RONILO SORREDA, petitioner, vs.

CAMBRIDGE ELECTRONICS CORPORATION,1

respondent.
G.R. No. 17227. !e"r#$r% 11, 2&1&.'
Labor Law; Jurisdiction; Jurisdiction over the subject matter of a complaint is determined by the allegations
of the complaint. In Pioneer Concrete Philippines, Inc. v. odaro, the Court reiterated that where no
employer!employee relationship e"ists between the parties, and the Labor Code or any labor statute or
collective bargaining agreement is not needed to resolve any issue raised by them, it is the #egional rial
Court which has jurisdiction.$Jurisdiction over the subject matter of a complaint is determined by the
allegations of the complaint. In Pioneer Concrete Philippines, Inc. v. odaro, %&' (C#) *%+ ,&--./ the
Court reiterated that where no employer!employee relationship e"ists between the parties, and the Labor
Code or any labor statute or collective bargaining agreement is not needed to resolve any issue raised by
them, it is the #egional rial Court which has jurisdiction. hus it has been consistently held that the
determination of the e"istence of a contract as well as the payment of damages is inherently civil in nature. )
labor arbiter may only ta0e cogni1ance of a case and award damages where the claim for such damages
arises out of an employer!employee relationship.
(ame; 2anagement Prerogative; Contract of 3mployment; ) contract of perpetual employment deprives
management of its prerogative to decide whom to hire, fire and promote, and renders inutile the basic
precepts of labor relations. 4hile management may validly waive its prerogatives, such waiver should not be
contrary to law, public order, public policy, morals or good customs. )n absolute and un5ualified
employment for life in the mold of petitioner6s concept of perpetual employment is contrary to public policy
and good customs, as it unjustly forbids the employer from terminating the services of an employee despite
the e"istence of a just or valid cause. It li0ewise compels the employer to retain an employee despite the
attainment of the statutory retirement age, even if the employee has became a 7non!performing asset8 or,
worse, a liability to the employer.$3ven assuming arguendo that the labor arbiter had the jurisdiction to
decide the case, the Court cannot countenance petitioner6s claim that a contract of perpetual employment
was ever constituted. 4hile the Constitution recogni1es the primacy of labor, it also recogni1es the critical
role of private enterprise in nation!building and the prerogatives of management. ) contract of perpetual
employment deprives management of its prerogative to decide whom to hire, fire and promote, and renders
inutile the basic precepts of labor relations. 4hile management may validly waive it prerogatives, such
waiver should not be contrary to law, public order, public policy, morals or good customs. )n absolute and
un5ualified employment for life in the mold of petitioner6s concept of perpetual employment is contrary to
public policy and good customs, as it unjustly forbids the employer from terminating the services of an
employee despite the e"istence of a just or valid cause. It li0ewise compels the employer to retain an
employee despite the attainment of the statutory retirement age, even if the employee has became a 7non!
performing asset8 or, worse, a liability to the employer.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Noel S. Sorreda for petitioner.
Laguesma !agsalin Consulta " #astardo for respondent.
CO$ONA %.&
This petition' see(s to reverse and set aside the !a) '* '++, decision- of the Court of Appeals
.CA/ in CA0#.$. SP No. 11-+- and its resolution den)ing reconsideration.2 The CA affirmed the
resolution, of the National La3or $elations Commission .NL$C/ in NL$C NC$ CA No. +'45,*0+5
declaring that petitioner $onilo Sorreda was not a regular emplo)ee of respondent Cam3ridge
Electronics Corporation.
On !a) 4 5666 petitioner was hired 3) respondent as a technician for a period of , months at
minimum wage.* 7ive wee(s into the 8o3 .on %une 5, 5666/ petitioner met an accident in which
his left arm was crushed 3) a machine and had to 3e amputated.1
Petitioner claimed that shortl) after his release from the hospital officers of respondent compan)
called him to a meeting with his common0law wife father and cousin. There he was assured a
place in the compan) as a regular emplo)ee for as long as the compan) e9isted and as soon as he
full) recovered from his in8ur).
