THIRD DIVISION

G.R. No. 200088, February 26, 2018

PHILIPPINE AIRLINES, INC., Petitioner, v. AIRLINE PILOTS ASSOCIATION OF

THE PHILIPPINES, SOTICO T. LLOREN, RONALDO V. CUNANAN, LEONCIO H.
MANARANG, JR., VICTOR N. AGUILAR, RODOLFO M. MEDINA, RENATO A.
FLESTADO, ROMEO L. LORENZO, WESLEY V. TATE, SALVADOR S. ARCEO, JR.,
MARIANO V. NAVARETTE, JR., WILLIAM Z. CENZON, LIBERATE D. GUTIZA,
MANUEL F. FORONDA, ISMAEL C. LAPUS, JR., RAQUELITO L. CAMACHO, JOHN
JOSEPH V. DE GUZMAN, EFREN L. PATTUGALAN, JIMMY JESUS D. ARRANZA,
PAUL DE LEON, ANTONIO A. CAYABA, DIOSDADO S. JUAN, JR., ORLANDO A.
DEL CASTILLO, DEOGRACIAS C. CABALLERO, JR., AND FLORENDO R. UMALI,
Respondents.

MARTIRES, J.

FACTS

● The present case arose from a labor dispute between petitioner Philippine
Airlines, Inc. (PAL) and respondent Airline Pilots' Association of the Philippines
(ALPAP), a duly registered labor organization and the exclusive bargaining agent
of all commercial pilots of PAL.
● On December 9, 1997, ALPAP filed a notice of strike with the DOLE alleging that
PAL committed unfair labor practice.
● On December 23, 1997, the Secretary of DOLE (SOLE) assumed jurisdiction and
then prohibited ALPAP from organizing a strike and committing any act that
could aggravate the dispute.
● ALPAP staged a strike on June 5, 1998, despite the prohibition of the SOLE.
● A return-to-work order was issued on June 7, 1998, but ALPAP defied the same
and went on with their strike.
● Consequently, on June 1, 1999, the SOLE issued a resolution that declared the
illegality of the strike staged by ALPAP and the loss of employment status of the
officers who participated in the strike.
● The CA upheld the SOLE's resolution. The matter was eventually elevated to this
Court. In a Resolution, the Court dismissed ALPAP's petition. The resolution
attained finality on August 29, 2002.
● On April 22, 2003, PAL filed before the LA a complaint for damages against
ALPAP, as well as some of its officers and members.
● PAL alleged, among others, that on June 6, 1998, the second day of the illegal
strike conducted by ALPAP, its striking pilots abandoned three (3) PAL aircraft
● Because of the deliberate and malicious abandonment of the said flights, its
passengers were stranded and rendered PAL liable for the violation of its contract
of carriage.
 ● PAL further alleged that its operation was crippled by the illegal strike resulting
in several losses.
● PAL claimed that, due to the illegal strike, it suffered actual damages in the
amount of P731,078,988.59.
● PAL further prayed that it be awarded P300,000,000.00 and P3,000,000.00 as
exemplary damages and attorney's fees, respectively.

The LA Ruling

● In its decision, dated April 22, 2008, the LA dismissed PAL's complaint.
● It ruled that it had no jurisdiction to resolve the issue of damages.
● Hence, jurisdiction to resolve all issues arising from the labor dispute, including
the claim for damages arising from the illegal strike, was left with the SOLE to
the exclusion of all other fora.
● PAL's 22 April 2003 complaint was filed beyond the 3-year prescriptive period set
forth in Article 291 of the Labor Code.
● The LA suggested, however, that PAL's cause of action may be treated as an
independent civil action in another forum.
● WHEREFORE, the complaint is DISMISSED for lack of merit.

The NLRC Ruling

● In its resolution, dated April 27, 2009, the NLRC affirmed with modification the
LA's April 22, 2008 decision.
● It ruled that labor tribunals have no jurisdiction over the claims interposed by
PAL.
● It opined that the reliefs prayed for by PAL should have been ventilated before
the regular courts considering that they are based on the tortuous acts allegedly
committed by the respondents.
● It explained that the airline pilots' refusal to fly their assigned aircrafts
constitutes breach of contractual obligation which is intrinsically a civil dispute.
● WHEREFORE, except for the MODIFICATION that the phrase "for lack of merit" in
the dispositive portion is deleted therefrom, the appealed Decision is hereby
AFFIRMED.
● PAL moved for reconsideration, but the same was denied by the NLRC in its
resolution, dated 26 February 2010.
● PAL filed a petition for certiorari before the CA.

