G.R. No. 167484 - Borra vs. Court of Appeals

Case Summary (G.R. No. 167484)

Factual Background

On September 12, 1997, petitioners filed with the National Labor Relations Commission separate complaints that were docketed as RAB Case No. 06-09-10698-97 and RAB Case No. 06-09-10699-97. RAB Case No. 06-09-10698-97 was filed against Hawaiian Philippine Company alone. Petitioners asked that they be recognized and confirmed as regular employees of Hawaiian Philippine Company, and they prayed for the benefits accorded to regular employees for three years preceding the filing of the complaint. RAB Case No. 06-09-10699-97 impleaded Hawaiian Philippine Company and Fela Contractor, and petitioners sought unpaid wages, holiday pay, allowances, thirteenth month pay, service incentive leave pay, and moral and exemplary damages for three years prior to filing.

Earlier, on October 16, 1997, private respondent filed a Motion to Consolidate the two RAB cases. The Labor Arbiter denied the motion in an Order dated October 20, 1997.

Labor Arbiter Proceedings in RAB Case No. 06-09-10698-97

On January 9, 1998, private respondent moved to dismiss RAB Case No. 06-09-10698-97, invoking res judicata. Private respondent relied on a prior, already-final labor controversy entitled Humphrey Perez, et al. v. Hawaiian Philippine Co. et al., docketed as RAB Case No. 06-04-10169-95 (the Perez case). In that earlier case, which included petitioners among the complainants and private respondent and Jose Castillon among the respondents, private respondent argued that the final ruling established that petitioners were not employees of private respondent, but of Castillon.

In an Order dated July 9, 1998, the Labor Arbiter granted the motion to dismiss RAB Case No. 06-09-10698-97. Petitioners appealed to the NLRC, which reversed the dismissal, reinstated RAB Case No. 06-09-10698-97, and remanded it for further proceedings. Private respondent then appealed to the Court of Appeals.

Prior Supreme Court Ruling (G.R. No. 151801) and Its Effect

The Court of Appeals affirmed the NLRC decision on January 12, 2001, and private respondent filed a petition for review on certiorari with the Supreme Court, docketed as G.R. No. 151801 and entitled Hawaiian Philippine Company v. Borra. On November 12, 2002, the Supreme Court denied the petition and affirmed the CA. The Supreme Court explained that the cases had different causes of action. The Perez case involved a money claim covering 1987 up until 1995, when petitioners were engaged by contractor Jose Castillon to work at private respondent’s warehouse. The action for confirmation of employment filed on September 12, 1997 was after Castillon was no longer the contractor; at that point, the contractor was Fela Contractor, and petitioners prayed for confirmation that they were regular employees of private respondent. Thus, even if privity issues had affected the finding of no employer-employee relationship in Perez, the factual milieu for RAB Case No. 06-09-10698-97 differed because it turned on the nature of the relationship between private respondent and Fela Contractor, including whether it functioned as a labor-only contractor and whether private respondent was the real employer.

The Supreme Court’s ruling required factual determination of whether Fela Contractor merely stepped into the shoes of Castillon, and it treated the matter of real employment as premature to be resolved on the record of the earlier Perez case.

Decision in RAB Case No. 06-09-10699-97 and Its Finality

Meanwhile, on December 21, 1998, the Labor Arbiter rendered a decision in RAB Case No. 06-09-10699-97, holding that there was no employer-employee relationship between private respondent and petitioners. The Labor Arbiter found that Fela Contractor replaced Jose Castillon and that petitioners, who were workers of Castillon, applied for employment with Jose Castillon, now acting through the owner/representative of Fela Contractor as the new handler and hauler for the sugar planters and traders. The Labor Arbiter dismissed the complaint against private respondent, concluding that private respondent had no employer-employee relation with petitioners, and that private respondent was only the depository of sugar where the contractor’s workers hauled the sugar. No appeal was taken from this decision; therefore, it became final and executory.

Second Dismissal Attempt in RAB Case No. 06-09-10698-97 and CA Proceedings

As a consequence of that final and executory ruling in RAB Case No. 06-09-10699-97, private respondent filed a new Motion to Dismiss RAB Case No. 06-09-10698-97. This time, private respondent invoked res judicata not from the Perez case, but from the final decision in RAB Case No. 06-09-10699-97.

On August 12, 2003, the Labor Arbiter denied the motion to dismiss. Private respondent then filed a petition for certiorari and prohibition with the Court of Appeals assailing the Labor Arbiter’s denial. On June 22, 2004, the Court of Appeals granted the petition. It annulled and set aside the August 12, 2003 order and dismissed RAB Case No. 09-10698-97. Petitioners’ motion for reconsideration was denied in a January 14, 2005 Court of Appeals resolution.

Issues Raised by Petitioners and Private Respondent’s Position

Petitioners invoked certiorari grounds centered on alleged lack of jurisdiction by the Court of Appeals and alleged grave abuse of discretion. They asserted that the Court of Appeals acted without jurisdiction when it took cognizance of the private respondent’s second petition for certiorari, supposedly despite the Supreme Court’s earlier directive in G.R. No. 151801 to remand the case to the Labor Arbiter for further proceedings. Petitioners also maintained that the Court of Appeals disregarded established facts on identity of subject matter and cause of action between HPCO v. Borra cases.

Private respondent, for its part, argued that the petition before the Court of Appeals was proper because it challenged an interlocutory denial of a motion to dismiss that was allegedly tainted with grave abuse of discretion. Private respondent further maintained that the final and executory Labor Arbiter decision in RAB Case No. 06-09-10699-97 barred further litigation in RAB Case No. 06-09-10698-97 via res judicata, and that there was no actionable forum shopping.

Legal Basis and Reasoning on Jurisdiction and Certiorari

The Court held that petitioners’ claim of the Court of Appeals’ lack of jurisdiction did not persuade. The Court reasoned that what private respondent filed with the Court of Appeals was a special civil action for certiorari under Rule 65 assailing the Labor Arbiter’s denial of the motion to dismiss. The controlling procedural rule then was Section 3, Rule V of the NLRC Rules of Procedure, which stated that an order denying a motion to dismiss (or suspending its resolution) was not appealable. The Court stressed that, similarly to civil procedure, an interlocutory denial of a motion to dismiss was not subject to appeal until final judgment. The remedy of certiorari required a showing that the denial was tainted with grave abuse of discretion, and the Court cited doctrine holding that when the denial of a motion to dismiss had such taint, Rule 65 could be availed of.

The Court then rejected petitioners’ theory that the Supreme Court’s prior remand directive deprived the Court of Appeals of jurisdiction. The Court explained that the “essence” of the Supreme Court’s earlier ruling in G.R. No. 151801 was limited to requiring resolution of a factual issue: whether Fela Contractor had stepped into the shoes of Castillon, making private respondent the real employer. The Court held that, by the time the Court of Appeals ruled in CA-G.R. SP No. 78729, the relevant employment question had already been resolved in the final and executory decision in RAB Case No. 06-09-10699-97.

Res Judicata and Conclusiveness of Judgment

The Court emphasized that tribunals could not determine whether petitioners were entitled to benefits as regular employees of private respondent if there was already a prior final finding that petitioners were not employees of private respondent. Accordingly, petitioners’ prayer for regularization and their prayer for backwages and related monetary claims in RAB Case No. 06-09-10698-97 were dependent on the establishment of employer-employee relations between petitioners and private respondent.

The Court held that the final and executory decision in RAB Case No. 06-09-10699-97 ruled that no employer-employee relationship existed between private respondent and petitioners because their real employer was Fela Contractor. The Court treated this as an instance of res judicata by conclusiveness of judgment, adopting its doctrinal distinction between bar by prior judgment and conclusiveness of judgment. Under the doctrine of conclusiveness of judgment, only the identity of parties and issues was required, and the fact or question squarely put in issue and judicially passed upon in a prior case could not be re-litigated in a future action between the same parties and their privies.

Thus, the Court ruled that there was no purpose in determining the main issue in RAB Case No. 06-09-10698-97—whether petitioners were regular employees of private respondent—because the earlier final ruling already conclusively established that petitioners were not employees of private respondent. The Court therefore affirmed the Court of Appeals’ conclusion that the Labor Arbiter committed grave abuse of discretion in denying private respondent’s motion to dismiss RAB Case No. 06-09-10698-97.

Forum Shopping

The Court then addressed petitioners’ contention that private respondent engaged in forum shopping. The Court denied the allegation. It held that forum shopping required that multiple remedies be substantially founded on the same transactions, same essential facts, and the same issues, in a manner that increased the chance of obtaining a favorable result in a different forum. The Court also identified the three common

Case Syllabus (G.R. No. 167484)

The petitioners were Hernando Borra and other complainants who sought labor relief before the NLRC Regional Arbitration Branch No. VI in Bacolod City.
The private respondent was Hawaiian Philippine Company, which moved to dismiss and later pursued certiorari in the Court of Appeals.
The case reached the Supreme Court through a special civil action for certiorari under Rule 65 assailing the Court of Appeals (CA) November 14, 2003 issuance of a preliminary mandatory injunction, the June 22, 2004 CA Decision, and the January 14, 2005 CA Resolution.
The June 22, 2004 CA Decision annulled the Labor Arbiter August 12, 2003 Order denying the motion to dismiss, and dismissed RAB Case No. 09-10698-97.
The Supreme Court ultimately dismissed the petition and affirmed the assailed CA Decision and Resolutions.

Parties and Procedural Posture

Petitioners filed two labor complaints in the NLRC against Hawaiian Philippine Company, with one complaint additionally impleading Fela Contractor.
The labor complaints were docketed as RAB Case No. 06-09-10698-97 and RAB Case No. 06-09-10699-97.
The Labor Arbiter initially denied private respondent’s Motion to Consolidate.
After adverse rulings, private respondent sought dismissal, and when denied, private respondent filed a petition for certiorari and prohibition with the CA.
The CA granted certiorari, set aside the denial of the motion to dismiss, dismissed the case, and later denied reconsideration.
Petitioners then filed the present Rule 65 petition, contending, among others, that the CA lacked jurisdiction and that private respondent committed forum shopping.

Key Factual Allegations

Petitioners sought recognition and confirmation as regular employees of Hawaiian Philippine Company and prayed for benefits allegedly received by regular employees.
In RAB Case No. 06-09-10698-97, petitioners asked for confirmation of employment and payment of various benefits for three (3) years prior to the filing of the complaint.
In RAB Case No. 06-09-10699-97, petitioners sought unpaid wages, holiday pay, allowances, thirteenth month pay, service incentive leave pay, and moral and exemplary damages for the same three (3) years prior to filing.
Private respondent’s position was that petitioners were not its employees but were employed through a contractor arrangement, and that the contractor changed over time.
The Labor Arbiter later found that Fela Contractor replaced Jose Castillon, with petitioners having been absorbed and employed by the new contractor.

Prior Litigation and Res Judicata

Private respondent moved to dismiss RAB Case No. 06-09-10698-97 in 1998 on res judicata, invoking an earlier action entitled Humphrey Perez, et al. v. Hawaiian Philippine Co. et al. (Perez case) docketed as RAB Case No. 06-04-10169-95.
The Perez case had included petitioners among the complainants and ruled that petitioners were not employees of Hawaiian Philippine Company but of Castillon.
The Labor Arbiter granted the motion to dismiss in an Order dated July 9, 1998, based on the finality of the Perez case.
Petitioners appealed to the NLRC, which set aside the dismissal, reinstated RAB Case No. 06-09-10698-97, and remanded the case for further proceedings.
Private respondent appealed to the CA, and then to the Supreme Court through a petition for review on certiorari in Hawaiian Philippine Company v. Borra docketed as G.R. No. 151801.
In G.R. No. 151801 (Decision dated November 12, 2002), the Supreme Court held that the two cases involved different causes of action because the Perez case covered employment during November 1987 to April 6, 1995, while the later confirmation claim was filed on September 12, 1997, after the contractor arrangement changed.
The Supreme Court in G.R. No. 151801 required a factual determination of whether Fela Contractor had stepped into the shoes of Castillon, since the employer-employee relationship depended on that determination.
After remand, the Labor Arbiter rendered a Decision in RAB Case No. 06-09-10699-97 on December 21, 1998, holding that no employer-employee relationship existed between petitioners and Hawaiian Philippine Company, and ruling that petitioners’ real employer was Fela Contractor.
No appeal was taken from the Decision in RAB Case No. 06-09-10699-97, and it became final and executory.
Private respondent then filed another motion to dismiss RAB Case No. 06-09-10698-97, again invoking res judicata, but this time based on the final Decision in RAB Case No. 06-09-10699-97.

Labor Arbiter Proceedings

The Labor Arbiter handling RAB Case No. 06-09-10698-97 denied private respondent’s initial attempt to consolidate the cases.
The Labor Arbiter first granted dismissal in 1998 based on the Perez case, but that dismissal was reversed by the NLRC, which reinstated the complaint.
Upon remand, the Labor Arbiter later decided RAB Case No. 06-09-10699-97 on December 21, 1998.
The Labor Arbiter’s Decision in RAB Case No. 06-09-10699-97 described the contractor transition from Castillon to Fela Contractor and concluded that petitioners were absorbed and employed by Fela Contractor.
The Labor Arbiter dismissed petitioners’ complaint against Hawaiian Philippine Company in RAB Case No. 06-09-10699-97, explaining that Hawaiian was merely a depository of sugar where the contractor hauled sugar.
Despite the finality of the RAB Case No. 06-09-10699-97 ruling, the Labor Arbiter in RAB Case No. 06-09-10698-97 issued an Order dated August 12, 2003 denying private respondent’s renewed motion to dismiss.

CA Review and Certiorari Grounds

Private respondent filed a petition for certiorari and prohibition in the CA assailing the Labor Arbiter’s August 12, 2003 Order denying the motion to dismiss.
The petition sought to challenge the denial as grave abuse of discretion, p