International Flavors and Fragrances (Phil.), Inc. vs. Argos

A civil action for damages against an employer expressly grounded on subsidiary liability under the Revised Penal Code is premature if filed while the criminal case against the employee is pending; Article 33 of the Civil Code authorizes an independent civil action only against the employee's primary civil liability, not the employer's subsidiary liability.

International Flavors and Fragrances (Phils.), Inc. (IFFI) is a Philippine corporation; respondents Merlin J. Argos and Jaja C. Pineda were the general manager and commercial director, respectively, of its Fragrances Division. In 1992, IFFI created the office of managing director to head its Philippine operations and appointed Hernan H. Costa, a Spaniard, as managing director, with the general managers reporting directly to him. The dispute implicated Article 33 of the Civil Code, which permits an independent civil action for damages in cases of defamation, and the subsidiary civil liability of employers under the Revised Penal Code.

International Flavors and Fragrances (Phils.), Inc. (IFFI) is a corporation organized under Philippine laws. Respondents Merlin J. Argos and Jaja C. Pineda were the general manager and commercial director, respectively, of the Fragrances Division of IFFI. In 1992, IFFI created the office of managing director to head its Philippine operations, and Hernan H. Costa, a Spaniard, was appointed managing director. Consequently, the general managers reported directly to Costa.

Costa and respondents had serious differences. When the positions of the general managers became redundant, respondents agreed to the termination of their services. They signed a "Release, Waiver and Quitclaim" on December 10, 1993. On the same date, Costa issued a "Personnel Announcement" which described respondents as "persona non grata" and urged employees not to have further dealings with them.

On July 1, 1994, respondents filed a criminal complaint for libel, resulting in the filing of two Informations against Costa docketed as Criminal Case Nos. 9917 and 9918 with the Metropolitan Trial Court of Taguig, Metro Manila. On March 31, 1995, respondents filed a civil case for damages, docketed as Civil Case No. 65026, with the Regional Trial Court of Pasig, Branch 166, against Costa and IFFI, in its subsidiary capacity as employer.

The complaint's title named IFFI "in its subsidiary capacity, as employer of Hernan H. Costa." Paragraph 2 stated that IFFI was being sued in its subsidiary capacity as employer of Costa in accordance with the pertinent provisions under the Rules of Court, the Revised Penal Code, and/or the Civil Code. Paragraph 22 stated that in case of Costa's default, IFFI should be held subsidiarily liable as employer, and that IFFI had the absolute and sole power and authority in matters of company policies and management, citing Articles 100, 101, 102, and 104 of the Revised Penal Code. The prayer sought judgment against Costa and/or against IFFI in its subsidiary capacity as employer. The criminal libel cases against Costa remained pending.

• Nature of the Complaint: Petitioner argued that the Court of Appeals erred in treating Civil Case No. 65026 as an action to enforce IFFI's primary liability under Article 33 of the Civil Code. The complaint did not allege primary liability; it was replete with references to IFFI's subsidiary capacity. A cause of action is determined by the allegations and prayer of the complaint, and the appellate court could not introduce a new cause of action or change the theory of the case after IFFI had answered.
• Subsidiary Liability Under the Revised Penal Code: Petitioner maintained that the complaint was one to enforce the subsidiary civil liability of an employer under the Revised Penal Code for the alleged libelous statements of its former employee. An employer does not incur subsidiary civil liability under the Civil Code, but only under the Revised Penal Code, and under the latter, the employer becomes subsidiarily liable only upon conviction of the accused employee and proof of his insolvency. While a separate civil action for damages may proceed against Costa under Article 33, no such action may proceed against IFFI to enforce its subsidiary liability as employer under the same article.
• Reservation, Litis Pendentia, and Forum-Shopping: Petitioner argued that respondents' admitted failure to reserve their right to institute a separate civil action, and their continued participation in the criminal case, barred the filing of the complaint for damages against Costa and IFFI. It invoked litis pendentia and the need to prevent forum-shopping or multiplicity of suits, and contended that the civil action to enforce subsidiary liability must be dismissed.

• Independent Civil Action Under Article 33: Respondents averred that the Court of Appeals correctly treated the action as a civil action for damages entirely separate and distinct from the criminal action, which may proceed independently in accordance with Article 33 of the Civil Code.
• Direct Action Against the Employer: Respondents maintained that the Court of Appeals correctly recognized their right to move directly against IFFI as the employer of Costa, who had long fled the country.
• Respondeat Superior and Primary Liability: Respondents invoked the principle of respondeat superior in attempting to rely on Article 33 to hold IFFI primarily liable for its employee's defamatory statements.

