YUSEN AIR AND SEA SERVICE
PHILIPPINES, INCORPORATED VS.
VILLAMOR
Via this petition for review on certiorari under Rule
45 of the Rules of Court, petitioner Yusen Air and
Sea Service Philippines, Incorporated, urges us to
annul and set aside the following orders of the
Regional Trial Court at Paraaque City, Branch 258, in
its Civil Case No. 02-0063, to wit:
1. Order dated March 20,
2002,[1] dismissing, on ground of lack of jurisdiction,
petitioners complaint for injunction and damages with
prayer for a temporary restraining order filed by it
against herein respondent, Isagani A. Villamor; and
2. Order dated June 21,
2002,[2] denying petitioners motion for
reconsideration.
The facts:
Petitioner, a corporation organized and existing under
Philippines laws, is engaged in the business of freight
forwarding. As such, it is contracted by clients to
pick-up, unpack, consolidate, deliver, transport and
distribute all kinds of cargoes, acts as cargo or freight
accommodation and enters into charter parties for the
carriage of all kinds of cargoes or freight.
On August 16, 1993, petitioner hired respondent as
branch manager in its Cebu Office. Later, petitioner
reclassified respondents position to that of Division
Manager, which position respondent held until his
resignation on February 1, 2002.
Immediately after his resignation, respondent started
working for Aspac International, a corporation
engaged in the same line of business as that of
petitioner.
On February 11, 2002, in the Regional Trial Court at
Paraaque City, petitioner filed against respondent a
complaint[3] for injunction and damages with prayer
for a temporary restraining order. Thereat docketed as
Civil Case No. 02-0063 which was raffled to Branch
258 of the court, the complaint alleged, inter alia, as
follows:
7. That [respondent] duly signed an
undertaking to abide by the policies of the [Petitioner]
which includes the provision on the employees
responsibility and obligation in cases of conflict of
interest, which reads:
No employee may engage in any business or
undertaking that is directly or indirectly in
competition with that of the company and its affiliates
or engage directly or indirectly in any undertaking or
activity prejudicial to the interests of the company or
to the performance of his/her job or work
assignments. The same provision will be implemented
for a period of two (2) years from the date of an
employees resignation, termination or separation from
the company.
8. That in clear violation and breach of his
undertaking and agreement with the policies of
[petitioner], [respondent] joined Aspac International,
within two years from [his] date of resignation, whose
business is directly in conflict with that of
[petitioner]. (Underscoring supplied; words in bracket
ours).
Petitioner thus prayed for a judgment enjoining
respondent from further pursuing his work at Aspac
International, and awarding it P2,000,000 as actual
damages; P300,000 as exemplary damages; and
another P300,000 as attorneys fees.
On March 4, 2002, apparently not to be outdone,
respondent filed against petitioner a case for illegal
dismissal before the National Labor Relations
Commission.
Meanwhile, instead of filing his answer in Civil Case
No. 02-0063, respondent filed a Motion to
Dismiss,[4] arguing that the RTC has no jurisdiction
over the subject matter of said case because an
employer-employee relationship is involved.
On March 20, 2002, the trial court issued the herein
first assailed order dismissing petitioners complaint
for lack of jurisdiction over the subject matter thereof
on the ground that the action was for damages arising
from employer-employee relations. Citing Article 217
of the Labor Code, the trial court ruled that it is the
labor arbiter which had jurisdiction over petitioners
complaint:
xxx the Court, after going over all the assertions,
averments and arguments of the parties and after
carefully evaluating the same, is of the firm and
honest opinion that the arguments raised by
[respondent] movant are more in conformity with the
rules and jurisprudence as this case involves an
employer-employee relationship and is within the
exclusive original jurisdiction of the NLRC pursuant
to Art. 217 of the Labor Code of the Philippines. Not
only that, there is even a pending case for illegal
dismissal against herein [petitioner] filed by
[respondent] before the Regional Arbitration Branch
VII in Cebu City.
WHEREFORE, this case is hereby ordered
DISMISSED for lack of jurisdiction.
SO ORDERED. (Words in bracket ours).
In time, petitioner moved for a reconsideration but its
motion was denied by the trial court in its subsequent
order of June 21, 2002.
Hence, petitioners present recourse, maintaining that
its cause of action did not arise from employer-
employee relations even if the claim therein is based
on a provision in its handbook, and praying that Civil
Case No. 02-0063 be remanded to the court a quo for
further proceedings.