In Septem3er 5666 after he recovered from his in8ur) petitioner reported for wor(. Instead of
giving him emplo)ment the) made him sign a memorandum of resignation to formali:e his
separation from the compan) in the light of the e9piration of his five0month contract.
On Novem3er 5* 5666 petitioner filed in the $egional Ar3itration ;ranch of the NL$C of
<asmari=as Cavite a complaint4 for illegal dismissal .later changed to 3reach of contract/. In his
position paper he raised the following issues&
5. whether there was a valid agreement or contract of perpetual emplo)ment perfected 3etween
the parties concerned>
'. whether respondent corporation was 3ound there3) and
-. whether ?petitioner@ has a cause of action for damages against respondent 3ased on the
contract.6
Ae claimed that respondent failed to compl) with the terms of the contract of perpetual emplo)ment
which was perfected in %une 5666 when he was called to a meeting 3) management.5+ Ae pra)ed
that respondent 3e made to pa) compensator)55 moral5' and e9emplar) damages and attorne)Bs
fees for default or 3reach of contract.
$espondent denied that it e9tended regular emplo)ment to petitioner. Onl) words of
encouragement were offered 3ut not perpetual emplo)ment. !oreover it assailed the la3or
ar3iterBs 8urisdiction over the case claiming a lac( of causal connection 3etween the alleged
3reach of contract and their emplo)er0emplo)ee relationship.
The la3or ar3iter held that he had 8urisdiction to hear and decide the case as it involved the
emplo)er0emplo)ee relationship of the contending parties. Ae ruled that petitioner who had 3een
emplo)ed on a per0pro8ect 3asis 3ecame a regular emplo)ee 3) virtue of the contract of perpetual
emplo)ment. Ae stated that the positive declaration of the witnesses .common0law wife father and
cousin/ present at the meeting and the parole evidence rule was enough to support the petitionerBs
claim. Thus in a decision dated !arch 6 '++5 the la3or ar3iter ruled that petitioner was emplo)ed
1 | S o r r e d a
3) respondent for an indefinite period of emplo)ment .that is on regular status./ Ae ordered
petitionerBs reinstatement and the pa)ment of 3ac(wages moral damages and e9emplar)
damages as well as attorne)Bs fees.5-
;oth petitioner and respondent appealed to the NL$C. Petitioner claimed that the la3or ar3iter
erred in finding that he was a regular emplo)ee that the case was 3ased on illegal dismissal and
that reinstatement and pa)ment of 3ac(wages were the proper reliefs. $espondent on the other
hand as(ed for the reversal of the la3or ar3iterBs decision 3ased on grave a3use of discretion for
assuming 8urisdiction over the case.
The NL$C agreed with respondent.52 It found that petitioner was not a regular emplo)ee> thus he
was neither illegall) dismissed nor entitled to reinstatement and 3ac(wages. Petitioner sued for
compensator) damages 3ecause of the accident that 3efell him. As the contract for per0pro8ect
emplo)ment had alread) e9pired the issue no longer fell under the 8urisdiction of the la3or ar3iter
and NL$C. !oreover the testimonies of petitionerBs witnesses were declared self0serving and thus
insufficient to prove the contract of perpetual emplo)ment. The motion for reconsideration of
petitioner was denied.5,
Aggrieved petitioner filed a petition for certiorari5* in the CA Cuestioning the NL$CBs finding of
non0e9istence of the contract of perpetual emplo)ment.
The CA dismissed the petition for lac( of merit stating that the la3or ar3iter decided the case on an
issue that was never raised .i.e. the emplo)ment status of petitioner/. !oreover petitionerBs
principal cause of action 3reach of contract was not cogni:a3le 3) the la3or courts 3ut 3) the
regular courts.51 The CA concluded that the NL$C did not commit an) reversi3le error in finding
that the la3or ar3iter had no 8urisdiction over the case. 7urthermore petitioner failed to prove grave
a3use of discretion in the NL$CBs e9ercise of its Cuasi08udicial function.
Petitioner moved for reconsideration 3ut the motion was denied.54 Thus this petition.
De affirm the Court of Appeals.
This case rests on the issue of whether the la3or ar3iter had the 8urisdiction to ta(e cogni:ance
thereof.
