World's Best Gas, Inc. vs. Vital

Claims arising from employer-employee relations involving amounts exceeding ₱5,000.00 fall under the exclusive original jurisdiction of labor arbiters pursuant to Article 217 of the Labor Code, and a regular court's adjudication of such claims is null and void and cannot be perpetuated even if affirmed on appeal. A dismissal grounded on lack of jurisdiction is without prejudice, and the claimant may refile before the proper labor tribunal.

Vital was one of the incorporators of World's Best Gas, Inc. (WBGI), holding ₱500,000.00 worth of shares of stock. As a separate business venture, Vital and his wife Floserfina sourced Liquefied Petroleum Gas (LPG) from WBGI and distributed it through ERJ Enterprises, which they owned, accumulating an outstanding balance of ₱923,843.59 for unpaid LPG. On January 6, 1999, Vital was appointed Internal Auditor and Personnel Manager by WBGI's President/CEO, serving until his mandatory retirement on September 25, 2003.

Vital was one of the incorporators of World's Best Gas, Inc. (WBGI), holding ₱500,000.00 worth of shares of stock. As a separate business venture, Vital and his wife Floserfina sourced Liquefied Petroleum Gas (LPG) from WBGI and distributed it through ERJ Enterprises, which they owned. As of their last statement of account, their outstanding balance with WBGI for unpaid LPG amounted to ₱923,843.59.

On January 6, 1999, Vital was appointed Internal Auditor and Personnel Manager by WBGI's President/CEO, and he continued to serve in those positions until his mandatory retirement on September 25, 2003. Upon his retirement, WBGI's Board of Directors computed Vital's retirement benefits at ₱82,500.00 by multiplying his ₱15,000.00 monthly pay by 5.5 years, the length of his service in those positions. WBGI also agreed to acquire Vital's ₱500,000.00 shares of stock at par value.

After offsetting the ₱500,000.00 due from WBGI's acquisition of his shares against ERJ Enterprises' ₱923,843.59 outstanding balance, Vital claimed that unpaid salaries and separation pay due him amounted to ₱845,000.00 and ₱250,000.00, respectively, leaving a net amount of ₱671,156.41 payable to him. WBGI rejected Vital's claim and contended that after offsetting, Vital actually owed it ₱369,156.19.

On January 4, 2006, Vital filed a complaint before the NLRC-RAB III for non-payment of separation and retirement benefits, underpayment of salaries/wages and 13th month pay, illegal reduction of salary and benefits, and damages. WBGI countered that the Labor Arbiter had no jurisdiction because Vital was not an employee but a mere incorporator and stockholder, and therefore no employer-employee relationship existed between them. The Labor Arbiter, in a Decision dated May 3, 2006, found the issues intra-corporate in nature as they arose between a stockholder and the corporation, and dismissed the case for lack of jurisdiction. Vital then refiled his complaint before the RTC on July 19, 2007, docketed as Civil Case No. 8694.

The RTC, acting as a special commercial court, found in its Decision dated December 12, 2011 that Vital was an employee of WBGI — reasoning that since the positions of Internal Auditor and Personnel Manager were not provided for in WBGI's By-Laws, Vital was not a corporate officer but an employee entitled to employment benefits. The RTC upheld Vital's claims of ₱845,000.00 and ₱250,000.00 in unpaid salaries and separation pay, offset these amounts together with the ₱500,000.00 due from the shares acquisition against the ₱923,843.59 arrearages, and awarded Vital the net amount of ₱671,156.41 with legal interest, ₱50,000.00 as attorney's fees, and costs of suit plus litigation expenses. The CA affirmed on appeal, although it observed that the RTC's award of employment benefits was improper as it fell under the labor arbiters' exclusive jurisdiction, yet still ruled on the claim on the reasoning that it had eventual authority to review labor courts' decisions.

• No Employer-Employee Relationship: Petitioner averred that the Labor Arbiter had no jurisdiction over Vital's complaint because Vital was not an employee but a mere incorporator and stockholder of WBGI, hence no employer-employee relationship existed between them.
• Impropriety of CA's Adjudication of Labor Claims: Petitioner assailed the CA's decision affirming the RTC's ruling on Vital's labor claims, contending that the CA erred in ruling upon Vital's claim of ₱845,000.00 and ₱250,000.00 in unpaid salaries and separation pay.

