Case Digest: Bañez v. Valdevilla, G.R. No. 128024, May 9, 2000

 Labor Law | NLRC

• Bebanio Bañez was the sales operations manager of private respondent Oro Marketing, Inc. in Iligan City.
• In 1993, the private respondent "indefinitely suspended" the petitioner.
• Petitioner filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC) in Iligan City.
• Labor Arbiter: Found petitioner illegally dismissed and ordered payment of separation pay, backwages, and attorney’s fees.
• NLRC: Dismissed the appeal on procedural grounds.
• Private respondent then filed a complaint for damages before the Regional Trial Court (RTC) seeking payment for various losses.

WoN Regional Trial Court (RTC) has jurisdiction over an action for damages filed by the employer against the dismissed employee, despite a prior labor case. NO

Article 217(a), paragraph 4 of the Labor Code, which was already in effect at the time of the filing of this case, reads:

ARTICLE 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:

x       x       x

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

x       x       x

The above provisions are a result of the amendment by Section 9 of Republic Act ("R.A.") No. 6715, which took effect on March 21, 1989, and which put to rest the earlier confusion as to who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees.

It will be recalled that years prior to R.A. 6715, jurisdiction over all money claims of workers, including claims for damages, was originally lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor Code. On May 1, 1979, however, Presidential Decree ("P.D.") No. 1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages." This limitation in jurisdiction, however, lasted only briefly since on May 1, 1980, P.D. No. 1691 nullified P.D. No. 1367 and restored Article 217 of the Labor Code almost to its original form. Presently, and as amended by R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations" .

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees, we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case.

Even under Republic Act No. 875 (the "Industrial Peace Act", now completely superseded by the Labor Code), jurisprudence was settled that where the plaintiff’s cause of action for damages arose out of, or was necessarily intertwined with, an alleged unfair labor practice committed by the union, the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations, and the assumption of jurisdiction of regular courts over the same is a nullity. To allow otherwise would be "to sanction split jurisdiction, which is prejudicial to the orderly administration of justice." Thus, even after the enactment of the Labor Code, where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union, such complaint for damages is deeply rooted from the labor dispute between the parties, and should be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in National Federation of Labor v. Eisma, 127 SCRA 419:chanrob1es virtual 1aw library

Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations.

There is no mistaking the fact that in the case before us, private respondent’s claim against petitioner 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 below 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 equivalent to the value of private respondent’s property and supplies which petitioner used in conducting his "business" .

Second, and more importantly, 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. The Labor Arbiter, however, found to the contrary — that no business losses may be attributed to petitioner as in fact, it was by reason of petitioner’s installment plan that the sales of the Iligan branch of private respondent (where petitioner was employed) reached its highest record level to the extent that petitioner was awarded the 1989 Field Sales Achievement Award in recognition of his exceptional sales performance, and that the installment scheme was in fact with the knowledge of the management of the Iligan branch of private Respondent. In other words, the issue of actual damages has been settled in the labor case, which is now final and executory.

Still on the prospect of re-opening factual issues already resolved by the labor court, it may help to refer to that period from 1979 to 1980 when jurisdiction over employment-predicated actions for damages vacillated from labor tribunals to regular courts, and back to labor tribunals. In Ebon v. de Guzman, 113 SCRA 52, 13 this Court discussed:

The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor cases could have assumed that the Labor Arbiters’ position-paper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at a just and accurate assessment of damages, as distinguished from backwages and separation pay, and that the trial procedure in the Court of First Instance would be a more effective means of determining such damages. . .

Evidently, the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim.

So, on May 1, 1980, Presidential Decree No. 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. 1367 and restored to the Labor Arbiter and the NLRC their jurisdiction to award all kinds of damages in cases arising from employer-employee relations . . . 

Clearly, respondent court’s taking jurisdiction over the instant case would bring about precisely the harm that the lawmakers sought to avoid in amending the Labor Code to restore jurisdiction over claims for damages of this nature to the NLRC.

This is, of course, to distinguish from cases of actions 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 14 , malicious prosecution 15 , or breach of contract, as when the claimant seeks to recover a debt from a former employee 16 or seeks liquidated damages in enforcement of a prior employment contract. 

Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations — in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code. 

Thus, it is obvious that private respondent’s remedy is not in the filing of this separate action for damages, but in properly perfecting an appeal from the Labor Arbiter’s decision. Having lost the right to appeal on grounds of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for damages cannot take the place of such lost appeal.

Respondent court clearly having no jurisdiction over private respondent’s complaint for damages, we will no longer pass upon petitioner’s other assignments of error.

WHEREFORE, the Petition is GRANTED, and the complaint in Civil Case No. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby DISMISSED. No pronouncement as to costs.