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543 Phil. 546

THIRD DIVISION

[ G. R. No. 166996, February 06, 2007 ]

PHILIPPINE AIRLINES, INCORPORATED, FRANCISCO X. YNGENTE IV, PAG-ASA C. RAMOS, JESUS FEDERICO V. VIRAY, RICARDO D. ABUYUAN, PETITIONERS, VS. BERNARDIN J. ZAMORA, RESPONDENT.

R E S O L U T I O N

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended, seeks to set aside the 13 August 2004 Decision[1] and 1 February 2005 Amended Decision[2] of the Court of Appeals in CA G.R. SP No. 68795 entitled "Bernardin J. Zamora v. National Labor Relations Commission, et al."  In the assailed decisions, the Court of Appeals annulled and set aside the 27 April 2001 Resolution[3] and 31 October 2001 Decision[4] of the Third Division of the National Labor Relations Commission (NLRC) in CA No. 013358-97, a) ordering the Labor Arbiter to forthwith issue a Writ of Execution stating that "(1) complainant must be awarded, in lieu of reinstatement, separation pay equivalent to one month's salary for every year of service from February 9, 1981 to June 30, 2000; and (2) the award of backwages must be computed from December 15, 1995 to June 30, 2000;"[5] and b) suspending the proceedings of the case in view of the ongoing rehabilitation of petitioner Philippine Airlines, Inc. (PAL) and accordingly referring the particular case to the permanent rehabilitation receiver.

This case stemmed from a labor Complaint[6] filed by herein respondent Bernardin J. Zamora (Zamora) against herein petitioners PAL and Francisco X. Yngente IV, Assistant Vice-President, PAL Cargo Sales and Services, for illegal dismissal, unfair labor practice, non-payment of wages, damages and attorney's fees. The complaint was docketed as NLRC NCR Case No. 00-03-01672-96. Later on, on respondent Zamora's motion, Pag-asa C. Ramos, Manager, PAL Payroll and Timekeeping Department, Jesus Federico V. Viray, Operations Director for International Cargo, PAL Import Division, Ricardo D. Abuyuan, Supervisor for International Cargo, PAL Import Division, and Gerardo V. Ignacio, Manager, PAL Import Operations Division, were included as party-respondents in the labor case.

As culled from the records of the case, the facts are as follows:

Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981 when the former was hired as a Cargo Representative at petitioner PAL's Import Operations Division.

On 13 November 1995, respondent Zamora was dismissed from service for having been found by petitioner PAL's management to be liable for insubordination, neglect of customer, disrespect for authority and absence without official leave.

On 12 March 1996, respondent Zamora filed a complaint against petitioners PAL and Francisco X. Yngente IV[7] before the NLRC for illegal dismissal, unfair labor practice, non-payment of wages, damages and attorney's fees.

On 28 September 1998, the labor arbiter[8] rendered a Decision[9] dismissing respondent Zamora's complaint for lack of merit, the dispositive portion of which reads:
WHEREFORE, consistent with the foregoing tenor, judgment is hereby entered dismissing the charges of illegal dismissal for lack of merit. Complainant is, however, ordered to report to his new assignment at respondent PAL's Domestic Cargo and for respondent PAL to accept him back to work under the same terms and conditions of employment prior to the dispute as soon as it resumes operations or, for respondent PAL to pay him his appropriate separation pay in the event it finally closed shop.

The rest of the claims is (sic) likewise dismissed for lack of merit.
In dismissing the complaint, the labor arbiter considered respondent Zamora's transfer as an exercise of petitioner PAL's management prerogative.

On appeal, the NLRC, on 26 July 1999, set aside[10] the aforequoted decision and ordered the immediate reinstatement of respondent Zamora to the latter's former position. According to the NLRC, petitioners PAL, et al. "failed to substantiate that complainant's (respondent Zamora) transfer was for a just and proper cause."[11] Finding that said order was prompted not by legitimate reasons and, thus, went beyond the exercise of management prerogative, the NLRC declared the transfer a form of harassment, intimidation and undue discrimination. It went on further to ratiocinate that:
x x x  What appears to be simply an order of transfer is actually an attempt to strifle (sic) complainant's (respondent Zamora) efforts to avert illegal activities at his original work assignment. For why would the individual respondents pick on complainant only after he wrote to the company President, unless there is a veiled attempt to weaken his chance to have a full investigation conducted on an anomaly immediately after he had started to spill out the beans, so to speak.
The decretal part of the subject decision provides:
WHEREFORE, in light of the foregoing, the instant appeal is hereby GRANTED. The assailed Decision dated September 28, 1998 is hereby ordered SET ASIDE and a new one is hereby entered declaring complainant's transfer at the Domestic Cargo Operations on November 13, 1996 illegal.