The petition is impressed with merit.
At the outset, we take note of the fact that the 2-year
prohibition against employment in a competing
company which petitioner seeks to enforce thru
injunction, had already expired sometime in February
2004. Necessarily, upon the expiration of said period,
a suit seeking the issuance of a writ of injunction
becomes functus oficio and therefore moot. As things
go, however, it was not possible for us, due to the
great number of cases awaiting disposition, to have
decided the instant case earlier. However, the issue of
damages remains unresolved. In Philippine National
Bank v. CA,[5] we declared:
In the instant case, aside from the principal action for
damages, private respondent sought the issuance of a
temporary restraining order and writ of preliminary
injunction to enjoin the foreclosure sale in order to
prevent an alleged irreparable injury to private
respondent. It is settled that these injunctive reliefs
are preservative remedies for the protection of
substantive rights and interests. Injunction is not a
cause of action in itself but merely a provisional
remedy, an adjunct to a main suit. When the act
sought to be enjoined ha[s] become fait accompli,
only the prayer for provisional remedy should be
denied. However, the trial court should still proceed
with the determination of the principal action so that
an adjudication of the rights of the parties can be had.
Along similar vein, the damage aspect of the present
suit was never rendered moot by the lapse of the 2-
year prohibitive period against employment in a
competing company.
This brings us to the sole issue of whether petitioner's
claim for damages arose from employer-employee
relations between the parties.
We rule in the negative.
Actually, the present case is not one of first
impression. In a kindred case, Dai-Chi Electronics
Manufacturing vs. Villarama,[6] with a substantially
similar factual backdrop, we held that an action for
breach of contractual obligation is intrinsically a civil
dispute.
There, a complaint for damages was filed with the
regular court by an employer against a former
employee who allegedly violated the non-compete
provision of their employment contract when, within
two years from the date of the employees resignation,
he applied with, and was hired by a corporation
engaged in the same line of business as that of his
former employer. The employer sought to recover
liquidated damages. The trial court 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, as amended by
R.A. No. 6715, which stated that it is the Labor
Arbiter who had original and exclusive jurisdiction
over the subject matter of the case.
When the case was elevated to this Court, we held
that the claim for damages did not arise from
employer-employee relations, to wit:
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
respondents breach of his contractual obligation to its
damage and prejudice. 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.
[W]hile seemingly the cause of action arose from
employer-employee relations, the employers 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.
Indeed, 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 a claim for
damages be considered as arising from employer-
employee relations.
Article 217, as amended by Section 9 of RA 6715,
provides:
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:
xxx xxx xxx
4. Claims for actual, moral, exemplary and
other forms of damages arising from the employer-
employee relations;"
xxx xxx xxx
In San Miguel Corporation vs. National Labor
Relations Commission,[7] 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 employers). It is evident
that there is a unifying element which runs through
paragraph 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 printers 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 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.
When, as here, 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.[8]
As it is, petitioner does not ask for any relief under
the Labor Code. It merely seeks to recover damages
based on the parties contract of employment as
redress for respondent's breach thereof. Such cause of
action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the
regular courts. More so must this be in the present
case, what with the reality that the stipulation refers to
the post-employment relations of the parties.
For sure, a plain and cursory reading of the complaint
will readily reveal that the subject matter is one of
claim for damages arising from a breach of contract,
which is within the ambit of the regular courts
jurisdiction.[9]
It is basic that jurisdiction over the subject matter is
determined upon the allegations made in the
complaint, irrespective of whether or not the plaintiff
is entitled to recover upon the claim asserted therein,
which is a matter resolved only after and as a result of
a trial. Neither can jurisdiction of a court be made to
depend upon the defenses made by a defendant in his
answer or motion to dismiss. If such were the rule, the
question of jurisdiction would depend almost entirely
upon the defendant.[10]
ACCORDINGLY, the assailed orders of the lower
court are SET ASIDE and Civil Case No. 02-0063
REMANDED to it for trial on the merits of the main
claim for damages.
SO ORDERED.
