G.R. No. 80933 . October 31, 1990.
PHIL-DUMEZ CONSTRUCTION CORPORATION, petitioner, vs. THE COURT OF APPEALS AND ANGELINA A. LATONIO, respondents.

FACTS

Petitioner Phil-Dumez Construction Corporation terminated its agreement with private respondent Dr. Angelina A. Latonio, who was operating its medical clinic. Dr. Latonio had offered her services in May 1984 after the company laid off its medical staff. She was required to absorb specific dismissed doctors into her clinic, follow detailed operational memoranda from management regarding procedures and personnel hours, and participate in administrative tasks like computerizing records. The company’s president even involved her in plans to expand the medical complex and adopted the name of her own clinic, “Spectrum,” for the facility. Her compensation was based on a per-applicant fee. After the clinic was operational, her services were terminated abruptly on August 16, 1984.
Dr. Latonio filed a complaint for damages in the Regional Trial Court (RTC) of Quezon City, claiming illegal termination. The RTC ruled in her favor, awarding actual, moral, and exemplary damages, lost earnings, and attorney’s fees. The Court of Appeals modified the decision, deleting the awards for actual, moral, and exemplary damages, reducing the lost earnings to a three-month period, and lowering the attorney’s fees, but sustaining the award for services rendered. Phil-Dumez appealed to the Supreme Court, arguing that the labor tribunals had exclusive jurisdiction and that Dr. Latonio was an independent contractor whose agreement it could terminate at will.

ISSUE

Whether the regular courts have jurisdiction over Dr. Latonio’s complaint for damages arising from the alleged illegal termination of her services.

RULING

The Supreme Court dismissed the petition, affirming the Court of Appeals. It held that the RTC properly exercised jurisdiction. The complaint was essentially for damages due to a tortious act—the alleged oppressive and illegal dismissal—not a claim for labor standards benefits like wages, overtime, or separation pay. Jurisdiction is determined by the nature of the cause of action as alleged in the complaint. Dr. Latonio sought redress for a breach of contract and a wrongful act causing her damage, a matter within the competence of regular courts.
On the substantive issue, the Court found that an employer-employee relationship was indicated by the degree of control exercised by Phil-Dumez. The company issued directives on medical procedures, set working hours for her personnel, required her to absorb specific staff, and integrated her clinic’s identity into its operations. The “control test” pointed to an employment relationship. Regardless, even assuming she was an independent contractor, her services were terminated without justifiable cause, constituting a clear breach of contract for which damages are recoverable. The factual findings of the Court of Appeals on the illegality of termination and the resulting damages are conclusive, as petitioner failed to show any arbitrariness. Thus, the regular courts had jurisdiction to adjudicate the claim for damages stemming from the contractual breach.