Fact:

Banez was the sales operations manager of private respondent in its branch in Iligan City. In 1993, private
respondent "indefinitely suspended" petitioner and the latter filed a complaint for illegal dismissal with
the National Labor Relations Commission. Both the Labor Arbiter and NLRC Found in FAVOV of
Banez. ORO Marketing Filed a complaint With the RTC For damages against Banez. According to Oro:
Defendant canvassed customers personally or through salesmen of plaintiff which were hired or recruited
by him. If said customer decided to buy items from plaintiff on installment basis, defendant, without the
knowledge of said customer and plaintiff, 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 plaintiff, purporting that said customer purchased the items
from plaintiff on installment basis. Thereafter, defendant collected the installment payments either
personally or through Venus Lozano, a Group Sales Manager of plaintiff but also utilized by him as
secretary in his own business for collecting and receiving of installments, purportedly for the plaintiff but
in reality on his own account or business. In declaring itself as having jurisdiction over the subject matter
of the instant controversy, respondent court stated: A perusal of the complaint which is for damages does
not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages as redress for
defendant's breach of his 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.However, Banez put up the defense of Lack of jurisdiction.
Issue: Who had jurisdiction?
Held:
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 employeremployee 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 ". Maniks
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 employe. 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. Oldmiso
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.
[17]
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