[G.R. No. 152121. July 29, 2003]
EDUARDO G. EVIOTA, petitioner, vs. THE
HON. COURT OF APPEALS, THE HON. JOSE
BAUTISTA, Presiding Judge of Branch 136,
Regional Trial Court of Makati, and STANDARD
CHARTERED BANK, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under
Rule 45 of the Revised Rules of Court, of the
Decision[1] of the Court of Appeals in CA-G.R. SP
No. 60141 denying the petition for certiorari filed by
the petitioner praying the nullification of the Order of
the Regional Trial Court of Makati, Branch 136.[2]
Sometime on January 26, 1998, the respondent
Standard Chartered Bank and petitioner Eduardo G.
Eviota executed a contract of employment under
which the petitioner was employed by the respondent
bank as Compensation and Benefits Manager, VP
(M21). However, the petitioner abruptly resigned
from the respondent bank barely a month after his
employment and rejoined his former employer.
On June 19, 1998, the respondent bank filed a
complaint against the petitioner with the RTC of
Makati City. The respondent bank alleged inter alia in
its complaint that:
1. It is a foreign banking institution authorized to do
business in the Philippines, with principal offices at
the 5th Floor, Bankmer Bldg., 6756 Ayala Avenue,
Makati City.
2. Defendant Eduardo Eviota (Eviota) is a former
employee of the Bank, and may be served with
summons and other court processes at 8 Maple Street,
Cottonwoods, Antipolo, Metro Manila.
3. On December 22, 1997, Eviota began negotiating
with the Bank on his possible employment with the
latter. Taken up during these negotiations were not
only his compensation and benefit package, but also
the nature and demands of his prospective position.
The Bank made sure that Eviota was fully aware of
all the terms and conditions of his possible job with
the Bank.
4. On January 26, 1998, Eviota indicated his
conformity with the Banks Offer of Employment by
signing a written copy of such offer dated January 22,
1998 (the Employment Contract). A copy of the
Employment Contract between Eviota and the Bank is
hereto attached as Annex A.
5. Acting on the Employment Contract and on Eviotas
uninhibited display of interest in assuming his
position, the Bank promptly proceeded to carry out
the terms of the Employment Contract as well as to
facilitate his integration into the workforce. Among
others, the Bank: (a) renovated and refurbished the
room which was to serve as Eviotas office; (b)
purchased a 1998 Honda CR-V (Motor No.
PEWED7P101101; Chassis No. PADRD
1830WV00108) for Eviotas use; (c) purchased a
desktop IBM computer for Eviotas use; (d) arranged
the takeout of Eviotas loans with Eviotas former
employer; (e) released Eviotas signing bonus in the
net amount of P300,000.00; (f) booked Eviotas
participation in a Singapore conference on Y2K
project scheduled on March 10 and 11, 1998; and (g)
introduced Eviota to the local and regional staff and
officers of the Bank via personal introductions and
electronic mail.
6. The various expenses incurred by the Bank in
carrying out the above acts are itemized below, as
follows:
a. Signing Bonus P 300,000.00
b. 1 Honda CR-V 800,000.00
c. IBM Desktop Computer 89,995.00
d. Office Reconfiguration 29,815.00
e. 2-Drawer Lateral File
Cabinet 13,200.00
f. 1 Officers Chair 31,539.00
g. 1 Guest Chair 2,200.00
h. 1 Hanging Shelf 2,012.00
i. Staff Loan Processing
Title Verification 375.00
Cost of Appraisal
Housing Loan 3,500.00
TOTAL P1,272,636.00
An itemized schedule of the above expenses incurred
by the Bank is hereto attached as Annex B.
7. On February 25, 1998, Eviota assumed his position
as Compensation and Benefits Manager with the
Bank and began to discharge his duties. At one
Human Resources (HR) Committee meeting held on
March 3, 1998, Eviota energetically presented to
senior management his projects for the year, thus
raising the latters expectations. The same day, Eviota
instructed the Banks HR Administrator to book him a
flight for Singapore, where he was scheduled to
participate in a Y2K project on March 10 and 11,
1998. Confident of Eviotas professed commitment to
the Bank, the latter made the aforementioned airline
booking for him. In addition, the Bank allowed Eviota
access to certain sensitive and confidential
information and documents concerning the Banks
operations.
8. After leading the Bank to believe that he had come
to stay, Eviota suddenly resigned his employment
with immediate effect to re-join his previous
employer. His resignation, which did not comply with
the 30-day prior notice rule under the law and under
the Employment Contract, was so unexpected that it
disrupted plans already in the pipeline (e.g., the
development of a salary/matrix grid and salary
structure, and the processing of merit promotion
recommendations), aborted meetings previously
scheduled among Bank officers, and forced the Bank
to hire the services of a third party to perform the job
he was hired to do. For the services of this third party,
the Bank had to pay a total of P208,807.50. A copy of
a receipt for the above expenses is hereto attached as
Annex C (See also, Annex B).
