Paiton vs. Armscor Global Defense, Inc.

Filing an illegal dismissal case during the pendency of a previously filed regularization case does not constitute forum shopping where the dismissal is a supervening event that gives rise to a distinct cause of action, as the reliefs sought, the causes of action, and the evidence required in the two cases differ.

Petitioners were employed as Machine Operators by respondent Armscor Global Defense, Inc. (Armscor). They alleged that Armscor transferred their employment to different manpower agencies, including respondent Manpower Outsourcing Services, Inc. (MOSI), to prevent them from attaining regular status, and that MOSI was a labor-only contractor. The individual respondents included Martin Tuason (Owner/President of Armscor), Atty. Ermilando O. Villafuerte (HR-Head/In-House Counsel of Armscor), and Diogenes Jaurique (President/Owner of MOSI). The dispute centered on whether petitioners' filing of an illegal constructive dismissal case while their earlier regularization cases were still pending constituted forum shopping or litis pendentia.

Petitioners Jules King M. Paiton, James C. Adriatico, Isagani M. Ubalde, Roland A. Agustin, Mario S. Manahan, Jr., and Jesrome C. Siega were employed as Machine Operators by respondent Armscor Global Defense, Inc. (Armscor). On separate dates between 2016 and 2017, petitioners filed separate complaints for regularization and payment of benefits against Armscor and respondent Manpower Outsourcing Services, Inc. (MOSI) with the Arbitration Branch of the NLRC. They alleged that they were regular employees of Armscor by operation of law, having performed work necessary and desirable to Armscor's business for over one year; that Armscor transferred their employment to different manpower agencies, including MOSI, to prevent them from attaining regular status; and that MOSI was a labor-only contractor. They claimed their true employer was Armscor, which hired them, paid their salaries, and exercised direct control and supervision over their work through its managers and supervisors. Specifically, Paiton and Adriatico filed NCR Case No. NCR-12-14953-16; Siega filed NCR Case No. NCR-11-14762-16; Ubalde filed NCR Case No. NCR-12-14906-16; and Agustin and Manahan filed NLRC Case No. NCR-03-03052-17 — collectively referred to as the regularization cases. At the time the present petition was filed, these regularization cases were on appeal with the Court of Appeals, except for Paiton and Adriatico's case, which was already pending before the Supreme Court.

During the pendency of the regularization cases, petitioners alleged that on June 16, 2017, Armscor refused to allow them entry into the work premises because MOSI had pulled them out after the expiration and non-renewal of the service contract between Armscor and MOSI. Thus, on July 6, 2017, petitioners filed a separate illegal constructive dismissal case, NCR Case No. NCR-07-09884-17, with a claim for damages and attorney's fees against respondents before the NLRC. In that complaint, petitioners reiterated their allegation that they were regular employees of Armscor with security of tenure and could not be terminated without just or authorized cause.

For their part, Armscor and its officers, Martin Tuason and Atty. Ermilando O. Villafuerte, asserted that petitioners were employed by MOSI and not by Armscor, and that they were not liable for petitioners' claims. They also alleged that the service contract between Armscor and MOSI had expired and that petitioners were validly pulled out by MOSI. Meanwhile, MOSI prayed for the dismissal of the complaint due to forum shopping, contending that the earlier-filed regularization cases shared similar facts, issues, and arguments. MOSI also asserted that it was a legitimate contractor and that petitioners' dismissal was due to redundancy.

The Labor Arbiter dismissed the illegal constructive dismissal case on the ground of litis pendentia or forum shopping, finding that the regularization cases and the constructive dismissal case were similar in parties, issues, and causes of action, such that a judgment in either would be determinative of the other. The NLRC affirmed this dismissal, and the Court of Appeals denied the petition for certiorari, finding no grave abuse of discretion on the part of the NLRC. Neither the Labor Arbiter, the NLRC, nor the Court of Appeals resolved the substantive merits of the constructive dismissal complaint.

