Aldovino vs. NLRC

A final voluntary-arbitration decision upholding an employer's temporary layoffs bars individual union members from later relitigating the legality of those layoffs under res judicata and law of the case, where the union represented them in the arbitration and they did not withdraw from the case.

Petitioner URFA is the labor union of respondent AG&P's regular rank-and-file employees, and Art. 242 of the Labor Code expressly guarantees a legitimate labor organization the right to act as representative of its members for collective bargaining and to sue and be sued in its registered name. The case tests whether that union representation binds individual members who did not withdraw from a voluntary arbitration case brought by the union.

Pimentel began work as a lay-out man on 25 April 1985 assigned at AG&P San Roque, Bauan, Batangas, while Aldovino was hired in June 1989 as an electrician at the AG&P Batangas Marine and Fabrication Yard (BMFY) in Bauan, Batangas. Pimentel and Aldovino acquired the status of regular employees on 1 December 1990 and 1 February 1991, respectively, and became members in good standing of URFA, then the recognized and exclusive collective bargaining agent for all regular rank-and-file employees of AG&P.

On 25 July 1991, Luis I. Villanueva, president of AG&P, issued Presidential Directive No. 0191 enumerating emergency measures to be implemented by the company "to stave off the devastating impact" of its severe losses. Among these plans was the temporary layoff of forty percent (40%) of the existing complement in all its corporate and divisional support units. By the following month, respondent company began to lay off seven hundred five (705) rank-and-file employees and eighty-four (84) staff and managerial personnel. This forced URFA to file a notice of strike with the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE). On 13 August 1991, at a conciliatory conference held before the NCMB, AG&P and URFA agreed to submit for voluntary arbitration the issue of the temporary layoffs. Meanwhile, the AG&P Supervisors' Union, an unrecognized union seeking recognition as the bargaining agent for supervisory personnel, waged a strike in all operating divisions of respondent company in Metro Manila to protest the layoffs. This union was later on joined by the Lakas ng Manggagawa sa AG&P — National Federation of Labor Chapter (LAKAS-NFL), another unrecognized union for workers, particularly the company's project employees.

On 7 September 1991, an agreement ending the strike was reached by AG&P and the three unions of AG&P, namely, petitioner URFA, the Supervisors' Union and LAKAS-NFL. The covenant outlined the financial assistance to be extended by AG&P to all laid-off employees during the 6-month layoff period. The employees were given the option to request payment of separation pay and/or other cash benefits in case they would not be recalled, or to extend their temporary layoff status until the company could hire them. Ten (10) days later, or on 17 September 1991, petitioners Aldovino and Pimentel were served separate notices of temporary layoff. Both received temporary financial assistance equivalent to two (2) months basic pay in accordance with the 7 September 1991 agreement. On 7 January 1992, Voluntary Arbitrator Romeo B. Batino upheld the right of respondent company to temporarily lay off its employees upon his finding that AG&P's claim of severe financial losses due to adverse business conditions was duly substantiated. On 9 February 1993, after applying anew for work at the AG&P, Pimentel was rehired at a reduced salary as a project or contractual employee assigned at the company's Flour Daniel-Enron Project.

In 1994 Aldovino and Pimentel instituted separate but similar complaints against AG&P for unfair labor practice, illegal layoff, illegal dismissal and non-payment of CBA increases and benefits. They prayed for reinstatement with back wages, interests, CBA wage increases, benefits and attorney's fees. The two (2) cases were thereafter consolidated. On 12 August 1994, finding that the complainants were illegally dismissed, Labor Arbiter Ernesto S. Dinopol rendered a decision in the two (2) cases ordering AG&P to reinstate Aldovino and Pimentel as regular employees and to pay back wages and attorney's fees. He explained that the financial situation of AG&P was not bleak as was pictured in its position paper, which was why the extended temporary layoff status of Aldovino and Pimentel was unjustified and "akin to illegal dismissal." The Labor Arbiter however rejected the charge of unfair labor practice and the claims for damages and other monetary benefits for lack of evidence.

AG&P appealed to the NLRC protesting that the issue of the validity of the temporary layoff had already been decided in its favor by a voluntary arbitrator, hence, was res judicata. Aldovino and Pimentel also appealed, although partially, questioning the Labor Arbiter's computation of their back wages and the denial of their claim for CBA increases and benefits. Resolving the appeal on 18 February 1995, the NLRC set aside the 12 August 1994 decision of the Labor Arbiter and agreed with AG&P that the principle of res judicata was applicable in petitioners' case, citing the decision of Voluntary Arbitrator Batino which upheld the validity of the 17 September 1991 temporary layoffs. It also alluded to its decision in Revidad vs. AG&P of Manila promulgated on 14 July 1993 which already established the law of the case. In its resolution of 30 March 1995, the NLRC denied reconsideration. Hence this recourse.

