Encarnacion vs. Dynasty Amusement Center Corporation

A claim for damages arising from acts attributed to an employer while the claimant was still an employee falls within the exclusive jurisdiction of Labor Arbiters, and the curative statute (Presidential Decree No. 1691) that transferred such jurisdiction from the regular courts to labor agencies applies retrospectively to pending proceedings.

Petitioner Rodolfo Encarnacion was employed in 1975 as a projectionist by respondent Dynasty Amusement Center Corporation, of which respondents Lorenzo Co and Lucisno Tan were officers. At the time the complaint was filed, jurisdiction over labor-related money claims was governed by Presidential Decree No. 1367, which vested in Labor Arbiters exclusive jurisdiction over cases arising from employer-employee relations but excluded claims for moral or other forms of damages. During the pendency of the case, Presidential Decree No. 1691 amended the jurisdictional scheme, vesting exclusively in Labor Arbiters jurisdiction over all money claims, including claims for damages arising from or in connection with employer-employee relations.

In 1975, petitioner Rodolfo Encarnacion was employed as a projectionist by respondent Dynasty Amusement Center Corporation, of which respondents Lorenzo Co and Lucisno Tan served as officers. On September 29, 1978, Encarnacion filed a complaint for damages with the then Court of First Instance of Manila, Branch XI, presided over by Judge Elias B. Asuncion. He alleged that he had been suspended or disallowed from working and that he had been subjected to harassment and slanderous accusations by his employer.

Respondents promptly filed a motion to dismiss on the ground that the court lacked jurisdiction over the nature of the case, it being a labor dispute pertaining exclusively to the National Labor Relations Commission. Without waiting for the court to resolve the motion, respondents filed their answer dated October 16, 1978, asserting that the suspension was a valid management prerogative to impose discipline among employees, a right recognized under the New Labor Code of the Philippines.

On October 24, 1978, the trial court issued an order dismissing the case for lack of jurisdiction over the nature of the action. Encarnacion's subsequent motion for reconsideration was denied by the court a quo on November 20, 1978, prompting the instant appeal.

• Nature of the Action: Petitioner maintained that the case was primarily one for damages and thus a civil dispute, not a labor case, particularly because reinstatement was not among the reliefs prayed for.
• Waiver and Estoppel: Petitioner contended that respondents had waived and were estopped from questioning the trial court's jurisdiction when they filed their answer seeking affirmative reliefs before the motion to dismiss was resolved.

• Jurisdiction: Respondents argued that the trial court had no jurisdiction over the nature of the case, as it involved a labor dispute within the exclusive jurisdiction of the National Labor Relations Commission.
• Management Prerogative: Respondents averred that the suspension of petitioner from work was a valid exercise of management prerogative to impose discipline among employees, a right recognized under the New Labor Code of the Philippines.

• Jurisdiction: Whether the Court of First Instance had jurisdiction over the petitioner's complaint for damages arising from his suspension and harassment by his employer.
• Retroactive Application of PD 1691: Whether Presidential Decree No. 1691, which vested exclusive jurisdiction over money claims including damages arising from employer-employee relations in Labor Arbiters, applies retroactively to the pending case.
• Estoppel: Whether respondents were estopped from questioning the trial court's jurisdiction by filing an answer seeking affirmative relief.

• Jurisdiction: No. The complaint for damages arose from acts attributed to the employer while the petitioner was still an employee, placing the action within the exclusive jurisdiction of Labor Arbiters under Presidential Decree No. 1691.
• Retroactive Application of PD 1691: Yes. Presidential Decree No. 1691 is a curative statute with retrospective application to pending proceedings, ousting the regular courts of jurisdiction they initially had under Presidential Decree No. 1367.
• Estoppel: No. Estoppel cannot attach to jurisdictional issues, as jurisdiction may be raised at any stage of the proceedings and can never be waived; moreover, the issue of jurisdiction was raised by respondents even before their answer was filed.

• Jurisdiction: The complaint on its face showed that the petitioner's claim for damages arose from the acts attributed to his employer while he was still an employee. An action for damages grounded on employer-employee relations is not converted into a civil dispute merely because reinstatement is not sought; an employee need not pray for reinstatement in order to file a complaint before the Labor Arbiter. The nature of the action is determined by the allegations of the complaint and the relationship from which the cause of action springs, not by the specific reliefs prayed for.

• Retroactive Application of PD 1691: When the case was filed, Presidential Decree No. 1367 governed, excluding claims for moral or other forms of damages from Labor Arbiter jurisdiction. However, the amendatory provisions of Presidential Decree No. 1691, which took effect during the pendency of the case, vested exclusive jurisdiction over all money claims, including claims for damages arising from or in connection with employer-employee relations, in Labor Arbiters. Consistent with prior rulings, Presidential Decree No. 1691 is a curative statute that corrected the jurisdictional bifurcation created by Presidential Decree No. 1367 and restored to Labor Arbiters a jurisdiction earlier vested in them. Curative statutes are given retrospective application to pending proceedings, and the rule of adherence of jurisdiction until final resolution does not apply when the change in jurisdiction is curative in character.