• Distinct Cause of Action: Petitioners maintained that the illegal constructive dismissal case arose from a supervening event — Armscor's refusal to allow them entry after MOSI's pullout — which occurred after the regularization cases were filed, giving rise to a cause of action distinct from the regularization claims.
• No Identity of Reliefs or Evidence: Petitioners argued that the regularization cases sought recognition as regular employees and payment of benefits from the first day of engagement, whereas the constructive dismissal case questioned the propriety of their dismissal and prayed for reinstatement, requiring different evidence.
• Grave Abuse of Discretion: Petitioners contended that the NLRC committed grave abuse of discretion in affirming the LA's dismissal on the ground of litis pendentia, as the ruling contravened settled jurisprudence, particularly Del Rosario vs. ABS-CBN Broadcasting Corporation.

• Employment by MOSI, Not Armscor: Armscor and its officers countered that petitioners were employed by MOSI, not by Armscor, and that Armscor was not liable for petitioners' claims of illegal constructive dismissal.
• Valid Pullout: Armscor asserted that the service contract between Armscor and MOSI had expired and that petitioners were validly pulled out by MOSI.
• Forum Shopping: MOSI argued for dismissal of the complaint due to forum shopping, contending that the earlier-filed regularization cases shared similar facts, issues, and arguments as the constructive dismissal case.
• Legitimate Contractor: MOSI asserted that it was a legitimate contractor and that petitioners' dismissal was due to redundancy.

• Forum Shopping / Litis Pendentia: Whether the Court of Appeals correctly held that the NLRC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it affirmed the Labor Arbiter's dismissal of the illegal constructive dismissal case on the ground of litis pendentia or forum shopping.

• Forum Shopping / Litis Pendentia: No. The NLRC committed grave abuse of discretion in dismissing the illegal constructive dismissal case on the ground of litis pendentia or forum shopping, as the supervening event of dismissal gave rise to a distinct cause of action from the earlier-filed regularization cases, pursuant to Del Rosario vs. ABS-CBN Broadcasting Corporation.

• Forum Shopping / Litis Pendentia: Forum shopping exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, raising substantially the same issues. The elements of litis pendentia are: (a) identity of parties, or at least such parties representing the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars is such that any judgment in the pending case would amount to res judicata in the other. The test for identity of causes of action is whether the same evidence would support both actions. Applying Del Rosario vs. ABS-CBN Broadcasting Corporation, which was held to be on all fours, the Court found no identity of causes of action between the regularization cases and the illegal constructive dismissal case. The regularization cases involved a determination of whether petitioners were regular employees of Armscor and entitled to benefits from the first day of engagement, whereas the constructive dismissal case questioned the propriety of their dismissal and prayed for reinstatement. While the latter case would inevitably touch on the employer-employee relationship, the ultimate issue was whether petitioners were constructively dismissed without just or authorized cause. Critically, at the time the regularization cases were initiated, the facts spawning the constructive dismissal case had not yet occurred. It was only after Armscor refused them entry following the expiration and non-renewal of the service contract between Armscor and MOSI that petitioners were constrained to file the constructive dismissal case. This supervening event gave rise to a distinct cause of action. The evidence to be presented in the two cases, while potentially overlapping in certain points, was distinct. The NLRC's ruling affirming the LA's dismissal was thus tainted with grave abuse of discretion, and the CA erred in affirming it. Because the Labor Tribunals and the CA dismissed the case only on procedural grounds, there were no factual findings on the merits, and the Court, not being a trier of facts, remanded the case to the Labor Arbiter for resolution on the merits.

• Forum Shopping / Litis Pendentia — Forum shopping exists when one party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court. The elements of litis pendentia are: (a) identity of parties, or at least such parties representing the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars is such that any judgment in the pending case, regardless of which party is successful, would amount to res judicata in the other. The test to determine whether causes of action are identical is to ascertain whether the same evidence would support both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. In this case, the Court applied this test and found no identity of causes of action between the regularization cases and the illegal constructive dismissal case, because the supervening event of dismissal created a distinct cause of action requiring different evidence and reliefs.

• Supervening Event as Source of Distinct Cause of Action — A supervening event occurring during the pendency of a prior case — such as the termination or constructive dismissal of employees while a regularization case is pending — gives rise to a new and distinct cause of action. The circumstances obtaining at the time the first case was filed differ from those at the time the second case is initiated, and the reliefs sought and evidence required are not the same. The Court relied on Del Rosario vs. ABS-CBN Broadcasting Corporation to hold that petitioners who file an illegal dismissal case during the pendency of a regularization case are not guilty of forum shopping, because the dismissal is a supervening act by the employer that creates a separate cause of action questioning the validity of the termination.

