1. To reinstate complainants to their former positions without loss
of manufacturing, distributing, and marketing of softdrinks and of seniority rights and privileges and to pay complainants
other beverage products. By reason of its business, CCBPI entered backwages from the time they were illegally dismissed up to the
into a Warehousing Management Agreement10 with MDTC for the time of this decision.
latter to perform warehousing and inventory functions for the
former. The computation unit of this Office is hereby directed to compute
the monetary award of the complainant[s] which forms part of this
CCBPI and Lyons insisted that MDTC was a legitimate and decision.
independent contractor, which only assigned petitioners at CCBPI's
plant in Otis, Manila. They posited that MDTC carried on a distinct Other claims are DISMISSED for lack of merit
and independent business; catered to other clients, aside from
CCBPI; and possessed sufficient capital and investment in
SO ORDERED.12
machinery and equipment for the conduct of its business as well as
an office building.
The LA ruled that respondents failed to refute that petitioners were
employees of CCBPI and the latter undermined their regular status
CCBPI and Lyons likewise stressed that petitioners were employees
by transferring them to an agency. The LA decreed that, per the
of MDTC, not CCBPI. They averred that MDTC was the one who
identification cards (IDs) of petitioners, CCBPI hired Lingat in
engaged petitioners and paid their salaries. They also claimed that
1993, and Altoveros in 1996. Moreover, as plant driver, and
CCBPI only coordinated with the Operations Manager of MDTC in
segregator/mixer, petitioners performed activities necessary in the
order to monitor the end results of the services rendered by the
usual business or trade of CCBPI; and, their continued
employees of MDTC. They added that it was MDTC which imposed
employment for more than one year proved that they were regular
corrective action upon its employees when disciplinary matters
employees of CCBPI.
arose.

The LA likewise ratiocinated that the contracts of employment

Finally, CCBPI and Lyons averred that when the Warehousing
which petitioners may have entered with CCBPI's contractors could
Management Agreement between CCBPI and MDTC expired, the
not undermine their (petitioners) tenure arising from their regular
parties no longer renewed the same. Consequently, it came as a
status with CCBPI.
surprise to CCBPI that petitioners filed this complaint considering
that CCBPI was not their employer, but MDTC.
In sum, the LA decreed that, since respondents failed to debunk
the allegations raised by petitioners, then judgment must be
Meanwhile, LA Catalino R. Laderas declared that despite notice,
rendered in favor of petitioners.
MDTC failed to file its position paper on this case.11

Ruling of the National Labor Relations Commission

Ruling of the Labor Arbiter

On appeal, the NLRC dismissed the illegal dismissal case. It,

On December 9, 2008, the LA ruled for the petitioners, the
nonetheless, ordered MDTC to pay Altoveros separation pay
dispositive portion of his Decision reads:
amounting to P10,725.00.

WHEREFORE, premised on the foregoing considerations[,]

judgment is hereby rendered declaring that complainants were
ILLEGALLY DISMISSED from their employment.
Respondent CCBPI is hereby ordered, viz.:
According to the NLRC, Lingat stated that CCBPI illegally dismissed
him in April2005. However, he only filed his complaint for illegal
dismissal on May 5, 2008, which was beyond three years from his
dismissal. Thus, Lingat's complaint must be dismissed on the
ground of prescription.
Also, the NLRC decreed that the complaint of Altoveros was bereft
of merit. It explained that per Altoveros' ID, CCBPI employed him
in January 1996 until September 19, 1996; thereafter, he was
employed by Genesis Logistics and Warehouse Corporation; and,
on April 7, 2003, MDTC hired him and assigned him as
loader/mixer at CCBPI's warehouse in Paco, Manila until December
2005 when MDTC's contract with CCBPI expired.
In ruling that Altoveros was an employee of MDTC, the NLRC gave
credence to the Warehousing Management Agreement between
MDTC and CCBPI as well as to MDTC's Amended Articles of
Incorporation. It held that MDTC did not appear to be a mere
agent of CCBPI but was one that provided stock handling and
storage services to CCBPI. It held that, considering MDTC was the
employer of Altoveros, then it must pay him separation pay of 1/2
month pay for every year of his service.
On November 4, 2009, the NLRC denied13 petitioners' Motion for
Reconsideration prompting them to file a Petition for Certiorari
with the CA.
Ruling of the Court of Appeals
On July 4, 2012, the CA modified the NLRC Decision in that it
ordered MDTC to pay separation pay to both petitioners.
Contrary to the finding of the NLRC, the CA found that the illegal
dismissal case filed by Lingat had not yet prescribed. It held that,
aside from money claims, Lingat prayed for reinstatement, as
such, pursuant to Article 1146 of the Civil Code, Lingat had four
years within which to file his case. It noted that Lingat filed this
suit on May 5, 2008 or only three years and one day from his
alleged illegal dismissal; thus, he timely filed his case against
respondents.
Nevertheless, the CA agreed with the NLRC that MDTC was an
independent contractor and the employer of petitioners. It gave
weight to petitioners' latest IDs, which were issued by MDTC as
well as to the Articles of Incorporation of MDTC, which indicated
that its secondary purpose was "to engage in the business of land
transportation" and "the business of warehousing services." It
further ruled that MDTC had substantial capital stock, as well as
properties and equipment, which supported the conclusion that
MDTC was a legitimate labor contractor.
On January 16,2 013, the CA denied the Motion for
Reconsideration on the assailed Decision.
Issues
Undaunted, petitioners filed this Petition raising these issues:
1. Whether or not there exists [an] employer-employ[ee]
relationship between Petitioners and Respondent CCBPI;
2. Whether or not Petitioner Lingat's complaint is barred by
prescription;
3. Whether or not the Court of Appeals gravely erred in
declaring [that] Petitioners [were] not regular employees
of Respondent CCBPI;
4. Whether or not Petitioners were dismissed without cause
and due process;
5. Whether or not moral and exemplary damages lie; and
6. Whether or not the Petitioners are entitled to attorney's
fees.14
Petitioners maintain that they were regular employees of CCBPI.
They insist that their engagement by CCBPI in 1993 (Lingat) and
1996 (Altoveros) proved that they were its employees from the
beginning. They also aver that they worked at CCBPI's warehouse,
wore its uniforms, operated its machinery, and were under the
direct control and supervision of CCBPI. They likewise contend that
CCBPI illegally dismissed them from work. On this, they insist that
respondents themselves admitted that petitioners' employment
contract expired; and thereafter, they were no longer given any
new assignments. They remain firm that such termination of
contract was not a valid cause for their dismissal from work.
CCBPI and Lyons, for their part, counter that this Petition was not
a proper recourse because petitioners seek a recalibration of facts
and evidence which is not within the scope of the Petition because
only pure questions of law may be raised herein. They add that
MDTC was a legitimate and independent job contractor and was
the employer of petitioners, not CCBPI.
Our Ruling
The Petition is impressed with merit.
As a rule, the determination of whether an employer-employee
relationship exists between the parties involves factual matters
that are generally beyond the ambit of this Petition as only
questions of law may be raised in a petition for review
on certiorari. However, this rule allows certain exceptions, which
include an instance where the factual findings of the courts or
tribunals below are conflicting. Given the situation here where the
factual findings of the NLRC and the CA are divergent from those
of the LA, the Court deems it proper to re-assess and review these
findings in order to arrive at a just resolution of the issues on
hand.15
Moreover, pursuant to Article 295 of the Labor Code, as amended
and renumbered, a regular employee is a) one that has been
engaged to perform tasks usually necessary or desirable in the
employer's usual business or trade – without falling within the
category of either a fixed or a project or a seasonal employee; or
b) one that has been engaged for a least one year, whether his or
her service is continuous or not, with respect to such activity he or
she is engaged, and the work of the employee remains while such
activity exists.
In this case, petitioners described their respective duties at CCBPI
in this manner:
x x x I, V. Lingat, x x x was also engaged as forklift operator [but]
my main work as plant driver [required me] to take out truck
loaded with softdrinks/Coca-Cola products after the same has been
checked by the checker area; [I also] drive back Coca-Cola trucks
loaded with empty bottles or sometimes x x x unsold softdrinks x x
x This represented [my] daily chores while employed at Coca-
Cola[.]
x x x I, A. Altoveros, was with the latest work as segregator/mixer
of softdrinks according to the demands of the customers, that is,
when a customer needed ten (10) cases of Royal Tru-Orange or
five (5) cases of Coke Sakto, the same is relayed to me in the
loading area (as no sales personnel is allowed therein)[.] I have to
segregate softdrinks accordingly to fill up the order of [the]
customer.16
To ascertain if one is a regular employee, it is primordial to
determine the reasonable connection between the activity he or
she performs and its relation to the trade or business of the
supposed employer.17
Relating petitioners' tasks to the nature of the business of CCBPI –
which involved the manufacture, distribution, and sale of soft
drinks and other beverages – it cannot be denied that mixing and
segregating as well as loading and bringing of CCBPI's products to
its customers involved distribution and sale of these items. Simply
put, petitioners' duties were reasonably connected to the very
business of CCBPI. They were indispensable to such business
because without them the products of CCBPI would not reach its
customers.
Interestingly, in Coca-Cola Bottlers Philippines, Inc. v. Agito,18 the
Court held that respondents salesmen therein were regular
employees of CCBPI as their work constituted distribution and sale
of its products. The Court also stressed in Agito that the repeated
rehiring of those salesmen bolstered the indispensability of their
work to the business of CCBPI.
Similarly, herein petitioners have worked for CCBPI since 1993
(Lingat) and 1996 (Altoveros) until the non-renewal of their
contracts in 2005. Aside from the fact that their work involved the
distribution and sale of the products of CCBPI, they remained to be
working for CCBPI despite having been transferred from one
agency to another. Hence, such repeated re-hiring of petitioners,
and the performance of the same tasks for CCBPI established the
necessity and the indispensability of their activities in its business.
In addition, in Pacquing v. Coca-Cola Philippines, Inc.,19 the Court
ruled that the sales route helpers of CCBPI were its regular
employees. In this case, petitioners had similarly undertook to
bring CCBPI's products to its customers at their delivery points.
In Pacquing, it was even stated that therein sales route helpers
"were part of a complement of three personnel comprised of a
driver, a salesman and a regular route helper, for every delivery
truck."20 As such, it would be absurd for the Court to hold those
helpers as regular employees of CCBPI without giving the same
status to its plant driver, including its segregator of softdrinks,
whose work also had reasonable connection to CCBPI's business of
distribution and sale of soft drinks and other beverage products.
Furthermore, in Quintanar v. Coca-Cola Bottlers, Philippines,
Inc.,21 therein route helpers, like petitioners, were tasked to
distribute CCBPI's products and were likewise successively
transferred to agencies after having been initially employed by
CCBPI. The Court decreed therein that said helpers were regular
employees of CCBPI notwithstanding the fact that they were
transferred to agencies while working for CCBPI. In the same vein,
the transfer of herein petitioners from one agency to another did
not adversely affect their regular employment status. Such was
the case because they continued to perform the same tasks for
CCBPI even if they were placed under certain agencies, the last of
which was MDTC.
Moreover, CCBPI and Lyons' contention that MDTC was a
legitimate labor contractor and was the actual employer of
petitioners does not hold water.
A labor-only contractor is one who enters into an agreement with
the principal employer to act as the agent in the recruitment,
supply, or placement of workers for the latter. A labor-only
contractor 1) does not have substantial capital or investment in
tools, equipment, work premises, among others, and the recruited
employees perform tasks necessary to the main business of the
principal; or 2) does not exercise any right of control anent the
performance of the contractual employee. In such case, where a
labor-only contracting exists, the principal shall be deemed the
employer of the contractual employee; and the principal and the
labor-only contractor shall be solidarily liable for any violation of
the Labor Code. On the other hand, a legitimate job contractor
enters into an agreement with the employer for the supply of
workers for the latter but the "employer-employee relationship
between the employer and the contractor's employees [is] only for
a limited purpose, i.e., to ensure that the employees are paid their
wages."22
In Diamond Farms, Inc. v. Southern Philippines Federation of
Labor (SPFL)-Workers Solidarity of DARBMUPCO/Diamond-
SPFL,23 the Court distinguished a labor-only contractor and a
legitimate job contractor in this wise:
The Omnibus Rules Implementing the Labor Code distinguishes
between permissible job contracting (or independent
contractorship) and labor-only contracting. Job contracting is
permissible under the Code if the following conditions are met:
(a) The contractor carries on an independent business and
undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the
results thereof; and
(b) The contractor has substantial capital or investment in the
form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business.
In contrast, job contracting shall be deemed as labor-only
contracting, an arrangement prohibited by law, if a person who
undertakes to supply workers to an employer:
(1) Does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises and other materials;
and
(2) The workers recruited and placed by such person are
performing activities which are directly related to the principal
business or operations of the employer in which workers are
habitually employed.
Here, based on their Warehousing Management Agreement, CCBPI
hired MDTC to perform warehousing management services, which
it claimed did not directly relate to its (CCBPI's) manufacturing
operations.24 However, it must be stressed that CCBPI's
business not only involved the manufacture of its products but also
included their distribution and sale. Thus, CCBPI's argument that
petitioners were employees of MDTC because they performed
tasks directly related to "warehousing management services,"
lacks merit. On the contrary, records show that petitioners were
performing tasks directly related to CCBPI's distribution and sale
aspects of its business.
To reiterate, CCBPI is engaged in the manufacture, distribution,
and sale of its products; in turn, as plant driver and
segregator/mixer of soft drinks, petitioners were engaged to
perform tasks relevant to the distribution and sale of CCBPI's
products, which relate to the core business of CCBPI, not to the
supposed warehousing service being rendered by MDTC to CCBPI.
Petitioners' work were directly connected to the achievement of
the purposes for which CCBPI was incorporated. Certainly, they WHEREFORE, the Petition is GRANTED. The July 4, 2012
were regular employees of CCBPI. Decision and January 16, 2013 Resolution of the Court of Appeals
in CA-G.R. SP No. 112829 are REVERSED and SET ASIDE.
Moreover, we disagree with the CA when it heavily relied on Accordingly, the December 9, 2008 Decision of the Labor Arbiter
MDTC's alleged substantial capital in order to conclude that it was is REINSTATED WITH MODIFICATIONS in that separation pay,
an independent labor contractor. in lieu of reinstatement, and attorney's fees equivalent to 10% of
the monetary grants are awarded to petitioners. All monetary
awards shall earn interest at the legal rate of 6% per annum from
To note, in  Quintanar v. Coca-Cola Bottlers, Philippines, Inc.,25 the
the finality of this Decision until fully paid.
Court ruled that "the possession of substantial capital is only one
element."26 To determine whether a person or entity is indeed a
legitimate labor contractor, it is necessary to prove not only SO ORDERED.
substantial capital or investment in tools, equipment, work
premises, among others, but also that the work of the employee is
directly related to the work that contractor is required to perform
for the principal.27 Evidently, the latter requirement is wanting in
the case at bench.

