Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No.178055 July 2, 2014

AMECOS INNOVATIONS, INC. and ANTONIO F. MATEO, Petitioners,

vs.
ELIZA R. LOPEZ, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are the March 22, 2007 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 96959 which affirmed the June 30, 2006 Decision3 of the Regional
Trial Court (RTC) of Caloocan City, Branch 121, dismissing the Complaint4 for lack of jurisdiction,
and its May 23, 2007 Resolution5 denying petitioners' Motion for Reconsideration.6

Factual Antecedents

Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under Philippine
laws engaged in the business of selling assorted products created by its President and herein co-
petitioner, Antonio F. Mateo (Mateo). On May 30, 2003, Amecos received a Subpoena7 from the
Office of the City Prosecutor of Quezon City in connection with a complaint filed by the Social
Security System (SSS) for alleged delinquency in the remittance of SSS contributions and penalty
liabilities in violation of Section 22(a) and 22(d) in relation to Section 28(e) of the SSS law, as
amended.

By way of explanation, Amecos attributed its failure to remit the SSS contributions to herein
respondent Eliza R. Lopez (respondent). Amecos claimed that it hired respondent on January 15,
2001 as Marketing Assistant to promote its products; that upon hiring, respondent refused to provide
Amecos with her SSS Number and to be deducted her contributions; that on the basis of the
foregoing, Amecos no longer enrolled respondent with the SSS and did not deduct her
corresponding contributions up to the time of her termination in February 2002.

Amecos eventually settled its obligations with the SSS; consequently, SSS filed a Motion to
Withdraw Complaint8 which was approved by the Office of the City Prosecutor.9

Thereafter, petitioners sent a demand letter10 to respondent for ₱27,791.65 representing her share in
the SSS contributions and expenses for processing, but to no avail. Thus, petitioners filed the instant
Complaint for sum of money and damages against respondent docketed as Civil Case No. 04-27802
and raffled to Branch 51 of the Metropolitan Trial Court (MeTC) of Caloocan City. Petitioners claimed
that because of respondent’s misrepresentation, they suffered actual damages in the amount of
₱27,791.65 allegedly incurred by Amecos by way of settlement and payment of its obligations with
the SSS.11 Mateo also allegedly suffered extreme embarrassment and besmirched reputation as a
result of the filing of the complaint by the SSS. Hence they prayed for ₱50,000.00 as moral
damages, ₱50,000.00 as exemplary damages, ₱50,000.00 as attorney’s fees, and costs of the suit.

Respondent filed her Answer with Motion to Dismiss12 claiming that she was formerly an employee of
Amecos until her illegal dismissal in February 2002; that Amecos deliberately failed to deduct and
remit her SSS contributions; and that petitioners filed the instant Complaint in retaliation to her filing
of an illegal dismissal case. Respondent also averred that the regular courts do not have jurisdiction
over the instant case as it arose out of their employer-employee relationship.

The parties then submitted their respective Position Papers.13

Ruling of the Metropolitan Trial Court

On March 24, 2006, the MeTC issued its Decision,14 which decreed as follows:
All viewed from the foregoing, the court hereby dismisses the complaint for lack of jurisdiction.

SO ORDERED.15

Ruling of the Regional Trial Court

Petitioners appealed to the RTC. On June 30, 2006, the RTC rendered its Decision16 disposing as
follows:

WHEREFORE, premises considered, the instant appeal is accordingly DISMISSED for lack of merit.

SO ORDERED.17

The RTC affirmed the view taken by the MeTC that under Article 217(a)(4) of the Labor
Code,18 claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relationship are under the jurisdiction of the Labor Arbiters or the National Labor Relations
Commission (NLRC); that since petitioners and respondent were in an employer-employee
relationship at the time, the matter of SSS contributions was thus an integral part of that relationship;
and as a result, petitioners’ cause of action for recovery of damages from respondent falls under the
jurisdiction of the Labor Arbiters, pursuant to Article 217(a)(4) of the Labor Code.

Petitioners filed a Motion for Reconsideration19 which the RTC denied.20

Ruling of the Court of Appeals

Petitioners thus instituted a Petition for Review21 with the CA claiming that the RTC seriously erred in
sustaining the dismissal of the Complaint by the MeTC on the ground of lack of jurisdiction. On
March 22, 2007, the CA rendered the assailed Resolution, viz:

ACCORDINGLY, the petition for review is DENIED DUE COURSE and this case is DISMISSED.

SO ORDERED.22

Finding no error in the Decision of the RTC, the CA held that:

x x x The matter of whether the SSS employer’s contributive shares required of the petitioners to be
paid due to the complaint of the respondent necessarily flowed from the employer-employee
relationship between the parties. As such, the lower courts were correct in ruling that jurisdiction
over the claim pertained to the Labor Arbiter and the National Labor Relations Commission, not to
the regular courts, even if the claim was initiated by the employer against the employee.23

Petitioners moved to reconsider, but in the second assailed Resolution24 dated May 23, 2007, the CA
denied petitioners’ Motion for Reconsideration.25 Hence, the instant Petition.

