Nasipit Lumber Company, Inc. vs. National Labor Relations Commission

A final clearance to terminate employment granted in a summary administrative proceeding does not operate as res judicata to bar a subsequent complaint for illegal dismissal. An employer may validly dismiss an employee for loss of trust and confidence upon showing of “some basis” or reasonable ground to believe the employee committed the misconduct, proof beyond reasonable doubt being unnecessary, and the dismissal of related criminal charges does not bind the labor tribunal. Reinstatement is not proper where termination is grounded on breach of trust and confidence, and separation pay is unavailable when the dismissal is for serious misconduct reflecting on moral character.

Nasipit Lumber Company, Inc. (NALCO) employed Juanito Collado as a security guard (1st Sergeant of its Security Force) in Nasipit, Agusan del Norte. In August 1976, four crates of lawanit boards were stolen from the premises of an affiliate. Collado was implicated. NALCO placed him under preventive suspension and sought administrative clearance to dismiss him from the Department of Labor. The clearance was approved after Collado failed to appear at a scheduled investigation, and the action was later affirmed on appeal by the Acting Secretary of Labor. Rather than challenging that affirmance through certiorari, Collado filed a new complaint for illegal dismissal before the labor arbiter. The labor arbiter and, on appeal, the NLRC ordered reinstatement, the NLRC adding two years’ backwages, after giving weight to the dismissal of criminal charges against Collado.

• Parties: NALCO, a domestic logging and lumber manufacturing corporation with field offices in Nasipit, Agusan del Norte; Juanito Collado, employed as a security guard since September 9, 1970, and assigned as 1st Sergeant of the NALCO Security Force.
• The Theft: On August 20, 1976, four crates of lawanit boards containing 1,000 panels were stolen from the crating section of Philippine Wallboard Corporation, a NALCO affiliate.
• Implication and Preventive Suspension: Collado was implicated in the theft and placed under preventive suspension.
• Clearance Application: On September 8, 1976, NALCO filed an application for clearance to dismiss Collado with DOLE Regional Office No. X in Cagayan de Oro City. Collado opposed but failed to appear at the scheduled investigation on September 16, 1976 despite notice. The Head of the Agusan Provincial Labor Office submitted an investigation report recommending approval.
• Approval of Clearance: On October 12, 1976, Officer-in-Charge Roy V. Seneres approved the clearance to dismiss based on the investigation report.
• Collado’s Recourse: Collado moved for reconsideration, denying participation in the theft. The case was eventually certified to the Executive Labor Arbiter, who returned it to the Regional Director, treating the motion as an appeal to the Secretary of Labor. Acting Secretary Amado G. Inciong affirmed the clearance on June 7, 1978.
• Subsequent Complaint for Illegal Dismissal: Instead of seeking certiorari from the Supreme Court, Collado filed a complaint for illegal dismissal on October 9, 1978 before the Butuan District Labor Office, alleging his termination was unfounded, based on malicious suspicion and hearsay. NALCO moved to dismiss, invoking res judicata.
• Criminal Proceedings: In Criminal Case No. 2236, the municipal judge found no probable cause against Collado and ordered him dropped from the complaint for qualified theft; the provincial fiscal also dropped Collado from Criminal Case No. 1127.
• Labor Arbiter’s Decision: Executive Labor Arbiter Agbuya ordered reinstatement without backwages and without loss of seniority rights. He found NALCO complied with clearance requirements and acted in good faith, but gave weight to the dropping of criminal charges and the judge’s finding that prosecution evidence did not establish Collado’s probable guilt.
• NLRC Decision: On appeal, the NLRC modified the ruling by awarding two years’ backwages in addition to reinstatement, without qualification. It rejected res judicata because the clearance proceeding did not resolve the case on the merits and was hastily conducted.

• Res Judicata: Petitioner argued that the Acting Secretary of Labor’s final order affirming the clearance to dismiss rendered the issue of illegal dismissal res judicata, barring Collado’s subsequent complaint.
• Legality of Dismissal and Reinstatement: Petitioner maintained that Collado’s dismissal was lawful based on sworn statements implicating him in theft, which justified loss of trust and confidence, and that reinstatement was improper because the employer-employee relationship had been legally severed by the approved clearance.
• Conflicting Decisions: Petitioner contended that upholding the NLRC decision would create two diametrically opposed rulings on the same issue of dismissal.

• Non-applicability of Res Judicata: The NLRC and private respondent argued that clearance proceedings are non-litigious and summary, and res judicata cannot be invoked; the clearance was granted without a full hearing on the merits and should not bar a complaint for illegal dismissal.
• Illegal Dismissal and Due Process: Collado claimed his dismissal was unjust, based on uncorroborated suspicion and hearsay, and that he was denied an opportunity to be heard in the clearance investigation.
• Entitlement to Reinstatement: Collado maintained that the dismissal of criminal charges and absence of evidence of guilt entitled him to reinstatement with backwages.

• Res Judicata: Whether the final order of the Acting Secretary of Labor affirming the clearance to dismiss operated as res judicata to bar Collado’s subsequent complaint for illegal dismissal.
• Legality of Dismissal and Reinstatement: Whether the NLRC gravely abused its discretion in ordering Collado’s reinstatement with two years’ backwages despite the employer’s invocation of loss of trust and confidence and the dismissal having been based on sworn statements implicating him in theft.

• Res Judicata: The principle of res judicata was found inapplicable. Clearance proceedings under the Labor Code’s implementing rules are non-litigious and summary in nature, designed as an expeditious administrative shield against arbitrary dismissals, not as a full adjudication of the merits. Res judicata applies only to judicial or quasi-judicial proceedings, not to the exercise of administrative powers. The action of the Acting Secretary of Labor did not bar Collado from filing a complaint for illegal dismissal, although his delay in questioning the affirmance might be considered laches—an argument not invoked against him because it would prejudice his rights as a laborer.
• Legality of Dismissal and Reinstatement: The NLRC committed grave abuse of discretion in ordering reinstatement with backwages. Dismissal for loss of trust and confidence does not require proof beyond reasonable doubt. It suffices that the employer has “some basis” or reasonable ground to entertain the moral conviction that the employee was responsible for the misconduct, rendering him unworthy of the trust reposed in him. NALCO supported the application for clearance with sworn statements that directly implicated Collado in the theft, thereby establishing a reasonable basis for loss of confidence. The dismissal of the criminal charges against Collado was not binding upon the labor tribunal. Because Collado’s position as a security guard was one impressed with a high degree of trust, and the cause of dismissal constituted a breach of that trust, reinstatement was not proper. Further, separation pay could not be awarded as a measure of social justice, the dismissal having been for a cause reflecting on his moral character, consistent with the Court’s ruling in Philippine Long Distance Telephone Company v. NLRC.

• Non-Application of Res Judicata in Labor Clearance Proceedings — The doctrine of res judicata does not govern proceedings for clearance to terminate employment because such proceedings are non-litigious, summary, and administrative, not judicial or quasi-judicial. The clearance mechanism serves as an expeditious protective measure against arbitrary dismissals, not as a conclusive adjudication of the rights of the parties.
• Dismissal for Loss of Trust and Confidence — For a valid dismissal on this ground, the employer need only show “some basis” or a reasonable ground to believe that the employee is responsible for the misconduct, and that the nature of the participation renders the employee unworthy of the trust and confidence demanded by the position. Proof beyond reasonable doubt is not required. Sworn statements implicating the employee constitute sufficient basis.
• Effect of Acquittal or Dropping of Criminal Charges in Labor Cases — The dismissal of criminal charges or a finding of lack of probable cause does not bind the labor tribunal; the quantum of evidence and purpose of the proceedings are distinct.
• Impropriety of Reinstatement in Breach of Trust Cases — Reinstatement is not a proper remedy where termination is grounded on breach of trust and confidence, especially for positions requiring a high degree of trust.
• Separation Pay as Social Justice — Moral Character Exception — Separation pay shall be allowed as a measure of social justice only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on the employee’s moral character. Where dismissal is for such character-related causes, no separation pay is granted.

• “The principle of res judicata may not be invoked in labor relations proceedings considering that Section 5, Rule XIII, Book V of the Rules and Regulations Implementing the Labor Code provides that such proceedings are ‘non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law.’” (quoting Razon v. Inciong)
• “Proof beyond reasonable doubt of an employee's misconduct is not required when loss of confidence is the ground for dismissal. It is sufficient if the employer has ‘some basis’ to lose confidence or that the employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.”
• “The sensitivity of Collado's job as a security guard vis-a-vis the cause of his dismissal cost him his right to be rehired to the same position. Reinstatement is not proper where termination of employment was due to breach of trust and confidence.”
• “We are aware of Collado's almost six years of service to the petitioner as well as the hardships resulting from the loss of his job. Compassion dictates us to grant him separation pay as financial assistance but we are bound by the ruling of the Court en banc in Philippine Long Distance Telephone Company v. NLRC that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.”

• Razon v. Inciong, G.R. No. 51809, December 19, 1980, 101 SCRA 738 — Followed; established that res judicata does not apply in labor relations proceedings due to their non-litigious and summary nature.
• Citytrust Finance Corporation v. NLRC, G.R. No. 75740, January 15, 1988, 157 SCRA 87 — Followed; articulated the “some basis” standard for dismissal based on loss of trust and confidence.
• Zamboanga City Water District v. Bartolome, G.R. No. 66766, December 20, 1985, 140 SCRA 432 (citing Sea-Land Service, Inc. v. NLRC) — Applied; held that the dropping of criminal charges is not binding upon a labor tribunal.
• University of the East v. NLRC, G.R. No. 71065, November 22, 1985, 140 SCRA 296 — Applied; ruled that reinstatement is improper where termination is based on breach of trust and confidence.
• Philippine Long Distance Telephone Company v. NLRC, G.R. No. 80609, August 23, 1988 — Applied; laid down the rule that separation pay as social justice is unavailable when dismissal is for serious misconduct reflecting on moral character.

• Section 5, Rule XIII, Book V of the Rules and Regulations Implementing the Labor Code — Declared that labor relations proceedings are non-litigious and summary without regard to legal technicalities, forming the basis for rejecting res judicata.
• Sections 7 and 8, Rule XIV, Book V, Rules and Regulations Implementing the Labor Code (as then in force) — Outlined the clearance procedure, demonstrating its non-litigious character by allowing approval with or without the employee’s opposition.
• Batas Pambansa Blg. 130 (1981) — Abolished the requirement of a prior written clearance from the Department of Labor before termination, rendering the conflict over two possible decisions academic.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.