Primero vs. Intermediate Appellate Court

Labor Arbiters have original and exclusive jurisdiction over claims for moral and exemplary damages arising from an employee’s illegal dismissal, and an employee who obtains relief from the Labor Arbiter for illegal dismissal cannot thereafter sue in a regular court for moral damages based on the manner of dismissal; such splitting of a cause of action is barred by res judicata.

Alfredo F. Primero was employed as a bus driver by DM Transit Corporation for over six years before his August 1974 discharge. The dispute implicated the shifting statutory jurisdiction of Labor Arbiters under the Labor Code: Article 265, later Article 217, of PD 442 originally vested Labor Arbiters with broad jurisdiction over matters arising from employer-employee relations; PD 1367, effective May 1, 1978, barred Labor Arbiters from entertaining claims for moral or other damages; and PD 1691, effective May 1, 1980, removed that restriction and restored exclusive original jurisdiction over damages to Labor Arbiters. B.P. Blg. 227, effective June 1, 1982, further amended Article 217 but had no application to the case.

Alfredo F. Primero was employed as a bus driver by DM Transit Corporation for over six years before his discharge in August 1974. According to the findings narrated by the Intermediate Appellate Court, from August 1, 1974, DM’s bus dispatcher stopped assigning any bus to Primero for 23 days without giving him any reason. During those 23 days, Primero repeatedly pleaded with management officials to be allowed to work because his family was in dire need of money, but he was given a run-around from one official to another, received cold treatment, was evaded, given confusing information, ridiculed, humiliated, and sometimes made to wait in the offices of management personnel. The General Manager and the Vice-President and Treasurer made him go back and forth between them not less than ten times within the 23-day period, and on the 23rd day General Manager Briones suddenly told him to seek employment with other bus companies because he was already dismissed, without being told the cause of his dismissal.

Primero then pleaded with Corporate President Demetrio Munoz, Jr. for reinstatement and asked for P300.00 as financial assistance, but Munoz refused to give him even one centavo and told him that he would pay only if Primero sued him in court and won. Primero also advised the President of the oppressive, anti-social, and inhumane acts of subordinate officers, but Munoz did nothing and told him to go back to Briones, who insisted that Primero seek employment with other bus firms in Metro Manila while admitting that Primero had not violated any company rule or regulation. Primero further alleged that DM, in bad faith and with malice, persuaded other firms—California Transit, Pascual Lines, De Dios Transit, Negrita Corporation, and MD Transit—not to employ him; these companies allegedly called the DM Transit Office and were told not to accept him because he had been dismissed.

Primero instituted proceedings against DM with the Labor Arbiters of the Department of Labor for illegal dismissal and for recovery of back wages and reinstatement. The record does not clearly show whether these proceedings consisted of one or two separately filed actions, but Primero withdrew his claims for back wages and reinstatement with the end in view of filing a damage suit in a civil court that, he asserted, had exclusive jurisdiction over his complaint for damages founded on tortious acts, breach of employment contract, and their consequent effects. After due investigation, the Labor Arbiter rendered judgment dated January 24, 1977 ordering DM to pay Primero P2,000.00 as separation pay in accordance with the Termination Pay Law. The judgment was affirmed by the National Labor Relations Commission and later by the Secretary of Labor, the case having been concluded at that level on March 3, 1978.

Some three months after the Secretary of Labor’s affirmance, Primero brought suit against DM in the Court of First Instance of Rizal seeking recovery of damages caused not only by the breach of his employment contract but also by the oppressive and inhuman, and consequently tortious, acts of his employer and its officers antecedent and subsequent to his dismissal from employment without just cause. The Labor Arbiter’s judgment, affirmed by the NLRC and the Secretary of Labor, held that Primero had been fired without just cause and awarded him separation pay. The Intermediate Appellate Court adopted the narration of facts in Primero’s brief, including the findings that he had not been assigned any bus for 23 days without reason and that he was told he was dismissed without being informed of any cause.

• Jurisdiction of Regular Courts: Petitioner argued that his cause of action for damages was intrinsically civil and cognizable by the regular courts, because the manner of his dismissal was tortious and oppressive.
• Employment Relation Not Decisive: Petitioner maintained that the existence of an employer-employee relationship did not alone determine jurisdiction, and that such a relationship may give rise to a civil dispute distinct from a purely labor dispute.
• Tortious Exercise of Dismissal Power: Petitioner contended that where the employer’s right to dismiss is exercised tortiously, in a manner oppressive to labor, contrary to morals, good customs, or public policy, the resulting claim is civil in nature.
• Withdrawal of Labor Claims: Petitioner asserted that he had withdrawn his claims for back wages and reinstatement precisely to pursue a damage suit in a civil court with exclusive jurisdiction over tortious acts and breach of employment contract.

• Jurisdiction over Moral and Exemplary Damages: Whether Labor Arbiters have original and exclusive jurisdiction over claims for moral and other damages arising from an employee’s illegal dismissal.
• Splitting Causes of Action and Res Judicata: Whether an employee who recovered separation pay from a Labor Arbiter for illegal dismissal may subsequently sue in a regular court for moral damages based on the tortious manner of dismissal.

