AMECOS INNOVATIONS, INC. AND ANTONIO F.

MATEO, Petitioners, v. ELIZA R.
LOPEZ, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are the March 22, 2007 Resolution2 of
the Court of Appeals (CA) in CA-G.R. SP No. 96959 which affirmed the June 30, 2006
Decision3 of the Regional Trial Court (RTC) of Caloocan City, Branch 121, dismissing the
Complaint4 for lack of jurisdiction, and its May 23, 2007 Resolution5 denying petitioners’
Motion for Reconsideration.6

Factual Antecedents

Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under

Philippine laws engaged in the business of selling assorted products created by its
President and herein co-petitioner, Antonio F. Mateo (Mateo). On May 30, 2003,
Amecos received a Subpoena7 from the Office of the City Prosecutor of Quezon City in
connection with a complaint filed by the Social Security System (SSS) for alleged
delinquency in the remittance of SSS contributions and penalty liabilities in violation of
Section 22(a) and 22(d) in relation to Section 28(e) of the SSS law, as amended.

By way of explanation, Amecos attributed its failure to remit the SSS contributions to
herein respondent Eliza R. Lopez (respondent). Amecos claimed that it hired respondent
on January 15, 2001 as Marketing Assistant to promote its products; that upon hiring,
respondent refused to provide Amecos with her SSS Number and to be deducted her
contributions; that on the basis of the foregoing, Amecos no longer enrolled respondent
with the SSS and did not deduct her corresponding contributions up to the time of her
termination in February 2002.

Amecos eventually settled its obligations with the SSS; consequently, SSS filed a
Motion to Withdraw Complaint8 which was approved by the Office of the City
Prosecutor.9

Thereafter, petitioners sent a demand letter10 to respondent for P27,791.65

representing her share in the SSS contributions and expenses for processing, but to no
avail. Thus, petitioners filed the instant Complaint for sum of money and damages
against respondent docketed as Civil Case No. 04-27802 and raffled to Branch 51 of the
Metropolitan Trial Court (MeTC) of Caloocan City. Petitioners claimed that because of
respondent’s misrepresentation, they suffered actual damages in the amount of
P27,791.65 allegedly incurred by Amecos by way of settlement and payment of its
obligations with the SSS.11 Mateo also allegedly suffered extreme embarrassment and
besmirched reputation as a result of the filing of the complaint by the SSS. Hence they
prayed for P50,000.00 as moral damages, P50,000.00 as exemplary damages,
P50,000.00 as attorney’s fees, and costs of the suit.

Respondent filed her Answer with Motion to Dismiss12 claiming that she was formerly an
employee of Amecos until her illegal dismissal in February 2002; that Amecos
deliberately failed to deduct and remit her SSS contributions; and that petitioners filed
the instant Complaint in retaliation to her filing of an illegal dismissal case. Respondent
also averred that the regular courts do not have jurisdiction over the instant case as it
arose out of their employer-employee relationship.

The parties then submitted their respective Position Papers.13

Ruling of the Metropolitan Trial Court

On March 24, 2006, the MeTC issued its Decision,14 which decreed as follows:
All viewed from the foregoing, the court hereby dismisses the complaint for lack of
jurisdiction.

SO ORDERED.15
Ruling of the Regional Trial Court

Petitioners appealed to the RTC. On June 30, 2006, the RTC rendered its
Decision16 disposing as follows:
WHEREFORE, premises considered, the instant appeal is accordingly DISMISSED for
lack of merit.

SO ORDERED.17
The RTC affirmed the view taken by the MeTC that under Article 217(a)(4) of the Labor
Code,18 claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relationship are under the jurisdiction of the Labor Arbiters or the
National Labor Relations Commission (NLRC); that since petitioners and respondent
were in an employer-employee relationship at the time, the matter of SSS contributions
was thus an integral part of that relationship; and as a result, petitioners’ cause of
action for recovery of damages from respondent falls under the jurisdiction of the Labor
Arbiters, pursuant to Article 217(a)(4) of the Labor Code.

Petitioners filed a Motion for Reconsideration19 which the RTC denied.20

Ruling of the Court of Appeals

Petitioners thus instituted a Petition for Review21 with the CA claiming that the RTC
seriously erred in sustaining the dismissal of the Complaint by the MeTC on the ground
of lack of jurisdiction. On March 22, 2007, the CA rendered the assailed Resolution, viz:
ACCORDINGLY, the petition for review is DENIED DUE COURSE and this case is
DISMISSED.

SO ORDERED.22
Finding no error in the Decision of the RTC, the CA held that:
x x x The matter of whether the SSS employer’s contributive shares required of the
petitioners to be paid due to the complaint of the respondent necessarily flowed from
the employer-employee relationship between the parties. As such, the lower courts
were correct in ruling that jurisdiction over the claim pertained to the Labor Arbiter and
the National Labor Relations Commission, not to the regular courts, even if the claim
was initiated by the employer against the employee.23
Petitioners moved to reconsider, but in the second assailed Resolution24 dated May 23,
2007, the CA denied petitioners’ Motion for Reconsideration.25 Hence, the instant
Petition.

Issues

The issues raised in this Petition are:

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE
NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR
REIMBURSEMENT ARISING FROM EMPLOYER-EMPLOYEE RELATIONS.

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE
NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR
DAMAGES FOR MISREPRESENTATION ARISING FROM EMPLOYER-EMPLOYEE
RELATIONS.26
Petitioners’ Arguments

In praying that the assailed CA Resolutions be set aside, petitioners argue that their
Complaint is one for recovery of a sum of money and damages based on Articles
19,27 22,28 and 215429 of the Civil Code; that their cause of action is based on solutio
indebiti or unjust enrichment, which arose from respondent’s misrepresentation that
there was no need to enroll her with the SSS as she was concurrently employed by
another outfit, Triple A Glass and Aluminum Company, and that she was self-employed
as well. They argue that the employer-employee relationship between Amecos and
respondent is merely incidental, and does not necessarily place their dispute within the
exclusive jurisdiction of the labor tribunals; the true source of respondent’s obligation is
derived from Articles 19, 22, and 2154 of the Civil Code. They add that by reason of
their payment of respondent’s counterpart or share in the SSS premiums even as it was
not their legal obligation to do so, respondent was unjustly enriched, for which reason
she must return what petitioners paid to the SSS.

Petitioners cite the pronouncements of the Court to the effect that where the employer-
employee relationship is merely incidental and the cause of action proceeds from a
different source of obligation, such as tort, malicious prosecution or breach of contract,
the regular courts have jurisdiction;30 that when the cause of action is based on Articles
19 and 21 of the Civil Code, the case is not cognizable by the labor tribunals;31 that
money claims of workers which fall within the original and exclusive jurisdiction of
Labor Arbiters are those money claims which have some reasonable causal connection
with the employer-employee relationship;32 and that when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience, a case
of solutio indebiti arises.33

Respondent’s Arguments

Respondent, on the other hand, maintains that jurisdiction over petitioners’ case lies
with the Labor Arbiter, as their cause of action remains necessarily connected to and
arose from their employer-employee relationship. At any rate, respondent insists that
petitioners, as employers, have the legal duty to enroll her with the SSS as their
employee and to pay or remit the necessary contributions.
 Our Ruling

The Court denies the Petition.

This Court holds that as between the parties, Article 217(a)(4) of the Labor Code is
applicable. Said provision bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations. The
observation that the matter of SSS contributions necessarily flowed from the employer-
employee relationship between the parties – shared by the lower courts and the CA – is
correct; thus, petitioners’ claims should have been referred to the labor tribunals. In
this connection, it is noteworthy to state that “the Labor Arbiter has jurisdiction to
award not only the reliefs provided by labor laws, but also damages governed by the
Civil Code.”34

At the same time, it cannot be assumed that since the dispute concerns the payment of
SSS premiums, petitioners’ claim should be referred to the Social Security Commission
(SSC) pursuant to Republic Act No. 1161, as amended by Republic Act No. 8282.35 As
far as SSS is concerned, there is no longer a dispute with respect to petitioners’
accountability to the System; petitioners already settled their pecuniary obligations to
it. Since there is no longer any dispute regarding coverage, benefits, contributions and
penalties to speak of, the SSC need not be unnecessarily dragged into the
picture.36 Besides, it cannot be made to act as a collecting agency for petitioners’ claims
against the respondent; the Social Security Law should not be so interpreted, lest the
SSC be swamped with cases of this sort.

At any rate, it appears that petitioners do not have a cause of action against
respondent. The Complaint in Civil Case No. 04-27802 reads in part:
STATEMENT OF FACTS AND CAUSES OF ACTION

4. On or about 15 January 2001, [petitioners] hired [respondent] as a

Marketing Assistant to promote the products of [petitioners].

5. Immediately, [respondent] represented that she had other gainful

work and that she was also self-employed for which reason, she
refused to divulge her [SSS] Number and refused to be deducted
her share in the [SSS] contributions. In her bio-data submitted to
[petitioners], she did not even indicate her SSS [N]umber. x x x
[These] representations were later found out to be untrue and
[respondent]knew that.

6. Misled by such misrepresentation, [petitioners’] employees no

longer deducted her corresponding SSS contributions up to the
time of her termination from employment on or about 18 February
2002.

