MED ARBITER’S FINDING ON LACK OF EMPLOYER-EMPLOYEE RELATIONSHIP IS NOT RES JUDICATA IN AN ILLEGAL DISMISSAL CASE BEFORE THE LABOR ARBITER

Hijo Resources Corporation vs. Mejares

G.R. No. 208986, January 13, 2016

Facts:

Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., DanteSaycon, and Cecilio Cucharo  were among the complainants,represented by their labor union named “Nagkahiusang Mamumuo ng Bit,Djevon,   at   Raquilla   Farms   sa   Hijo   Resources   Corporation”(NAMABDJERA-HRC), who filed with the  NLRC an illegal dismissal caseagainst petitioner Hijo Resources Corporation (HRC).

Complainants (which include the respondents herein) alleged that petitioner HRC, formerly known as Hijo Plantation Incorporated (HPI), is the owner of agricultural lands in Madum, Tagum, Davao del Norte, which were planted primarily with Cavendish bananas. In 2000, HPI was renamed as HRC. HRC’s application for the conversion of its agricultural lands into agri-industrial use was approved. The machineries and equipment formerly used by HPI continued to be utilized by HRC.

Complainants claimed that they were employed by HPI as farmworkers in HPI’s plantations occupying various positions as area harvesters,packing house workers, loaders, or labelers. Complainants were absorbed by HRC, but they were working under the contractor-growers: Buenaventura Tano (Bit Farm); Djerame Pausa (Djevon Farm); and Ramon Q. Laurente (Raquilla Farm). Complainants asserted that these contractor-growers received compensation from HRC and were under the control of HRC. They further alleged that the contractor-growers did not have their own capitalization, farm machineries, and equipment.

Complainants later formed their union NAMABDJERA-HRC, which was later registered with the Department of Labor and Employment (DOLE). Subsequently, NAMABDJERA-HRC filed a petition for certification election before the DOLE. When HRC learned that complainants formed a union, the three contractor-growers filed with the DOLE a notice of cessation of business operations. Complainants were terminated from their employment on the ground of cessation of business operations by the contractor-growers of HRC. Complainants, represented by NAMABDJERA-HRC, filed a case for unfair labor practices, illegal dismissal, among others, before the NLRC.

DOLE Med-Arbiter issued an Order, dismissing NAMABDJERA-HRC’s petition for certification election on the ground that there was no employer-employee relationship between complainants (members of NAMABDJERA-HRC) and HRC. Complainants did not appeal the Order of Med-Arbiter but pursued the illegal dismissal case they filed.

HRC filed a motion to inhibit Labor Arbiter Maria Christina S. Sagmit and moved to dismiss the complaint for illegal dismissal. The motion to dismiss was anchored on the following arguments:(1) Lack of jurisdiction under the principle of res  judicata; and (2) The Order of the Med-Arbiter finding that complainants were not employees of HRC, which complainants did not appeal, had become final and executory.

LA Ruling:

Labor Arbiter Sagmit denied the motion to inhibit. Labor Arbiter Sagmit likewise denied the motion to dismiss. Labor Arbiter Sagmit held that res judicata does not apply. Citing the cases of Manila Golf & Country Club, Inc. v. IAC and Sandoval Shipyards, Inc. v. Pepito, the Labor Arbiter ruled that the decision of the Med-Arbiter in a certification election case, by the nature of that proceedings, does not foreclose further dispute between the parties as to the existence  or non-existence of employer-employee  relationship between them. Thus, the finding of Med-Arbiter Jasa that no employment relationship exists between HRC and complainants does not bar the Labor Arbiter from making his own independent finding on the same issue. The non-litigious nature of the proceedings before the Med-Arbiter does not prevent the Labor Arbiter from hearing and deciding the case. Thus, Labor Arbiter Sagmit denied the motion to dismiss and ordered the parties to file their position papers.HRC filed with the NLRC a petition for certiorari with a prayer for temporary restraining order, seeking to nullify the Orders of Labor Arbiter Sagmit.

NLRC Ruling:

The NLRC granted the petition, holding that Labor Arbiter Sagmit gravely abused her discretion in denying HRC’s motion to dismiss. The NLRC held that the Med-Arbiter Order dated 19 November 2007 dismissing the certification election case on the ground of lack of employer-employee relationship between HRC and complainants (members of NAMABDJERA-HRC) constitutes  res  judicata  under the concept of conclusiveness of judgment,  and thus, warrants the dismissal of the case. The NLRC ruled that the Med-Arbiter exercises quasi-judicial power and   the Med-Arbiter’s decisions and orders have, upon their finality, the force and effect of a final judgment within the purview of the doctrine of res judicata.

CA Ruling:

Citing Sandoval Shipyards, Inc. v. Pepito, the Court of Appeals held that the certification proceedings before the Med-Arbiter are non-adversarial and merely investigative. On the other hand, under Article 217 of the Labor Code, the Labor Arbiter has original and exclusive jurisdiction over illegal dismissal cases. Although the proceedings before the Labor Arbiter are also described as non-litigious, the Court of Appeals noted that the Labor Arbiter is given wide latitude in ascertaining the existence of employment relationship. Thus, unlike the Med-Artbiter, the Labor Arbiter may conduct clarificatory hearings and even avail of ocular inspection to ascertain facts speedily. Hence, the Court of Appeals concluded that the decision in a certification election case does not foreclose further dispute as to the existence or non-existence of an employer-employee relationship between HRC and the complainants.

The CA disposed of the case by remanding the same to the LA for further proceedings. Thus, the petition.

Issue/s:

Whether or not the decision of the Med-Arbiter finding no employer-employee relationship is res judicata to the case of illegal dismissal before the LA

SC Ruling:

The SC found merit in the petition.

The facts in this case are very similar to those in the Sandoval case, which also involved the issue of whether the ruling  n a certification election case on the existence or non-existence of an employer-employee relationship operates as res judicata in the illegal dismissal case filed before the NLRC. Hence, the Court of Appeals concluded that the decision in a certification election case does not foreclose further dispute as to the existence or non-existence of an employer-employee relationship between HRC and the complainants.

This case is different from the Chris Garments case cited by the NLRC where the Court held that the matter of employer-employee relationship has been resolved with finality by the DOLE Secretary, whose factual findings were not appealed by the losing party. As mentioned earlier, the Med-Arbiter’s order in this case dismissing the petition for certification election on the basis of non-existence of employer-employee relationship was issued after the members of the respondent union were dismissed  from their employment. The respondent union, without its member-employees, was thus stripped of its   personality   to   challenge   the  Med-Arbiter’s   decision     in   the certification election case. Thus, the members of the respondent union were left with no option but to pursue their illegal dismissal case filed before the Labor Arbiter.  To dismiss the illegal dismissal case filed before the Labor Arbiter on the basis of the pronouncement of the Med-Arbiter in the certification election case that there was no employer-employee relationship between the parties, which the respondent union could not even appeal to the DOLE Secretary because of the dismissal of its members,  would be tantamount to denying due process to the complainants in the illegal dismissal case.