GR 81390; (August, 1989) (Digest)
G.R. No. 81390 August 29, 1989
NATHANIEL OLACAO, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, EASTCOAST DEVELOPMENT ENTERPRISES, ET AL., respondents.
FACTS
Petitioners, former workers of the logging enterprise Eastcoast Development Enterprises, filed a complaint in 1977 for unpaid wages and allowances. In December 1977, the business permanently closed. In January 1978, after the business assets were sold to a new owner who incorporated the entity as Eastcoast Development Enterprises, Inc., petitioners received payment for all unpaid wages, allowances, and termination pay computed up to November 1977. They executed sworn “Receipt and Release” documents, forever discharging the company from any and all claims concerning past salaries, termination pay, and other privileges. Based on these releases, Labor Arbiter Porfirio T. Reyes dismissed their unpaid wages case in 1980, a decision affirmed by the NLRC in 1982.
Subsequently, in a separate case for illegal dismissal and separation pay filed in 1978, Labor Arbiter Jose O. Libron awarded separation pay to petitioners. Private respondents appealed this award to the NLRC, arguing the prior final judgment in the unpaid wages case, which upheld the validity of the releases, barred the claim for separation pay under the principle of res judicata.
ISSUE
Whether the National Labor Relations Commission committed grave abuse of discretion in setting aside the award of separation pay on the ground of res judicata.
RULING
The Supreme Court ruled that the NLRC did not commit grave abuse of discretion. The legal logic is anchored on the finality of the prior judgment and the prevention of unjust enrichment. The issue of the validity of the sworn releases executed by petitioners, which absolutely discharged the company from all claims including termination pay, was squarely raised and conclusively resolved in the earlier “Unpaid Wages Case.” Labor Arbiter Reyes’s 1980 decision, which found the releases valid and binding, and the NLRC’s 1982 affirmation of that decision, constituted a final judgment on the merits.
The principle of res judicata bars the relitigation of the same issue between the same parties. Here, the claim for separation pay is intrinsically linked to the claims for termination pay and other benefits that were expressly extinguished by the valid releases. Allowing a new award would effectively grant petitioners separation pay twice for the same termination, contravening the principle against unjust enrichment. While the Court noted a technicality regarding the timeliness of the private respondents’ appeal in the separation pay case, it upheld the NLRC’s prerogative to relax procedural rules to prevent a miscarriage of justice. The paramount objective was to give effect to a prior final judgment and avoid an inequitable outcome. Thus, the NLRC’s decision to set aside the separation pay award was legally justified.