FACTS:

The petitioners in this case were employees of the petitioner company who were suspected of being involved in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint against the private respondents for theft, but this was later withdrawn and substituted with a complaint for falsification of private documents. On November 26, 1987, the complaint was dismissed after a preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, and this dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor.

Meanwhile, the private respondents were dismissed by the petitioner company on November 23, 1987, allegedly after an administrative investigation. As a result, the private respondents lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) and demanded reinstatement with damages. They also filed a separate civil complaint against the petitioners for damages arising from what they claimed to be their malicious prosecution.

The petitioners moved to dismiss the civil complaint, arguing that the trial court had no jurisdiction over the case because it involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was granted, but later on, the respondent judge reinstated the complaint upon motion for reconsideration, stating that it was distinct from the labor case pending before the labor courts. The petitioners then appealed to the Supreme Court.

ISSUES:

1. Whether the civil complaint filed by the private respondents for damages arising from alleged malicious prosecution falls under the jurisdiction of the labor arbiter.

2. Whether there is a "reasonable causal connection" between the claim asserted and employee-employer relations to put the case under the provisions of Article 217 of the Labor Code.

RULING:

1. No. The civil complaint filed by the private respondents does not fall under the jurisdiction of the labor arbiter. Not every controversy involving workers and their employers can be resolved only by the labor arbiter. The complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction if there is no reasonable causal connection between the claim asserted and employee-employer relations.

2. The claim of alleged malicious prosecution does not have a reasonable causal connection to employee-employer relations. Therefore, the regular court has jurisdiction over the civil complaint.

PRINCIPLES:

• Not every controversy involving workers and their employers can be resolved only by the labor arbiter. The case will be cognizable by the regular courts of justice if there is no reasonable causal connection between the claim asserted and employee-employer relations. (Medina v. Castro-Bartolome)

• The provisions of Article 217 of the Labor Code provide the jurisdiction of labor arbiters, which include unfair labor practice cases, cases involving wages and other terms and conditions of employment, money claims of workers, cases involving household services, and cases arising from any violation of Article 265 of the Labor Code.