• Jurisdiction over Moral and Exemplary Damages: Yes. Under Article 265, later Article 217, of the Labor Code, Labor Arbiters had original and exclusive jurisdiction over claims for moral and other damages arising from employer-employee relations, including illegal dismissal.
• Splitting Causes of Action and Res Judicata: No. The employee should have joined all reliefs in the labor proceedings; the Labor Arbiter’s judgment awarding separation pay barred the subsequent civil action for damages under res judicata because the cause of action was split.

• Jurisdiction over Moral and Exemplary Damages: At the time Primero filed his complaints with the Labor Arbiter, Article 265 of PD 442, the Labor Code, effective May 1, 1974, conferred on Labor Arbiters original and exclusive jurisdiction over all cases or matters arising from employer-employee relations, unless expressly excluded. The legislative intent was to allow recovery in proceedings before Labor Arbiters of moral and other forms of damages in all cases arising from employer-employee relations, including unlawful dismissal. If the evidence established that the employer terminated the employee without just cause or due process, the Labor Arbiter could award reinstatement and back wages, or separation pay, under the Labor Code; moral damages, however, had to be grounded on the Civil Code and required additional facts—that the dismissal was attended by bad faith or fraud, was oppressive to labor, or was done in a manner contrary to morals, good customs, or public policy, and that social humiliation, wounded feelings, grave anxiety, or similar injury resulted. The Labor Code governed the legality of the act of dismissal, while the Civil Code governed the manner of dismissal and the moral damages flowing from it. This division did not create a cause of action independent of the illegal dismissal or remove the claim from the Labor Arbiter’s jurisdiction. The Court reiterated its prior rulings that Article 217 jurisdiction is sufficiently comprehensive to include claims for moral and exemplary damages based on illegal dismissal; contrary rulings were abandoned or modified. Although PD 1367 later barred Labor Arbiters from entertaining moral damages claims and PD 1691 later removed that restriction, these amendments did not alter the conclusion that Primero should have pursued all his reliefs in the labor proceedings.
• Splitting Causes of Action and Res Judicata: An employee who has been illegally dismissed in a manner that causes moral damages has a single cause of action for reinstatement and recovery of back wages and damages. When he institutes proceedings before the Labor Arbiter, he must claim all such reliefs. He cannot prosecute his claims piecemeal, institute separate and contemporaneous actions on the same cause of action or part of it, or sue in two forums—one before the Labor Arbiter for reinstatement, back wages, or separation pay on the theory that the dismissal was illegal, and another before a court for moral and other damages on the theory that the manner of dismissal was tortious. Such conduct constitutes splitting a cause of action and engenders a multiplicity of actions, which the Rules of Court treat as grounds for abatement or dismissal under litis pendentia or res judicata. Primero did precisely this: he withdrew his claims for back wages and reinstatement from the Labor Arbiter to file a separate civil action for damages. Consequently, the Labor Arbiter’s judgment granting him separation pay operated as a bar to his subsequent action for damages in the Court of First Instance under res judicata. A prior judgment is conclusive not only as to the matter directly adjudged but also as to any other matter that could have been raised in relation thereto. The Quisaba vs. Sta. Ines-Melale Veneer & Plywood Inc. distinction between the employer’s right to dismiss and the manner in which that right was exercised—the latter being allegedly cognizable only by regular courts as intrinsically civil—was the very distinction the law sought to eradicate as tenuous, difficult to observe, and productive of split jurisdiction or multiplicity of actions.

• Labor Arbiter jurisdiction over moral and exemplary damages — Article 217, formerly Article 265, of the Labor Code vests Labor Arbiters with original and exclusive jurisdiction over claims for moral and exemplary damages arising from employer-employee relations, including illegal dismissal. The Court applied this to hold that Primero could have pleaded and proved his moral damages claim before the Labor Arbiter.
• Splitting causes of action — A single cause of action cannot be divided and its parts prosecuted in separate forums. An illegally dismissed employee who seeks moral damages based on the manner of dismissal must join that claim with the labor claim for reinstatement, back wages, or separation pay. The Court applied this to bar Primero’s separate civil action.
• Res judicata — A prior judgment is conclusive not only as to matters directly adjudged but also as to any other matter that could have been raised in relation thereto. The Labor Arbiter’s award of separation pay barred Primero’s subsequent civil action for damages.
• Manner of dismissal governed by Civil Code but not an independent cause of action — While the Labor Code governs the legality of the act of dismissal, the Civil Code governs the manner of dismissal and the moral damages recoverable for bad faith, fraud, oppression, or acts contrary to morals, good customs, or public policy. This does not create a separate cause of action cognizable by regular courts outside the Labor Arbiter’s jurisdiction.
• Abandonment of the Quisaba distinction — The distinction between the employer’s right to dismiss, cognizable by labor agencies, and the manner of its exercise, allegedly cognizable by regular courts, is tenuous and difficult to observe and leads to split jurisdiction or multiplicity of actions. The Court deemed contrary rulings abandoned or modified.

