Nasipit Lumber Co. v.
NLRC o NALCO asked for the reversal and revocation of the decision of the
Res Judicata | August 31, 1989 | Fernan, J.
Nature of the case: Petition for Certiorari and Prohibition
Digest maker: Hernandez
SUMMARY: Collado, a security guard of petitioner NALCO, was implicated in the theft of 4
crates of lawanit boards belonging to petitioner. Petitoner preventively suspended Collado
and a month later, filed a petition for clearance to dismiss him before the DOLE Regional
Office. The DOLE Officer in charge ordered Collado’s dismissal. Acting Secretary of Labor
affimed. Collado file a complaint before the Butuan District Labor Office for unjust
dismissal and reinstatement with backwages and benefits. Petitioner filed a motion to
dismiss for lack of cause of action and res judicata.LA order reinstatement. NLRC affirmed
LA. The Court ruled that the NLRC did not violate the doctrine of res judicata. The
principle of res judicata may not be invoked in labor relations proceedings.
DOCTRINE: 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.”
The doctrine of res judicata applies only to judicial or quasi-judicial proceedings and not
to the exercise of administrative powers.
FACTS:
 Petitioner Nasipit Lumber Co. (NALCO) is a domestic corporation engaged in the
business of logging, lumber manufacturing and wood processing.
 Private respondent Collado was employed by petitioner as security guard
 Collado was implicated in the theft of 4 crates of lawanit boards containing 1,000
panels from the crating section of the Philippine Wallboard Corporation, a NALCO
affiliate
 He was placed under preventive suspension
 NALCO filed a petition for clearance to dismiss Collado with the Regional Office of
the DOLE in Cagayan. Such was approved by the Regional Office No. X Officer-in-
charge Roy V. Seneres. It was also affirmed by the Acting Labor Secretary Amado
Inciong
 Instead of resorting to the SC on a petition for certiorari, Collado filed a complaint
before the Butuan District Labor Office, for unjust dismissal and reinstatement with
backwages and benefits.
 NALCO file a motion to dismiss alleging that because the order of Secretary Inciong
has become final and executory, the issue of illegal dismissal had also become res
judicata.
 The case having been certified for compulsory arbitration, Executive Labor Arbiter
Idelfonso G. Agbuya rendered a decision ordering NALCO to reinstate Collado to his
fomer position without backwages and without loss of seniority rights
o Agbuya ordered the reinstatement because of the order of the Nasipit
municipal judge in Criminal Case for theft against Collado wherein nothing
was found in the testimony of the prosecution witness to establish the
probable guilt of Collado who should therefore be dropped from the
complaint for qualified theft
 Both parties appealed to the NLRC.
Executive Labor Arbiter and prayed for reinstatement
 NLRC rendered a decision ordering Collado’s reinstatement. It also ruled that res
judicata can’t be invoked because the granting of the application for clearance which
although admittedly was secured with all the formalities required by law, did not
resolve the case on its merits.
 NALCO filed a petition for certiorari and prohibition seeking to annul the decision of
the NLRC and prohibit its execution.
o It imputed to the NLRC, lack or excess of jurisdiction and grave and patent
abuse of discretion amounting to lack of jurisdiction in overturning the final
decision of the Acting Secretary of Labor thereby denigrating the time-
honored doctrine of bar by former judgement or res judicata.
 The Court dismissed the petition for lack of merit. NALCO filed an MR. The Court
reconsidered the dismissal resolution and gave due course to the petition for
certiorari and prohibition.
ISSUE/S & RATIO:
1. WON the principle of Res Judicata is applicable– NO
a. Justice Vicente Abad Santos in Razon v Inciong: 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.”
i. Said pronouncement is in consonance with the
jurisprudential dictum that the doctrine of res judicata
applies only to judicial or quasi-judicial proceedings
and not to the exercise of administrative powers.
ii. The requirement of a clearance to terminate employment
is non-litigious and summary in nature as shown by the
fact that Book V, Rule XIV of the Rules and Regulations
Implementing the Labor Code allowed a procedure for
the approval of the clearance with or without the
opposition of the employee concerned.
a. However, the requirement of clearance was
abolished by BP 130 in 1981, hence; the
possibility that there would be two conflicting
decisions on the issue of Collado’s dismissal
may now be considered academic. Dismissal
proceedings are now confined within the
establishments. The NLRC or the labor arbiter
steps in only if the said decision is contested by
the employee
iii. SC is unprepared to rule that such action of Acting
Secretary of Labor barred Collado from filing the
complaint for illegal dismissal. If ever, the most that can
be attributed against Collado is laches for his failure to
question seasonably the Acting Secretary of Labor's
affirmance of the approval of the clearance to terminate.
However, to count laches against Collado would be
prejudicial to his rights as laborer
 2. WON reinstatement is proper – NO
a. Reinstatement is not proper where termination of employment was due to
breach of trust and confidence.
b. In this case, petitioner supported its application for clearance to terminate
Collado’s employment with sworn statements implicating him in the theft.
Such sworn statements are sufficient to warrant the dismissal. On the other
hand, the dropping of the qualified theft charges against Collado is not
binding upon a labor tribunal. The sensitivity of Collado’s job as a security
guard visavis 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.

RULING: Decision of the NLRC is reversed and set aside.