Issues

The issues raised in this Petition are:

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE
NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR
REIMBURSEMENT ARISING FROM EMPLOYER-EMPLOYEE RELATIONS.

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE
NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR
DAMAGES FOR MISREPRESENTATION ARISING FROM EMPLOYER-EMPLOYEE
RELATIONS.26

Petitioners’ Arguments

In praying that the assailed CA Resolutions be set aside, petitioners argue that their Complaint is
one for recovery of a sum of money and damages based on Articles 19,27 22,28 and 215429 of the Civil
Code; that their cause of action is based on solutio indebitior unjust enrichment, which arose from
respondent’s misrepresentation that there was no need to enroll her with the SSS as she was
concurrently employed by another outfit, Triple A Glass and Aluminum Company, and that she was
self-employed as well. They argue that the employer-employee relationship between Amecos and
respondent is merely incidental, and does not necessarily place their dispute within the exclusive
jurisdiction of the labor tribunals; the true source of respondent’s obligation is derived from Articles
19, 22, and 2154 of the Civil Code. They add that by reason of their payment of respondent’s
counterpart or share in the SSS premiums even as it was not their legal obligation to do so,
respondent was unjustly enriched, for which reason she must return what petitioners paid to the
SSS.

Petitioners cite the pronouncements of the Court to the effect that where the employer-employee
relationship is merely incidental and the cause of action proceeds from a different source of
obligation, such as tort, malicious prosecution or breach of contract, the regular courts have
jurisdiction;30 that when the cause of action is based on Articles 19 and 21 of the Civil Code, the case
is not cognizable by the labor tribunals;31 that money claims of workers which 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;32 and that when a person unjustly
retains a benefit to the loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience, a case of solutio indebiti
arises.33

Respondent’s Arguments

Respondent, on the other hand, maintains that jurisdiction over petitioners’ case lies with the Labor
Arbiter, as their cause of action remains necessarily connected to and arose from their employer-
employee relationship. At any rate, respondent insists that petitioners, as employers, have the legal
duty to enroll her with the SSS as their employee and to pay or remit the necessary contributions.

Our Ruling

The Court denies the Petition.

This Court holds that as between the parties, Article 217(a)(4) of the Labor Code is applicable. Said
provision bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages
arising from employer-employee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the parties – shared by the
lower courts and the CA – is correct; thus, petitioners’ claims should have been referred to the labor
tribunals. In this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to award
not only the reliefs provided by labor laws, but also damages governed by the Civil Code."34

At the same time, it cannot be assumed that since the dispute concerns the payment of SSS
premiums, petitioners’ claim should be referred to the Social Security Commission (SSC) pursuant to
Republic Act No. 1161, as amended by Republic Act No. 8282.35 As far as SSS is concerned, there
is no longer a dispute with respect to petitioners’ accountability to the System; petitioners already
settled their pecuniary obligations to it. Since there is no longer any dispute regarding coverage,
benefits, contributions and penalties to speak of, the SSC need not be unnecessarily dragged into
the picture.36 Besides, it cannot be made to act as a collecting agency for petitioners’ claims against
the respondent; the Social Security Law should not be so interpreted, lest the SSC be swamped with
cases of this sort.

At any rate, it appears that petitioners do not have a cause of action against respondent. The
Complaint in Civil Case No. 04-27802 reads in part:

STATEMENT OF FACTS AND CAUSES OF ACTION

4. On or about 15 January 2001, [petitioners] hired [respondent] as a Marketing Assistant to

promote the products of [petitioners].

5. Immediately, [respondent] represented that she had other gainful work and that she was
also self-employed for which reason, she refused to divulge her [SSS] Number and refused
to be deducted her share in the [SSS] contributions. In her bio-data submitted to [petitioners],
she did not even indicate her SSS [N]umber. x x x [These] representations were later found
out to be untrue and [respondent]knew that.
 6. Misled by such misrepresentation, [petitioners’] employees no longer deducted her
corresponding SSS contributions up to the time of her termination from employment on or
about 18 February 2002.

7. On or about 30 May 2003, to the unpleasant surprise and consternation of [petitioner]

Mateo, he received a Subpoena x x x pursuant to a criminal complaint against [petitioner] Dr.
Antonio Mateo for alleged un-remitted SSS Contributions including that corresponding to the
[respondent]. Upon subsequent clarification with the Social Security System, only that portion
corresponding to the [respondent’s] supposed unremitted contribution remained as the
demandable amount. The total amount demanded was ₱18,149.95. x x x

8. On or about 24 July 2003, [petitioner] Mateo had to explain to the Social Security System
the circumstances as to why no contributions reflected for [respondent]. x x x

9. On or about 31 July 2003, [petitioners] had to pay the Social Security System the amount
of ₱18,149.95 including the share which should have been deducted from [respondent] in the
amount of ₱12,291.62. x x x

10. With this development, some of [petitioners’] employees felt troubled and started to doubt
x x x whether or not their SSS contributions were being remitted or paid by the [petitioners].
[Petitioner] Mateo had to explain to them why there was an alleged deficiency in SSS
contributions and had to assure them that their contributions were properly remitted.

