The Supreme Court ruled that a civil action to enforce an employer’s subsidiary liability for defamation cannot proceed independently of the criminal action against the employee. The employer’s liability arises only after the employee is convicted in the criminal case. This decision underscores the importance of adhering to procedural rules and the specific conditions under which subsidiary liability can be enforced, protecting employers from premature civil suits.

Defamation and Dollars: When Can an Employer Be Sued for an Employee’s Words?

International Flavors and Fragrances (Phils.) Inc. (IFFI) faced a lawsuit stemming from allegedly libelous statements made by its former managing director, Hernan H. Costa. The respondents, Merlin J. Argos and Jaja C. Pineda, former employees of IFFI, filed a civil case for damages against Costa and IFFI following a “Personnel Announcement” that they deemed defamatory. The core legal question was whether IFFI could be sued for damages based on subsidiary liability in an independent civil action under Article 33 of the Civil Code, while the criminal libel cases against Costa were still pending.

The court emphasized that the nature of a complaint is determined by its allegations and the relief sought. In this case, the respondents explicitly stated they were suing IFFI in its subsidiary capacity as Costa’s employer. The complaint itself referred to IFFI’s liability as subsidiary and invoked provisions of the Revised Penal Code relating to employer liability. The Supreme Court highlighted that the respondents’ complaint clearly indicated that IFFI was being sued in a subsidiary capacity, not a primary one.

WHEREFORE, it is respectfully prayed that after hearing, this Honorable Court renders judgment against the defendant, Hernan H. Costa and/or against defendant International Flavors and Fragrances (Phil.), Inc., in its subsidiary capacity (subsidiary liability) as an employer…

The Supreme Court referenced key provisions of the Civil Code and the Revised Penal Code to clarify the basis for subsidiary liability. Article 1161 of the Civil Code states that obligations arising from crimes are governed by penal laws. Article 100 of the Revised Penal Code provides that employers engaged in any kind of industry shall be civilly liable for felonies committed by their employees in the discharge of their duties, but this is in default of the persons criminally liable.

Moreover, the court addressed the applicability of Article 33 of the Civil Code, which allows for a civil action for damages in cases of defamation, fraud, and physical injuries, separate and distinct from the criminal action. The Court clarified that Article 33 contemplates an action against the employee in his primary civil liability, and it does not apply to an action against the employer to enforce its subsidiary civil liability.

Article 33 of the Civil Code provides specifically that in cases of defamation, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action proceeds independently of the criminal prosecution and requires only a preponderance of evidence. In Joaquin vs. Aniceto,12 SCRA 308 (1964), we held that Article 33 contemplates an action against the employee in his primary civil liability. It does not apply to an action against the employer to enforce its subsidiary civil liability, because such liability arises only after conviction of the employee in the criminal case or when the employee is adjudged guilty of the wrongful act in a criminal action and found to have committed the offense in the discharge of his duties.

The ruling emphasized that any action brought against the employer based on its subsidiary liability before the conviction of its employee is premature. The Supreme Court stated that respondents were trying to rely on Art. 33 to hold IFFI primarily liable for its employee’s defamatory statements. However, the respondents did not raise the claim of primary liability as a cause of action in its complaint before the trial court.

The Supreme Court ultimately concluded that both the trial and appellate courts erred in failing to dismiss the complaint against IFFI. The action was premature because the criminal libel cases against Costa were still pending. Therefore, the petition was granted, reversing the Court of Appeals’ decision and ordering the dismissal of the civil complaint against IFFI.

FAQs

What was the key issue in this case?	The key issue was whether an employer can be sued for subsidiary liability for defamation before the employee is convicted in the criminal case. The Supreme Court ruled that such an action is premature.
What is subsidiary liability?	Subsidiary liability refers to the responsibility of an employer for the acts of their employee, which arises only after the employee has been convicted and found to be insolvent. This means the employer is secondarily liable if the employee cannot pay for the damages caused.
What is Article 33 of the Civil Code?	Article 33 of the Civil Code allows for an independent civil action for damages in cases of defamation, fraud, and physical injuries. However, it applies to the primary liability of the person who committed the act, not the subsidiary liability of the employer.
When can an employer be held subsidiarily liable for an employee’s actions?	An employer can be held subsidiarily liable only after the employee has been convicted in a criminal case and is found to be insolvent. The employer’s liability arises from the employee’s criminal act committed during their employment.
What happens if the employee is acquitted in the criminal case?	If the employee is acquitted in the criminal case, the employer cannot be held subsidiarily liable. The subsidiary liability is dependent on the employee’s conviction and subsequent insolvency.
Can the civil and criminal cases proceed simultaneously?	While Article 33 allows for a separate and independent civil action, this applies to the primary liability of the person who committed the act. An action for subsidiary liability against the employer is premature until the criminal case against the employee is resolved with a conviction.
What should the plaintiff do if they want to hold the employer liable?	The plaintiff must wait for the criminal case against the employee to be resolved. If the employee is convicted and found to be insolvent, then the plaintiff can proceed with a civil action against the employer to enforce subsidiary liability.
Is it possible for the employer to be primarily liable?	The Court stated that respondents were trying to rely on Art. 33 to hold IFFI primarily liable for its employee’s defamatory statements. However, the respondents did not raise the claim of primary liability as a cause of action in its complaint before the trial court.

This case clarifies the procedural requirements for enforcing subsidiary liability against employers in defamation cases. It underscores the principle that civil actions based on subsidiary liability are premature until the employee is convicted in the corresponding criminal case. This ruling ensures that employers are not prematurely subjected to civil suits based on the alleged actions of their employees.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: INTERNATIONAL FLAVORS AND FRAGRANCES (PHIL.), INC. vs. MERLIN J. ARGOS AND JAJA C. PINEDA, G.R. No. 130362, September 10, 2001