• Nature of the Action: Whether Civil Case No. 65026 was an action to enforce IFFI's primary liability under Article 33 of the Civil Code or its subsidiary liability as employer of Costa under the Revised Penal Code, as determined by the allegations and prayer of the complaint.
• Prematurity of the Subsidiary Liability Suit: Whether private respondents could sue IFFI for damages based on subsidiary liability in an independent civil action under Article 33 of the Civil Code during the pendency of the criminal libel cases against IFFI's employee, Costa.

• Nature of the Action: Subsidiary liability, not primary. The complaint's title, paragraph 2, paragraph 22, and prayer expressly sued IFFI in its subsidiary capacity as Costa's employer; the nature of an action is determined by the allegations in the complaint and the character of the relief sought.
• Prematurity of the Subsidiary Liability Suit: Yes, premature. Article 33 of the Civil Code permits an independent civil action only against the employee's primary civil liability; an employer's subsidiary liability under the Revised Penal Code arises only after the employee's conviction or when the employee is adjudged guilty in the criminal action and found to have committed the offense in the discharge of his duties. The complaint was therefore ordered dismissed.

• Nature of the Action: The Court found petitioner's contentions persuasive. The well-established rule is that the allegations in the complaint and the character of the relief sought determine the nature of an action. A perusal of respondents' complaint showed that they sued IFFI in a subsidiary, not primary, capacity. The title of the complaint designated IFFI "in its subsidiary capacity, as employer of Hernan H. Costa"; paragraph 2 categorically stated that IFFI was being sued in its subsidiary capacity as employer of Costa under pertinent provisions of the Rules of Court, the Revised Penal Code, and/or the Civil Code; paragraph 22 described the liability as subsidiary in case of Costa's default, invoking Articles 100, 101, 102, and 104 of the Revised Penal Code; and the prayer sought judgment against Costa and/or against IFFI in its subsidiary capacity. Although the title is not necessarily determinative, it indicates intention, and the designation of the nature of the action is not meaningless. The Court of Appeals could not convert allegations of subsidiary liability into averments of primary liability without fundamental unfairness to IFFI. Essential averments lacking in a pleading may not be construed into it, and facts not alleged by a plaintiff cannot be taken as having existence. Justice requires that a party be apprised of the nature of the action against him so that he may prepare his defense. A pleading must be construed most strictly against the pleader; material allegations omitted are presumed not to exist absent an application to amend. Thus, the complaint was not one to enforce IFFI's primary liability under Article 33.
• Prematurity of the Subsidiary Liability Suit: Obligations arising from crimes are governed by Article 1161 of the Civil Code, which provides that such obligations are governed by the penal laws, subject to Article 2177 and the pertinent provisions on human relations and damages. Article 100 of the Revised Penal Code provides that every person criminally liable for a felony is also civilly liable, and in default of the persons criminally liable, employers engaged in any kind of industry are civilly liable for felonies committed by their employees in the discharge of their duties. Article 33 of the Civil Code specifically provides that in cases of defamation, a civil action for damages entirely separate and distinct from the criminal action may be brought by the injured party; it proceeds independently of the criminal prosecution and requires only a preponderance of evidence. In Joaquin vs. Aniceto, the Court held that Article 33 contemplates an action against the employee in his primary civil liability. It does not apply to an action against the employer to enforce its subsidiary civil liability, because such liability arises only after conviction of the employee in the criminal case or when the employee is adjudged guilty of the wrongful act in a criminal action and found to have committed the offense in the discharge of his duties. Any action brought against the employer based on its subsidiary liability before the conviction of its employee is premature. Here, respondents sought to enforce IFFI's subsidiary liability as employer of Costa while the criminal libel cases against Costa were pending. Although respondents invoked respondeat superior to hold IFFI primarily liable under Article 33, they did not raise primary liability as a cause of action in their complaint; they instead sought to enforce subsidiary liability prematurely. Both the trial and appellate courts therefore erred in failing to dismiss the complaint. The dismissal did not prejudice the reliefs respondents might seek at the appropriate time.

• Nature of an action determined by allegations and prayer — The nature of an action is determined by the allegations in the complaint and the character of the relief sought, not by the title alone, although the title may indicate the pleader's intention. Applied: the complaint's title, paragraphs, and prayer showed that IFFI was sued in its subsidiary capacity, so the Court of Appeals could not treat it as an action for primary liability under Article 33.
• Article 33, Civil Code — Independent civil action for defamation — In cases of defamation, fraud, and physical injuries, the injured party may bring a civil action for damages entirely separate and distinct from the criminal action; it proceeds independently and requires only a preponderance of evidence. Applied: the provision permits an action against the employee in his primary civil liability, but not against the employer to enforce subsidiary liability.
• Employer's subsidiary civil liability under the Revised Penal Code — Every person criminally liable for a felony is also civilly liable; in default of the persons criminally liable, employers engaged in industry are subsidiarily liable for felonies committed by their employees in the discharge of their duties. Such liability arises only after conviction of the employee or when the employee is adjudged guilty of the wrongful act in a criminal action and found to have committed the offense in the discharge of his duties. Applied: because Costa had not been convicted, the action against IFFI was premature.
• Prematurity — An action against an employer based on subsidiary liability before the conviction of its employee is premature and must be dismissed. Applied: the civil complaint was dismissed without prejudice to reliefs respondents might seek at the appropriate time.
• Pleadings construed strictly against the pleader — Essential averments lacking in a pleading may not be construed into it, and facts not alleged by the plaintiff are not taken as having existence; material allegations omitted are presumed not to exist absent amendment. Applied: respondents did not allege primary liability, so their complaint could not be converted into one under Article 33.