• Estoppel: Estoppel cannot attach to questions of jurisdiction pursuant to Section 2, Rule 9 of the Revised Rules of Court, which allows the question of competence to be raised even for the first time on appeal. Jurisdictional issues can never be waived. In any event, respondents had raised the jurisdictional question by filing a motion to dismiss before submitting their answer, so the issue was timely raised.

• Curative Statute Doctrine — A curative statute is one that corrects a prior jurisdictional defect or anomaly and is given retrospective application to pending proceedings. Presidential Decree No. 1691 was held to be a curative statute because it corrected the jurisdictional bifurcation created by Presidential Decree No. 1367, restoring to Labor Arbiters the exclusive jurisdiction over all money claims, including damages, arising from employer-employee relations. The rule of adherence of jurisdiction until final resolution does not apply when the change in jurisdiction is curative in character.

• Jurisdiction Cannot Be Waived or Conferred by Estoppel — Jurisdiction over the subject matter is determined by law and cannot be waived by the parties or conferred by estoppel. The question of competence may be raised at any stage of the proceedings, even for the first time on appeal, pursuant to Section 2, Rule 9 of the Revised Rules of Court.

• Nature of Action Determined by Allegations and Relationship — A claim for damages arising from acts attributed to an employer while the claimant was still an employee is an action arising from employer-employee relations, regardless of whether reinstatement is prayed for. An employee need not seek reinstatement in order to file a complaint before the Labor Arbiter.

• "P.D. 1691 is a curative statute which corrected the lack of jurisdiction of the Labor Arbiter at the start of the proceedings and, therefore, should be given a restrospective application to the pending proceedings." — This passage, quoted from Atlas Fertilizer Corp. vs. Navarro, articulates the controlling rationale for retroactive application of curative jurisdictional statutes to pending cases.

• "The rule of adherence of jurisdiction until a cause is finally resolved or adjudicated does not apply when the change in jurisdiction is curative in character." — Quoted from Abad vs. RTC of Manila, this formulation distinguishes the general doctrine of adherence of jurisdiction from its exception where the jurisdictional change is curative, and is frequently cited in subsequent labor jurisdiction cases.

• "estoppel cannot attach by virtue of Section 2, Rule 9 of the Revised Rules of Court, inasmuch as the question of compentencia maybe raised even for the first time on appeal, apart from the fact that jurisdiction issues can never be waived." — This passage states the ratio for rejecting the estoppel argument, grounding the holding in both procedural rules and substantive jurisdictional principles.

• Atlas Fertilizer Corp. vs. Navarro, 149 SCRA 432 — Controlling precedent directly quoted for the proposition that Presidential Decree No. 1691 is a curative statute with retrospective application to pending proceedings, resolving conflicts of jurisdiction between courts and labor agencies.
• Abad vs. RTC of Manila, 154 SCRA 664 — Followed for the principle that the rule of adherence of jurisdiction does not apply when the jurisdictional change is curative in character, and that Courts of First Instance/Regional Trial Courts no longer have jurisdiction over monetary claims of laborers.
• Ebon vs. De Guzman, 113 SCRA 52 — Cited within the Atlas Fertilizer quotation as one of the cases establishing the retrospective application of Presidential Decree No. 1691.
• Aguda vs. Vallejos, 113 SCRA 69 — Cited within the Atlas Fertilizer quotation as supporting authority for the retrospective application of Presidential Decree No. 1691.
• Sentinel Insurance Co., Inc. vs. Bautista — Cited as authority for the curative nature and retrospective application of Presidential Decree No. 1691, and for the purpose of settling jurisdictional conflicts between regular courts and labor agencies.
• Getz Corporation Phils. vs. Court of Appeals, 116 SCRA 86 — Cited as authority declaring Presidential Decree No. 1691 a curative statute with retrospective application to pending proceedings.
• PLDT vs. Dulay, 172 SCRA 33 — Cited as further authority for the retrospective application of Presidential Decree No. 1691.
• Polotan-Tuvera vs. Dayrit, 160 SCRA 423 — Cited as further authority for the retrospective application of Presidential Decree No. 1691.
• A. Consteel Construction Co., Inc. vs. Intermediate Appellate Court, G.R. No. 64673, Oct. 21, 1988 — Cited for the proposition that an employee need not seek reinstatement in order to file a complaint before the Labor Arbiter.

• Section 1, Presidential Decree No. 1367 — Amended Article 217(a) of the Labor Code to vest exclusive jurisdiction in Labor Arbiters over unfair labor practice cases, unresolved collective bargaining cases, and other cases arising from employer-employee relations, but expressly excluded claims for moral or other forms of damages from Labor Arbiter jurisdiction. This was the law in force when the complaint was filed.
• Presidential Decree No. 1691 — Amended the jurisdictional scheme by vesting exclusively in Labor Arbiters jurisdiction over all money claims, including claims for damages arising from or in connection with employer-employee relations, thereby ousting regular courts of jurisdiction over such claims. Applied retroactively as a curative statute.
• Section 2, Rule 9, Revised Rules of Court — Provides that the question of competence (jurisdiction) may be raised at any stage of the proceedings, even for the first time on appeal. Relied upon to reject the estoppel argument.

Narvasa, C.J., Padilla, Regalado, and Nocon, JJ., concurred.