9. Aside from causing no small degree of chaos
within the Bank by reason of his sudden resignation,
Eviota made off with a computer diskette and other
papers and documents containing confidential
information on employee compensation and other
Bank matters, such as the salary schedule of all
Corporate and Institutional Banking officers and
photocopies of schedules of benefits provided
expatriates being employed by the Bank.
10. With the benefit of hindsight, the Bank realizes
that it was simply used by Eviota as a mere leverage
for his selfish efforts at negotiating better terms of
employment with his previous employer. Worse,
there is evidence to show that in his attempts to
justify his hasty departure from the Bank and conceal
the real reason for his move, Eviota has resorted to
falsehoods derogatory to the reputation of the Bank.
In particular, he has been maliciously purveying the
canard that he had hurriedly left the Bank because it
had failed to provide him support. His untruthful
remarks have falsely depicted the Bank as a contract
violator and an undesirable employer, thus damaging
the Banks reputation and business standing in the
highly competitive banking community, and
undermining its ability to recruit and retain the best
personnel in the labor market.
11. On March 16, 1998, the Bank made a written
demand on Eviota to return the aforementioned
computer diskette and other confidential documents
and papers, reimburse the Bank for the various
expenses incurred on his account as a result of his
resignation (with legal interest), and pay damages in
the amount of at least P500,000.00 for the
inconvenience and work/program disruptions suffered
by the Bank.
A copy of the Banks demand letter dated March 16,
1998 is hereto attached as Annex D.
12. In partial compliance with said demand, Eviota
made arrangements with his previous employer to
reimburse the Bank for the expenses incurred in
connection with the Banks purchase of the Honda
CR-V for his use. The Bank informed Eviota that in
addition to the Honda CR-Vs purchase price of
P848,000.00 (of which Eviota initially shouldered
P48,000.00), incidental costs in the form of
Processing Fees (P1,000.00), FPD/MCAR/98-155684
(P1,232.53) and Fund Transfer Price (P18,646.84)
were incurred, bringing the total cost of the Honda
CR-V to P868,881.38. On April 29, 1998, the Bank
received two managers checks in the aggregate
amount of P868,881.38, representing costs incurred in
connection with the purchase of the Honda CR-V,
inclusive of processing fees and other incidental
costs. Previously, Eviota had returned his
P300,000.00 signing bonus, less the P48,000.00 he
had advanced for the Honda CR-Vs purchase price.
13. Eviota never complied with the Banks demand
that he reimburse the latter for the other expenses
incurred on his account, amounting to P360,562.12
(see, Annex B).[3]
The respondent bank alleged, by way of its causes of
action against the petitioner, the following:
First Cause of Action
14. Eviotas actions constitute a clear violation of
Articles 19, 20 and 21 of Republic Act No. 386, as
amended (the Civil Code). Assuming arguendo that
Eviota had the right to terminate his employment with
the Bank for no reason, the manner in and
circumstances under which he exercised the same are
clearly abusive and contrary to the rules governing
human relations.
14.1. By his actions and representations, Eviota had
induced the Bank to believe that he was committed to
fulfilling his obligations under the Employment
Contract. As a result, the Bank incurred expenses in
carrying out its part of the contract (see Annexes B
and C). Less reimbursements received from Eviota,
the Bank is entitled to actual damages of
P360,562.12. (See, Annex C).
Second Cause of Action
15. Under Article 285 (a) of Presidential Decree No.
442, as amended (the Labor Code), an employee may
terminate without just cause the employer-employee
relationship by serving written notice on the employer
at least one (1) month in advance. In addition, Section
13 of the Employment Contract specifically provides
that: Your [i.e., Eviotas] employment may be
terminated by either party giving notice of at least one
month. (Annex A, p. 5.)
15.1. Eviotas failure to comply with the above
requirement threw a monkey wrench into the Banks
operations Eviotas sudden resignation aborted
meetings previously scheduled among Bank officers
and disrupted plans for a salary/merit review program
and development of a salary structure and merit grid
already in the pipeline.