• "In our view, respondents' suit based on subsidiary liability of petitioner is premature." — This states the core holding of the decision and frames the entire analysis: the action against IFFI could not proceed while Costa's criminal libel cases remained pending.
• "The well-established rule is that the allegations in the complaint and the character of the relief sought determine the nature of an action." — This is the controlling rule on pleadings used to reject the Court of Appeals' treatment of the complaint as one for primary liability under Article 33.
• "Article 33 contemplates an action against the employee in his primary civil liability. It does not apply to an action against the employer to enforce its subsidiary civil liability, because such liability arises only after conviction of the employee in the criminal case or when the employee is adjudged guilty of the wrongful act in a criminal action and found to have committed the offense in the discharge of his duties." — This is the canonical formulation distinguishing an independent civil action under Article 33 from an action to enforce an employer's subsidiary liability.
• "Any action brought against the employer based on its subsidiary liability before the conviction of its employee is premature." — This crystallizes the prematurity rule applied to dismiss the complaint against IFFI.

• Joaquin vs. Aniceto, 12 SCRA 308 (1964) — Controlling precedent; held that Article 33 of the Civil Code contemplates an action against the employee in his primary civil liability and does not apply to an action against the employer to enforce subsidiary civil liability, which arises only after conviction or when the employee is adjudged guilty in the criminal action.
• Yonaha vs. CA, G.R. No. 112346, 255 SCRA 397, 402 (1996) — Cited in support of the rule that an employer's subsidiary liability arises only after conviction of the employee or when the employee is adjudged guilty of the wrongful act in a criminal action.
• Franco vs. Intermediate Appellate Court, G.R. No. 71137, 178 SCRA 331, 338 (1989) — Cited for the same rule on the prematurity of an action to enforce an employer's subsidiary liability before the employee's conviction.
• Morta, Sr. vs. Occidental, G.R. No. 123417, 308 SCRA 167, 172 (1999) — Cited for the rule that the allegations in the complaint and the character of the relief sought determine the nature of an action.
• Andamo vs. Intermediate Appellate Court, G.R. No. 74761, 191 SCRA 195, 199 (1990) — Cited for the same rule on determining the nature of an action from the complaint's allegations and relief sought.
• Bulao vs. CA, G.R. No. 101983, 218 SCRA 321, 325 (1993) — Cited for the proposition that the title of the complaint, while not necessarily determinative, indicates the pleader's intention as to the nature of the action.

• Article 33, Civil Code — In cases of defamation, fraud, and physical injuries, a civil action for damages entirely separate and distinct from the criminal action may be brought by the injured party; it proceeds independently and requires only a preponderance of evidence. Applied: the Court held it authorizes an action against the employee's primary civil liability, not an action against the employer to enforce subsidiary liability.
• Article 1161, Civil Code — Civil obligations arising from criminal offenses are governed by the penal laws, subject to Article 2177 and the pertinent provisions on human relations and damages. Applied: obligations arising from Costa's alleged libel are governed by the Revised Penal Code, including its rules on subsidiary liability.
• Article 2177, Civil Code — Responsibility for fault or negligence under Article 2176 is entirely separate and distinct from civil liability arising from negligence under the Penal Code, but the plaintiff cannot recover damages twice for the same act or omission. Mentioned as an exception in Article 1161 and cited as part of the governing law on civil obligations arising from crimes.
• Article 100, Revised Penal Code — Every person criminally liable for a felony is also civilly liable. Applied: the employer's subsidiary liability operates only in default of the persons criminally liable.
• Article 102, Revised Penal Code — Subsidiary civil liability of innkeepers, tavernkeepers, and proprietors of establishments for crimes committed in their establishments under certain conditions. Cited in the footnote in relation to subsidiary liability under the Revised Penal Code.
• Article 103, Revised Penal Code — Subsidiary civil liability of employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties. Applied: this is the employer subsidiary liability invoked against IFFI, which arises only after conviction of the employee and proof of insolvency.
• Articles 100, 101, 102, and 104, Revised Penal Code — Cited in respondents' complaint as the basis for IFFI's subsidiary liability as employer. The Court treated these references as confirming the subsidiary nature of the action.

Mendoza, Buena, and De Leon, Jr., JJ., concurred. Bellosillo, J., took no part.