Finally, as regular employees, petitioners may be dismissed only

for cause and with due process. These requirements were not
complied with here.

It was not disputed that petitioners ceased to perform their work

when they were no longer given any new assignment upon the
alleged termination of the Warehousing Management Agreement
between CCBPI and MDTC. However, this is not a just or
authorized cause to terminate petitioners' services. Otherwise
stated, the contract expiration was not a valid basis to dismiss
petitioners from service. At the same time, there was no clear
showing that petitioners were afforded due process when they
were terminated. Therefore, their dismissal was without valid
cause and due process of law; as such, the same was illegal.

Considering that petitioners were illegally terminated, CCBPI and

MDTC are solidarily liable for the rightful claims of petitioners.28

Moreover, by reason of the lapse of more than 10 years since the

inception of this case on May 5, 2008, the Court deems it more
practical and would serve the best interest of the parties to award
separation pay to petitioners, in lieu of reinstatement. 29 Finally,
since petitioners were compelled to litigate to protect their rights
and interests, attorney's fees of 10% of the monetary award is
given them. The legal interest of 6% per annum  shall be imposed
on all the monetary grants from the finality of the Decision until
paid in full.30

G.R. No. 112940 November 21, 199
DAI-CHI ELECTRONICS MANUFACTURING
CORPORATION, Petitioner, v. HON. MARTIN S. VILLARAMA,
JR., Presiding Judge, Regional Trial Court, Branch 156,
Pasig, Metro Manila and ADONIS C. LIMJUCO, Respondents.
QUIASON, J.:
This is a petition for review on certiorari  under Rule 45 of the
Revised Rules of Court in relation to R.A. No. 5440 and Circular
No. 2-90 of the following orders of the Regional Trial Court, Branch
156, Pasig, Metro Manila, in Civil Case No. 63448: 1) Order dated
September 20, 1993, dismissing the complaint of petitioner on the
ground of lack of jurisdiction over the subject matter of the
controversy; and 2) Order dated November 29, 1993, denying
petitioner's motion for reconsideration.
I
On July 29, 1993, petitioner filed a complaint for damages with the
Regional Trial Court, Branch 156, Pasig, Metro Manila, against
private respondent, a former employee.
Petitioner alleged that private respondent violated paragraph five
of their Contract of Employment dated August 27, 1990, which
provides:
That for a period of two (2) years after termination of service from
EMPLOYER, EMPLOYEE shall not in any manner be connected,
and/or employed, be a consultant and/or be an informative body
directly or indirectly, with any business firm, entity or undertaking
engaged in a business similar to or in competition with that of the
EMPLOYER (Rollo, p. 24).
Petitioner claimed that private respondent became an employee of
Angel Sound Philippines Corporation, a corporation engaged in the
same line of business as that of petitioner, within two years from
January 30, 1992, the date of private respondent's resignation
from petitioner's employ. Petitioner further alleged that private
respondent is holding the position of Head of the Material
Management Control Department, the same position he held while
in the employ of petitioner.
Petitioner sought to recover liquidated damages in the amount of
One Hundred Thousand Pesos (P100,000.00), as provided for in
paragraph seven of the contract, which provides:
That a violation of the conditions set forth in provisions Nos. (2)
and (5) of this contract shall entitle the EMPLOYER to collect from
the EMPLOYEE the sum of ONE HUNDRED THOUSAND PESOS
(P100,000.00) by way of liquidated damages and likewise to adopt
appropriate legal measures to prevent the EMPLOYEE from
accepting employment and/or engaging, directly or indirectly, in a
business similar to or in competition with that of the EMPLOYER,
before the lapse of the aforesaid period of TWO (2) YEARS from
date of termination of service from EMPLOYER (Rollo, p. 25).
Respondent court, in its Order dated September 20, 1993, ruled
that it had no jurisdiction over the subject matter of the
controversy because the complaint was for damages arising from
employer-employee relations. Citing Article 217(4) of the Labor
Code of the Philippines, as amended by R.A.
No. 6715, respondent court stated that it is the Labor Arbiter
which had original and exclusive jurisdiction over the subject
matter of the case (Rollo, pp. 28-32).
In this petition, petitioner asks for the reversal of respondent
court's dismissal of the civil case, contending that the case is
cognizable by the regular courts. It argues that the cause of action
did not arise from employer-employee relations, even though the
claim is based on a provision in the employment contract.
II
This issue is: Is petitioner's claim for damages one arising from
employer-employee relations?
We answer in the negative.
Article 217, as amended by Section 9 of R.A. No. 6715, provides
as follows:
Jurisdiction of Labor Arbiters and the Commission. - (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
xxx xxx xxxchanrobles virtual law library
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations; (Emphasis
supplied)
xxx xxx xxx
Petitioner does not ask for any relief under the Labor Code of the
Philippines. It seeks to recover damages agreed upon in the
contract as redress for private respondent's breach of his
contractual obligation to its "damage and prejudice" (Rollo, p. 57).
Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts.
More so when we consider that the stipulation refers to the post-
employment relations of the parties.
A case in point is Singapore Airlines Limited v. Paño, 122 SCRA
671 (1983), which also dealt with the employee's breach of an
obligation embodied in a written employment agreement.
Singapore Airlines filed a complaint in the trial court for damages
against its employee for "wanton failure and refusal" without just
cause to report to duty and for having "maliciously and with bad
faith" violated the terms and conditions of its "Agreement for a
Course of Conversion Training at the Expense of Singapore Airlines
Limited." This agreement provided that the employee shall agree
to remain in the service of the employer for a period of five years
from the date of the commencement of the training program. The
trial court dismissed the complaint on the grounds that it did not
have jurisdiction over the subject matter of the controversy.
On appeal to this court, we held that jurisdiction over the
controversy belongs to the civil courts. We stated that the action
was for breach of a contractual obligation, which is intrinsically a
civil dispute. We further stated that while seemingly the cause of
action arose from employer-employee relations, the employer's
claim for damages is grounded on "wanton failure and refusal"
without just cause to report to duty coupled with the averment
that the employee "maliciously and with bad faith" violated the
terms and conditions of the contract to the damage of the
employer. Such averments removed the controversy from the
coverage of the Labor Code of the Philippines and brought it within
the purview of Civil Law.chanroblesvirtualawlibrarychanrobles
virtual law library
Jurisprudence has evolved the rule that claims for damages under
paragraph 4 of Article 217, to be cognizable by the Labor Arbiter,
must have a reasonable causal connection with any of the claims
provided for in that article. Only if there is such a connection with
the other claims can the claim for damages be considered as
arising from employer-employee relations.
In San Miguel Corporation v. National Labor Relations Commission,
161 SCRA 719 (1988), we had occasion to construe Article 217, as
amended by B.P. Blg. 227. Article 217 then provided that the
Labor Arbiter had jurisdiction over all money claims of workers,
but the phrase "arising from employer-employee relation" was
deleted. We ruled thus:
While paragraph 3 above refers to "all money claims of workers," it
is not necessary to suppose that the entire universe of money
claims that might be asserted by workers against their employers
has been absorbed into the original and exclusive jurisdiction of
Labor Arbiters. In the first place, paragraph 3 should be read not
in isolation from but rather within the context formed by
paragraph 1 (relating to unfair labor practices), paragraph 2
(relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services,
a particular species of employer-employee relations), and
paragraph 5 (relating to certain activities prohibited to employees
or to employers). It is evident that there is a unifying element
which runs through paragraphs 1 to 5 and that is, that they all
refer to cases or disputes arising out of or in connection with an
employer-employee relationship. This is, in other words, a
situation where the rule of noscitur a sociis may be usefully
invoked in clarifying the scope of paragraph 3, and any other
paragraph of Article 217 of the Labor Code, as amended. We reach
the above conclusion from an examination of the terms themselves
of Article 217, as last amended by B.P Blg. 227, and even though
earlier versions of Article 217 of the Labor Code expressly brought
within the jurisdiction of the Labor Arbiters and the NLRC "cases
arising from employer-employee relations," which clause was not
expressly carried over, in printer's ink, in Article 217 as it exists
today. For it cannot be presumed that money claims of workers
which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the
general jurisdiction of regular courts of justice, were intended by
the legislative authority to be taken away from the jurisdiction of
the courts and lodged with Labor Arbiters on an exclusive basis.
The Court, therefore, believes and so holds that the "money claims
of workers" referred to in paragraph 3 of Article 217 embraces
money claims which arise out of or in connection with the
employer-employee relationship or some aspect or incident of
some relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction
of Labor Arbiters are those money claims which have
some reasonable causal connection  with the employer-employee
relationship (Emphasis supplied).
San Miguel  was cited in Ocheda v. Court of Appeals, 214 SCRA
629 (1992), where we held that when the cause of action is based
on a quasi-delict or tort, which has no reasonable causal
connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts.
We also applied the "reasonable causal connection rule" in Pepsi-
Cola Distributors of the Philippines, Inc. v. Gallang, 201 SCRA 695
(1991), where we held that an action filed by employees against
an employer for damages for the latter's malicious filing of a
criminal complaint for falsification of private documents against
them came under the jurisdiction of the regular courts (See also
Honiron Philippines, Inc. v. Intermediate Appellate Court, G.R. No.
66929, August 13, 1990 and Abejaron v. Court of Appeals, 208
SCRA 899 [1992]).
The rationale  behind the holdings in these cases is that the
complaint for damages was anchored not on the termination of the
employee's services per se, but rather on the manner and
consequent effects of such termination.
Cases decided under earlier versions of Article 217 were consistent
also in that intrinsically civil disputes, even if these involve an
employer and his employee, are cognizable by the regular courts.
In Medina vs. Castro-Bartolome, 116 SCRA 597 (1982), a civil
complaint for damages against the employer for slanderous
remarks made against them, we upheld the regular court's
jurisdiction after finding that the plaintiffs did not allege any unfair
labor practice, their complaint being a simple action for damages
for tortious acts allegedly committed by the defendants. In Molave
Sales, Inc. v.  Laron, 129 SCRA 485 (1984), we held that the claim
of the plaintiff against its sales manager for payment of certain
accounts and cash advances was properly cognizable by the
regular
courts because "although a controversy is between an employer
and an employee, the Labor Arbiters have no jurisdiction if the
Labor Code is not involved."
Private respondent also raises the issue of forum shopping. He
asserts that the petition should be dismissed pursuant to Circular
No. 28-91 because petitioner merely "mentioned in passing a labor
case between petitioner and private respondent which is being
handled by petitioner's other counsel" (Rollo, p. 42). Private
respondent is referring to NLRC NCR Case No. 00-11-0689493 filed
by him on November 8, 1993.
Petitioner asserts that the case before the Labor Arbiter was filed
by private respondent against petitioner for alleged illegal
dismissal, underpayment of wages and non-payment of overtime
and premium pay with prayer for moral and exemplary damages,
to which petitioner, through its other counsel, "logically raised as
one of its several counterclaims against private respondent the
liquidated damages mentioned in the contract of employment
between the parties" (Rollo, p. 69).
Petitioner did not fail to disclose the pending labor case in the
certification required under Circular No. 28-91. Thus, petitioner
cannot be considered to have submitted a false certification
warranting summary dismissal of the petition (Par. 3[a] of Circular
No. 28-91).
Petitioner did not commit forum shopping. It set up its