7. On or about 30 May 2003, to the unpleasant surprise and

consternation of [petitioner] Mateo, he received a Subpoena x x x
pursuant to a criminal complaint against [petitioner] Dr. Antonio
Mateo for alleged un-remitted SSS Contributions including that
corresponding to the [respondent]. Upon subsequent clarification
 with the Social Security System, only that portion corresponding to
the [respondent’s] supposed unremitted contribution remained as
the demandable amount.  The total amount demanded was
P18,149.95. x x x

8. On or about 24 July 2003, [petitioner] Mateo had to explain to the

Social Security System the circumstances as to why no
contributions reflected for [respondent]. x x x

9. On or about 31 July 2003, [petitioners] had to pay the Social

Security System the amount of P18,149.95 including the share
which should have been deducted from [respondent] in the amount
of P12,291.62. x x x

10.With this development, some of [petitioners’] employees felt

troubled and started to doubt x x x whether or not their SSS
contributions were being remitted or paid by the [petitioners].
[Petitioner] Mateo had to explain to them why there was an alleged
deficiency in SSS contributions and had to assure them that their
contributions were properly remitted.

11.As a result of these events, [petitioner] Mateo, for days, felt deep
worry and fear leading to sleepless nights that the Social Security
System might prosecute him for a possible criminal offense.

12.[Petitioner] Mateo also felt extreme embarrassment and

besmirched reputation as he, being a recognized inventor, a dean
of a reputable university and a dedicated teacher, was made the
butt of ridicule and viewed as a shrewd businessman capitalizing on
even the SSS contributions of his employees. x x x

13.On or about 15 January 2004, in order to [recover] what is due

[petitioners], they sent a demand letter to [respondent] for her to
pay the amount of P27,791.65 as her share in the SSS
contributions and other expenses for processing. x x x

14.This demand, however, fell on deaf ears as [respondent] did not

pay and has not paid to date the amount of her share in the SSS
contributions and other amounts demanded.

15.For such malicious acts and the suffering befalling [petitioner]

Mateo, [respondent] is liable for moral damages in the amount of
FIFTY THOUSAND PESOS (P50,000.00).

16.For having made gross misrepresentation, she is liable for

exemplary damages in the amount of FIFTY THOUSAND PESOS
(P50,000.00) to serve as a warning for the public not to follow her
evil example.

17.As [petitioners] were compelled to file the instant suit to protect

and vindicate [their] right and reputation, [respondent] should also
 be held liable for attorney’s fees in the amount of FIFTY THOUSAND
PESOS (P50,000.00) in addition to the costs of this suit.

PRAYER

[Petitioners] respectfully [pray] that a judgment, in [their] favor and against

[respondent], be rendered by this Honorable Court, ordering [respondent]:

1. To pay the amount due of TWENTY SEVEN THOUSAND SEVEN HUNDRED

NINETY ONE AND 65/100 (P27,791.65) representing her share in the SSS
contributions and processing costs, with interest, at legal rate, from the
time of the filing of this Complaint;

2. To pay FIFTY THOUSAND PESOS (P50,000.00) for moral damages;

3. To pay FIFTY THOUSAND PESOS (P50,000.00) for exemplary damages;

4. To pay FIFTY THOUSAND PESOS (P50,000.00) as attorney’s fees;

5. To pay the costs of this suit.

[Petitioners] further [pray] for such other relief as are just and equitable under the
circumstances.37
In fine, petitioners alleged that respondent misrepresented that she was simultaneously
employed by another company; consequently, they did not enroll her with the SSS or
pay her SSS contributions. Likewise, when petitioners eventually paid respondent’s SSS
contributions as a result of the filing of a complaint by the SSS, respondent was
unjustly enriched because the amount was not deducted from her wages in Amecos.

The evidence, however, indicates that while respondent was employed, Amecos did not
remit premium contributions – both employer and employees’ shares – to the SSS; the
SSS demand letter38 sent to it covers non-payment of SSS premium contributions from
January 2001 up to April 2002, amounting to P85,687.84.39 The Amecos
payroll40 covering the period from January 30 to November 29, 2001 likewise shows
that no deductions for SSS contributions were being made from respondent’s salaries.
This can only mean that during the period, Amecos was not remitting SSS contributions
– whether the employer or employees’ shares – pertaining to respondent. As such,
during her employment with Amecos, respondent was never covered under the System
as SSS did not know in the first instance that petitioners employed her, since the
petitioners were not remitting her contributions. Petitioners were forced to remit
monthly SSS contributions only when SSS filed I.S. No. 03-6068 with the Quezon City
Prosecutor’s Office. By that time, however, respondent was no longer with Amecos, as
her employment was terminated sometime in mid-February of 2002.

Given the above facts, it is thus clear that petitioners have no cause of action against
the respondent in Civil Case No. 04-27802. Since Amecos did not remit respondent’s
full SSS contributions, the latter was never covered by and protected under the
System. If she was never covered by the System, certainly there is no sense in making
her answerable for the required contributions during the period of her employment. And
it follows as a matter of consequence that claims for other damages founded on the
foregoing non-existent cause of action should likewise fail.

WHEREFORE, premises considered, the Petition is DENIED. The assailed March 22,
2007 and the May 23, 2007 Resolutions of the Court of Appeals in CA-G.R. SP No.
96959 are AFFIRMED.

SO ORDERED.