5. Banez vs. Valdevilla Iligan City.

The Labor Arbiter rendered a

[G.R. No. 128024. May 9, 2000] decision in favor of Banez. Accordingly, he was
illegally dismissed and the Labor Arbiter
To allow respondent court to proceed with the ordered the payment of separation pay in lieu of
instant action for damages would be to open reinstatement, and of backwages and attorney‘s
anew the factual issue of whether petitioner‘s fees. The decision was appealed to the NLRC,
installment sale scheme resulted in business which dismissed the same for having been filed
losses and the dissipation of private out time. A petition for certiorari was file before
respondent‘s property. This issue has been duly the Supreme Court, but it was also dismissed
raised and ruled upon in the illegal dismissal based on technical grounds. The court, however,
case, where private respondent brought up as a pointed out that even if all the procedural
defense the same allegations now embodied in requirements for the filing of the petition were
his complaint, and presented evidence in met, it would still be dismissed for failure to
support thereof. In other words, the issue of show grave abuse of discretion on the part of the
actual damages has been settled in the labor NLRC.
case, which is now final and executory.
On November 13, 1995, Oro Marketing
FACTS: filed a complaint for damages before the RTC of
Bebiano M. Banez was the sales Misamis Oriental. On January 30, 1996, Banez
operations manager of private respondent Oro filed a motion to dismiss. He interposed in the
Marketing in its branch in Iligan City. As an court that the action for damages, having arisen
operations manager, he canvassed customers from an employer-employee relationship, was
personally or through salesmen of Oro squarely under the exclusive original jurisdiction
Marketing, who were hired by him. If said of the NLRC under Article 217 (a) paragraph 4
customer decides to buy items from the of the Labor Code and is barred by reason of the
company on installment basis, Banez would buy final judgment in the labor case. He accused Oro
the items on cash basis at ex-factory price, a Marketing of splitting causes of action, stating
privilege not given to customers, and thereafter that the latter could very well have included the
required the customer to sign promissory notes instant claim for damages in its counterclaim
and other documents using the name and before the Labor Arbiter. He also pointed out
property of the company, purporting that said that the civil action of Oro
customer purchased the items from plaintiff on Marketing in an act of forum-shopping and was
installment basis. merely resorted to after a failure to obtain a
favorable decision with the NLRC.
Thereafter, Banez collected the
installment payments either personally or Accordingly, the respondent court
through Venus Lozano, Group Sales Manager declared that it has jurisdiction over the subject
and also a secretary of Banez in his own matter of the the controversy. It stated that after
business for collecting and receiving perusal of the complaint which if for damages
installments, purportedly for the plaintiff Oro does not ask for any relief under the Labor
Marketing but in reality on his own account or Code. It seeks to recover damages as
business. The collection and receipt of payments redress for defendant‘s breach of contractual
were made inside the branch in Iligan City, obligation to plaintiff who was damaged and
using the company‘s facilities, property, and prejudiced. The court believes such cause of
manpower. That accordingly, the company‘s action is within the realm of civil law, and
sales decreased and reduced to a considerable jurisdiction over the controversy belongs to the
extent the profits which it would have earned. regular courts.

In 1993, Oro Marketing ―indefinitely While seemingly the cause of action

suspended‖ Bebiano Banez and the latter file a arose from employer-employee relationship, the
complaint for illegal dismissal with the NLRC in employer‘s claim for damages is grounded on
the nefarious activities of defendant causing respondent‘s property and supplies which
damage and prejudice to plaintiff. The court petitioner used in conducting his business.
believes that there was breach of contractual
obligation, which is intrinsically a civil dispute. To allow respondent court to proceed
The averments in the complaint removed the with the instant action for damages would be
controversy from the coverage of the Labor to open anew the factual issue of whether
Code and brought it within the purview of civil petitioner‘s installment sale scheme resulted in
law. Petitioner‘s motion for reconsideration was business losses and the dissipation of private
denied for lack of merit. respondent‘s property. This issue has been duly
raised and ruled upon in the illegal dismissal
ISSUES: case, where private respondent brought up as a
1. WON the action for damages filed before the defense the same allegations now embodied in
RTC will prosper. NO his complaint, and presented evidence in support
2. WON regular courts has jurisdiction over thereof. In other words, the issue of actual
claims for damages as between employers and damages has been settled in the labor case,
employees. NO. which is now final and executory.

HELD: This is, of course, to distinguish from cases of

Art. 217 (a), par. 4 of the Labor Code, which action for damages where the employer-
was already in effect at the time of the filing of employee relationship is merely incidental and
this case, reads: the cause of action proceeds from a different
source of obligation. Thus, the jurisdiction of
Art. 217. Jurisdiction of Labor Arbiters and the regular courts was upheld where the damages,
Commission- (a) Except as otherwise provided claimed for were based on tort, malicious
under this Code the Labor Arbiters shall have prosecution, or breach of contract, as when the
original and exclusive jurisdiction to hear and claimant seeks to recover a debt from a former
decide, within thirty (30) calendar days after the employee or seeks liquidated damages in
submission of the case by the parties for enforcement of a prior employment contract.
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