G.R. No. 127516 May 28, 1999
ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC. (AG&P), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, ENRIQUE M. GAMBOA, CLARO M. TUASON and JOHN DIN, respondents.

FACTS

Petitioner AG&P, a construction firm, implemented a redundancy program in March 1988, terminating 177 employees including private respondents, all union members. This action was taken following substantial financial losses reported in 1987. The separated employees received full separation benefits and executed releases. Over a year later, in May 1989, private respondents filed a complaint for illegal dismissal and unfair labor practice. The Labor Arbiter ruled in their favor, declaring the redundancy program illegal and ordering reinstatement with backwages, adopting the reasoning from a prior, related NLRC case involving other union members.
While that prior NLRC case was initially decided against AG&P, it was subsequently reversed on appeal by the NLRC First Division after considering new financial evidence. That reversal was ultimately upheld by the Supreme Court in G.R. No. 108259 (AG&P United Rank and File Association v. NLRC). Despite this final Supreme Court ruling on the identical redundancy program, the NLRC Second Division, in the present case involving different individual employees, affirmed the Labor Arbiter’s decision invalidating the same program. AG&P thus filed this certiorari petition.

ISSUE

Whether the NLRC Second Division committed grave abuse of discretion in declaring AG&P’s redundancy program illegal and ordering the reinstatement of private respondents, contrary to the final and binding Supreme Court decision in G.R. No. 108259 which upheld the legality of the same program.

RULING

Yes. The Supreme Court granted the petition and set aside the NLRC’s decision. The legal logic is anchored on the doctrine of conclusiveness of judgment or preclusion of issues. The Supreme Court had already definitively ruled on the very same redundancy program implemented by AG&P in G.R. No. 108259. In that case, the Court examined the company’s financial distress and characterized the program as a valid retrenchment measure—a legitimate exercise of management prerogative to prevent serious business losses—rather than a union-busting scheme.
The factual milieu and the legal cause for termination in the instant case are identical to those in the earlier Supreme Court case. The NLRC Second Division therefore committed grave abuse of discretion by disregarding this final adjudication. It is a fundamental rule that once a matter has been settled by final judgment, it becomes the law of the case and is binding on all inferior courts and tribunals. The NLRC cannot validly issue a decision that directly contradicts a ruling of the Supreme Court on the same set of operative facts. Consequently, the termination of private respondents under the upheld redundancy/retrenchment program was legal.