The CA Ruling

● In its assailed Decision, dated August 26, 2011, the CA partially granted PAL's
petition.
● It ruled that while the NLRC correctly sustained the LA's dismissal of the
complaint for lack of jurisdiction, it declared that the NLRC gravely abused its
 discretion when it affirmed the LA's pronouncement that PAL's cause of action
had already been prescribed.
● The appellate court concurred with the NLRC's opinion that exclusive jurisdiction
over PAL's claim for damages lies with the regular courts and not with the SOLE.
● SOLE’s authority stated in Article 263(g) of the Labor Code must be interpreted
to cover only those causes of action which are based on labor laws.
● Causes of action based on an obligation or duty not provided under the labor
laws are beyond the SOLE's jurisdiction.
● It continued that only those issues that arise from the assumed labor dispute,
which has a direct causal connection to the employer-employee relationship
between the parties, will fall under the jurisdiction of the SOLE.
● The damages caused by the wilful acts are recoverable under civil law and are
thus within the jurisdiction of the regular courts.
● Further, the appellate court held that PAL's cause of action accrued only on
August 29, 2002, the date when this Court's resolution sustained the finding of
the strike's illegality had attained finality.
● WHEREFORE, premises considered, the Petition for Certiorari is PARTIALLY
GRANTED. The April 27, 2009 and February 26, 2010 NLRC Resolutions are
MODIFIED as follows: 1) The complaint for damages arising from the illegal
strike claimed by the petitioner lies not within the jurisdiction of the DOLE
Secretary or the Labor Arbiter but with the regular courts; and 2) Petitioner's
cause of action for damages has not yet prescribed. No costs.
● PAL moved for partial reconsideration but the same was denied by the CA in its
assailed Resolution, dated 5 January 2012.

ISSUE

● Whether or not the NLRC and the Labor Arbiter have jurisdiction over PAL’s
claims against the respondents for damages incurred as a consequence of the
latter's actions during the illegal strike.

RULING

● Yes, the NLRC and the Labor Arbiter have jurisdiction over PAL’s claims against
the respondents for damages incurred as a consequence of the latter's actions
during the illegal strike.
● Labor tribunals have jurisdiction over actions for damages arising from a labor
strike.
● Under Article 217 [now Article 224] of the Labor Code, as amended by Section 9
of R.A. No. 6715, the LA and the NLRC have jurisdiction to resolve cases
involving claims for damages arising from the employer-employee relationship.
● The appellate court is mistaken.
● The Court agrees with PAL that its claim for damages has reasonable connection
with its employer-employee relationship with the respondents.
● Contrary to the pronouncements made by the appellate court, PAL's cause of
action is not grounded on mere acts of quasi-delict.
● The claimed damages arose from the illegal strike and acts committed during the
same which were in tum closely related and intertwined with the respondents'
allegations of unfair labor practices against PAL.
● Since the loss and injury from which PAL seeks compensation have reasonable
causal connection with the alleged acts of unfair labor practice, a claim provided
for in Article 217 of the Labor Code, the question of damages becomes a labor
controversy and is therefore an employment relationship dispute.
● The Court stressed that the wordings of Article 217 of the Labor Code is explicit
and clear enough to mean that exclusive jurisdiction over suits for damages
arising from a strike belongs to the labor arbiter, thus: Article 217 is to be
applied the way it is worded.
● Jurisprudence dictates that where the plaintiffs cause of action for damages
arose out of or was necessarily intertwined with an alleged unfair labor practice,
the jurisdiction is exclusively with the labor tribunal.
● Likewise, 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 in the labor dispute between the parties and within the
exclusive jurisdiction of the labor arbiter.
● From the foregoing, it is clear that the regular courts do not have jurisdiction
over PAL's claim of damages, the same being intertwined with its labor dispute
with the respondents over which the SOLE had assumed jurisdiction. It is
erroneous, therefore, for the CA to even suggest that PAL's complaint should
have been ventilated before the trial court.
● A separate complaint for damages runs counter to the rule against split
jurisdiction.
● While there is merit in the contention that regular courts do not have jurisdiction
over claims for damages arising from a labor controversy, the Court opines that
PAL could no longer recover the alleged damages.
● In sum, the Court finds meritorious PAL's claim that the CA erred in its decision.
Indeed, the CA erred when it ruled that regular courts have jurisdiction to
entertain claims for damages arising from strike as the same violates the
proscription against splitting of jurisdiction.
● The Court, however, also finds that the LA was already divested of its jurisdiction
to entertain PAL's claim for damages as such issue was deemed included in the
issue of legality of strike of which the SOLE had assumed jurisdiction, pursuant
to the rule against splitting of jurisdiction. Unfortunately, for PAL's failure to raise
the claim during the pendency of the illegal strike case before the SOLE, the
same is deemed waived.
● WHEREFORE, the August 26, 2011 Decision and January 5, 2012 Resolution of
the Court of Appeals (CA) in CA-G.R. SP No. 113985 are SET ASIDE. The April
22, 2008 Decision of the Labor Arbiter is REINSTATED insofar as it dismissed
 the April 22, 2003 Complaint filed by Philippine Airlines, Inc. in NLRC NCR No.
04-04906-03 for lack of jurisdiction. SO ORDERED.

