REASONABLE CAUSAL CONNECTION RULE

SAN MIGUEL CORP VS. ETCUBAN

FACTS:

In 1981, San Miguel Corporation (SMC) informed its Mandaue City Brewery employees that it was suffering from
heavy losses and 􏰀nancial distress which could eventually lead to its total closure. In several meetings convened
by SMC with its employees, it was explained to them that the distressed state of SMC was caused by its poor
sales performance which, in order to survive, called for a cutback in production and a corresponding reduction
in the work force. Because of this, SMC offered its "Retrenchment to Prevent Loss Program" to its employees.
SMC admonished its employees that their failure to avail of the retrenchment program might lead to difficulty in
following-up and obtaining their separation pay from SMC's main office in Manila.

Convinced by the representations and importunings of SMC, respondents, who had been employees of SMC
since the 1960s, availed of the retrenchment program at various times in 1981, 1982 and 1983. After their
inclusion in the retrenchment program, respondents were given their termination letters and separation pay. In
return, respondents executed "receipt and release" documents in favor of SMC.

Sometime in May of 1986, respondents got hold of an SMC publication allegedly revealing that SMC was never
in financial distress during the time when they were being retrenched but was, in fact, enjoying a growth in sales.
Respondents also learned that, during their retrenchment, SMC was engaged in hiring new employees. Thus,
respondents concluded that SMC's financial distress story and retrenchment program were merely schemes to
rid itself of regular employees and, thus, avoid the payment of their actual benefits.

On 17 October 1988, respondents filed a complaint before the Regional Arbitration Branch No. VII of the National
Labor Relations Commission (NLRC) for the declaration of nullity of the retrenchment program. In their
complaint, respondents alleged that they were former regular employees of SMC who were deceived into
severing their employment due to SMC's concocted financial distress story and fraudulent retrenchment
program. Respondents prayed for reinstatement, backwages and damages. On 25 July 1989, the Labor Arbiter
dismissed the complaint on the ground of prescription, stating:

ART. 291. Money claims. — All money claims arising from employer-employee relations accruing during
the effectivity of this Code, shall be filed within three (3) years from the time the cause of action accrued;
otherwise they shall be forever barred. . .

Even if this Office were to apply the more liberal interpretation of the above provisions enunciated by
the Honorable Supreme Court in the case of Callanta vs. Carnation Phils., Inc., G.R. No. 70615, Nov. 3,
1986, an interpretation that views illegal dismissal as an inquiry upon the rights of a person, hence, under
Article 1146 of the Civil Code prescribes in 4 years, those who were retrenched in 1983, at the very latest,
had only until 1987 to institute a complaint against SMC.

The records will show that all the above captioned cases were filed in 1988.

Respondents then appealed to the NLRC which, on 20 December 1990, dismissed the appeal and affirmed the
decision of the labor arbiter.

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On 14 December 1993, respondents, who were thirty-one (31) in number, again filed a complaint against SMC,
but this time before the Regional Trial Court of Cebu City, Branch 19. Although their complaint was captioned as
an action for damages, respondents sought the declaration of nullity of their so-called collective "contract of
termination" with SMC. Respondents theorized that SMC's offer of retrenchment and their acceptance of the
same resulted in the consummation of a collective "contract of termination" between themselves and SMC.
Respondents asserted that since the cause of their "contract of termination" was non-existent, i.e., the claim of
SMC that it was under 􏰀nancial distress, the said contract is null and void.

Instead of filing an answer, SMC filed a motion to dismiss on the bases of lack of jurisdiction, res judicata,
payment, prescription and failure to state a cause of action. On 21 June 1994, the RTC issued a resolution granting
SMC's motion to dismiss on the grounds of lack of jurisdiction and prescription.

Respondents seasonably appealed to the Court of Appeals (CA). In its Decision dated 16 May 1996, the CA
reversed and set aside the lower court's order of dismissal and remanded the case to the RTC for further
proceedings. The pertinent portion of the decision reads:

A scrutiny of the allegations of the present complaint reveals that plaintiffs' cause of action is not actually
based on an employer-employee relationship between the plaintiffs and the defendants. It primarily
involves a civil dispute arising from the claim of plaintiffs that the cause for the contract of termination
of their services is inexistent rendering said contract as null and void from the beginning. . . .