counterclaim for liquidated damages merely as a defense against
private respondent's complaint before the Labor Arbiter.
ACCORDINGLY, the Orders of the Regional Trial Court dated
September 20, 1993 and November 29, 1993 are SET ASIDE. The
trial court is ORDERED to continue with the proceedings in Civil
Case No. 63448.
SO ORDERED.
[G.R. No. 109272. August 10, 1994.]
GEORG GROTJAHN GMBH & CO., Petitioner, v. HON. LUCIA
VIOLAGO ISNANI, Presiding Judge, Regional Trial Court,
Makati, Br. 59; ROMANA R. LANCHINEBRE; and TEOFILO A.
LANCHINEBRE, Respondents.
SYLLABUS
1. LABOR LAW; LABOR RELATIONS; LABOR ARBITERS AND THE
NLRC; JURISDICTION; LIMITED TO DISPUTES ARISING FROM
EMPLOYER-EMPLOYEE RELATIONSHIP; CASE AT BAR. — Not every
dispute between an employer and employee involves matters that
only labor arbiters and the NLRC can resolve in the exercise of
their adjudicatory or quasi-judicial powers. The jurisdiction of labor
arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship
which can only be resolved by reference to the Labor Code, other
labor statutes, or their collective bargaining agreement. Civil Case
No. 92-2486 is a simple collection of a sum of money brought by
petitioner, as creditor, against private respondent Romana
Lanchinebre, as debtor. The fact that they were employer and
employee at the time of the transaction does not negate the civil
jurisdiction of the trial court. The case does not involve
adjudication of a labor dispute but recovery of a sum of money
based on our civil laws on obligation and contract.
2. COMMERCIAL LAW; CORPORATIONS; CAPACITY TO SUE;
FOREIGN, CORPORATIONS DOING BUSINESS IN THE
PHILIPPINES, ELABORATED. — The trial court erred in holding that
petitioner does not have capacity to sue in the Philippines. It is
clear that petitioner is a foreign corporation doing business in the
Philippines. Petitioner is covered by the Omnibus Investment Code
of 1987. There is no general rule or governing principle as to what
constitutes "doing" or "engaging in" or "transacting" business in
the Philippines. Each case must be judged in the light of its
peculiar circumstances. In the case at bench, petitioner does not
engage in commercial dealings or activities in the country because
it is precluded from doing so by P.D. No. 218, under which it was
established. Nonetheless, it has been continuously, since 1983,
acting as a supervision, communications and coordination center
for its home office’s affiliates in Singapore, and in the process has
named its local agent and has employed Philippine nationals like
private respondent Romana Lanchinebre. From this uninterrupted
performance by petitioner of acts pursuant to its primary purposes
and functions as a regional/area headquarters for its home office,
it is clear that petitioner is doing business in the country.
3. ID.; ID.; DOCTRINE OF ESTOPPEL TO DENY CORPORATE
EXISTENCE; APPLIED. — Private respondents are estopped from
assailing the personality of petitioner. So we held in Merrill Lynch
Futures, Inc. v. Court of Appeals, 211 SCRA 824, 837 (1992): "The
rule is that a party is estopped to challenge the personality of a
corporation after having acknowledged the same by entering into a
contract with it. And the ‘doctrine of estoppel to deny corporate
existence applies to foreign as well as to domestic corporations;’
‘one who has dealt with a corporation of foreign origin as a
corporate existence and capacity.’ The principle ‘will be applied to
prevent a person contracting with a foreign corporation from later
taking advantage of its noncompliance with the statutes chiefly in
cases where such person has received the benefits of the contract,
. . . .’"
4. REMEDIAL LAW; CIVIL PROCEDURE; DISMISSAL OF ACTIONS;
GROUNDS; MISJOINDER OF PARTIES, NOT INCLUDED. — It is a
basic rule that" (m)isjoinder or parties is not ground for dismissal
of an action." Moreover, the Order of the trial court is based on
Section 4(h), Rule 3 of the Revised Rules of Court, which provides:
"A married woman may not . . . be sued alone without joining her
husband, except . . . if the litigation is incidental to the profession,
occupation or business in which she is engaged," Whether or not
the subject loan was incurred by private respondent as an incident
to her profession, occupation or business is a question of fact. In
the absence of relevant evidence, the issue cannot be resolved in a
motion to dismiss.
PUNO, J.:
Petitioner impugns the dismissal of its Complaint for a sum of
money by the respondent judge for lack of jurisdiction and lack of
capacity to sue.
The records show that petitioner is a multinational company
organized and existing under the laws of the Federal Republic of
Germany. On July 6, 1983, petitioner filed an application, dated
July 2, 1983, 1 with the Securities and Exchange Commission
(SEC) for the establishment of a regional or area headquarters in
the Philippines, pursuant to Presidential Decree No. 218. The
application was approved by the Board of Investments (BOI) on
September 6, 1983. Consequently, on September 20, 1983, the
SEC issued a Certificate of Registration and License to petitioner. 2
Private respondent Romana R. Lanchinebre was a sales
representative of petitioner from 1983 to mid-1992. On March 12,
1992, she secured a loan of twenty-five thousand pesos
(P25,000.00) from petitioner. On March 26 of June 10, 1992, she
made additional cash advances in the sum of ten thousand pesos
(P10,000.00). Of the total amount, twelve thousand one hundred
seventy pesos and thirty-seven centavos (P12,170.37) remained
unpaid. Despite demand, private respondent Romana failed to
settle her obligation with petitioner.
On July 22, 1992, private respondent Romana Lanchinebre filed
with the Arbitration Branch of the National Labor Relations
Commission (NLRC) in Manila, a Complaint for illegal suspension,
dismissal and non-payment of commissions against petitioner. On
August 18, 1992, petitioner in turn filed against private respondent
a Complaint for damages amounting to one hundred twenty
thousand pesos (P120,000.00) also with the NLRC Arbitration
Branch (Manila). 3 The two cases were consolidated.
On September 2, 1992, petitioner filed another Complaint for
collection of sum of money against private respondents spouses
Roman and Teofilo Lanchinebre which was docketed as Civil Case
No. 92-2486 and raffled to the sala of respondent judge. Instead
of filing their Answer, private respondents moved to dismiss the
Complaint. This was opposed by petitioner.
On December 21, 1992, respondent judge issued the first
impugned Order, granting the motion to dismiss. She held,
viz:jgc:chanrobles.com.ph
"Jurisdiction over the subject matter or nature of the action is
conferred by law and not subject to the whims and caprices of the
parties.
"Under Article 217 of the Labor Code of the Philippines, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the
case by the parties for decision, the following cases involving all
workers, whether agricultural or non-agricultural:
‘(4) claims for actual, moral, exemplary and other forms of
damages arising from an employer-employee relations.
x          x          x
(6) Except claims for employees compensation, social security,
medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether or not
accompanied with a claim for reinstatement.’
"In its complaint, the plaintiff (petitioner herein) seeks to recover
alleged cash advances made by defendant (private respondent
herein) Romana Lanchinebre while the latter was in the employ of
the former. Obviously the said cash advances were made pursuant
to the employer-employee relationship between the (petitioner)
and the said (private respondent) and as such, within the original
and exclusive jurisdiction of the National Labor Relations
Commission.
"Again, it is not disputed that the Certificate of Registration and
License issued to the (petitioner) by the Securities and Exchange
Commission was merely ‘for the establishment of a regional or
area headquarters in the Philippines, pursuant to Presidential
Decree No. 218 and its implementing rules and regulations.’ It
does not include a license to do business in the Philippines. There
is no allegation in the complaint moreover that (petitioner) is suing
under an isolated transaction. It must be considered that under
Section 4, Rule 8 of the Revised Rules of Court, facts showing the
capacity of a party to sue or be sued or the authority of a party to
sue or be sued in a representative capacity or the legal existence
of an organized association of persons that is made a party must
be averred. There is no averment in the complaint regarding
(petitioner’s) capacity to sue or be sued.
"Finally, (petitioner’s) claim being clearly incidental to the
occupation or exercise of (respondent) Romana Lachinebre’s
profession, (respondent) husband should not be joined as party
defendant." 4
On March 8, 1993, the respondent judge issued a minute Order
denying petitioner’s Motion for Reconsideration.
Petitioner now raises the following assignments of errors:
"I
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT THE
REGULAR COURTS HAVE NO JURISDICTION OVER DISPUTES
BETWEEN AN EMPLOYER AND AN EMPLOYEE INVOLVING THE
APPLICATION PURELY OF THE GENERAL CIVIL LAW.
"II
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT
PETITIONERS HAS NO CAPACITY TO SUE AND BE SUED IN THE
PHILIPPINES DESPITE THE FACT THAT PETITIONER IS DULY
LICENSED BY THE SECURITIES AND EXCHANGE COMMISSION TO
SET UP AND OPERATE A REGIONAL OR AREA HEADQUARTERS IN
THE COUNTRY AND THAT IT HAS CONTINUOUSLY OPERATED AS
SUCH FOR THE LAST NINE (9) YEARS.
"III
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT THE
ERRONEOUS INCLUSION OF THE HUSBAND IN A COMPLAINT IS A
FATAL DEFECT THAT SHALL RESULT IN THE OUTRIGHT DISMISSAL
OF THE COMPLAINT.
"IV
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT THE
HUSBAND IS NOT REQUIRED BY THE RULES TO BE JOINED AS A
DEFENDANT IN A COMPLAINT AGAINST THE WIFE."
There is merit to the
Firstly, the trial court should not have held itself without
jurisdiction over Civil Case No. 92-2486. It is true that the loan
and cash advances sought to be recovered by petitioner were
contracted by private respondent Romana Lanchinebre while she
was still in the employ of petitioner. Nonetheless, it does not follow
that Article 217 of the Labor Code covers their relationship.
Not every dispute between an employer and employee involves
matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-
employee relationship which can only be resolved by reference to
the Labor Code, other labor statutes, or their collective bargaining
agreement. In this regard, we held in the earlier case of Molave
Motor Sales, Inc. v. Laron, 129 SCRA 485 (1984), viz:
"Before the enactment of BP Blg. 227 on June 1, 1982, Labor
Arbiters, under paragraph 5 of Article 217 of the Labor Code had
jurisdiction over "all other cases arising from employer-employee
relation, unless expressly excluded by this Code." Even then, the
principle followed by this Court was that, although a controversy is
between an employer and an employee, the Labor Arbiters have
no jurisdiction if the Labor Code is not involved. In Media v.
Castro-Bartolome, 116 SCRA 597, 604 in negating jurisdiction of
the Labor Arbiter, although the parties were an employer and two
employees, Mr. Justice Abad Santos stated:chanrob1es virtual 1aw
library
‘The pivotal question to Our mind is whether or not the Labor Code
has any relevance to the reliefs sought by plaintiffs. For if the
Labor Code has no relevance, any discussion concerning the
statutes amending it and whether or not they have retroactive
effect is unnecessary.
x          x          x
"And in Singapore Airlines Limited v. Pano, 122 SCRA 671, 677,
the following was said:
‘Stated differently, petitioner seeks protection under the civil laws
petition.
and claims no benefits under the Labor Code. The primary relief
sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits
demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or
separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.’
"x       x       x"
In San Miguel Corporation v. NLRC, 161 SCRA 719 (1988), we
crystallized the doctrines set forth in the Medina, Singapore
Airlines, and Molave Motors cases, thus:
". . . The important principle that runs through these three (3)
cases is that where the claim to the principal relief sought is to be
resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the
general civil law, the jurisdiction over the dispute belongs to the
regular courts of justice and not to the Labor Arbiter and the
NLRC. In such situations, resolutions of the dispute requires
expertise, not in labor management relations nor in wage
structures and other terms and conditions of employment, but
rather in the application of the general civil law. Clearly, such
claims fall outside the area of competence or expertise ordinarily
ascribed to Labor Arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies
disappears."cralaw virtua1aw library
Civil Case No. 92-2486 is a simple collection of a sum of money
brought by petitioner, as creditor, against private respondent
Romana Lanchinebre, as debtor. The fact that they were employer
and employee at the time of the transaction does not negate the
civil jurisdiction of the trial court. The case does not involve
adjudication of a labor dispute but recovery of a sum of money
based on our civil laws on obligation and contract.
