CONCLUSIVENESS OF JUDGMENT OR ISSUE PRECLUSION PRINCIPLE REQUIRES ONLY IDENTITIES OF PARTIES TO OPERATE

Conclusiveness of judgment requires only the identities of parties and issues. Absolute identity of parties is not required, shared identity of interest is sufficient to invoke the coverage of this principle.

It is enough that there is a community of interest between a party in the first case and a party in the second case even if the latter was not impleaded in the first case.

Hence, the Supreme Court held in the following case, as follows:

Philtranco Service Enterprises, Inc., et al. vs. Cual
G.R. No. 207684, July 17, 2017

Facts:

Respondents (Cual, et al) were all members of Philtranco Workers Union -Association of Genuine Labor Organization (PWU-AGLO). They were all included in a retrenchment program embarked on by Philtranco in the years 2006 to 2007, on the ground that Philtranco was suffering business losses.

Consequently, PWU-AGLO filed a Notice of Strike with the Department of Labor and Employment (DOLE), claiming that Philtranco engaged in unfair labor practices with the NCMB-NCR. The parties were unable to settle their differences, thus the case was eventually referred to the Office of the Secretary of the DOLE.

The Acting DOLE Secretary Danilo P. Cruz issued a Decision ordering Philtranco to reinstate the illegally terminated 17 union officers with backwages, maintenance of status quo, among others.

Cual, et al. alleged that they were not absorbed by Philtranco despite the fact that the company was hiring new employees; thus, they, together with other Philtranco employees, filed a labor complaint for illegal dismissal on October 16, 2007, and prayed for reinstatement, backwages and wage differentials. Docketed as NLRC NCR Case No. 00-10-11607-07 (first NLRC case), the complaint essentially assailed the employees’ inclusion in the retrenchment program of Philtranco.

In March 25, 2008 Decision, Labor Arbiter (LA) Macam found union president Jose Jessie Olivar (Olivar) to have been illegally dismissed and was entitled to reinstatement, backwages and attorney’s fees. The present Cual, et al.’ claims, however, were dismissed for their failure to sign the verification and certification of non-forum shopping of the complaint and position paper; the latter was signed only by Olivar without specific authority from the board.

Cual, et al.’ appeal to the National Labor Relations Commission (NLRC), on the matter of their exclusion, was unsuccessful. So was their subsequent petition before the CA in CA-G.R. SP No. 1104106, which attained finality on May 14, 2010. Thus, they remained excluded from the award.

Significantly, the LA, as affirmed by the NLRC and the CA in CA-G.R. SP No. 110410, found the retrenchment program undertaken by Philtranco in the years 2006 to 2007 as invalid for failure to sufficiently prove its necessity, considering that the audited financial statements for those years were not presented. On this basis, Olivar was declared to have been illegally dismissed.

On the belief that the dismissal of their claims due to a technicality was without prejudice to their re-filing of the same complaint, Cual, et al. filed NLRC-NCR Case No. 06-08130-10 (second NLRC case). This time, Philtranco submitted its audited financial statements for the years 2006 and 2007.

LA Ruling:

Labor Arbiter Cueto III (LA Cueto) rendered a decision finding Cual, et al. to have been illegally dismissed. In so deciding, LA Cueto applied the law of the case principle, stating that the first NLRC case is binding upon Philtranco.

Philtranco appealed to the NLRC.

NLRC Ruling:

The Commission reversed the LA.

The commission gave weight to the audited financial statements for the years 2006 and 2007 submitted by Philtranco in the refiled case, but which was not presented in the prior case. The NLRC also disagreed with LA Cueto’s application of the law of the case in the refiled complaint, stating that the principle applies only to Olivar.

Cual, et al.’s motion for reconsideration before the NLRC was denied. Hence, they assailed the reversal via a petition for certiorari before the CA.

CA Ruling:

The CA reinstated LA Cueto’s decision.