Hence, Eviota is liable to the Bank for damages in the
amount of at least P100,000.00.
Third Cause of Action
16. Eviotas false and derogatory statements that the
Bank had failed to deliver what it had purportedly
promised have besmirched the Banks reputation and
depicted it as a contract violator and one which does
not treat its employees properly. These derogatory
statements have injured the Banks business standing
in the banking community, and have undermined the
Banks ability to recruit and retain the best personnel.
Hence, plaintiff is entitled to moral damages of at
least P2,000,000.00.
17. By way of example or correction for the public
good, and to deter other parties from committing
similar acts in the future, defendant should be held
liable for exemplary damages of at
P1,000,000.00
18. Eviotas actions have compelled plaintiff to obtain
the services of undersigned counsel for a fee, in order
to protect its interests. Hence, plaintiff is entitled to
attorneys fees of at least P200,000.00.[4]
The respondent bank prayed, that after due
proceedings, judgment be rendered in its favor as
follows:
WHEREFORE, it is respectfully prayed that
judgment be rendered ordering the defendant to pay
the plaintiff:
1. As actual damages, the amount of P360,562.12,
representing expenses referred to in items c to i of
par. 6 and the cost of the third-party services
mentioned in par. 8;
2. For violating the 30-day notice requirement under
the Labor Code and order (sic) the Employment
Contract, damages in the amount of at least
P100,000.00;
3. As moral damages, the amount of P2,000,000.00;
4. As exemplary damages, the amount
P1,000,000.00;
5. As attorneys fees, the amount of P200,000.00; and
6. Costs of the suit.
Other just and equitable reliefs are likewise prayed
for.[5]
The respondent bank appended to its complaint a
copy of the petitioners employment contract.
The petitioner filed a motion to dismiss the complaint
on the ground that the action for damages of the
respondent bank was within the exclusive jurisdiction
of the Labor Arbiter under paragraph 4, Article 217 of
the Labor Code of the Philippines, as amended. The
petitioner averred that the respondent banks claim for
damages arose out of or were in connection with his
employer-employee relationship with the respondent
bank or some aspect or incident of such relationship.
The respondent bank opposed the motion, claiming
that its action for damages was within the exclusive
jurisdiction of the trial court. Although its claims for
damages incidentally involved an employer-employee
relationship, the said claims are actually predicated on
the petitioners acts and omissions which are
separately, specifically and distinctly governed by the
New Civil Code.
On November 29, 1999, the trial court issued an order
denying the petitioners motion to dismiss,
ratiocinating that the primary relief prayed for by the
least respondent bank was grounded on the tortious manner
by which the petitioner terminated his employment
with the latter, and as such is governed by the New
Civil Code:
The Court holds that here, since the primary relief
prayed for by the plaintiff is for damages, grounded
on the tortious manner by which the defendant
terminated his employment with the company, the
same are recoverable under the applicable provision
of the Civil Code, the present controversy is removed
from the jurisdiction of the Labor Arbiter and brings
in within the purview of the regular courts.[6]
The petitioner filed a motion for reconsideration of
the said order, but the court issued an order denying
the same. The petitioner filed a petition for certiorari
with the Court of Appeals for the nullification of the
orders of the trial court, alleging that the court a quo
committed grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the said
orders. The petitioner further asserted that contrary to
the ruling of the court, the respondent bank claimed
damages in its complaint against the petitioner based
on his employment contract, and not on tortious acts.
On November 15, 2001, the CA promulgated a
decision dismissing the petition, holding that the trial
of court and not the Labor Arbiter had exclusive
jurisdiction over the action of the respondent bank. It
held that the latters claims for damages were
grounded on the petitioners sudden and
unceremonious severance of his employment with the
respondent bank barely a month after assuming
office.
With his motion for reconsideration of the decision
having been denied by the CA, the petitioner filed his
petition with this Court contending that:
Suffice to state immediately that on the basis of the
allegations in the complaint, it is the Labor Arbiter,
not the Regional Trial Court, which has jurisdiction of
the subject matter of the complaint in Civil Case No.
98-1397, the principal cause of action being the
alleged omission of petitioner in giving notice to the
respondent Bank employer of termination of their
relationship; whereas the claims for other
actual/moral/exemplary damages are well within the
competence of the Labor Arbiter.[7]
The petition is barren of merit.