*** This case digest put more emphasis on the case of NICANOR F. MALCABA vs.
PROHEALTH PHARMA PHILIPPINES, INC., GENEROSO R. DEL CASTILLO, JR., AND
DANTE M. BUSTO.

THIRD DIVISION

G.R. No. 209085, June 06, 2018

NICANOR F. MALCABA, CHRISTIAN C. NEPOMUCENO, AND LAURA MAE FATIMA
F. PALIT-ANG, Petitioners, v. PROHEALTH PHARMA PHILIPPINES, INC.,
GENEROSO R. DEL CASTILLO, JR., AND DANTE M. BUSTO, Respondents.

DECISION

LEONEN, J.

FACTS:

● This is a Petition for Review on Certiorari 1 assailing the Court of Appeals February
19, 2013 Decision2 and September 10, 2013 Resolution 3 in CA-G.R. SP No.
119093, which reversed the judgments of the Labor Arbiter and of the National
Labor Relations Commission.
● ProHealth Pharma Philippines, Inc. (ProHealth) is a corporation engaged in the
sale of pharmaceutical products and health food on a wholesale and retail basis.
● Malcaba was employed as its President.
● Malcaba had been employed with ProHealth since it started in 1997. He was one
of its incorporators together with Del Castillo and Busto, and they were all
members of the Board of Directors in 2004.
● Malcaba alleged that Del Castillo did acts that made his job difficult. He asked to
take a leave on October 23, 2007. When he attempted to return on November 5,
2007, Del Castillo insisted that he had already resigned and had his things
removed from his office. He attested that he was paid a lower salary in
December 2007 and his benefits were withheld.
● On January 7, 2008, Malcaba tendered his resignation effective February 1,
2008.
● Malcaba, Nepomuceno, Palit-Ang, and Adona separately filed Complaints before
the Labor Arbiter for illegal dismissal, nonpayment of salaries and 13th month
pay, damages, and attorney's fees.
● The Labor Arbiter found that Malcaba was constructively dismissed. He found
that ProHealth never controverted the allegation that Del Castillo made it difficult
for Malcaba to effectively fulfill his duties.
● He likewise ruled that ProHealth's insistence that Malcaba's leave of absence in
October 2007 was an act of resignation was false since Malcaba continued to
perform his duties as President through December 2007.
● ProHealth appealed to the National Labor Relations Commission. On September
29, 2010, the National Labor Relations Commission rendered its Decision,
affirming the Labor Arbiter's April 5, 2009 Decision with modifications.
● ProHealth moved for reconsideration but was denied by the National Labor
Relations Commission in its January 31, 2011 Resolution.
● Thus, ProHealth, Del Castillo, and Busto filed a Petition for Certiorari before the
Court of Appeals.
● On February 19, 2013, the Court of Appeals rendered its Decision reversing and
setting aside the National Labor Relations Commission September 29, 2010
Decision.
● On the substantive issues, the Court of Appeals held that there was no
employer-employee relationship between Malcaba and ProHealth since he was a
corporate officer. Thus, he should have filed his complaint with the Regional Trial
 Court, not with the Labor Arbiter, since his dismissal from service was an intra-
corporate dispute.
● While the Court of Appeals ordered the return of the amounts given to Malcaba,
it allowed Nepomuceno and Palit-Ang to keep the amounts given considering that
even if the finding of illegal dismissal were reversed on appeal, the employer was
still obliged to reinstate and pay the wages of a dismissed employee during the
period of appeal.
● Malcaba, Nepomuceno, and Palit-Ang moved for reconsideration but were denied
in a Resolution dated September 10, 2013. Hence, this Petition was filed before
this Court.
● Petitioners contend that petitioner Malcaba properly filed his Complaint before
the Labor Arbiter since he was an employee of respondent ProHealth, albeit a
high-ranking one.
● They argue that respondents merely alleged that petitioner Malcaba is a
corporate officer but failed to substantiate this allegation.
● They maintain that petitioner Malcaba did not resign on September 24, 2007
considering that the General Information Sheet for 2007 submitted on October
11, 2007 listed him as respondent ProHealth's President.
● They submit that respondent Del Castillo's action took a toll on petitioner
Malcaba's well-being; hence, the latter merely took a leave of absence and
returned to work in November 2007. They claim that respondents made it
difficult for petitioner Malcaba to continue his work upon his return, resulting in
his resignation in January 2008. Thus, they argue that petitioner Malcaba was
constructively dismissed.
● Respondents likewise insist that petitioner Malcaba was a corporate officer
considering that he was not only an incorporator and stockholder, but also an
elected Director and President of respondent ProHealth.
● They also point out that he filed his labor complaint seven (7) months after his
resignation and that his voluntary resignation already disproves his claim of
constructive dismissal.

ISSUE:

Whether or not the Labor Arbiter and National Labor Relations Commission had
jurisdiction over petitioner Nicanor F. Malcaba's termination dispute considering the
allegation that he was a corporate officer, and not a mere employee;

RULING:

● No, the Labor Arbiter and National Labor Relations Commission had no
jurisdiction over petitioner Nicanor F. Malcaba's termination dispute.
● Petitioner Malcaba alleges that the Court of Appeals erred in dismissing his
complaint for lack of jurisdiction, insisting that he was an employee of the
respondent, not a corporate officer. At the time of his alleged dismissal,
petitioner Malcaba was the President of the respondent corporation.
● Petitioner disputes this position as the respondents' bare assertion, yet he also
insists that his name appears as President in the corporation's General
Information Sheet for 2007.
● Under Section 25 of the Corporation Code, the President of a corporation is
considered a corporate officer. The dismissal of a corporate officer is considered
an intra-corporate dispute, not a labor dispute.
● Further, in Matling Industrial and Commercial Corporation v. Coros, this Court
stated that jurisdiction over intra-corporate disputes involving the illegal
dismissal of corporate officers was with the Regional Trial Court, not with the
Labor Arbiter.
● Effective on August 8, 2000, upon the passage of Republic Act No. 8799,
otherwise known as The Securities Regulation Code, the SEC's jurisdiction over
all intra-corporate disputes was transferred to the RTC, pursuant to Section 5.2
of RA No. 8799.
● Petitioner Malcaba was an incorporator of the corporation and a member of the
Board of Directors. Respondent corporation's By-Laws creates the office of the
President. That foundational document also states that the President is elected
by the Board of Directors.
● Petitioners cite Prudential Bank and Trust Company v. Reyes as basis that even
high-ranking officers may be considered regular employees, not corporate
officers. Prudential Bank, however, is not applicable to this case.
● Finding that petitioner Malcaba is the President of the respondent corporation
and a corporate officer, any issue on his alleged dismissal is beyond the
jurisdiction of the Labor Arbiter or the National Labor Relations Commission.
● Their adjudication on his money claims is void for lack of jurisdiction.
● WHEREFORE, the Petition is PARTIALLY GRANTED. The Court of Appeals
February 19, 2013 Decision and September 10, 2013 Resolution in CA-G.R. SP
No. 119093, finding that the National Labor Relations Commission had no
jurisdiction to adjudicate petitioner Nicanor F. Malcaba's claims is SUSTAINED.
● Petitioner Malcaba is further ordered to RETURN the amount of P4,937,420.40
to respondents for having been erroneously awarded. This shall be without
prejudice to the filing of petitioner Malcaba's claims in the proper forum. SO
ORDERED.