• Grave Abuse of Discretion in Labor Cases — Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner tantamount to lack of jurisdiction. To be considered "grave," discretion must be exercised in a despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence. If the NLRC's ruling has basis in the evidence and applicable law and jurisprudence, no grave abuse of discretion exists. Here, the NLRC's dismissal of the constructive dismissal case on the ground of litis pendentia contravened settled jurisprudence, constituting grave abuse of discretion.

• "the circumstances obtaining at the time the workers filed the regularization cases were different from when they subsequently filed the illegal dismissal cases. Before their illegal dismissal, the workers were simply clamoring for their recognition as regular employees, and their right to receive benefits concomitant with regular employment. However, during the pendency of the regularization cases, the workers were summarily terminated from their employment. This supervening event gave rise to a cause of action for illegal dismissal, distinct from that in the regularization case." — This passage, quoted from Del Rosario vs. ABS-CBN Broadcasting Corporation, articulates the core ratio decidendi: a supervening termination during the pendency of a regularization case creates a distinct cause of action, negating forum shopping.

• "In fine, the Court finds that the NLRC's ruling affirming the LA's dismissal of the instant illegal constructive dismissal case on the ground of litis pendentia or forum shopping is tainted with grave abuse of discretion; and hence, the CA erred in affirming the same." — This is the Court's ultimate conclusion applying the Del Rosario doctrine to the facts, establishing that the Labor Tribunals' dismissal was procedurally infirm.

• "As much as possible, labor cases should always be resolved expeditiously and with reasonable dispatch. This is because needless delays would almost always result in the wearing out of the efforts and meager resources of the worker to the point that the latter is constrained to settle for less what is due them." — This passage underscores the policy rationale for remanding labor cases to the tribunal of origin for prompt resolution on the merits rather than dismissal on technical grounds.

• Del Rosario vs. ABS-CBN Broadcasting Corporation, G.R. No. 202481, September 8, 2020 — Controlling precedent, found to be on all fours. The Court applied its holding that filing an illegal dismissal case during the pendency of a regularization case does not constitute forum shopping because the supervening event of dismissal gives rise to a distinct cause of action, with different reliefs, evidence, and issues.
• Jolo's Kiddie Carts vs. Caballa, 821 Phil. 1101 (2017) — Cited for the definition of grave abuse of discretion in the context of certiorari, in turn citing Gadia vs. Sykes Asia, Inc.
• University of Santo Tomas vs. Samahang Manggagawa ng UST, 809 Phil. 212 (2017) — Cited for the proposition that grave abuse of discretion in labor cases may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence.
• Kapisanang Pangkaunlaran ng Kababaihang Potrero, Inc. vs. Barreno, 710 Phil. 654 (2013) — Cited for the definition of forum shopping.
• Abbott Laboratories, Phils. vs. Alcaraz, 714 Phil. 510 (2013) — Cited for the elements of litis pendentia.
• Gatan vs. Vinarao, 820 Phil. 257 (2017) — Cited for the principle that the Supreme Court is not a trier of facts, supporting the remand to the Labor Arbiter.
• Opinaldo vs. Ravina, 719 Phil. 584 (2013) — Cited for the principle that labor cases should be resolved expeditiously and with reasonable dispatch.

• Rules of Court, Rule 65 (Certiorari) — The petition was brought as a Petition for Review on Certiorari assailing the CA's affirmance of the NLRC. The Court applied the standard that grave abuse of discretion must be shown to justify the grant of certiorari, defining it as judgment exercised in a capricious and whimsical manner tantamount to lack of jurisdiction. No specific article or section of the Labor Code was cited; the decision relied primarily on jurisprudential doctrines governing forum shopping, litis pendentia, and grave abuse of discretion in labor proceedings.

Leonen (Chairperson, Third Division), M. Lopez, J., and Lopez, J. — concurred. Lazaro-Javier, J., was on official business.