The CA reasoned that the supervening event is inapplicable in the present case and agreed with LA Cueto that it is inappropriate to consider the belatedly filed audited financial statements for the years 2006 and 2007.

Aggrieved by the denial of its motion for reconsideration, Philtranco timely filed the present Petition for Review on Certiorari.

Issue/s:

Whether or not the first labor case involving the union members finding the retrenchment as illegal constitutes as law of the case for the second labor case involving the same claim for other union officers.

Whether or not issue preclusion or collateral estoppel principle applies in this case.

SC Ruling:

The SC found the law of the case doctrine not applicable in the instant petition.

Guide to Valid Dismissal of Employees Second Edition

The law of the case doctrine is defined as “that principle under which determinations of questions of law will generally be held to govern a case throughout all its subsequent stages where such determination has already been made on a prior appeal to a court of last resort. It is merely a rule of procedure and does not go to the power of the court, and will not be adhered to where its application will result in an unjust decision. It relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case.”

The second NLRC case is certainly not a continuation of the first NLRC case from which Cual, et al. were excluded. It is a separate case instituted anew by Cual, et al. because the prior case was only given due course with respect to the parties who signed the complaint and position paper.

The appellate court’s finding then in CA-G.R. SP No. 110410, that the retrenchment undertaken by Philtranco in 2006-2007 was invalid, may not be invoked as the law of the case.

While the second NLRC case is separate from the first NLRC case and the NCMB case, it is not altogether accurate to say that the determinations made in these previously decided cases has no bearing on the second NLRC case.

The SC held that the LA’s decision in the first NLRC case, finding Philtranco’s retrenchment program to be illegal, constitutes res judicata in the concept of collateral estoppel or issue preclusion. Citing Degayo vs. Magbanua-Dinglasan, the SC ruled that res judicata literally means “a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.”

Further, res judicata also refers to the “rule that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points and matters determined in the former suit. It rests on the principle that parties should not to be permitted to litigate the same issue more than once; that, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate.

Section 47, Rule 39 of the Rules of Court comprehends two distinct concepts of res judicata: (1) bar by former judgment and (2) conclusiveness of judgment.

The first aspect is the effect of a judgment as a bar to the prosecution of a second action upon the same claim, demand or cause of action. In traditional terminology, this aspect is known as merger or bar; in modem terminology, it is called claim preclusion.

The second aspect precludes the re-litigation of a particular fact of issue in another action between the same parties on a different claim or cause of action. This is traditionally known as collateral estoppel; in modern terminology, it is called issue preclusion.

The conclusively settled fact or question furthermore cannot again be litigated in any future or other action between the same parties or their privies and successors-in-interest, in the same or in any other court of concurrent jurisdiction, either for the same or for a different cause of action. Thus, only the identities of parties and issues are required for the operation of the principle of conclusiveness of judgment.

Absolute identity of parties is not required, shared identity of interest is sufficient to invoke the coverage of this principle. Thus, it is enough that there is a community of interest between a party in the first case and a party in the second case even if the latter was not impleaded in the first case. One test to determine substantial identity of interest would be to see whether the success or failure of one party materially affects the other.

In both the first and second NLRC cases, the issue of whether or not complainants were illegally dismissed is hinged on the validity of Philtranco’s retrenchment program in 2006 and 2007. Without a doubt, the interests of all the complainants are inextricably intertwined on that factual question.

The only difference between the first NLRC case and the second NLRC case is Philtranco’s submission of its audited financial statements for the years 2006 and 2007 in the second NLRC case. The NLRC treated such belated submission as a “supervening event”. The SC, however, agree with the CA that the supervening event principle does not apply in this case.

Supervening events refer to facts which transpire after judgment has become final and executory or to new circumstances which developed after the judgment has acquired finality, including matters which the parties were not aware of prior to or during the trial as they were not yet in existence at that time.

In this case, the Audited Financial Statements could not be considered as a supervening event because the existence thereof should have been established as early as February 2007, the time when the retrenchment was effected. Unfortunately, Philtranco failed to present the same.