• Jurisdiction over Labor Claims: Whether the CA erred in ruling upon Vital's claim of ₱845,000.00 and ₱250,000.00 in unpaid salaries and separation pay.
• Jurisdiction over Intra-corporate and Civil Claims: Whether the RTC had jurisdiction over Vital's claim of ₱500,000.00 from WBGI's acquisition of his shares of stocks and over the ₱923,843.59 in arrearages payable to WBGI from ERJ Enterprises.
• Offset and Recovery of Net Balance: Whether the ₱500,000.00 due to Vital could be offset against the ₱923,843.59 arrearages, and whether WBGI could recover the net balance in the same case.

• Jurisdiction over Labor Claims: No. The RTC had no subject matter jurisdiction over Vital's labor claims arising from employer-employee relations involving amounts exceeding ₱5,000.00, which fall under the exclusive original jurisdiction of labor arbiters pursuant to Article 217 of the Labor Code; the RTC's adjudication was null and void and could not be perpetuated even if affirmed on appeal.
• Jurisdiction over Intra-corporate and Civil Claims: Yes. The RTC, acting as a special commercial court, had special jurisdiction over the intra-corporate claim of ₱500,000.00 from the shares acquisition pursuant to Republic Act No. 8799, and retained general jurisdiction over the civil claim of ₱923,843.59 in LPG arrearages.
• Offset and Recovery of Net Balance: The ₱500,000.00 was properly offset against the ₱923,843.59 arrearages, leaving a net of ₱423,843.59 in WBGI's favor; however, WBGI could not recover this amount in the same case because it never interposed a permissive counterclaim, as courts cannot grant relief not prayed for in the pleadings.

• Jurisdiction over Labor Claims: The case involved three distinct causes of action: (1) Vital's claim for unpaid salaries and separation pay, (2) the ₱923,843.59 arrearages payable to WBGI from ERJ Enterprises, and (3) Vital's claim of ₱500,000.00 from WBGI's acquisition of his shares. The first cause of action arose from Vital and WBGI's employer-employee relations and involved amounts exceeding ₱5,000.00, placing it within the exclusive original jurisdiction of labor arbiters under Article 217(a)(6) of the Labor Code. Because the RTC lacked subject matter jurisdiction over this claim, its ruling was null and void and could not be perpetuated even if affirmed on appeal by the CA. The CA's ratiocination that it had "eventual authority to review the labor courts' decision on the matter" was direly infirm. The dismissal, however, was without prejudice, and Vital could refile the claim, including related claims for moral and exemplary damages and attorney's fees, before the proper labor tribunal. The prescriptive period for the labor claim was deemed interrupted by Vital's timely filings, first before the NLRC-RAB on January 4, 2006, and again before the RTC on July 19, 2007, pursuant to Article 1155 of the Civil Code, as Vital never delayed in asserting his right but duly proceeded to refile as instructed by the Labor Arbiter.

• Jurisdiction over Intra-corporate and Civil Claims: The RTC had special jurisdiction, as a special commercial court, to adjudicate Vital's claim of ₱500,000.00 from WBGI's acquisition of his shares of stocks, because this claim arose from the relationship between a stockholder and the corporation and was inherently intra-corporate in nature, placing it under the jurisdiction of the Regional Trial Courts pursuant to Republic Act No. 8799 (the Securities Regulation Code). The RTC also retained general jurisdiction to adjudicate the ₱923,843.59 in arrearages payable to WBGI from ERJ Enterprises, which was admitted by Vital but not claimed by WBGI; even acting as a special commercial court, the RTC's general jurisdiction over this civil claim was retained.

• Offset and Recovery of Net Balance: With the RTC's jurisdiction established over the intra-corporate and civil claims, Vital's ₱500,000.00 claim from the shares acquisition was properly offset against the ₱923,843.59 arrearages payable to WBGI by ERJ Enterprises, as prayed for by Vital. After offsetting, no amount could be adjudicated in Vital's favor, as it was the respondents who would be left liable to WBGI in the net amount of ₱423,843.59. However, WBGI could not recover this net amount in the same case because it never interposed a permissive counterclaim in its answer. It is well-settled that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party. WBGI could, however, file a separate collection suit, including related claims for damages and attorney's fees, to recover the sum.

• Subject matter jurisdiction cannot be acquired by consent or acquiescence; a judgment rendered without jurisdiction is null and void — A court lacking subject matter jurisdiction over a particular class of claims renders a void judgment that cannot be perpetuated even if affirmed on appeal. The Court applied this doctrine to the RTC's adjudication of Vital's labor claims, which fell under the labor arbiters' exclusive jurisdiction under Article 217 of the Labor Code, rendering the RTC's ruling and the CA's affirmance thereof null and void.

