Concepcion v. Baliao

SECOND DIVISION

[G.R. No. 220439. January 11, 2016.]

JAMES P. CONCEPCION, petitioner, vs. JOSE WILFREDO R. BALIAO, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution dated 11 January 2016 which reads as follows:

"G.R. No. 220439 (JAMES P. CONCEPCION, petitioner v. JOSE WILFREDO R. BALIAO, respondent).

THE CASE

This is a petition for review on certiorari under Rule 45 of the Rules of Court, challenging the January 29, 2015 decision and September 3, 2015 resolution of the Court of Appeals (CA) in CA-GR CV No. 96327. Associate Justice Edwin D. Sorongon penned the challenged rulings, and Associate Justices Remedios A. Salazar-Fernando and Ricardo R. Rosario concurred.

James P. Concepcion (Concepcion) and Jose Wilfredo R. Baliao (Baliao) entered into a Joint Venture Agreement (JVA) in 2003 to establish and operate a restaurant in Makati City. Under the JVA, Concepcion agreed to provide a space for the restaurant, to set up a corporation to operate the restaurant, and to give Baliao a minimum compensation of P50,000.00 per month, his 30% share in the corporation, and a condominium unit in the same building. For his part, Baliao agreed to become the head chef and to ensure the smooth operation of the restaurant.

Ziggurat Restaurant opened on November 26, 2003. The restaurant gained an excellent reputation under Baliao's management within four months. However, Concepcion brought in two employees to act as chief officer and manager who allegedly started to meddle with the internal affairs of the restaurant.

On July 15, 2005, Baliao was dismissed as head chef and was not allowed to enter the restaurant. Concepcion and the two employees allegedly framed a story that Baliao had committed anomalous transactions while running the restaurant.

Baliao filed a complaint for breach of contract with the Regional Trial Court (RTC) with a prayer for the issuance of a temporary restraining order (TRO)1 against Concepcion and his two employees (defendants).

In their answer, the defendants alleged that: (a) the RTC has no jurisdiction over a case involving an employer-employee relationship; (b) Concepcion's obligations under the JVA were extinguished when Baliao consented to the registration of Jimsy Corporation without receiving the agreed 30% share; and (c) Baliao squandered the restaurant's funds.

The RTC ruled in Baliao's favor and ordered Concepcion to pay damages. 2 The RTC dismissed the complaint against the two employees because their liability for damages was not established.

The CA's decision

The CA affirmed the RTC's decision. The CA ruled that: (a) the RTC had jurisdiction; (b) the JVA was not novated; and (c) legal compensation does not apply to this case.

First, the CA noted that jurisdiction is determined by the allegations of the complaint. Baliao alleged in his complaint that Concepcion had violated the JVA's terms (i.e., by making it appear that Baliao was a mere employee and by terminating his services as head chef). The allegations and the reliefs sought in the complaint involve the Civil Code rather than Labor Code provisions. Thus, jurisdiction is with the RTC.

Second, the CA held that novation 3 is never presumed and must be proven as a fact either by express stipulation or by implication from the irreconcilable incompatibility between the old and new obligations. In the present case, Concepcion failed to prove that novation took place. He argued that the JVA was extinguished 4 but he failed to present a new agreement expressly entered into by the parties that extinguished the JVA.

Third, the CA ruled that legal compensation is not applicable because the parties are not mutual creditors and debtors of each other under the JVA.

THE PETITION

Concepcion maintains that the RTC had no jurisdiction over the case. He argues that the case involves an employer-employee relationship; thus, jurisdiction is with the National Labor Relations Commission (NLRC). CAIHTE

Concepcion also argues that the JVA was extinguished when Baliao acceded to the registration and operation of the restaurant under Jimsy Corporation without receiving the 30% share in the corporation. 5 Thus, the JVA had been novated to an employment contract. Consequently, Baliao was validly terminated as an employee.

Concepcion insists that the award of damages lacks basis. He argues that he was not in bad faith in dealing with Baliao and did not act in a wanton and fraudulent manner to justify the award of moral and exemplary damages.

THE COURT'S RULING

We dismiss the petition outright for lack of merit.

The issues before the Court are: (1) whether the RTC had jurisdiction; (2) whether the JVA was novated; and (3) whether the award of damages is justified because Concepcion had acted in bad faith.

Jurisdiction over the subject matter is determined from the allegations of the complaint. It does not depend on the defenses set up in the answer; otherwise, the question of jurisdiction would entirely depend on the defendant. 6 In Radio Communications of the Philippines, Inc. v. CA, 7 we ruled that an action for breach of contract is incapable of pecuniary estimation; thus, it is cognizable by the RTC.

In the present case, we find, as the lower courts did, that the RTC had jurisdiction. Baliao alleged in his complaint that Concepcion breached his obligations under the JVA. Baliao essentially argued that he was a partner 8 in the restaurant business and not a mere employee. Thus, the case is cognizable by the RTC, not by the NLRC.

Concepcion's other arguments in the petition are factual in nature. These issues are not allowed in a Rule 45 petition, subject to certain exceptions. 9 None of the exceptions apply to this case.

We have held that the questions whether there is novation and whether a person is in bad faith are factual matters. 10 Novation exists when the requisites are met based on the records of the case. 11 Bad faith is inferred from one's conduct or contemporaneous statements. 12 Thus, a court only needs to review the case records to rule on these issues. Moreover, these issues were duly considered and ruled upon by the lower courts and do not deserve further consideration by this Court.

WHEREFORE, premises considered, we DENY the petition outright for lack of merit.

SO ORDERED.

Very truly yours,

MA. LOURDES C. PERFECTODivision Clerk of Court

By:

(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court

 

Footnotes

1. The RTC issued a TRO and, after hearing, a writ of preliminary injunction against the defendants. The issuance of the writ was questioned before the Supreme Court but we denied the petition.

2. Moral damages at P100,000; exemplary damages at P50,000; attorney's fees at P50,000 and cost of suit.

3. Novation is a mode of extinguishing an obligation by changing the object, by substituting a new debtor, or by subrogating a third party to the creditor's rights. (Civil Code of the Philippines, Art. 1293.)

4. Allegedly when Baliao agreed to register the restaurant under Jimsy Corporation.

5. Baliao allegedly agreed to sign the checks on behalf of Jimsy Corporation and to receive a salary of P50,000.00 plus bonuses and fringe benefits.

6. Fort Bonifacio Development Corporation v. Sorongon and Fong, G.R. No. 176709, May 8, 2009, 587 SCRA 613.

7. G.R. No. 136109, August 1, 2002, 386 SCRA 67.

8. Primelink Properties and Development Corporation v. Lazatin-Magat, G.R. No. 167379, June 27, 2006, 493 SCRA 444: A joint venture is a form of partnership and is governed by the laws of partnership.

9. Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc., G.R. No. 190515, June 6, 2011: The exceptions are when: (i) the conclusion is grounded entirely on speculation, surmises, and conjectures; (ii) the inference made is manifestly mistaken, absurd, or impossible; (iii) there is a grave abuse of discretion; (iv) the judgment is based on a misapprehension of facts; (v) the findings of fact are conflicting; (vi) the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (vii) the findings are contrary to those of the trial court; (viii) the findings of fact are conclusions without citation of specific evidence on which these are based; (ix) the facts set forth in the petition and the petitioners' main and reply briefs are not disputed by the respondents; and (x) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record.

10. Benedicto v. Villaflores, G.R. No. 185020, October 6, 2010, 632 SCRA 446; David v. David, G.R. No. 162365, January 15, 2014.

11. David v. David, supra note 10.

12. Benedicto v. Villaflores, supra note 10.