Secondly, the trial court erred in holding that petitioner does not
have capacity to sue in the Philippines. It is clear that petitioner is
a foreign corporation doing business in the Philippines. Petitioner is
covered by the Omnibus Investment Code of 1987. Said law
defines "doing business," as follows:
". . . shall include soliciting orders, purchases, service contracts,
opening offices, whether called ‘liaison’ offices or branches;
appointing representatives or distributors who are domiciled in the
Philippines or who in any calendar year stay in the Philippines for a
period or periods totalling one hundred eighty (180) days or more;
participating in the management, supervision or control of any
domestic business firm, entity or corporation in the Philippines,
and any other act or acts that imply a continuity of commercial
dealings or arrangements and contemplate to that extent the
performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business
organization." 5
There is no general rule or governing principle as to what
constitutes "doing" or "engaging in" or "transacting" business in
the Philippines. Each case must be judged in the light of its
peculiar circumstances. 6 In the case at bench, petitioner does not
engage in commercial dealings or activities in the country because
it is precluded from doing so by P.D. No. 218, under which it was
established. 7 Nonetheless, it has been continuously, since 1983,
acting as a supervision, communications and coordination center
for its home office’s affiliates in Singapore, and in the process has
named its local agent and has employed Philippine nationals like
private respondent Romana Lanchinebre. From this uninterrupted
performance by petitioner of acts pursuant to its primary purposes
and functions as a regional/area headquarters for its home office,
it is clear that petitioner is doing business in the country.
Moreover, private respondents are estopped from assailing the
personality of petitioner. So we held in Merrill Lynch Futures, Inc.
v. Court of Appeals, 211 SCRA 824, 837 (1992):
"The rule is that a party is estopped to challenge the personality of
a corporation after having acknowledged the same by entering into
a contract with it. And the ‘doctrine of estoppel to deny corporate
existence applies to foreign as well as to domestic corporations;’
‘one who has dealt with a corporation of foreign origin as a
corporate existence and capacity.’ The principle ‘will be applied to
prevent a person contracting with a foreign corporation from later
taking advantage of its noncompliance with the statutes chiefly in
cases where such person has received the benefits of the contract,
. . . .’" (Emphasis omitted.)
Finally, the trial court erred when it dismissed Civil No. 92-2486 on
what it found to be the misjoinder of private respondent Teofilo
Lanchinebre as party defendant. It is a basic rule that"
(m)isjoinder or parties is not ground for dismissal of an action." 8
Moreover, the Order of the trial court is based on Section 4(h),
Rule 3 of the Revised Rules of Court, which provides:
"A married woman may not . . . be sued alone without joining her
husband, except . . . if the litigation is incidental to the profession,
occupation or business in which she is engaged,"
Whether or not the subject loan was incurred by private
respondent as an incident to her profession, occupation or
business is a question of fact. In the absence of relevant evidence,
the issue cannot be resolved in a motion to dismiss.
IN VIEW WHEREOF, the instant Petition is GRANTED. The Orders,
dated December 21, 1992 and March 8, 1993, in Civil Case No.
92-2486 are REVERSED AND SET ASIDE. The RTC of Makati, Br.
59, is hereby ordered to hear the reinstated case on its merits. No
costs.
SO ORDERED.
G.R. No. 85517 October 16, 1992
DOROTEO OCHEDA, Petitioner, vs. THE HONORABLE COURT
OF APPEALS and THE HEIRS OF EDUARDO
SANTOS, Respondents.chanrobles virtual law library
DAVIDE, JR., J.:
The trial court's jurisdiction over an action for damages arising
from a quasi-delict  which resulted in the death of an employee
while in the performance of his duty is challenged in this case.
The late Eduardo Santos was, at the time of his death, employed
as a painter by the petitioner who was a sub-contractor for the
painting job on M.J. Building then being constructed along Salcedo
Street, Makati, Metro Manila. The C.E. Construction Corporation,
Inc. (CECCI) was the principal contractor thereof by virtue of a
contract it entered into with M.J. Development Corporation, the
owner of the building. Another corporation, Fujitec Philippines
Industrial Company, Inc. (FUJITEC), was contracted by M.J.
Development Corporation to install two (2) standard scenic
elevator units in the building.
When the painting job was almost complete, i.e., all that remained
to be painted was the wall of the shaft for the second elevator, the
petitioner trimmed his work forces to two (2) employees, Hernani
Gozun and Eduardo Santos; these employees were tasked to finish
the painting. On 5 February 1981, they started work on the inner
wall of the elevator shaft; to paint the same, they had to stand on
top of the elevator which was then on the second floor of the
building. After they finished, they called on the boy operating the
elevator to ask him to bring the same down to the first floor.
Instead of lowering the elevator, however, the boy brought it up to
the sixth floor. The sudden upward movement caused the elevator
to jerk and the two (2) painters to lose their balance. Hernani was
able to cling to the cable but Eduardo fell off the top, found himself
pinned between the shaft and the elevator as the latter was
moving upward and then fell to the ground when the elevator
finally stopped on the sixth floor. Hernani rushed to Eduardo's aid
upon hearing the latter's cry for help. The former lifted Eduardo in
his arms and, with the help of another man, brought him to the
Makati Medical Center where he later died. While the elevator boy
was never identified, it is alleged that he worked for
CECCI.chanroblesvirtualawlibrarychanrobles virtual law library
On 11 September 1981, the spouses Catalino and Ester Santos,
together with Wilma Palabasan-Santos, parents and widow,
respectively, of Eduardo, filed a Complaint 1 for damages against
Doroteo Ocheda and CECCI before the then Court of First instance
(now Regional Trial Court) of Pampanga. The case was docketed
as Civil Case No. 6263 and was assigned to Branch 42 thereof. The
complaint alleges the foregoing facts and, in addition, specifically
states that while Eduardo was employed by the petitioner in 1979
and received a daily wage of P35.00, the petitioner did not place
him within "any SSS, Medicare and Workmen's Compensation
coverage." It is further averred that the elevator boy was
inexperienced for the work assigned to him. Then they asked for
judgment ordering the defendants, jointly and severally, to pay
P10,000.00 as burial expenses, P30,000.00 as moral damages,
attorney's fees and compensatory damages as may be proved at
the trial and costs.
Petitioner filed an Answer with a Counterclaim against the plaintiff,
and a Cross-Claim against CECCI. 2 He alleges therein that
Eduardo was employed by him only a week before the accident
and purely on a casual basis for the particular painting job. As
affirmative defense, he avers that Eduardo's death was due to the
negligence and carelessness of the elevator boy, an employee of
CECCI. Thus, the latter is solely liable for the said death and no
cause of action exists against him. Moreover, it is postulated that
the trial court has no jurisdiction over the claims involving SSS,
Medicare, Workmen's Compensation and insurance benefits. Such
jurisdiction is vested in other administrative or quasi-judicial
bodies; furthermore, he avers that the allegation concerning such
claims (paragraph 8 of the complaint) is not essential to the
plaintiffs' cause of action which is the negligent operation of the
elevator. In this counterclaim, petitioner asks for an award of
attorney's fees in the amount of P10,000.00, and the expenses of
litigation.
In due course, CECCI likewise filed its Answer with a Third-Party
Complaint 3against FUJITEC which it alleged to be liable, being the
employer of the elevator boy. FUJITEC filed its Answer to the said
Third-Party Complaint 4 denying the allegations made therein and
asserting that the operation of the elevator was turned over the
building owner long before the fatal accident.
Pre-trial was conducted on 23 September 1983. The pre-trial order
issued by the trial court embodies the respective positions of the
parties. As to herein petitioners, the Pre-trial order summarized his
stand as follows:
2. Defendant Ocheda's Case:
Defendant Doroteo Ocheda denies liability. He claims that the
complaint states no cause of action against him; that the death of
the deceased Eduardo Santos resulted from the operation of the
elevator at the construction site; that he had nothing to do with
the operation, or control, or management of the elevator in
question, hence, the death of Eduardo Santos is not attributable to
him; that his participation in the construction of the building was
limited solely to painting specific portions thereof; that he filed a
cross-claim against defendant C.E. Construction Corp. because the
said corporation was the general contractor of the building,
operator/maintainer of the elevator, and employer of the elevator
boy.  of the elevator as stepping board while painting the wall of the
During the trial of the case on the merits, petitioner presented two
(2) witnesses - Josefino Rivera and himself.  employees.
On 24 February 1986, the trial court rendered its decision 7 finding
both the petitioner and CECCI liable for the death of Eduardo. The
dispositive portion of the decision reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is
hereby rendered as follows:
1. The defendant (sic) Doroteo Ocheda and C.E. Construction
Corporation, Inc. are ordered to pay jointly and severally the
plaintiffs the following amounts:
a) Seven Thousand Three Hundred Fifty Pesos (P7,350.00) as
burial expenses;
b) Thirty Thousand Pesos (P30,000.00) as moral damages;
c) Five Thousand pesos (P5,000.00) as attorney's fees;
andchanrobles virtual law library
d) Costs of suit.
2. The third-party complaint is hereby dismissed and the third-
party plaintiff C.E. Construction Corporation, Inc. is ordered to pay
the third-party defendant Fujitec the sum of Fifteen Thousand
Pesos (P15,000.00) as attorney's fees plus the cost of suit;
3. The cross-claim and counterclaim of defendant Ocheda and the
counterclaim of defendant C.E. Construction are hereby dismissed.
SO ORDERED. 
This determination of liability is based on the trial court's findings
that:
It has been sufficiently established that it was defendant Ocheda
who caused the accident to happen. It was defendant Ocheda who
ordered the late Eduardo Santos and Hernani Gozun to use the top
elevator shaft. And defendant Ocheda failed to exercise the
diligence of a good father of a family in the supervision of his
It has likewise been shown that C.E. Construction was, at the time
of the incident in question, in full control of the building since the
same was not yet accepted by the owner thereof. C.E.
Construction was the general contractor of the building, hence it
was in full management and control of the elevator because the
same was already turned over to and accepted by the building
owner from Fujitec. As such C.E. Construction should have
guarded against the unauthorized use of the elevator by people
working in the building. At the time of the incident, the late
Eduardo Santos was an employee of defendant Ocheda, a sub-
contractor of C.E. Construction. In view of all these, C.E.
Construction is equally liable with defendant Ocheda pursuant to
Article 2180, in conjunction with Article 2176 of the civil Code. The
elevator which caused the injury and subsequent death of Eduardo
Santos was under the management and control of C.E.
Construction. Consequently, had C.E. Construction used proper
care in the management and operation of the elevator, and had it
exercised the diligence of a good father of a family in the
supervision of its employees, then the fatal incident would not
have happened. 
Petitioner and CECCI appealed this adverse decision to the
respondent Court of Appeals which docketed the case as C.A.-G.R.
CV No. 09574. In the Brief he submitted, petitioner made the
following assignment of errors:
I
THE LOWER COURT ERRED IN HOLDING THAT THE REGIONAL
TRIAL COURT HAD JURISDICTION OVER THE COMPLAINT;
II
THE LOWER COURT ERRED IN HOLDING THAT OCHEDA WAS
GUILTY OF NEGLIGENCE FOR THE DEATH OF SANTOS;
III
THE LOWER COURT ERRED IN APPLYING ARTICLE 2180 OF THE
NEW CIVIL CODE TO OCHEDA;
IV
THE LOWER COURT ERRED IN HOLDING OCHEDA JOINTLY AND
SEVERALLY LIABLE WITH C.E. CONSTRUCTION CORP. TO THE
PLAINTIFFS FOR DAMAGES. 10
On the other hand, CECCI, in its Brief, contended that the trial
court gravely erred in finding it solidarily liable with the herein
petitioner for the death of Eduardo, in awarding moral damages, in
dismissing the third-party complaint and in not holding the
plaintiffs therein liable for damages, attorney's fees and costs of
the suit. 11
On 1 September 1988, the respondent Court promulgated its
decision 12 upholding the findings of the trial court but reducing the
