5. Banez vs. Valdevilla
The
[G.R. No. 128024. May 9, 2000]
To allow respondent court to proceed
with the instant action for damages
would be to open anew the factual
issue of whether petitioner‘s
installment sale scheme resulted in
business losses and the dissipation of
private respondent‘s property. This
issue has been duly raised and ruled
upon in the illegal dismissal case,
where private respondent brought up
as a defense the same allegations now
embodied in his complaint, and
presented evidence in support
thereof. In other words, the issue of
actual damages has been settled in
the labor case, which is now final and
executory.
FACTS:
Bebiano M. Banez was the sales
operations manager of private
respondent Oro Marketing in its
branch in Iligan City. As an operations
manager, he canvassed customers
personally or through salesmen of Oro
Marketing, who were hired by him. If
said customer decides to buy items
from the company on installment
basis, Banez would buy the items on
cash basis at ex-factory price, a
privilege not given to customers, and
thereafter required the customer to
sign promissory notes and other
documents using the name and
property of the company, purporting
that said customer purchased the
items from plaintiff on installment
basis.
Thereafter, Banez collected the
installment payments either
personally or through Venus Lozano,
Group Sales Manager and also a
secretary of Banez in his own
business for collecting and receiving
installments, purportedly for the
plaintiff Oro Marketing but in reality
on his own account or business.
collection and receipt of payments
were made inside the branch in Iligan
City, using the company‘s facilities,
property, and manpower. That
accordingly, the company‘s sales
decreased and reduced to a
considerable extent the profits which
it would have earned.
In 1993, Oro Marketing
―indefinitely suspended‖ Bebiano
Banez and the latter file a complaint
for illegal dismissal with the NLRC in
Iligan City. The Labor Arbiter
rendered a decision in favor of Banez.
Accordingly, he was illegally
dismissed and the Labor Arbiter
ordered the payment of separation
pay in lieu of reinstatement, and of
backwages and attorney‘s fees. The
decision was appealed to the NLRC,
which dismissed the same for having
been filed out time. A petition for
certiorari was file before the Supreme
Court, but it was also dismissed based
on technical grounds. The court,
however, pointed out that even if all
the procedural requirements for the
filing of the petition were met, it
would still be dismissed for failure to
show grave abuse of discretion on the
part of the NLRC.
On November 13, 1995, Oro
Marketing filed a complaint for
damages before the RTC of Misamis
Oriental. On January 30, 1996, Banez
filed a motion to dismiss. He
interposed in the court that the action
for damages, having arisen from an
employer-employee relationship, was
squarely under the exclusive original
jurisdiction of the NLRC under Article
217 (a) paragraph 4 of the Labor
Code and is barred by reason of the
final judgment in the labor case. He
accused Oro Marketing of splitting
causes of action, stating that the
latter could very well have included
the instant claim for damages in its
counterclaim before the Labor
Arbiter. He also pointed out that the
civil action of Oro
Marketing in an act of forum-
shopping and was merely resorted to
after a failure to obtain a favorable
decision with the NLRC.
Accordingly, the respondent
court declared that it has jurisdiction
over the subject matter of the the
controversy. It stated that after
perusal of the complaint which if for
damages does not ask for any relief
under the Labor Code. It seeks to
recover damages as
redress for defendant‘s breach of
contractual obligation to plaintiff who
was damaged and prejudiced. The
court believes such cause of action is
within the realm of civil law, and
jurisdiction over the controversy
belongs to the regular courts.
While seemingly the cause of
action arose from employer-employee
relationship, the employer‘s claim for
damages is grounded on the nefarious
activities of defendant causing
damage and prejudice to plaintiff. The
court believes that there was breach
of contractual obligation, which is
intrinsically a civil dispute. The
averments in the complaint removed
the controversy from the coverage of
the Labor Code and brought it within
the purview of civil law. Petitioner‘s
motion for reconsideration was denied
for lack of merit.
ISSUES:
1. WON the action for damages filed
before the RTC will prosper. NO
2. WON regular courts has
jurisdiction over claims for damages
as between employers and employees.
NO.
HELD:
Art. 217 (a), par. 4 of the Labor Code,
which was already in effect at the
time of the filing of this case, reads:
Art. 217. Jurisdiction of Labor
Arbiters and the Commission- (a)
Except as otherwise provided under
this Code the Labor Arbiters shall
have original and exclusive
jurisdiction to hear and decide, within
thirty (30) calendar days after the
submission of the case by the parties
for decision without extension, even
in the absence of stenographic notes,
the following cases involving all
workers, whether agricultural or non-
agricultural:
4. Claims for actual, moral,
exemplary, and other forms of
damages arising from the employer-
employee relations.
It is obvious that the
respondent‘s claim for actual
damages arose from a prior employer-
employee relationship. In the first
place, private respondent would not
have
taken issue with petitioner‘s ―doing
business of his own‖ had the latter not
been concurrently its employee. Thus,
the damages alleged in the complaint
are: first, those
amounting to lost profits and earnings
due to petitioner‘s abandonment or
neglect of his
duties as sales manager, having been
otherwise preoccupied by his
unauthorized installment sale scheme;
and second, those which are
equivalent to the value of private
respondent‘s property and supplies
which petitioner used in conducting
his business.
To allow respondent court to
proceed with the instant action for
damages would be
to open anew the factual issue of
whether petitioner‘s installment sale
scheme resulted in
business losses and the dissipation of
private respondent‘s property. This
issue has been duly raised and ruled
upon in the illegal dismissal case,
where private respondent brought up
as a defense the same allegations now
embodied in his complaint, and
presented evidence in support
thereof. In other words, the issue of
actual damages has been settled in
the labor case, which is now final and
executory.

This is, of course, to distinguish from

cases of action for damages where the
employer-employee relationship is
merely incidental and the cause of
action proceeds from a different
source of obligation. Thus, the
jurisdiction of regular courts was
upheld where the damages, claimed
for were based on tort, malicious
prosecution, or breach of contract, as
when the claimant seeks to recover a
debt from a former employee or seeks
liquidated damages in enforcement of
a prior employment contract.