De La Salle University v. Lao
REITERATIONFacts
The Antecedents: Lolita U. Lao was appointed as a "non-tenured full-time probationary assistant professor C" at De La Salle University. She was subsequently given a contract for the school year 1975-1976, which she signed. However, the university president did not sign the contract. The chairman of the economics department informed Lao that her services would be terminated at the end of her one-year probationary period, which coincided with the first semester of the academic year 1975-1976. The university officials confirmed this decision in writing, stating that they would not enter into a permanent contract with her. Procedural History: Lao filed a petition against the university and its officials, seeking to restrain the termination of her services and praying for damages. She later amended her petition to limit her action to the recovery of P99,000 as damages. The respondents questioned the jurisdiction of the court, arguing that the case falls under the National Labor Relations Commission (NLRC). The lower court ruled in favor of Lao, awarding her P90,000 as moral and exemplary damages and attorney's fees, relying on provisions of the Civil Code. The Court of Appeals affirmed this decision. The Appeal: The University and its officials appealed to the Supreme Court, contending that the case is within the jurisdiction of the NLRC. They also argued that Lao never became a permanent employee and thus had no cause of action for damages.
Issue(s)
Whether the Court of First Instance has jurisdiction over a claim for damages arising from the termination of a probationary employee when the existence of an employer-employee relationship is disputed. Whether Lolita U. Lao became a permanent employee of De La Salle University.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals, dismissing Lolita U. Lao's amended petition. The Court held that the Labor Arbiter and the NLRC do not have jurisdiction over the case because the existence of an employer-employee relationship was disputed. The Court found that Lao was a probationary employee whose probationary employment was legally terminated, and she had no cause of action for damages.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Labor Arbiter and the NLRC do not have jurisdiction over the case. The Court clarified that while the Labor Code grants exclusive jurisdiction to labor tribunals over cases arising from employer-employee relations, this jurisdiction is predicated on the assumption that such a relationship exists. When the very existence of the employer-employee relationship is the issue, as in this case, the ordinary courts are competent to determine it. This is especially true when the determination requires a full-dress trial, which is better suited for the regular courts than the summary position-paper procedure of labor arbiters. Therefore, the case was properly brought before the lower courts. On Issue 2: The Supreme Court found that Lolita U. Lao never became a permanent employee. The contract for permanent employment was not completed because it was not signed by the university president, it was legally withdrawn before it became effective, and it was never delivered to Lao. Consequently, Lao remained a probationary employee. The university had the prerogative to terminate her probationary employment and not to offer her a permanent position. Since her probationary employment was legally terminated and she did not attain permanent status, she had no cause of action for damages based on a breach of a permanent employment contract.
Main Doctrine
The Supreme Court held that the Labor Arbiter and the NLRC do not have jurisdiction over cases where the existence of an employer-employee relationship is the primary issue to be determined. Such cases fall within the competence of the regular courts, especially when a full-dress trial is necessary to resolve the dispute, as opposed to the position-paper procedure typically followed by labor arbiters. The Court emphasized that Article 265(f) of the Labor Code, later Article 217(5), assumes the existence of an employer-employee relationship, and does not grant jurisdiction to labor tribunals to determine whether such a relationship exists in the first place.