amount of damages; it likewise eliminated the grant of attorney's
fees in favor of FUJITEC. Thus:
WHEREFORE, the decision appealed from is hereby AFFIRMED in all
respects, except as modified herein by reducing the award for
actual or compensatory damages to only P5,880.00; reducing the
damage caused by death to only P24,000.00; and eliminating the
award of P15,000.00 attorney's fees to third party defendant
Fujitec. No costs.
SO ORDERED. 
The reduction in the award of damages was based on the
respondent Court's finding of contributory negligence on the part
of Eduardo Santos when he failed to heed the order to tie a rope
around his waist while working.
As to the issue of lack of jurisdiction on the part of the trial court,
the respondent Court held:
The case at bar is being prosecuted in behalf of a deceased, not
dismissed, employee for damages arising from the death of the
employee based on quasi-delict founded on an undoubted principle
of justice recognized by all legislations that every injury, loss or
damage which a person received in his right (sic), be it by act or
by omission, creates a juridical relation from which is derived the
right which the aggrieved party has to be indemnified and the
consequent obligation by the other party.
In the present case of Floresca vs.  Philex Mining Corporation, 136
SCRA 141, the Supreme Court ruled that recovery under the new
Civil Code for damages arising from negligence is not barred by
Article 173 of the New Labor Code. In this case, it was further held
that an ordinary court has jurisdiction over complaints for
damages filed by heirs of mining employees against the mining
corporation for the death of the former allegedly caused by the
negligence of their employer. 14
His motion to reconsider the decision having been denied in the
resolution of the respondent Court dated 18 October
1988, 15 petitioner took this recourse under Rule 45 of the Rules of
Court. He reiterates in the instant petition for review the
assignment of errors submitted before the respondent Court.
This Court grave due course to the petition and required the
parties to submit their respective Memoranda 16 after the
submission of the Comment to the petition by the private
respondent, the Reply thereto by the petitioner and the Rejoinder
to the latter by the private respondents.
We find no merit in the petition.
Regarding the issue of the factual findings upon which the second,
third and fourth assigned errors are based. We find no cogent
reason to disturb such findings of both the trial and respondent
courts. Petitioner does not even attempt to show that this case
falls under any of the accepted exceptions to the well-settled and
oft-repeated rule that findings of facts of the Court of Appeals are
biding upon this Court. 17
Anent the alleged lack of jurisdiction on the part of the trial court,
petitioner admits that the private respondents cause of action, as
expressed in the complaint, is based on a quasi-delict. The former
submits, however, that since the monetary award is sought in
connection with the employer-employee relationship which existed
between him and the late Eduardo Santos, only Labor Arbiters,
pursuant to Article 217 of the Labor Code of the Philippines as it
was then worded, 18 have original and exclusive jurisdiction over
them. Under the said provision, "all money claims of workers" and
"all other claims arising from employer-employee relations" are
exclusively cognizable by Labor Arbiters. We ruled in Getz
Corp.  vs. Court of Appeals  19 that pursuant to P.D. No. 1691, such
claims include moral and exemplary damages. Petitioner further
contends that Floresca vs.  Philex Mining Corp., 20 which the
respondent Court relied upon, is not applicable because the cause
of action involved therein accrued on 28 June 1967, or before the
enactment of the Labor Code and P.D. No. 1691; he asserts that
the decision therein constituted "judicial legislation".
Petitioner's unusual patience and tenacity on the first assigned
error merits him no reward. In the first place, he did not raise in
his answer that defense with respect to the claim for damages
arising from a quasi-delict. His affirmative defense of lack of
jurisdiction specifically refers to the allegation in paragraph 8 of
the complaint concerning the SSS, Medicare, Workmen's
Compensation and insurance benefits the award of which,
according to him, falls within the competence and jurisdiction of
other administrative or quasi-judicial bodies. In fact, he even
considers such allegation to be non-essential to the complaint's
cause of action - the negligent operation of the elevator. This is
how he worded that particular affirmative defense:
SECOND AFFIRMATIVE DEFENSE
12. He need not deny nor (sic) admit the allegations in paragraph
8 regarding the alleged SSS, Medicare, Workmen's Compensation,
and insurance coverage since this Honorable Court has no
jurisdiction over disputes involving cases of these sorts,
jurisdiction thereof being vested in other administrative or quasi-
judicial bodies. Furthermore, the allegations in said paragraph 8 of
the plaintiff's cause of action which is the negligent operation of
the elevator resulting in the death of Eduardo (sic) Santos. 21
Obviously, he did not even have Labor Arbiters in mind for such
cases. He knew, or at least ought to have known, that expressly
excepted from the broad jurisdiction of labor Arbiters in Section
217 of the Labor Code are "claims for employees compensation,
social security, medicate and maternity benefits."
In the second place, during the pre-trial conference, petitioner
failed to raise the issue of jurisdiction. He instead harped on the
lack of a cause of action - his first affirmative defense - which was
based on the theory that the proximate cause of Eduardo's death
was the negligence of the elevator boy who was an employee of
CECCI; in fact, it was against the latter that he filed a cross-claim.
In the third place, petitioner openly and unqualifiedly involved and
submitted to the jurisdiction of the trial court by setting up a
counterclaim, asking for relief in the concept of attorney's fees and
expenses of litigation against the private respondents and filing a
cross-claim against CECCI, whom he alleged to be the employer of
the elevator boy.
Finally, he presented evidence to prove that the proximate cause
of the accident and resulting death of Eduardo was the negligence
of the elevator boy. He concludes that as employer of the said boy,
CECCI is solely liable to the private respondents for the damages
claimed by the latter.
Petitioner was, therefore, effectively estopped from raising the
issue of jurisdiction with respect to the damages arising from a
quasi-delict. While it is true that jurisdiction over the subject
matter of a case may be raised at any stage of the proceedings as
the same is conferred by law, 22 it is nevertheless settled that a
party may be barred from arising it on the ground of
estoppel. 23 The reason for this is that after voluntarily submitting
a cause and encountering an adverse decision on the merits, it
would be improper and too late, to say the least, for the lower to
question the jurisdiction or power of the court. It is not correct for
a party who has invoked the jurisdiction of a court in a particular
matter to secure affirmative relief, to afterwards deny that very
jurisdiction to escape penalty.
And even granting, for the sake of argument, that the issue of
jurisdiction can still be raised in connection with its specific
reference to the damages arising out of a quasi-delict, petitioner's
thesis would still fail. Such damages may not be awarded in
accordance with Section 217 of the Labor Code, as amended, for
there is no reasonable causal connection with the employer-
employee relationship. At the time the cause of action accrued,
Article 217 of the Labor Code required that in order that the Labor
Arbiter may adjudicate claims not included in the other
paragraphs, the same must arise out of employer-employee
relations.
In  San Miguel Corporation vs. National Labor Relations
Commission, 24 this Court ruled, with respect to Article 217, as
amended by B.P. Blg. 227:
While paragraph 3 above refers to "all money claims of workers," it
is not necessary to suppose that the entire universe of money
claims that might be asserted by workers against their employers
has been absorbed into the original and exclusive jurisdiction of
Labor Arbiters. In the first place, paragraph 3 should be read not
in isolation from but rather within the context formed by
paragraph 1 (relating to unfair labor practices), paragraph 2
(relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services,
a particular species of employer-employee relations), and
paragraph 5 (relating to certain activities prohibited to employees
or to employers). It is evident that there is a unifying element
which runs through paragraphs 1 to 5 and that is, that they all
refer to cases or disputes arising out of or in connection with an
employer-employee relationship. This is, in other words, a
situation where the rule of noscitur a sociis may be usefully
invoked in clarifying the scope of paragraph 3, and any other
paragraph of Article 217 of the Labor Code, as amended. We reach
the above conclusion from an examination of the terms themselves
of Article 217, as last amended by B.P. Blg. 227, and even though
earlier versions of Article 217 of the Labor Code expressly brought
within the jurisdiction of the Labor Arbiters and the NLRC "cases
arising from employer-employee relations," which clause was not
expressly carried over, in printer's ink, in Article 217 as it exists
today. For it cannot be presumed that money claims of workers
which do not arise out of or in connection with their employer-
employee relationships, and which would therefore fall within the
general jurisdiction of the courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the
courts and lodged with Labor Arbiters on an exclusive basis. The
Court, therefore, believes and so holds that the "money claims of
workers" referred to in paragraph 3 of Article 217 embraces money
claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such
relationship. Put a little differently, that money claims of workers
which now fall within the original and exclusive jurisdiction of labor
Arbiters are those money claims which have some reasonable
causal connection with the employer-employee relationship.
Said article presently reads as follows: 25
Art. 217. Jurisdiction of Labor Arbiters and the Commission. - (a)
Except as otherwise provided under this Code, the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence
of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination of disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strike and lockouts;
and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
(c) Cases involving from the interpretation or implementation of
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided
in said agreements.
In the instant case, the source of the obligation upon which the
private respondents' cause of action is based is a quasi-delict or
tort which has no reasonable connection with any of the claims
provided for in the aforesaid Article 217 of the Labor Code. It
would have been entirely different if the claim for damages arose
out of, for instance, the illegal dismissal of Eduardo, in which case
the Labor Arbiter would have exclusive jurisdiction thereon. 26
It would have also been different if the petitioner had grounded his
claim of lack of jurisdiction on the basis of the Workmen's
Compensation Law. Unfortunately, he adroitly avoided this issue
from the very beginning not only because of his claim that the
allegation on this matter is irrelevant to the private respondents'
theory but, and more importantly, he did not, as revealed by the
latter, register Eduardo with the Social Security System pursuant
to the Amended Rules on Employees Compensation in relation to
Chapter II, Title II, Book IV of the Labor Code of the Philippines
(P.D. No. 442), as amended. To avoid possible liability thereunder,
and more particularly the criminal and civil sanctions under Section
4, Rule II of said Rules which reads:
Sec. 4. Penalty. - Any violation of this Rule shall be penalized as
follows:
(1) In case of failure or refusal to register employees, the
employer or responsible official who committed the violation shall
be punished with a fine of not less than P1,000 nor more than
P10,000 and/or imprisonment for the duration of the violation or
noncompliance or until such time that rectification of the violation
has been made, at the discretion of the court.
(2) In case a compensable contingency occurs after 30 days from
employment and before the System receives any report for
coverage about the employee or EC contribution on his behalf, his
employer shall be liable to the System for the lump sum equivalent
to the benefits to which he or his dependents may be entitled.
petitioner unabashedly asserted in his Answer that the late
Eduardo Santos was his employee for barely a week and that he
was hired on a casual basis only for the particular painting job on
the M.J. Building. Having done so, he cannot now be heard to
make a strained and tenuous analysis of Floresca vs. Philex mining
Corporation. 27
WHEREFORE, for lack of merit, the instant petition is DENIED with
costs against the petitioner.
This decision is immediately executory.
SO ORDERED.

