G.R. No. 195654 , November 25, 2015
REYNALDO INUTAN, HELEN CARTE, NOEL AYSON, IVY CABARLE, NOEL JAMILI, MARITES HULAR, ROLITO AZUCENA, RAYMUNDO TUNOG, ROGER BERNAL, AGUSTIN ESTRE, MARILOU SAGUN, AND ENRIQUE LEDESMA, JR., PETITIONERS, VS. NAPAR CONTRACTING & ALLIED SERVICES, NORMAN LACSAMANA, JONAS INTERNATIONAL, INC., AND PHILIP YOUNG, RESPONDENTS.

FACTS

Petitioners were employees of respondent Napar Contracting & Allied Services, a recruitment agency owned by Norman Lacsamana, and were assigned to work at respondent Jonas International, Inc., a food manufacturing company. In September 2002, petitioners and other co-workers filed complaints before the NLRC for various monetary claims against respondents. On January 13, 2003, the parties entered into a Joint Compromise Agreement, which was approved by Labor Arbiter Jaime M. Reyno in an Order dated January 16, 2003, and the cases were dismissed without prejudice. The agreement stipulated that: 1) petitioners were considered regular employees; 2) Napar would reassign them to work within 45 days; 3) if Napar failed to reassign them, petitioners would be reinstated in the payroll or given salary equivalent to minimum wage; 4) each petitioner would receive P7,000.00 as payment for monetary claims; and 5) upon compliance, all claims would be deemed satisfied.
Petitioners reported to Napar and received the P7,000.00 each. However, Napar required them to submit numerous documents (e.g., police clearance, NBI clearance, health certificate), attend orientation seminars, undergo interviews, and pass qualifying examinations before reassignment. Petitioners failed to fully comply and were not given new assignments. Consequently, petitioners filed new complaints for illegal dismissal and monetary claims, alleging constructive dismissal due to Napar’s failure to reinstate or reassign them without conditions.
Labor Arbiter Pablo C. Espiritu, Jr. ruled in favor of petitioners, holding that the conditions imposed violated the compromise agreement, justifying its rescission, and that petitioners were constructively dismissed. The NLRC reversed this decision, ruling that the approved compromise agreement had the effect of res judicata, barring the new complaints, and ordered its execution. The Court of Appeals affirmed the NLRC’s decision.

ISSUE

Whether the Court of Appeals erred in affirming the NLRC’s dismissal of the complaints on the ground of res judicata, thereby upholding the validity and enforceability of the Joint Compromise Agreement despite alleged violations by respondents.

RULING

The Supreme Court granted the petition, reversed the Court of Appeals’ decision, and reinstated the Labor Arbiter’s decision with modifications. The Court held that the principle of res judicata does not apply because the compromise agreement was validly rescinded due to respondents’ failure to comply with its terms. Under Article 2041 of the Civil Code, if one party fails to abide by a compromise, the other party may either enforce it or regard it as rescinded and insist upon the original demand. Here, respondents violated the agreement by imposing new requirements for reassignment (submission of documents, seminars, interviews, exams) that were not stipulated, effectively preventing petitioners’ reinstatement. This constituted a refusal to abide by the agreement, entitling petitioners to rescind it and pursue their original claims for illegal dismissal. The dismissal of the first case was “without prejudice,” allowing the refiling of complaints. The Court found petitioners were constructively dismissed and awarded separation pay in lieu of reinstatement, along with specific monetary claims, subject to the P7,000.00 already received.