SMC filed a motion for reconsideration but was denied in the CA's Resolution dated 14 November 1996. Hence,
this petition

ISSUE:

WON THE CAUSE OF ACTION OF THE RESPONDENTS ARE NOT ACTUALLY BASED ON AN EMPLOYER-EMPLOYEE
RELATIONSHIP WHEN THE COMPLAINT SHOWS THAT THE RESPONDENTS ARE CLAIMING TO HAVE BEEN
UNJUSTLY SEPARATED FROM THEIR REGULAR EMPLOYMENTS. NO

HELD:

NO, it is based on employer-employee relationship.

The demarcation line between the jurisdiction of regular courts and labor courts over cases involving workers
and their employers has always been the subject of dispute. We have recognized that not all claims involving
such groups of litigants can be resolved solely by our labor courts. 7 However, we have also admonished that the
present trend is to refer worker-employer controversies to labor courts, unless unmistakably provided by the
law to be otherwise. 8 Because of this trend, jurisprudence has developed the "reasonable causal connection
rule." Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of our labor courts. 9 In the absence of such nexus, it
is the regular courts that have jurisdiction.

The jurisdiction of labor courts is provided under Article 217 of the Labor Code, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under this
Code the Labor Arbiter 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
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 absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:

 Unfair labor practice cases;

 Termination disputes
 If accompanied with a claim for reinstatement, those cases that workers may <le involving wages,
rates of pay, hours of work and other terms and conditions of employment;
 Claims for actual, moral, exemplary and other forms of damages arising from employer-employee
relations;
 Cases arising from any violation of Article 264 of this Code including questions involving the legality
of strikes and lockouts; and
 Except claims for Employees Compensation, Social Security, Medicare and maternity bene<ts, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding <ve 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 arising from the interpretation or implementation of collective bargaining agreements 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.

With regard to claims for damages under paragraph 4 of the above article, this Court has observed that:

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 the present case, while respondents insist that their action is for the declaration of nullity of their "contract of
termination," what is inescapable is the fact that it is, in reality, an action for damages emanating from employer-
employee relations. First, their claim for damages is grounded on their having been deceived into serving their
employment due to SMC's concocted financial distress and fraudulent retrenchment program — a clear case of
illegal dismissal. Second, a comparison of respondents' complaint for the declaration of nullity of the
retrenchment program before the labor arbiter and the complaint for the declaration of nullity of their "contract
of termination" before the RTC reveals that the allegations and prayer of the former are almost identical with
those of the latter except that the prayer for reinstatement was no longer included and the claim for backwages
and other bene<ts was replaced with a claim for actual damages. These are telltale signs that respondents' claim
for damages is intertwined with their having been separated from their employment without just cause and,
consequently, has a reasonable causal connection with their employer-employee relations with SMC.
Accordingly, it cannot be denied that respondents' claim falls under the jurisdiction of the labor arbiter as
provided in paragraph 4 of Article 217.

Respondent's assertion that their action is for the declaration of nullity of their "contract of termination" is
merely an ingenious way of presenting their actual action, which is a claim for damages grounded on their having
been illegal terminated.

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The Court is aware that the Civil Code provisions on contracts and damages may be used as bases for addressing
the claim of respondents. However, the fact remains that the present action primarily involves an employer-
employee relationship. The damages incurred by respondents as a result of the alleged fraudulent retrenchment
program and the allegedly defective "contract of termination" are merely the civil aspect of the injury brought
about by their illegal dismissal.