[G.R. No. 89621. September 24, 1991.]
PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC.,
represented by its Plant General Manager ANTHONY B.
SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE
HERAYA, Petitioners, v. HON. LOLITA O. GAL-LANG,
SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO
CABAÑAS & FULGENCIO LEGO, Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR ARBITER; SCOPE OF
POWER; RULE. — It must be stressed that not every controversy
involving workers and their employers can be resolved only by the
labor arbiters. This will be so only if there is a "reasonable causal
connection" between the claim asserted and employee-employer
relations to put the case under the provisions of Article 217.
Absent such a link, the complaint will be cognizable by the regular
courts of justice in the exercise of their civil and criminal
jurisdiction.
2. REMEDIAL LAW; CIVIL PROCEDURE; COMPLAINT FOR DAMAGE
FOR MALICIOUS PROSECUTION FILED BY EMPLOYEES AGAINST
EMPLOYERS; COGNIZABLE BY REGULAR COURTS OF JUSTICE;
CASE AT BAR. — The case now before the Court involves a
complaint for damages for malicious prosecution which was filed
with the Regional Trial Court of Leyte by the employees of the
defendant company. It does not appear that there is a "reasonable
causal connection" between the complaint and the relations of the
parties as employer and employees. The complaint did not arise
from such relations and in fact could have arisen independently of
an employment relationship between the parties. No such
relationship or any unfair labor practice is asserted. What the
employees are alleging is that the petitioners acted with bad faith
when they filed the criminal complaint which the Municipal Trial
Court said was intended "to harass the poor employee" and the
dismissal of which was affirmed by the Provincial Prosecutor "for
lack of evidence to establish even a slightest probability that all
the respondents herein have committed the crime imputed against
them." This is a matter which the labor arbiter has no competence
to resolve as the applicable law is not the Labor Code but the
Revised Penal Code.
CRUZ, J.:
The question now before us has been categorically resolved in
earlier decisions of the Court that a little more diligent research
would have disclosed to the petitioners. On the basis of those
cases and the facts now before us, the petition must be
denied.chanrobles.com.ph :
The private respondents were employees of the petitioner who
were suspected of complicity in the irregular disposition of empty
Pepsi Cola bottles. On July 16, 1987, the petitioners filed a
criminal complaint for theft against them but this was later
withdrawn and substituted with a criminal complaint for
falsification of private documents. On November 26, 1987, after a
preliminary investigation conducted by the Municipal Trial Court of
Tanauan, Leyte, the complaint was dismissed. The dismissal was
affirmed on April 8, 1988, by the Office of the Provincial
Prosecutor.
2. Those that workers may file involving wages, hours of work and
Meantime, allegedly after an administrative investigation, the other terms and conditions of employment;
private respondents were dismissed by the petitioner company on
November 23, 1987. As a result, they lodged a complaint for illegal 3. All money claims of workers, including those based on non-
dismissal with the Regional Arbitration Branch of the NLRC in payment or underpayment of wages, overtime compensation,
Tacloban City on December 1, 1987, and demanded reinstatement separation pay and other benefits provided by law or appropriate
with damages. In addition, they instituted in the Regional Trial agreement, except claims for employees’ compensation, social
Court of Leyte, on April 1988, a separate civil complaint against security, medicare and maternity benefits;
the petitioners for damages arising from what they claimed to be
their malicious prosecution. 4. Cases involving household services; and

