G.R. No. 203355, August 18, 2015
Leo R. Rosales, Edgar Solis, Jonathan G. Raniola, Lito Feliciano, Raymundo Didal, Jr., Nestor Salin, Arnulfo S. Abril, Ruben Flores, Dante Ferma and Melchor Selga, Petitioners, vs. New A.N.J.H. Enterprises & N.H. Oil Mill Corporation, Noel Awayan, Ma. Fe Awayan, Byron Ilagan, Heidi A. Ilagan and Avelino Awayan, Respondents.

FACTS

Respondent New ANJH Enterprises, a sole proprietorship owned by Noel Awayan, terminated thirty-three employees, including petitioners, due to an alleged cessation of operations and sale of its assets to respondent NH Oil Mill Corporation. On February 13, 2010, employees were given notices of termination effective March 15, 2010. On March 5, 2010, Noel Awayan signed a Deed of Sale selling New ANJH’s equipment to NH Oil Mill Corporation, which was incorporated on January 27, 2010, with Noel Awayan owning more than two-thirds of its subscribed capital stock and the remaining shares held by his family members. On March 8, 2010, respondents filed a “Letter Request for Intervention” with the NLRC Sub-Regional Arbitration Branch, informing of the permanent closure and requesting to effect separation pay payments under its guidance. Between March 16 and 29, 2010, petitioners received their separation pay, signed check vouchers, and executed Quitclaims and Release before Labor Arbiter Melchisedek A. Guan, who subsequently issued Orders dismissing the “labor dispute” between the parties “with prejudice on ground of settlement.” Petitioners later filed a complaint for illegal dismissal, alleging the sale was a sham and that operations resumed as NH Oil with the same owners and management, constituting a circumvention of their security of tenure. The Executive Labor Arbiter found illegal dismissal and ordered reinstatement and payment of backwages. Respondents appealed, posting a 60% appeal bond and filing a motion to reduce bond. The NLRC initially dismissed the appeal for non-perfection but later reversed itself, dismissing petitioners’ complaint on grounds of res judicata due to LA Guan’s Orders and finding the sale a valid management prerogative. The Court of Appeals affirmed the NLRC.

ISSUE

1. Whether the NLRC correctly entertained respondents’ appeal despite initially posting only a 60% appeal bond.
2. Whether the doctrine of res judicata bars petitioners’ complaint for illegal dismissal due to the Orders issued by Labor Arbiter Guan dismissing the earlier “labor dispute” based on the quitclaims.

RULING

1. On the appeal bond: The Supreme Court found the NLRC and CA correctly ruled that respondents substantially complied with the rules on appeal bonds. The filing of a motion to reduce bond, upon posting of a bond in a reasonable amount, stops the running of the period to perfect an appeal. The NLRC has discretion to determine the reasonableness of the bond. Here, the NLRC reconsidered its initial denial and accepted the 60% bond as reasonable given the merits of respondents’ grounds. This aligns with jurisprudence allowing relaxation of the bond requirement under exceptional circumstances to serve substantial justice.
2. On res judicata: The Supreme Court ruled that res judicata does not apply. For res judicata to bar a subsequent action, there must be, among other elements, a final judgment or order on the merits by a court of competent jurisdiction. The proceedings before LA Guan were not an adversarial litigation but a mere “Letter Request for Intervention” by respondents to facilitate payment of separation benefits under DOLE guidance. LA Guan’s Orders, which declared the “labor dispute” dismissed based on settlement, were issued without a formal complaint being filed by the employees and without the arbiter actually exercising adjudicatory power over a contested matter. These Orders did not constitute a judgment on the merits of an illegal dismissal case. The quitclaims executed by petitioners, given the circumstances where they signed under the belief their employment was legally terminated due to a bona fide sale, are void for being contrary to law, public policy, and morals. The sale was not a legitimate closure but a mere change in the business form orchestrated by the same owners to continue operations, constituting illegal dismissal.
DISPOSITIVE:
The Petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The Decision of Executive Labor Arbiter Generoso V. Santos in NLRC Case No. RAB-IV-04-00649-10-L, finding petitioners illegally dismissed and ordering their reinstatement and payment of full backwages less the amounts received as separation pay, is REINSTATED.