In Associated Citizens Bank vs. Japson, 15 we held: For the unlawful termination of employment, this Court in
Primero v. Intermediate Appellate Court, supra, ruled that the Labor Arbiter had the exclusive and original
jurisdiction over claims for moral and other forms of damages, so that the employee in the proceedings before
the Labor Arbiter should prosecute his claims not only for reliefs speci<ed under the Labor Code but also for
damages under the Civil Code. This is because an illegally dismissed employee has only a single cause of action
although the act of dismissal may be a violation not only the Labor Code but also of the Civil Code. For a single
cause of action, the dismissed employee cannot institute a separate action before the Labor Arbiter for
backwages and reinstatement and another action before the regular court for the recovery of moral and other
forms of damages because splitting a single cause of action is procedurally unsound and obnoxious to the orderly
administration of justice.

KAWACHI VS DEL QUERO

FACTS:

private respondent Dominie Del Quero charged A/J Raymundo Pawnshop, Inc., Virgilio Kawachi and petitioner
Julius Kawachi with illegal dismissal, non-execution of a contract of employment, violation of the minimum wage
law, and non-payment of overtime pay. The complaint was filed before the National Labor Relations Commission
(NLRC).

The complaint essentially alleged that Virgilio Kawachi hired private respondent as a clerk of the pawnshop and
that on certain occasions, she worked beyond the regular working hours but was not paid the corresponding
overtime pay.

The complaint also narrated an incident on 10 August 2002, wherein petitioner Julius Kawachi scolded private
respondent in front of many people about the way she treated the customers of the pawnshop and afterwards
terminated private respondent's employment without affording her due process.

On 7 November 2002, private respondent Dominie Del Quero Dled an action for damages against petitioners
Julius Kawachi and Gayle Kawachi before the MeTC of Quezon City.

Petitioners moved for the dismissal of the complaint on the grounds of lack of jurisdiction and forum-shopping
or splitting causes of action. At Drst, the MeTC granted petitioners' motion and ordered the dismissal of the
complaint for lack of jurisdiction in an Order dated 2 January 2003. 4 Upon private respondent's motion, the
MeTC reconsidered and set aside the order of dismissal in an Order dated 3 March 2003. 5 It ruled that no causal
connection appeared between private respondent's cause of action and the employer-employee relations
between the parties.

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RTC issued the assailed Resolution, upholding the jurisdiction of the MeTC over private respondent's complaint
for damages.

The RTC held that private respondent's action for damages was based on the alleged tortious acts committed by
her employers and did not seek any relief under the Labor Code. The RTC cited the pronouncement in Medina,
et al. v. Hon. Castro-Bartolome, etc., et al. where the Court held that the employee's action for damages based
on the slanderous remarks uttered by the employer was within the regular courts' jurisdiction since the
complaint did not allege any unfair labor practice on the part of the employer.

ISSUE:

WON the regular courts have jurisdiction over the case. NO

HELD:

Petitioners argue that the NLRC has jurisdiction over the action for damages because the alleged injury is work-
related. They also contend that private respondent should not be allowed to split her causes of action by Dling
the action for damages separately from the labor case.

Private respondent maintains that there is no causal connection between her cause of action and the employer-
employee relations of the parties.

The jurisdictional controversy of the sort presented in this case has long been settled by this Court.

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.

In the case of San Miguel Corp, the Court noted further, jurisprudence has developed the "reasonable causal
connection rule." Under this rule, if there is a reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of our labor courts. In the absence of such
nexus, it is the regular courts that have jurisdiction.

The "reasonable causal connection rule" emerged in the 1987 case of Primero v. Intermediate Appellate Court,
15 where the Court recognized the jurisdiction of the labor arbiters over claims for damages in connection with
termination of employment, thus:

It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the
legality of the manner by which that act of dismissal was performed. But while the Labor Code treats of
the nature of, and the remedy available as regards the Drst — the employee's separation from
employment — it does not at all deal with the second — the manner of that separation — which is
governed exclusively by the Civil Code. In addressing the Drst issue, the Labor Arbiter applies the Labor
Code; in addressing the second, the Civil Code. And this appears to be the plain and patent intendment
of the law. For apart from the reliefs expressly set out in the Labor Code Mowing from illegal dismissal
from employment, no other damages may be awarded to an illegally dismissed employee other than
those speciDed by the Civil Code.