The petitioners moved to dismiss the civil complaint on the ground
that the trial court had no jurisdiction over the case because it
involved employee-employer relations that were exclusively
cognizable by the labor arbiter. The motion was granted on
February 6, 1989. On July 6, 1989, however, the respondent
judge, acting on the motion for reconsideration, reinstated the
complaint, saying it was "distinct from the labor case for damages
now pending before the labor courts." The petitioners then came to
this Court for relief.
The petitioners invoke Article 217 of the Labor Code and a number
of decisions of this Court to support their position that the private
respondents’ civil complaint for damages falls under the
jurisdiction of the labor arbiter. They particularly cite the case of
Getz Corporation v. Court of Appeals, 1 where it was held that a
court of first instance had no jurisdiction over the complaint filed
by a dismissed employee "for unpaid salary and other employment
benefits, termination pay and moral and exemplary damages."
We hold at the outset that the case is not in point because what
was involved there was a claim arising from the alleged illegal
dismissal of an employee, who chose to complain to the regular
court and not to the labor arbiter. Obviously, the claim arose from
employee-employer relations and so came under Article 217 of the
Labor Code which then provided as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a)
The Labor Arbiters shall have the original and exclusive jurisdiction
to hear and decide within thirty (30) working days after
submission of the case by the parties for decision, the following
cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
5. Cases arising from any violation of Article 265 of this Code,
including questions involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters. 2
It must be stressed that not every controversy involving workers
and their employers can be resolved only by the labor arbiters.
This will be so only if there is a "reasonable causal connection"
between the claim asserted and employee-employer relations to
put the case under the provisions of Article 217. Absent such a
link, the complaint will be cognizable by the regular courts of
justice in the exercise of their civil and criminal jurisdiction.
In Medina v. Castro-Bartolome, 3 two employees filed in the Court
of First Instance of Rizal a civil complaint for damages against their
employer for slanderous remarks made against them by the
company president. On the order dismissing the case because it
came under the jurisdiction of the labor arbiters, Justice Vicente
Abad Santos said for the Court:
It is obvious from the complaint that the plaintiffs have not alleged
any unfair labor practice. Theirs is a simple action for damages for
tortuous acts allegedly committed by the defendants. Such being
the case, the governing statute is the Civil Code and not the Labor
Code. It results that the orders under review are based on a wrong
premise.chanrobles.com.ph :
In Singapore Airlines Ltd. v. Paño, 4 where the plaintiff was suing
for damages for alleged violation by the defendant of an
"Agreement for a Course of Conversion Training at the Expense of
Singapore Airlines Limited," the jurisdiction of the Court of First
Instance of Rizal over the case was questioned. The Court, citing
the earlier case of Quisaba v. Sta. Ines Melale Veneer and
Plywood, Inc., 5 declared through Justice Herrera:
Stated differently, petitioner seeks protection under the civil laws
and claims no benefits under the Labor Code. The primary relief
sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits
demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or
separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.
In Molave Sales, Inc. v. Laron, 6 the same Justice held for the
Court that the claim of the plaintiff against its sales manager for
payment of certain accounts pertaining to his purchase of vehicles
and automotive parts, repairs of such vehicles, and cash advances
from the corporation was properly cognizable by the Regional Trial
Court of Dagupan City and not the labor arbiter, because "although
a controversy is between an employer and an employee, the Labor
Arbiters have no jurisdiction if the Labor Code is not involved."
The latest ruling on this issue is found in San Miguel Corporation v.
NLRC, 7 where the above cases are cited and the changes in
Article 217 are recounted. That case involved a claim of an
employee for a P60,000.00 prize for a proposal made by him which
he alleged had been accepted and implemented by the defendant
corporation in the processing of one of its beer products. The claim
was filed with the labor arbiter, who dismissed it for lack of
jurisdiction but was reversed by the NLRC on appeal. In setting
aside the appealed decision and dismissing the complaint, the
Court observed through Justice Feliciano:
It is the character of the principal relief sought that appears
essential, in this connection. Where such principal relief is to be
granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the Labor
Arbiter and the NLRC, even though a claim for damages might be
asserted as an incident to such claim.
x          x          x
Where the claim to the principal relief sought is to be resolved not
by reference to the Labor Code or other labor relations statute or a
collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice
and not to the Labor Arbiter and the NLRC. In such situations,
resolution of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to Labor Arbiters and
the NLRC and the rationale for granting jurisdiction over such
claims to these agencies disappears.
x          x          x
While paragraph 3 above refers to "all money claims of workers," it
is not necessary to suppose that the entire universe of money
claims that might be asserted by workers against their employers
has been absorbed into the original and exclusive jurisdiction of
Labor Arbiters.
x          x          x
For it cannot be presumed that money claims of workers which do
not arise out of or in connection with their employer-employee
relationship, and which would therefore fall within the general
jurisdiction of the regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the
courts and lodged with Labor Arbiters on an exclusive basis. The
Court, therefore, believes and so holds that the "money claims of
workers" referred to in paragraph 3 of Article 217 embraces money
claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such
relationship. Put a little differently, that money claims of workers
which now fall within the original and exclusive jurisdiction of
Labor Arbiters are those money claims which have some
reasonable causal connection with the employer-employee
relationship (Ibid.).
The case now before the Court involves a complaint for damages
for malicious prosecution which was filed with the Regional Trial
Court of Leyte by the employees of the defendant company. It
does not appear that there is a "reasonable causal connection"
between the complaint and the relations of the parties as employer
and employees. The complaint did not arise from such relations
and in fact could have arisen independently of an employment
relationship between the parties. No such relationship or any unfair
labor practice is asserted. What the employees are alleging is that
the petitioners acted with bad faith when they filed the criminal
complaint which the Municipal Trial Court said was intended "to
harass the poor employees" and the dismissal of which was
affirmed by the Provincial Prosecutor "for lack of evidence to
establish even a slightest probability that all the respondents
herein have committed the crime imputed against them." This is a
matter which the labor arbiter has no competence to resolve as
the applicable law is not the Labor Code but the Revised Penal
Code.
"Talents differ, all is well and wisely put," so observed the
philosopher-poet. 8 So it must be in the case we here decide.
WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the
petition DENIED, with costs against the petitioner.
SO ORDERED.
The orders of respondent judge 1 dated June 20, 1996 and October
16, 1996, taking jurisdiction over an action for damages filed by
an employer against its dismissed employee, are assailed in this
petition for certiorari under Rule 65 of the Rules of Court for
having been issued in grave abuse of discretion.
Petitioner was the sales operations manager of private respondent
in its branch in Iligan City. In 1993, private respondent
"indefinitely suspended" petitioner and the latter filed a complaint
for illegal dismissal with the National Labor Relations Commission
("NLRC") in Iligan City. In a decision dated July 7, 1994, Labor
Arbiter Nicodemus G. Palangan found petitioner to have been
illegally dismissed and ordered the payment of separation pay in
lieu of reinstatement, and of backwages and attorney's fees. The
decision was appealed to the NLRC, which dismissed the same for
having been filed out of time. 2 Elevated by petition
for certiorari before this Court, the case was dismissed on
technical grounds3 ; however, the Court also pointed out that even
if all the procedural requirements for the filing of the petition were
met, it would still be dismissed for failure to show grave abuse of
discretion on the part of the NLRC.

On November 13, 1995, private respondent filed a complaint for

damages before the Regional Trial Court ("RTC") of Misamis
Oriental, docketed as Civil Case No. 95-554, which prayed for the
payment of the following:

a. P709,217.97 plus 12% interest as loss of profit and/or unearned

income of three years;

b. P119,700.00 plus 12% interest as estimated cost of supplies,

facilities, properties, space, etc. for three years;

c. P5,000.00 as initial expenses of litigation; and

G.R. No. 128024 May 9, 2000 d. P25,000.00 as attorney's fees. 4

BEBIANO M. BAÑEZ, petitioner,
On January 30, 1996, petitioner filed a motion to dismiss the
vs.
above complaint. He interposed in the court below that the action
HON. DOWNEY C. VALDEVILLA and ORO MARKETING,
for damages, having arisen from an employer-employee
INC., respondents.
relationship, was squarely under the exclusive original jurisdiction
of the NLRC under Article 217(a), paragraph 4 of the Labor Code
GONZAGA-REYES, J.: and is barred by reason of the final judgment in the labor case. He
accused private respondent of splitting causes of action, stating
that the latter could very well have included the instant claim for
damages in its counterclaim before the Labor Arbiter. He also
pointed out that the civil action of private respondent is an act of
forum-shopping and was merely resorted to after a failure to
obtain a favorable decision with the NLRC.
Ruling upon the motion to dismiss, respondent judge issued the
herein questioned Order, which summarized the basis for private
respondent's action for damages in this manner:
Paragraph 5 of the complaint alleged that the defendant violated
the plaintiff's policy re: His business in his branch at Iligan City
wherein defendant was the Sales Operations Manager, and
paragraph 7 of the same complaint briefly narrated the modus
operandi of defendant, quoted herein: Defendant canvassed
customers personally or through salesmen of plaintiff which were
hired or recruited by him. If said customer decided to buy items
from plaintiff on installment basis, defendant, without the
knowledge of said customer and plaintiff, would buy the items on
cash basis at ex-factory price, a privilege not given to customers,
and thereafter required the customer to sign promissory notes and
other documents using the name and property of plaintiff,
purporting that said customer purchased the items from plaintiff
on installment basis. Thereafter, defendant collected the
installment payments either personally or through Venus Lozano, a
Group Sales Manager of plaintiff but also utilized by him as
secretary in his own business for collecting and receiving of
installments, purportedly for the plaintiff but in reality on his own
account or business. The collection and receipt of payments were
made inside the Iligan City branch using plaintiff's facilities,
property and manpower. That accordingly plaintiff's sales
decreased and reduced to a considerable extent the profits which it
would have earned. 5
In declaring itself as having jurisdiction over the subject matter of
the instant controversy, respondent court stated:
A perusal of the complaint which is for damages does not ask for
any relief under the Labor Code of the Philippines. It seeks to
recover damages as redress for defendant's breach of his
contractual obligation to plaintiff who was damaged and
prejudiced. The Court believes such cause of action is within the
realm of civil law, and jurisdiction over the controversy belongs to
the regular courts.
While seemingly the cause of action arose from employer-
employee relations, the employer's claim for damages is grounded
on the nefarious activities of defendant causing damage and
prejudice to plaintiff as alleged in paragraph 7 of the complaint.
The Court believes that there was a breach of a contractual
obligation, which is intrinsically a civil dispute. The averments in
the complaint removed the controversy from the coverage of the
Labor Code of the Philippines and brought it within the purview of
civil law. (Singapore Airlines, Ltd. Vs. Paño, 122 SCRA 671.) . . . 6
Petitioner's motion for reconsideration of the above Order was
denied for lack of merit on October 16, 1996. Hence, this petition.
Acting on petitioner's prayer, the Second Division of this Court
issued a Temporary Restraining Order ("TRO") on March 5, 1997,
enjoining respondents from further proceeding with Civil Case No.
95-554 until further orders from the Court.
By way of assignment of errors, the petition reiterates the grounds
raised in the Motion to Dismiss dated January 30, 1996, namely,
lack of jurisdiction over the subject matter of the action, res
judicata, splitting of causes of action, and forum-shopping. The
determining issue, however, is the issue of jurisdiction.
Art. 217(a), paragraph 4 of the Labor Code, which was already in
effect at the time of the filing of this case, reads:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence
of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
x x x           x x x          x x x
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
x x x           x x x          x x x
The above provisions are a result of the amendment by Section 9
of Republic Act ("R.A.") No. 6715, which took effect on March 21,
1989, and which put to rest the earlier confusion as to who
between Labor Arbiters and regular courts had jurisdiction over
claims for damages as between employers and employees.
It will be recalled that years prior to R.A. 6715, jurisdiction over all
money claims of workers, including claims for damages, was
originally lodged with the Labor Arbiters and the NLRC by Article
217 of the Labor Code. 7 On May 1, 1979, however, Presidential
Decree ("P.D.") No. 1367 amended said Article 217 to the effect
that "Regional Directors shall not indorse and Labor Arbiters shall
not entertain claims for moral or other forms of damages." 8 This
limitation in jurisdiction, however, lasted only briefly since on May
1, 1980, P.D. No. 1691 nullified P.D. No. 1367 and restored Article
217 of the Labor Code almost to its original form. Presently, and
as amended by R.A. 6715, the jurisdiction of Labor Arbiters and
the NLRC in Article 217 is comprehensive enough to include claims
for all forms of damages "arising from the employer-employee
relations"
Whereas this Court in a number of occasions had applied the
jurisdictional provisions of Article 217 to claims for damages filed
by employees, 9 we hold that by the designating clause "arising
from the employer-employee relations" Article 217 should apply
with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the fact of
termination, and should be entered as a counterclaim in the illegal
dismissal case.
Even under Republic Act No. 875 (the "Industrial Peace Act", now
completely superseded by the Labor Code), jurisprudence was
settled that where the plaintiff's cause of action for damages arose
out of, or was necessarily intertwined with, an alleged unfair labor
practice committed by the union, the jurisdiction is exclusively with
the (now defunct) Court of Industrial Relations, and the
assumption of jurisdiction of regular courts over the same is a
nullity. 10 To allow otherwise would be "to sanction split jurisdiction,
which is prejudicial to the orderly administration of
justice." 11 Thus, even after the enactment of the Labor Code,
where the damages separately claimed by the employer were
allegedly incurred as a consequence of strike or picketing of the
union, such complaint for damages is deeply rooted from the labor
dispute between the parties, and should be dismissed by ordinary
courts for lack of jurisdiction. As held by this Court in National
Federation of Labor vs. Eisma, 127 SCRA 419:
Certainly, the present Labor Code is even more committed to the
view that on policy grounds, and equally so in the interest of
greater promptness in the disposition of labor matters, a court is
spared the often onerous task of determining what essentially is a
factual matter, namely, the damages that may be incurred by
either labor or management as a result of disputes or
controversies arising from employer-employee relations.
There is no mistaking the fact that in the case before us, private
respondent's claim against petitioner for actual damages arose
from a prior employer-employee relationship. In the first place,
private respondent would not have taken issue with petitioner's
"doing business of his own" had the latter not been concurrently
its employee. Thus, the damages alleged in the complaint below
are: first, those amounting to lost profits and earnings due to
petitioner's abandonment or neglect of his duties as sales
manager, having been otherwise preoccupied by his unauthorized
installment sale scheme; and second, those equivalent to the
value of private respondent's property and supplies which
petitioner used in conducting his "business ".
Second, and more importantly, to allow respondent court to
proceed with the instant action for damages would be to open
anew the factual issue of whether petitioner's installment sale
scheme resulted in business losses and the dissipation of private
respondent's property. This issue has been duly raised and ruled
upon in the illegal dismissal case, where private respondent
brought up as a defense the same allegations now embodied in his
complaint, and presented evidence in support thereof. The Labor
Arbiter, however, found to the contrary — that no business losses
may be attributed to petitioner as in fact, it was by reason of
petitioner's installment plan that the sales of the Iligan branch of
private respondent (where petitioner was employed) reached its
highest record level to the extent that petitioner was awarded the
1989 Field Sales Achievement Award in recognition of his
exceptional sales performance, and that the installment scheme
was in fact with the knowledge of the management of the Iligan
branch of private respondent. 12 In other words, the issue of actual
damages has been settled in the labor case, which is now final and
executory.
Still on the prospect of re-opening factual issues already resolved
by the labor court, it may help to refer to that period from 1979 to
1980 when jurisdiction over employment-predicated actions for
damages vacillated from labor tribunals to regular courts, and back
to labor tribunals. In Ebon vs. de Guzman, 113 SCRA 52, 1 this
Court discussed:
The lawmakers in divesting the Labor Arbiters and the NLRC of
jurisdiction to award moral and other forms of damages in labor
cases could have assumed that the Labor Arbiters' position-paper
procedure of ascertaining the facts in dispute might not be an
adequate tool for arriving at a just and accurate assessment of
damages, as distinguished from backwages and separation pay,
and that the trial procedure in the Court of First Instance would be
a more effective means of determining such damages. . . .
Evidently, the lawmaking authority had second thoughts about
depriving the Labor Arbiters and the NLRC of the jurisdiction to
award damages in labor cases because that setup would
mean duplicity of suits, splitting the cause of action and possible
conflicting findings and conclusions by two tribunals on one and
the same claim.
So, on May 1, 1980, Presidential Decree No. 1691 (which
substantially reenacted Article 217 in its original form) nullified
Presidential Decree No. 1367 and restored to the Labor Arbiter and
the NLRC their jurisdiction to award all kinds of damages in cases
arising from employer-employee relations. . . . (Emphasis
supplied).
Neither can we uphold the reasoning of respondent court that
because the resolution of the issues presented by the complaint
does not entail application of the Labor Code or other labor laws,
the dispute is intrinsically civil. Article 217(a) of the Labor Code, as
amended, clearly bestows upon the Labor Arbiter original and
exclusive jurisdiction over claims for damages arising from
employer-employee relations — in other words, the Labor Arbiter
has jurisdiction to award not only the reliefs provided by labor
laws, but also damages governed by the Civil Code. 18
Thus, it is obvious that private respondent's remedy is not in the
filing of this separate action for damages, but in properly
perfecting an appeal from the Labor Arbiter's decision. Having lost
the right to appeal on grounds of untimeliness, the decision in the
labor case stands as a final judgment on the merits, and the
instant action for damages cannot take the place of such lost
appeal.
Respondent court clearly having no jurisdiction over private
respondent's complaint for damages, we will no longer pass upon
petitioner's other assignments of error.
WHEREFORE, the Petition is GRANTED, and the complaint in Civil
Case No. 95-554 before Branch 39 of the Regional Trial Court of
Misamis Oriental is hereby DISMISSED. No pronouncement as to
costs.
SO ORDERED.

Clearly, respondent court's taking jurisdiction over the instant case

would bring about precisely the harm that the lawmakers sought
to avoid in amending the Labor Code to restore jurisdiction over
claims for damages of this nature to the NLRC.

This is, of course, to distinguish from cases of actions for damages

where the employer-employee relationship is merely incidental and
the cause of action proceeds from a different source of obligation.
Thus, the jurisdiction of regular courts was upheld where the
damages, claimed for were based on tort 14 , malicious
prosecution 15 , or breach of contract, as when the claimant seeks
to recover a debt from a former employee 16 or seeks liquidated
damages in enforcement of a prior employment contract. 17