Article 217 of the Labor Code of the Philippines, as
amended by Rep. Act No. 6715 which took effect on
March 21, 1989 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:
1. Unfair labor practice cases;
2. Termination 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.
Case law has it that the nature of an action and the
subject matter thereof, as well as which court has
jurisdiction over the same, are determined by the
material allegations of the complaint and the reliefs
prayed for in relation to the law involved.
Not every controversy or money claim by an
employee against the employer or vice-versa is within
the exclusive jurisdiction of the labor arbiter. A
money claim by a worker against the employer or
vice-versa is within the exclusive jurisdiction of the
labor arbiter only if there is a reasonable causal
connection between the claim asserted and employee-
employer relation. Absent such a link, the complaint
will be cognizable by the regular courts of justice.[8]
Actions between employees and employer where the
employer-employee relationship is merely incidental
and the cause of action precedes from a different
source of obligation is within the exclusive
jurisdiction of the regular court.[9] In Georg Grotjahn
GMBH & Co. v. Isnani,[10] we held that the
jurisdiction of the Labor Arbiter under Article 217 of
the Labor Code, as amended, is limited to disputes
arising from an employer-employee relationship
which can only be resolved by reference to the Labor
Code of the Philippines, other labor laws or their
collective bargaining agreements. In Singapore
Airlines Limited v. Pao,[11] the complaint of the
employer against the employee for damages for
wanton justice and refusal without just cause to report
for duty, and for having maliciously and with bad
faith violated the terms and conditions of their
agreement for a course of conversion training at the
expense of the employer, we ruled that jurisdiction
over the action belongs to the civil court:
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
employers 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 the
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.[12]
The claims were the natural consequences flowing
from a breach of an obligation, intrinsically civil in
nature.
In Medina v. Castro-Bartolome,[13] we held that a
complaint of an employee for damages against the
employer for slanderous remarks made against him
was within the exclusive jurisdiction of the regular
courts of justice because the cause of action of the
plaintiff was for damages for tortious acts allegedly
committed by the employer. The fact that there was
between the parties an employer-employee
relationship does not negate the jurisdiction of the
trial court.
In Singapore Airlines Ltd. v. Pao,[14] we held that:
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 Dai-Chi Electronics Manufacturing Corporation v.
Villarama, Jr.,[15] the petitioner sued its employee
Adonis Limjuco for breach of contract which reads:
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.[16]
The petitioner alleged in its complaint with the trial
court that:
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 respondents resignation from
petitioners 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.[17]
The trial court dismissed the case for lack of
jurisdiction over the subject matter because the cause
of action for damages arose out of the parties
employer-employee relationship. We reversed the
order of the trial court and held, thus:
against the petitioner and their employer-employee
relationship. The fact that the private respondent was
the erstwhile employer of the petitioner under an
existing employment contract before the latter
abandoned his employment is merely incidental. In
fact, the petitioner had already been replaced by the
private respondent before the action was filed against
the petitioner.
IN LIGHT OF ALL THE FOREGOING, the Petition
is DENIED. The Decision of the Court of Appeals
dismissing the petition of the petitioner is
AFFIRMED.
SO ORDERED.

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
respondents 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.[18]

In this case, the private respondents first cause of

action for damages is anchored on the petitioners
employment of deceit and of making the private
respondent believe that he would fulfill his obligation
under the employment contract with assiduousness
and earnestness. The petitioner volte face when,
without the requisite thirty-day notice under the
contract and the Labor Code of the Philippines, as
amended, he abandoned his office and rejoined his
former employer; thus, forcing the private respondent
to hire a replacement. The private respondent was left
in a lurch, and its corporate plans and program in
jeopardy and disarray. Moreover, the petitioner took
off with the private respondents computer diskette,
papers and documents containing confidential
information on employee compensation and other
bank matters. On its second cause of action, the
petitioner simply walked away from his employment
with the private respondent sans any written notice, to
the prejudice of the private respondent, its banking
operations and the conduct of its business. Anent its
third cause of action, the petitioner made false and
derogatory statements that the private respondent
reneged on its obligations under their contract of
employment; thus, depicting the private respondent as
unworthy of trust.

It is evident that the causes of action of the private

respondent against the petitioner do not involve
the provisions of the Labor Code of the Philippines
and other labor laws but the New Civil Code.
Thus, the said causes of action are intrinsically civil.
There is no causal relationship between the causes of
action of the private respondents causes of action