MORALES, MARIVIC A.

Case No. 29

Labor Law II Block A

SAN MIGUEL CORPORATION vs NATIONAL LABOR RELATIONS COMMISSION et., al

G.R. No. 80774 May 31, 1988

FACTS:
Petitioner San Miguel Corporation (SMC) sponsored an Innovation Program which grant cash rewards to
all SMC employees who submit to the corporation ideas and suggestions found to beneficial to the
corporation.
Private Respondent Rustico Vega, who is a mechanic in the Bottling Department of the SMC submitted
an innovation proposal which supposed to eliminate certain defects in the quality and taste of the product
San Miguel Beer Grande.
Petitioner Corporation did not accept the said proposal and refused Mr. Vegas subsequent demands for
cash award under the innovation program. Hence, Vega filed a complaint with the then Ministry of Labor
and Employment in Cebu. He argued that his proposal had been accepted by the methods analyst and was
implemented by the SMC and it finally solved the problem of the Corporation in the production of Beer
Grande.
Petitioner denied of having approved Vegas proposal. It stated that said proposal was turned down for
lack of originality and the same, even if implemented, could not achieve the desire result. Further,
petitioner Corporation alleged that the Labor Arbiter had no jurisdiction.
The Labor Arbiter dismissed the complaint for lack of jurisdiction because the claim of Vega is not a
necessary incident of his employment and does not fall under Article 217 of the Labor Code. However,
in a gesture of compassion and to show the governments concern for the working man, the Labor Arbiter
ordered petitioner to pay Vega P2,000 as financial assistance. Both parties assailed said decision of the
Labor Arbiter. The NLRC set aside the decision of the Labor Arbiter and ordered SMC to pay
complainant the amount of P60,000
ISSUE:
Whether the Labor Arbiter and the Commission has jurisdiction over the money claim filed by private
respondent
HELD:
NO. The Labor Arbiter and the Commission has no jurisdiction over the money claim of Vega.
The court ruled that the money claim of private respondent Vega arose out of or in connection with his
employment with petitioner. However, it is not enough to bring Vegas money claim within the original
and exclusive jurisdiction of Labor Arbiters.
In the CAB, the undertaking of petitioner SMC to grant cash awards to employees could ripen into an
enforceable contractual obligation on the part of petitioner SMC under certain circumstances. Hence, the
issue whether an enforceable contract had arisen between SMC and Vega, and whether it has been
breached, are legal questions that labor legislations cannot resolved because its recourse is the law on
contracts.

Where the claim is to be resolved not by reference to the Labor Code or other labor relations statute or a
collective bargaining agreement BUT by the general civil law, the jurisdiction over the dispute belongs to
the regular courts of justice and not to the Labor Arbiter and NLRC.