%urisdiction over the su38ect matter of a complaint is determined 3) the allegations of the
complaint.56 In Pioneer Concrete Philippines Inc. v. Todaro'+ the Court reiterated that where no
emplo)er0emplo)ee relationship e9ists 3etween the parties and the La3or Code or an) la3or
statute or collective 3argaining agreement is not needed to resolve an) issue raised 3) them it is
the $egional Trial Court which has 8urisdiction. Thus it has 3een consistentl) held that the
determination of the e9istence of a contract as well as the pa)ment of damages is inherentl) civil in
nature.'5 A la3or ar3iter ma) onl) ta(e cogni:ance of a case and award damages where the claim
for such damages arises out of an emplo)er0emplo)ee relationship.''
In this instance petitioner from the period !a) 4 5666 to Octo3er 4 5666 was clearl) a per0
pro8ect emplo)ee of private respondent resulting in an emplo)er0emplo)ee relationship.
ConseCuentl) Cuestions or disputes arising out of this relationship fell under the 8urisdiction of the
la3or ar3iter.
Aowever 3ased on petitionerBs allegations in his position paper his cause of action was 3ased on
an alleged second contract of emplo)ment separate and distinct from the per0pro8ect emplo)ment
contract. Thus petitioner insisted that there was a perfected contract of perpetual emplo)ment and
that respondent was lia3le to pa) him damages.
De note however that petitioner filed the case onl) when respondent refused to rehire him.'-
Dhile there was an emplo)er0emplo)ee relationship 3etween the parties under their five0month
per0pro8ect contract of emplo)ment the present dispute is neither rooted in the aforestated contract
nor is it one inherentl) lin(ed to it. Petitioner insists on a right to 3e emplo)ed again in respondent
compan) and see(s a determination of the e9istence of a new and separate contract that
esta3lished that right. As such his case is within the 8urisdiction not of the la3or ar3iter 3ut of the
regular courts. The NL$C and the CA were therefore correct in ruling that the la3or ar3iter
erroneousl) too( cogni:ance of the case.
Even assuming arguendo that the la3or ar3iter had the 8urisdiction to decide the case the Court
cannot countenance petitionerBs claim that a contract of perpetual emplo)ment was ever
constituted. Dhile the Constitution recogni:es the primac) of la3or it also recogni:es the critical
role of private enterprise in nation03uilding and the prerogatives of management. A contract of
perpetual emplo)ment deprives management of its prerogative to decide whom to hire fire and
promote and renders inutile the 3asic precepts of la3or relations. Dhile management ma) validl)
waive it prerogatives such waiver should not 3e contrar) to law pu3lic order pu3lic polic) morals
or good customs.'2 An a3solute and unCualified emplo)ment for life in the mold of petitionerBs
concept of perpetual emplo)ment is contrar) to pu3lic polic) and good customs as it un8ustl)
for3ids the emplo)er from terminating the services of an emplo)ee despite the e9istence of a 8ust
or valid cause. It li(ewise compels the emplo)er to retain an emplo)ee despite the attainment of
the statutor) retirement age even if the emplo)ee has 3ecame a Enon0performing assetF or worse
a lia3ilit) to the emplo)er.
!oreover aside from the self0serving claim of petitioner there was no concrete proof to esta3lish
the e9istence of such agreement. Petitioner cannot validl) force respondent to enter into a
permanent emplo)ment contract with him. Such stance is contrar) to the consensualit) principle of
contracts as well as to the management prerogative of respondent compan) to choose its
emplo)ees.
DAE$E7O$E the petition is here3) <ENIE<.
Costs against petitioner.
SO O$<E$E<.
Gelasco %r. Nachura Peralta and !endo:a %%. concur.
Petition denied.
Note.HSo long as a compan)Bs management prerogatives are e9ercised in good faith for the
advancement of the emplo)erBs interest and not for the purpose of defeating or circumventing the
rights of the emplo)ees under special laws or under valid agreements the Supreme Court will
uphold them. .San !iguel Corporation vs. La)oc %r. ,-1 SC$A 11 ?'++1@/
2 | S o r r e d a
3 | S o r r e d a