• "The legislative intent appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of damages, in all cases or matters arising from employer-employee relations." — This passage states the legislative basis for the Labor Arbiter’s jurisdiction over moral damages, including those arising from illegal dismissal.
• "He cannot and should not 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 his dismissal was illegal; and two, before a court of justice for recovery of moral and other damages, upon the theory that the manner of his dismissal was unduly injurious, or tortious." — This is the Court’s canonical formulation of the prohibition against splitting a cause of action in labor cases.
• "Consequently, the judgment of the Labor Arbiter granting Primero separation pay operated as a bar to his subsequent action for the recovery of damages before the Court of First Instance under the doctrine of res judicata," — This passage applies res judicata to bar the separate civil action after the labor judgment.
• "the grant of jurisdiction to the Labor Arbiter by Article 217 of the Labor Code is sufficiently comprehensive to include claims for moral and exemplary damages sought to be recovered from an employer by an employee upon the theory of his illegal dismissal." — This excerpt reiterates the controlling doctrine on the scope of Labor Arbiter jurisdiction.

• Quisaba vs. Sta. Ines-Melale Veneer & Plywood Inc., 58 SCRA 771 — Cited in the dissent and discussed by the Court; it drew the distinction between the employer’s right to dismiss, cognizable by labor agencies, and the manner of exercising that right, allegedly cognizable by regular courts as intrinsically civil. The Court opined that this distinction was what the law sought to eradicate as tenuous and productive of split jurisdiction.
• Garcia vs. Martinez, 84 SCRA 577 — Cited as one of the cases laying down the doctrine that the grant of jurisdiction to Labor Arbiters under Article 217 is sufficiently comprehensive to include claims for moral and exemplary damages based on illegal dismissal.
• Pepsi-Cola Bottling Co. vs. Martinez, 112 SCRA 578 — Cited among the cases supporting the same comprehensive jurisdiction of Labor Arbiters over moral and exemplary damages.
• Sagmit vs. Sibulo, 133 SCRA 359 — Cited among the cases supporting the same doctrine.
• Atlas Fertilizer Corporation vs. Hon. Navarro, G.R. No. 721074, April 30, 1987 — Cited for the proposition that the law sought to eliminate the difficult dividing line between administrative labor jurisdiction and regular courts and to spare courts from determining damages in labor matters.

• Article 265, PD 442 (Labor Code) — Now Article 217; effective May 1, 1974. It conferred original and exclusive jurisdiction on Labor Arbiters over all cases or matters arising from employer-employee relations, unless expressly excluded. Applied to hold that Primero’s moral damages claim fell within the Labor Arbiter’s jurisdiction.
• Article 217, Labor Code (as amended) — The Court reiterated that the grant of jurisdiction to Labor Arbiters under this article is sufficiently comprehensive to include claims for moral and exemplary damages based on illegal dismissal.
• PD 1367 — Effective May 1, 1978. It provided that Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages. The trial court relied on this in dismissing Primero’s civil complaint for lack of jurisdiction.
• PD 1691 — Effective May 1, 1980. It eliminated the restrictive clause in PD 1367 and restored exclusive original jurisdiction for damages to Labor Arbiters.
• B.P. Blg. 227 — Effective June 1, 1982. It further amended Article 217 but had no application to the case.
• Civil Code, Articles 2195–2235; Article 1701; Articles 2219(10) in relation to Article 21 — Cited to establish that moral damages for oppressive or tortious dismissal are governed by the Civil Code, not the Labor Code, and require additional facts such as bad faith, fraud, oppression, or acts contrary to morals, good customs, or public policy.
• Rules of Court, Section 1(e), Rule 16 and Section 49(b), Rule 39 — Cited to show that splitting a cause of action may result in abatement or dismissal under litis pendentia or res judicata; Section 49(b) makes a prior judgment conclusive as to matters directly adjudged and any other matter that could have been raised in relation thereto.
• Article 280, Labor Code — Cited as the provision specifying reliefs for illegal dismissal, such as reinstatement and back wages or separation pay, which are distinct from Civil Code moral damages.
• R.A. 1052, as amended (Termination Pay Law) — Cited as the law under which the Labor Arbiter ordered DM to pay Primero P2,000.00 separation pay.

Teehankee, C.J., Cruz, Paras, and Gancayco, JJ., concur. The text notes that Paras was designated a Special Member of the First Division.

• Intermediate Appellate Court dissenters (not named in the text) — The Intermediate Appellate Court decision was reached by a vote of 3 to 2. The dissenters, relying on prior Supreme Court pronouncements, opined that Primero’s causes of action were cognizable by the courts, that the existence of employment relations was not alone decisive of jurisdiction, and that such relations may give rise to civil as distinguished from purely labor disputes, as where the employer’s right to dismiss is exercised tortiously, in a manner oppressive to labor, contrary to morals, good customs, or public policy. No Supreme Court dissenting opinion is reported in the text.