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In the instant case, the allegations in private respondent's complaint for damages show that her injury was the
offshoot of petitioners' immediate harsh reaction as her administrative superiors to the supposedly sloppy
manner by which she had discharged her duties. Petitioners' reaction culminated in private respondent's
dismissal from work in the very same incident. Clearly, the alleged injury is directly related to the employer-
employee relations of the parties.

Where the employer-employee relationship is merely incidental and the cause of action proceeds from a
different source of obligation, the Court has not hesitated to uphold the jurisdiction of the regular courts. Where
the damages claimed for were based on tort, malicious prosecution, or breach of contract, as when the claimant
seeks to recover a debt from a former employee or seeks liquidated damages in the enforcement of a prior
employment contract, the jurisdiction of regular courts was upheld. The scenario that obtains in this case is
obviously different. The allegations in private respondent's complaint unmistakably relate to the manner of her
alleged illegal dismissal.

For a single cause of action, the dismissed employee cannot be allowed to sue in two forums: one, before the
labor arbiter for reinstatement and recovery of back wages or for separation pay, upon the theory that the
dismissal was illegal; and two, before a court of justice for recovery of moral and other damages, upon the theory
that the manner of dismissal was unduly injurious or tortious. Suing in the manner described is known as
"splitting a cause of action," a practice engendering multiplicity of actions.

In the instant case, the NLRC has jurisdiction over private respondent's complaint for illegal dismissal and
damages arising therefrom. She cannot be allowed to Dle a separate or independent civil action for damages
where the alleged injury has a reasonable connection to her termination from employment. Consequently, the
action for damages filed before the MeTC must be dismissed.

EVIOTA VS CA

FACTS:

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 Bene:ts
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 :led a complaint against the petitioner with the RTC of Makati City. The
respondent bank alleged inter alia in its complaint that:

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 o=cers, and forced the Bank to hire the services of a third party to perform the job he was
hired to do.

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 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 con:dential
information on employee compensation and other Bank matters, such as the salary schedule of all
Corporate and Institutional Banking o=cers and photocopies of schedules of benefits provided
expatriates being employed by the Bank.

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 Bank's purchase of the Honda CR-
V for his use.

13. Eviota never complied with the Bank's demand that he reimburse the latter for the other expenses
incurred on his account, amounting to P360,562.12

First Cause of Action. Eviota's 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.

Second Cause of Action . 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 speci:cally
provides that: "Your [i.e., Eviota's] employment may be terminated by either party giving notice of at least one
month."

Third Cause of Action 16. Eviota's false and derogatory statements that the Bank had failed to deliver what it had
purportedly promised have besmirched the Bank's reputation and depicted it as a contract violator and one
which does not treat its employees properly. These derogatory statements have injured the Bank's business
standing in the banking community, and have undermined the Bank's ability to recruit and retain the best
personnel. Hence, plaintiff is entitled to moral damages of at least P2,000,000.00.

The petitioner :led 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 bank's 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 petitioner's acts and
omissions which are separately, specifically and distinctly governed by the New Civil Code.

trial court issued an order denying the petitioner's motion to dismiss, ratiocinating that the primary relief prayed
for by the 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:

CA promulgated a decision dismissing the petition, holding that the trial court and not the Labor Arbiter had
exclusive jurisdiction over the action of the respondent bank. It held that the latter's claims for damages were
grounded on the petitioner's sudden and unceremonious severance of his employment with the respondent
bank barely a month after assuming office.

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ISSUE:

WON there the regular courts have jurisdiction over the case. YES

HELD:

Not every controversy or money claim by an employee against the employer or viceversa 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.

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. Paño, 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 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 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.

The claims were the natural consequences Nowing from a breach of an obligation, intrinsically civil in nature.

I n 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 this case, the private respondent's :rst cause of action for damages is anchored on the petitioner's
employment of deceit and of making the private respondent believe that he would ful:ll 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 o=ce and rejoined his former employer; thus, forcing the private respondent
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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 respondent's computer diskette,
papers and documents containing con:dential 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 respondent's causes of action 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.