• Res Judicata / Identity of Parties, Subject Matter, and Causes of Action: Petitioners argued that res judicata cannot attach because the requisite identity of parties, subject matter, and causes of action is lacking in the instant case.
• Article 286 of the Labor Code: Petitioners argued that the NLRC misapplied Art. 286 because at the time AG&P asked them whether they were willing to extend their layoff status, there was yet no resumption of operations in the particular work unit or area to which they had been previously assigned.
• Constructive Dismissal: Petitioners argued that an extension of the six-month temporary layoff period operates as a constructive dismissal.
• Back Wages: Petitioners argued that the NLRC should have affirmed the Labor Arbiter's finding of illegal dismissal and rectified the award of back wages by computing them as of the time they were illegally laid off, not from the lapse of the six-month layoff period as ruled by the Labor Arbiter.

• Res Judicata: Whether the NLRC correctly applied res judicata and law of the case in holding that Voluntary Arbitrator Batino's final decision barred petitioners from relitigating the legality of their temporary layoffs.
• Union Representation: Whether petitioners Aldovino and Pimentel, as URFA members, are bound by the voluntary arbitration decision rendered in a case brought by URFA.
• Article 286, Constructive Dismissal, and Back Wages: Whether the NLRC misapplied Art. 286, whether the extension of the six-month temporary layoff operated as a constructive dismissal, and whether back wages should be recomputed from the time of illegal layoff rather than from the lapse of the six-month layoff period.

• Res Judicata: Yes. The final Batino decision barred relitigation of the legality of the layoffs under res judicata and law of the case.
• Union Representation: Yes. As URFA members who did not withdraw from the voluntary arbitration, petitioners were bound by the union's representation under Art. 242 of the Labor Code.
• Article 286, Constructive Dismissal, and Back Wages: Not resolved. The SC declared these arguments academic after finding res judicata.

• Res Judicata: The SC set out the requisites of res judicata: (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be identity of parties, subject matter, and causes of action. It found the Batino decision final because no appeal was taken from it, and it was a judgment on the merits upholding the temporary layoffs. On subject matter and causes of action, the SC relied on Revidad vs. NLRC, where it held that the 17 September 1991 layoff of Revidad and his co-employees Aldovino and Pimentel could not be validly asserted as the only layoff subject of the voluntary arbitration; the evidence showed a continuing process or correlated series of temporary layoffs under Presidential Directive No. 0191. In the instant case, even before Batino's decision, AG&P and its three unions including URFA had signed the 7 September 1991 agreement providing financial assistance to laid-off employees, and both Aldovino and Pimentel availed themselves of that assistance after their layoffs. This showed that Batino's decision was not confined to the initial August 1991 layoff but covered all layoffs subsequently made. When the decision attained finality, it became the law of the case. Under Zebra Security Agency and Allied Services vs. NLRC, law of the case means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which the decision was predicated continue to be the facts before the court. Petitioners were therefore barred by prior judgment from raising the same issue of the legality of their layoffs. The test for identity of causes of action is whether the same evidence necessary to sustain the second action would have been sufficient to authorize a recovery in the first, even if the forms or nature of the two actions be different. Allowing Aldovino and Pimentel to prove illegal dismissal from the extended layoff would relitigate the validity and reasonableness of AG&P's retrenchment program, already resolved by Batino and Revidad. Public interest requires an end to litigation by the same parties and their privies over a subject once fully and fairly adjudicated; interest republicae ut finis litium. The SC found no grave abuse of discretion on the part of the NLRC in applying res judicata.
• Union Representation: The SC rejected the argument that petitioners cannot be bound by Batino's decision because that case involved only URFA and AG&P. Both petitioners were bona fide members of URFA when the case was under voluntary arbitration. Under Davao Free Workers Front vs. Court of Industrial Relations, a labor union may carry the representation of its members, particularly against the employer's unfair labor practices, and file an action for their benefit without joining them, to avoid the cumbersome procedure of joining each and every member as a separate party. Art. 242 of the Labor Code expressly guarantees URFA's right as a legitimate labor union to represent its members. This right does not deprive individual members of their concomitant right to file a case in their own names or to withdraw from any case filed by the union in their behalf. Under Philippine Land-Air-Sea Labor Union (PLASLU), Inc. vs. CIR, only members who did not signify their intention to withdraw before trial and judgment on the merits are bound by the outcome. Since it was not shown that Aldovino and Pimentel withdrew from the voluntary arbitration case, both were bound by the decision. Identity of parties existed between the arbitrated case and the case before the Labor Arbiter. Under Sunflower Umbrella Mfg. Co., Inc. vs. De Leon, identity of parties is satisfied if the two actions are substantially between the same parties; the parties need not be physically identical provided there is privity between them.
• Article 286, Constructive Dismissal, and Back Wages: The SC did not reach the merits of these arguments. It held that because res judicata applied, all other arguments had become academic and need no longer be resolved.

• Res Judicata — A final judgment on the merits bars a later action between the same parties or their privies on the same subject matter and cause of action. The requisites are (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be identity of parties, subject matter, and causes of action. The SC applied the bar because Voluntary Arbitrator Batino's decision was final, on the merits, and covered the same temporary layoffs.
• Law of the Case — Whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which the decision was predicated continue to be the facts before the court. The SC applied it because the Batino decision became final without appeal and governed the legality of the layoffs.
• Representation by a Labor Union — A legitimate labor union may act as representative of its members, sue in its own name, and file an action for their benefit without joining each member as a separate party. Members who do not withdraw before trial and judgment on the merits are bound by the outcome. The SC applied it to bind Aldovino and Pimentel, who were URFA members and did not withdraw from the voluntary arbitration.
• Identity of Parties Through Privity — Identity of parties is satisfied if the two actions are substantially between the same parties; the parties need not be physically identical provided there is privity. The SC applied it because URFA represented its member-employees in the voluntary arbitration.
• Identity of Causes of Action — The test is whether the same evidence necessary to sustain the second action would have been sufficient to authorize a recovery in the first, even if the forms or nature of the two actions are different. The SC applied it because proving illegal dismissal from the extended layoff would relitigate the validity and reasonableness of AG&P's retrenchment program already resolved by Batino and Revidad.
• Interest Republicae Ut Finis Litium — Public interest requires an end to litigation by the same parties and their privies over a subject once fully and fairly adjudicated. The SC invoked it to bar petitioners from relitigating the layoffs.

• "For res judicata to apply (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and, (d) there must be as between the first and second actions identity of parties, subject matter and causes of action." — The SC states the four requisites of res judicata that govern the entire petition.
• "It is the function precisely of a labor union such as petitioner to carry the representation of its members particularly against the employer's unfair labor practices against it and its members and to file an action for their benefit and behalf without joining them and to avoid the cumbersome procedure of joining each and every member as a separate party . . ." — The SC uses this to explain why URFA's voluntary arbitration case bound its member-employees without joining them individually.
• "More specifically, [law of the case] means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court . . ." — The SC adopts this definition to hold that the final Batino decision became the law of the case on the legality of the layoffs.
• "The test to determine whether there is identity of causes of action is to ascertain whether the same evidence necessary to sustain the second action would have been sufficient to authorize a recovery in the first, even if the forms or nature of the two actions be different." — The SC applies this test to bar petitioners from relitigating the retrenchment program through their illegal-dismissal claims.

• Davao Free Workers Front vs. Court of Industrial Relations, No. L-29356, 31 October 1974, 60 SCRA 408 — Followed; cited to hold that a labor union may represent its members without joining each member as a separate party.
• Philippine Land-Air-Sea Labor Union (PLASLU), Inc. vs. CIR, 93 Phil. 747 [1953] — Followed; cited to hold that only union members who did not withdraw before trial and judgment are bound by the union's case.
• Sunflower Umbrella Mfg. Co., Inc. vs. De Leon, G.R. No. 107349, 26 September 1994, 237 SCRA 153 — Followed; cited for identity of parties through privity, where the parties need not be physically identical.
• Revidad vs. NLRC, G.R. No. 111105, 27 June 1995, 245 SCRA 356 — Controlling precedent; followed on identity of subject matter and causes of action, holding that the 17 September 1991 layoff was part of a continuing process of temporary layoffs.
• Zebra Security Agency and Allied Services vs. NLRC, G.R. No. 115951, 26 March 1997, 270 SCRA 476 — Followed; cited for the definition of law of the case.
• Nacuray vs. NLRC, G.R. No. 114924-27, 18 March 1997, 270 SCRA 9 — Followed; cited for the requisites of res judicata.
• Nabus vs. Court of Appeals, G.R. No. 91670, 7 February 1991, 193 SCRA 732 — Cited; used for the test of identity of causes of action.
• Ibabao vs. Intermediate Appellate Court, G.R. No. 74848, 20 May 1987, 150 SCRA 76 — Cited; used for the public interest in ending litigation by the same parties over a fully adjudicated subject.

• Article 242, Labor Code — Guarantees a legitimate labor organization the right to act as representative of its members for collective bargaining and to sue and be sued in its registered name. The SC used this to affirm URFA's right to represent Aldovino and Pimentel in the voluntary arbitration and to bind them absent withdrawal.
• Article 286, Labor Code — Petitioners invoked it, arguing that the NLRC misapplied it because no resumption of operations had occurred in their particular work unit or area when AG&P asked them to extend their layoff status. The SC did not resolve the argument because res judicata made it academic.