• Dismissal for lack of jurisdiction is without prejudice — Pursuant to Section 5, in relation to Section 1(b), Rule 16 of the Rules of Civil Procedure, a dismissal on the ground that the court has no jurisdiction over the subject matter of the claim shall not bar the refiling of the same action or claim. The Court applied this to allow Vital to refile his labor claims before the proper labor tribunal.

• Courts cannot grant relief not prayed for in the pleadings — Courts are without authority to grant a relief not prayed for in the pleadings or in excess of what is being sought by a party. The Court applied this doctrine to bar WBGI from recovering the net amount of ₱423,843.59 in the same case, as WBGI never interposed a permissive counterclaim for the arrearages in its answer.

• Interruption of prescriptive period by filing of complaint — Pursuant to Article 1155 of the Civil Code, the prescriptive period for money claims arising from employer-employee relations under Article 291 of the Labor Code is interrupted by the filing of a complaint, and the interruption continues until notice of the court's decision. The Court applied this to preserve Vital's right to refile, distinguishing the case from Rodriguez, Jr. vs. Aguilar, Sr. and Olympia International, Inc. vs. CA, where the dismissal was prompted by the plaintiff's own action or voluntary abandonment, which leaves the parties in the same position as though no action had been commenced.

• "Having no subject matter jurisdiction to resolve claims arising from employer-employee relations, the RTC's ruling on Vital's claim of ₱845,000.00 and ₱250,000.00 in unpaid salaries and separation pay is, thus, null and void, and therefore, cannot perpetuate even if affirmed on appeal" — This passage articulates the ratio decidendi on the nullity of a court's judgment rendered without subject matter jurisdiction, even if subsequently affirmed by an appellate court.

• "it is well-settled that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party" — This passage states the controlling doctrine that barred WBGI from recovering the net arrearages balance in the same case due to its failure to file a permissive counterclaim.

• "even acting as a special commercial court, the RTC's general jurisdiction to adjudicate on the first-mentioned claim is retained" — This passage clarifies that a RTC sitting as a special commercial court does not lose its general jurisdiction over civil claims that are not intra-corporate in nature.

• Philippine Woman's Christian Temperance Union, Inc. vs. Teodoro R. Yangco 2nd and 3rd Generation Heirs Foundation, Inc., G.R. No. 199595, April 2, 2014 — Cited as authority for the proposition that a judgment rendered without subject matter jurisdiction is null and void and cannot be perpetuated even if affirmed on appeal.

• Diona vs. Balangue, G.R. No. 173559, January 7, 2013 — Cited as authority for the rule that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party.

• De Guzman vs. CA, 358 Phil. 397 (1998) — Cited in relation to Article 1155 of the Civil Code on the interruption of the prescriptive period for money claims arising from employer-employee relations.

• Rodriguez, Jr. vs. Aguilar, Sr., 505 Phil. 469 (2005) — Distinguished; in that case, the dismissal was prompted by the plaintiff's own action, so the commencement of the civil action did not stop the running of the statute of limitations. In the present case, Vital never delayed in asserting his right and duly refiled as instructed by the Labor Arbiter.

• Olympia International, Inc. vs. CA, 259 Phil. 841 (1989) — Cited as the basis for the ruling in Rodriguez, Jr., which was distinguished from the present case on the same ground regarding prescription.

• Article 217, Labor Code — Defines the original and exclusive jurisdiction of labor arbiters, including paragraph (a)(6) covering all claims arising from employer-employee relations involving amounts exceeding ₱5,000.00 regardless of whether accompanied with a claim for reinstatement. Applied to establish that the RTC lacked jurisdiction over Vital's unpaid salaries and separation pay claims.

• Republic Act No. 8799 (Securities Regulation Code) — Confers jurisdiction over intra-corporate disputes upon the Regional Trial Courts. Applied to establish the RTC's special jurisdiction as a special commercial court over Vital's claim of ₱500,000.00 from WBGI's acquisition of his shares of stock, which arose from the stockholder-corporation relationship.

• Article 1155, Civil Code — Provides that the prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, or when there is any written acknowledgment of the debt by the debtor. Applied to determine that the prescriptive period for Vital's labor claims was interrupted by his timely filings before the NLRC-RAB and the RTC.

• Article 291, Labor Code — Sets the three-year prescriptive period for all money claims arising from employer-employee relations. Applied in the footnote analysis of the prescriptive period's interruption.

• Section 5, in relation to Section 1(b), Rule 16, Rules of Civil Procedure — Provides that a dismissal on the ground that the court has no jurisdiction over the subject matter of the claim shall not bar the refiling of the same action or claim. Applied to render the dismissal of Vital's labor claims without prejudice.

Sereno, C.J. (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ.