G.R. No. 130362 . September 10, 2001.
International Flavors and Fragrances (Phils.), Inc. vs. Merlin J. Argos and Jaja C. Pineda.

FACTS

Petitioner International Flavors and Fragrances (IFFI) employed respondents Merlin Argos and Jaja Pineda as managers. Their superior, Managing Director Hernan Costa, declared them “persona non grata” in a company announcement after their positions were made redundant and they signed quitclaims. Respondents filed criminal libel cases against Costa. Subsequently, they filed a civil case for damages against both Costa and IFFI, the latter sued in its subsidiary capacity as employer. IFFI moved to dismiss the civil case, arguing respondents failed to reserve their right to file a separate civil action. The trial court initially granted the dismissal but later reconsidered and reinstated the civil case against IFFI. The Court of Appeals dismissed IFFI’s petition challenging the trial court’s orders.

ISSUE

Whether a civil action for damages based on the alleged subsidiary liability of an employer under the Revised Penal Code can proceed independently during the pendency of the criminal case against the employee.

RULING

No. The Supreme Court ruled that the civil action against IFFI, premised on subsidiary liability under the Revised Penal Code, was prematurely filed. The Court clarified the nature of the complaint. While the Court of Appeals treated it as an independent civil action under Article 33 of the Civil Code (which covers libel), the allegations in the complaint itself consistently referred to IFFI’s liability as “subsidiary,” anchoring it on Costa’s criminal act. An employer’s subsidiary civil liability under Articles 102 and 103 of the Revised Penal Code is not a primary obligation but a liability that accrues only upon specific conditions: first, the conviction of the employee; second, a showing of the employee’s insolvency; and third, the employer’s own negligence. Since the criminal libel case against Costa was still pending, his criminal liability—and any subsidiary civil liability derivative of it—had not been established. Therefore, no cause of action against IFFI based on subsidiary liability had yet accrued. The proper recourse for respondents was to await the outcome of the criminal case. The civil action for subsidiary liability is inherently attached to the criminal prosecution and cannot be pursued independently as a separate civil suit. The trial court’s orders reinstating the civil case against IFFI were set aside, and the complaint against IFFI was dismissed for being premature.