INDOPHIL TEXTILE MILLS, INC. , petitioner, vs . ENGR. SALVADOR ADVIENTO ,

respondent.

FACTS:

Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of manufacturing thread
for weaving. On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer to
maintain its facilities in Lambakin, Marilao, Bulacan.

On August 7, 2002, respondent consulted a physician due to recurring weakness and dizziness. Few days later,
he was diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate, severe and persistent Allergic
Rhinitis. Accordingly, respondent was advised by his doctor to totally avoid house dust mite and textile dust as it
will transmute into health problems.

Distressed, respondent filed a complaint against petitioner with the National Labor Relations Commission (NLRC),
San Fernando, Pampanga, for alleged illegal dismissal and for the payment of backwages, separation pay, actual
damages and attorney's fees.

Subsequently, respondent filed another Complaint with the Regional Trial Court (RTC) of Aparri, Cagayan, alleging
that he contracted such occupational disease by reason of the gross negligence of petitioner to provide him with
a safe, healthy and workable environment.

According to respondent, these health hazards have been the persistent complaints of most, if not all, workers
of petitioner. Nevertheless, said complaints fell on deaf ears as petitioner callously ignored the health problems
of its workers and even tended to be apathetic to their plight, including respondent.

Respondent averred that, being the only breadwinner in the family, he made several attempts to apply for a new
job, but to his dismay and frustration, employers who knew of his present health condition discriminated against

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him and turned down his application. By reason thereof, respondent suffered intense moral suffering, mental
anguish, serious anxiety and wounded feelings,

RTC issued a Resolution denying the aforesaid Motion and sustaining its jurisdiction over the instant case. It held
that petitioner's alleged failure to provide its employees with a safe, healthy and workable environment is an act
of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the LA under Article 217 of the
Labor Code. On the matter of dismissal based on lis pendencia, the RTC ruled that the complaint before the NLRC
has a different cause of action which is for illegal dismissal and prayer for backwages, actual damages, attorney's
fees and separation pay due to illegal dismissal while in the present case, the cause of action is for quasi-delict.

CA rendered a Decision 27 dated May 30, 2005 dismissing petitioner's Petition for lack of merit,

ISSUE;

WON the RTC has jurisdiction over the subject matter of respondent's complaint praying for moral damages,
exemplary damages, compensatory damages, anchored on petitioner's alleged gross negligence in failing to
provide a safe and healthy working environment for respondent. YES

HELD:

The delineation between the jurisdiction of regular courts and labor courts over cases involving workers and their
employers has always been a matter of dispute. It is up to the Courts to lay the line after careful scrutiny of the
factual milieu of each case. Here, we find that jurisdiction rests on the regular courts.

The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended by Section 9 of
Republic Act (R.A.) No. 6715, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided under
this Code the Labor Arbiter 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 @le 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 employer-employee
relations ;

5. Cases arising from any violation of Article 264 of this Code including questions involving the legality of
strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity bene@ts, all
other claims, arising from employer-employee relations, including those of persons in domestic or
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 household service, involving an amount exceeding P5,000.00) regardless of whether accompanied with
a claim for reinstatement.

While we have upheld the present trend to refer worker-employer controversies to labor courts in light of the
aforequoted provision, we have also recognized that not all claims involving employees can be resolved solely
by our labor courts, specifically when the law provides otherwise. For this reason, we have formulated the
"reasonable causal connection rule", wherein if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts; and
in the absence thereof, it is the regular courts that have jurisdiction. Such distinction is apt since 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.

In fact, as early as Medina vs. Hon. Castro-Bartolome, 39 in negating the jurisdiction of the LA, although the
parties involved were an employer and two employees, the Court succinctly held that:

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a
simple action for damages for tortious 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.

Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc . that not all disputes between an employer
and his employees fall within the jurisdiction of the labor tribunals such that when the claim for damages is
grounded on the "wanton failure and refusal" without just cause of an employee to report for duty despite
repeated notices served upon him of the disapproval of his application for leave of absence, the same falls within
the purview of Civil Law, to wit:

As early as Singapore Airlines Limited v. Paño , we established that not all disputes between an employer
and his employee(s) fall within the jurisdiction of the labor tribunals . We differentiated between
abandonment per se and the manner and consequent effects of such abandonment and ruled that the
first, is a labor case, while the second, is a civil law case.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to
the civil Courts . While seemingly petitioner's claim for damages arises from employer-employee
relations, and the latest amendment to Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130
provides that all other claims arising from employer-employee relationship are cognizable by Labor
Arbiters [citation omitted], in essence, petitioner's claim for damages is grounded on the " wanton failure
and refusal" without just cause of private respondent Cruz to report for duty despite repeated notices
served upon him of the disapproval of his application for leave of absence without pay. This, coupled
with the further averment that Cruz " maliciously and with bad faith" violated the terms and conditions
of the conversion training course agreement to the damage of petitioner removes the present
controversy from the coverage of the Lab or Co de and brings it within the purview of Civil Law .

Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his
job — as the latter was not required in the Complaint to report back to work — but on the manner and
consequent effects of such abandonment of work translated in terms of the damages which petitioner
had to suffer . . . . .

Labrel Cases
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Indeed, jurisprudence has evolved the rule that claims for damages under Article 217 (a) (4) of the Labor Code,
to be cognizable by the LA, 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.

True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the acts
complained of appear to constitute matters involving employee-employer relations since respondent used to be
the Civil Engineer of petitioner. However, it should be stressed that respondent's claim for damages is specifically
grounded on petitioner's gross negligence to provide a safe, healthy and workable environment for its employees
— a case of quasi-delict.

In addition, respondent alleged that despite his earnest efforts to suggest to management to place roof insulation
to minimize, if not, eradicate the health hazards attendant in the workplace, the same was not heeded

In this case, a perusal of the complaint would reveal that the subject matter is one of claim for damages arising
from quasi-delict, which is within the ambit of the regular court's jurisdiction.

The pertinent provision of Article 2176 of the Civil Code which governs quasi-delict provides that: Whoever by
act or omission causes damage to another, there being fault or negligence , is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called quasi-
delict.

Thus, to sustain a claim liability under quasi-delict, the following requisites must concur: (a) damages suffered
by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must respond;
and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages
incurred by the plaintiff.

In the case at bar, respondent alleges that due to the continued and prolonged exposure to textile dust seriously
inimical to his health, he suffered work-contracted disease which is now irreversible and incurable, and deprived
him of job opportunities. Clearly, injury and damages were allegedly suffered by respondent, an element of
quasi-delict. Secondly, the previous contract of employment between petitioner and respondent cannot be used
to counter the element of "no pre-existing contractual relation" since petitioner's alleged gross negligence in
maintaining a hazardous work environment cannot be considered a mere breach of such contract of
employment, but falls squarely within the elements of quasi-delict under Article 2176 of the Civil Code since the
negligence is direct, substantive and independent.

It also bears stressing that respondent is not praying for any relief under the Labor Code of the Philippines. He
neither claims for reinstatement nor backwages or separation pay resulting from an illegal termination. The
cause of action herein pertains to the consequence of petitioner's omission which led to a work-related disease
suffered by respondent, causing harm or damage to his person. Such cause of action is within the realm of Civil
Law, and jurisdiction over the controversy belongs to the regular courts.

in Portillo, to wit: “It is clear, therefore, that while Portillo's claim for unpaid salaries is a money claim that arises
out of or in connection with an employer-employee relationship, Lietz Inc.'s claim against Po rtillo for violation
of the goodwill clause is a money claim based on an act done after the cessation of the employment relationship.
And, while the jurisdiction over Po rtillo's claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.'s
claim rests on the regular courts .”

Labrel Cases
Lee
Where the 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, such claim
falls outside the area of competence of expertise ordinarily ascribed to the LA and the NLRC.

Labrel Cases
Lee