G.R. No. 208986, January 13, 2016
HIJO RESOURCES CORPORATION, Petitioner, vs. EPIFANIO P. MEJARES, REMEGIO C. BALURAN, JR., DANTE SAYCON, and CECILIO CUCHARO, represented by NAMABDJERA-HRC, Respondents.

FACTS

Respondents, represented by their labor union NAMABDJERA-HRC, filed an illegal dismissal case against petitioner Hijo Resources Corporation (HRC). They alleged they were originally employed by HRC’s predecessor, Hijo Plantation Incorporated (HPI), as farm workers. In 2001, they were absorbed by HRC but made to work under contractor-growers who allegedly had no independent capitalization and were under HRC’s control. After forming and registering their union in July 2007 and filing a petition for certification election in August 2007, the contractor-growers filed a notice of cessation of business operations. Respondents were terminated in September 2007. They filed an illegal dismissal case with the NLRC in September 2007. Meanwhile, in November 2007, a DOLE Med-Arbiter dismissed the union’s petition for certification election, ruling no employer-employee relationship existed between respondents and HRC. Respondents did not appeal this Order but pursued their illegal dismissal case. HRC moved to dismiss the illegal dismissal complaint, arguing res judicata based on the Med-Arbiter’s final Order. The Labor Arbiter denied the motion to dismiss, holding that a Med-Arbiter’s finding in a certification election does not bar a Labor Arbiter from independently determining the existence of an employer-employee relationship. The NLRC reversed the Labor Arbiter, granting HRC’s petition and holding that the Med-Arbiter’s Order constituted res judicata (conclusiveness of judgment). The Court of Appeals reversed the NLRC, applying the precedent in Sandoval Shipyards, Inc. v. Pepito, and remanded the case to the Labor Arbiter for further proceedings.

ISSUE

Whether the Court of Appeals erred in setting aside the NLRC ruling and remanding the case to the Labor Arbiter for further proceedings. (The core legal issue is whether the Med-Arbiter’s finding in a certification election case that no employer-employee relationship exists constitutes res judicata and bars a Labor Arbiter from independently determining the same issue in a subsequent illegal dismissal case.)

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision and Resolution of the Court of Appeals. The Court held that the Med-Arbiter’s Order in the certification election case does not constitute res judicata in the illegal dismissal case. While a Med-Arbiter has the authority to determine the existence of an employer-employee relationship for purposes of a certification election, such proceedings are non-adversarial and merely investigative. In contrast, a Labor Arbiter has original and exclusive jurisdiction over illegal dismissal cases and is given wide latitude to ascertain facts, including through hearings and inspections. Citing Manila Golf & Country Club, Inc. v. IAC and Sandoval Shipyards, Inc. v. Pepito, the Court ruled that a decision in a certification election case does not foreclose further dispute as to the existence of an employer-employee relationship. To hold otherwise would deny the complainants in the illegal dismissal case due process. Thus, the case was properly remanded to the Labor Arbiter for further proceedings on the merits.