11. As a result of these events, [petitioner] Mateo, for days, felt deep worry and fear leading
to sleepless nights that the Social Security System might prosecute him for a possible
criminal offense.

12. [Petitioner] Mateo also felt extreme embarrassment and besmirched reputation as he,
being a recognized inventor, a dean of a reputable university and a dedicated teacher, was
made the butt of ridicule and viewed as a shrewd businessman capitalizing on even the SSS
contributions of his employees. x x x

13. On or about 15 January 2004, in order to [recover] what is due [petitioners], they sent a
demand letter to [respondent] for her to pay the amount of ₱27,791.65 as her share in the
SSS contributions and other expenses for processing. x x x

14. This demand, however, fell on deaf ears as [respondent] did not pay and has not paid to
date the amount of her share in the SSS contributions and other amounts demanded.

15. For such malicious acts and the suffering befalling [petitioner] Mateo, [respondent] is
liable for moral damages in the amount of FIFTY THOUSAND PESOS (₱50,000.00).

16. For having made gross misrepresentation, she is liable for exemplary damages in the
amount of FIFTY THOUSAND PESOS (₱50,000.00) to serve as a warning for the public not
to follow her evil example.

17. As [petitioners] were compelled to file the instant suit to protect and vindicate [their] right
and reputation, [respondent] should also be held liable for attorney’s fees in the amount of
FIFTY THOUSAND PESOS (₱50,000.00) in addition to the costs of this suit.

PRAYER

[Petitioners] respectfully [pray] that a judgment, in [their] favor and against [respondent], be rendered
by this Honorable Court, ordering [respondent]:

1. To pay the amount due of TWENTY SEVEN THOUSAND SEVEN HUNDRED

NINETY ONE AND 65/100 (₱27,791.65) representing her share in the SSS
contributions and processing costs, with interest, at legal rate, from the time of the
filing of this Complaint;

2. To pay FIFTY THOUSAND PESOS (₱50,000.00) for moral damages;

3. To pay FIFTY THOUSAND PESOS (₱50,000.00) for exemplary damages;

 4. To pay FIFTY THOUSAND PESOS (₱50,000.00) as attorney’s fees;

5. To pay the costs of this suit.

[Petitioners] further [pray] for such other relief as are just and equitable under the circumstances.37

In fine, petitioners alleged that respondent misrepresented that she was simultaneously employed by
another company; consequently, they did not enroll her with the SSS or pay her SSS contributions.
Likewise, when petitioners eventually paid respondent’s SSS contributions as a result of the filing of
a complaint by the SSS, respondent was unjustly enriched because the amount was not deducted
from her wages in Amecos.

The evidence, however, indicates that while respondent was employed, Amecos did not remit
premium contributions – both employer and employees’ shares – to the SSS; the SSS demand
letter38 sent to it covers non-payment of SSS premium contributions from January 2001 up to April
2002, amounting to ₱85,687.84.39 The Amecos payroll40 covering the period from January 30 to
November 29, 2001 likewise shows that no deductions for SSS contributions were being made from
respondent’s salaries. This can only mean that during the period, Amecos was not remitting SSS
contributions – whether the employer or employees’ shares – pertaining to respondent. As such,
during her employment with Amecos, respondent was never covered under the System as SSS did
not know in the first instance that petitioners employed her, since the petitioners were not remitting
her contributions. Petitioners were forced to remit monthly SSS contributions only when SSS filed
I.S. No. 03-6068 with the Quezon City Prosecutor’s Office. By that time, however, respondent was
no longer with Amecos, as her employment was terminated sometime in mid-February of 2002.

Given the above facts, it is thus clear that petitioners have no cause of action against the respondent
in Civil Case No. 04-27802. Since Amecos did not remit respondent’s full SSS contributions, the
1âw phi1

latter was never covered by and protected under the System. If she was never covered by the
System, certainly there is no sense in making her answerable for the required contributions during
the period of her employment. And it follows as a matter of consequence that claims for other
damages founded on the foregoing non-existent cause of action should likewise fail.

WHEREFORE, premises considered, the Petition is DENIED. The assailed March 22, 2007 and the
May 23, 2007 Resolutions of the Court of Appeals in CA-G.R. SP No. 96959 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

MARVIC MARIO VICTOR F. LEONEN*

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice