DAI-CHI ELECTRONICS MANUFACTURING CORPORATION, PETITIONER, VS. HON. MARTIN S. VILLARAMA, JR., PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 156, PASIG, METRO MANILA AND ADONIS C…

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

The 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                          xxx

4. Claims for
actual, moral, exemplary and other forms
of damages arising from the employer–employee
relations;” (Underscoring 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.

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 v. 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.

Padilla, (Chairman), Davide, Jr., Bellosillo, and Kapunan, JJ.,
concur.