Cash advance as counterclaim

Respondent Lani M. Labitigan filed a complaint for illegal dismissal seeking reinstatement and payment of money claims against petitioner Supra Multi-Services Inc. (SMSI).

In answer to the complaint, petitioner alleged, among others, that respondent has an accumulated outstanding cash advances amounting to P64,173.83 which was pleaded as counterclaim against respondent.

The Court of Appeals ( CA) gave due course to the counterclaim.

Did the CA err?

Ruling: Yes.

Unlike the unwarranted ECOLA, however, the Court cannot order respondent to pay her outstanding cash advances from petitioner SMSI, allegedly amounting to P64,173.83.

In Banez v. Valdevilla, 387 Phil. 601, 608 ( 2000), the Court recognized that the jurisdiction of Labor Arbiters and the NLRC in Article 217 of the Labor Code, as amended, is compre- hensive enough to include claims for all forms of damages “arising from the employer- employee relations.”

Whereas, the Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees, it also held that by the designating clause “arising from the employer- employee relations,” Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case.

Petitioners’ counterclaim for payment of respondent’s outstanding cash advances, although undoubtedly arising from employer- employee relations between petitioners and respondent, did not arise from or was not necessarily connected with the fact of respondent’s termination. To recall, petitioners terminated respondent’s employment on the ground that respondent, in granting herself unwarranted ECOLA, willfully breached the trust reposed in her by petitioners as Accounting Supervisor. Respondent’s failure to make the necessary deductions from her salary to pay for her cash advances from petitioner SMSI was clearly another transgression petitioners were charging respondent with.

While the Court may take cognizance herein of the fact that such a charge by petitioners against respondent exists, it has no jurisdiction to determine the truth or falsity of such charge. Such charge was not covered by the notices and hearing petitioners accorded respondent prior to the latter’s dismissal and for the Court to rule upon the same in this case would be in violation of respondent’s right to due process.

( Leonardo De Castro, Jr., SC First Division, Supra Multi- Services, Inc., Jesus Tambunting, Jr., And Rita Claire T. Dabu vs. Lanie M. Labatigan, G. R. No. 192297, August 3, 2016).