G.R. No. 209011. April 20, 2016
MALAYAN INSURANCE COMPANY, INC., petitioner, vs. DIANA P. ALIBUDBUD, respondent.

FACTS

Respondent Diana P. Alibudbud was employed by petitioner Malayan Insurance Company, Inc. as Senior Vice President. Under Malayan’s Car Financing Plan, she was issued a 2004 Honda Civic sedan, subject to conditions including continuous service for at least three years. She executed a Promissory Note and a Deed of Chattel Mortgage, stipulating that if she resigned, retired, or was terminated before three years, she must pay Malayan’s 50% equity share (P360,000) and any outstanding balance, with the entire obligation becoming immediately due and payable upon separation. The agreements also provided for foreclosure or legal action upon default, delivery of the vehicle to Malayan, and attorney’s fees.
Alibudbud was dismissed on July 18, 2005, due to redundancy. Malayan demanded the surrender of the car, but she refused. On September 21, 2005, Malayan filed a complaint for replevin and/or sum of money before the Regional Trial Court (RTC) of Manila, seeking seizure of the car or payment of P552,599.93 plus charges and attorney’s fees. Alibudbud, in turn, filed a complaint for illegal dismissal before the Labor Arbiter, seeking reinstatement. She moved to suspend the civil proceedings, arguing that the labor case presented a prejudicial question. The RTC denied her motions, ruling that the replevin action arose from the Promissory Note and was separate from the labor dispute. The RTC eventually granted the replevin complaint, converting it into a money claim due to Alibudbud’s refusal to surrender the car. Meanwhile, the Labor Arbiter dismissed the illegal dismissal case, upholding Malayan’s redundancy program as a valid exercise of management prerogative.
On appeal, the Court of Appeals (CA) reversed the RTC, dismissing the replevin action for lack of jurisdiction. The CA held that the Car Financing Plan was intimately connected to Alibudbud’s employment, thus the case fell under labor relations jurisdiction. Malayan filed this Petition for Review.

ISSUE

Whether the Regional Trial Court had jurisdiction over the complaint for replevin filed by Malayan against Alibudbud.

RULING

Yes, the Regional Trial Court had jurisdiction. The Supreme Court reversed the CA and reinstated the RTC Decision. The Court held that the action for replevin was civil in nature, arising from the Promissory Note and Deed of Chattel Mortgage executed by Alibudbud, which established a debtor-creditor relationship. The issue in the replevin case was separate and distinct from the illegal dismissal case, as it concerned Alibudbud’s obligation to pay Malayan’s equity share in the vehicle or surrender its possession upon her termination, per their agreement. The illegal dismissal case had already been resolved in favor of Malayan, confirming the validity of her termination. The Court emphasized that the characterization of an employee’s services as redundant is an exercise of business judgment, not subject to review absent arbitrariness. Thus, the RTC correctly exercised jurisdiction over the replevin action.