Moreover, respondents are hereby ordered to immediately reinstate complainant Bernardin J. Zamora to his former position as Cargo Representative at the Import Operations Division of respondent PAL without loss of seniority rights and other privileges and to pay him back salaries and backwages beginning December 15, 1995 until his actual reinstatement, inclusive of allowances and other benefits and increases thereto.

All other reliefs herein sought and prayed for are hereby DENIED for lack of merit.[12]
Respondent Zamora filed a Motion for Partial Reconsideration[13] of the abovequoted decision in so far as it denied his claim for damages and attorney's fees.

On 16 September 1999, the NLRC issued a Resolution[14] dismissing the aforesaid motion.

Claiming that the 26 July 1999 Decision of the NLRC respecting his reinstatement and the payment of his backwages and other monetary benefits have become final and executory, respondent Zamora, through counsel, wrote[15] petitioner PAL demanding the execution thereof.

What transpired next, as revealed by the record of the instant petition, was an exchange of a barrage of pleadings.

Petitioners PAL, et al., filed a "Motion to Furnish Respondents a Copy of the NLRC Decision Promulgated on July 26, 1999"[16] dated 5 October 1999.

On 18 October 1999, respondent Zamora filed two pleadings before the NLRC. Firstly, he filed an Opposition (to Respondents-Appellees' Motion to Furnish Respondents a Copy of the NLRC Decision Promulgated on July 26, 1999).  He opposed the motion on the ground that the record of the NLRC with regard to the subject case indicates that copies of the 26 July 1999 Decision were sent, via registered mail, to petitioners PAL, et al. and their counsel's address of record on 11 August 1999 and that the same remained unclaimed for a time and later on were returned to sender.  As of 16 August 1999, or five days later, service upon them of the copies of said Decision was deemed completed per the pronouncement of the Supreme Court in the case of Magno v. Court of Appeals.[17]  Then respondent Zamora filed a Motion for Partial Entry of Judgment[18] of the 26 July 1999 Decision respecting his reinstatement to his former position as well as the payment of various monetary benefits allegedly due him.

Thereafter, petitioners PAL, et al. filed an Opposition[19] (to Complainant's Motion for Partial Entry of Judgment) as well as a Motion for Reconsideration[20] of the 26 July 1999 Decision of the NLRC.

On 8 November 1999, respondent Zamora filed a Reply[21] to the aforementioned Opposition. Ten days later, or on 18 November 1999, he then opposed the Motion for Reconsideration of petitioners PAL, et al., and moved to have the latter expunged from the record of the case on the argument that the 26 July 1999 NLRC Decision had long become final and executory.[22]

Not to be outdone, petitioners PAL, et al. filed a Comment[23] to respondent Zamora's 18 November 1999 Opposition To And Motion To Expunge.

Subsequently, the NLRC resolved to deny the Motion for Reconsideration of petitioners PAL, et al. in a Resolution[24] dated 25 November 1999.

Aggrieved by the ruling of the NLRC in its 26 July 1999 Decision and 25 November 1999 Resolution, petitioners PAL, et al. filed a Petition for Certiorari[25] before the Court of Appeals on 11 December 1999.  Said case was docketed as CA G.R. SP No. 56428.[26]

On 5 January 2000, respondent Zamora filed anew a Motion for Partial Execution[27] dated 3 January 2000 reiterating his earlier prayer for the execution of the 26 July 1999 NLRC Decision with regard to his reinstatement to his former position and the payment of monetary benefits allegedly due him. A few months thereafter, or on 5 July 2000, respondent Zamora filed a Motion for Contempt[28] dated 3 July 2000, before the office of the labor arbiter, praying that petitioners PAL, et al. be declared in contempt of the Honorable Commission for their refusal to physically reinstate respondent Zamora to his former position or in the payroll as embodied in the 26 July 1999 NLRC Decision despite the immediately executory nature of that part of the decision.  Petitioners PAL, et al. opposed the motion.[29]

On 8 January 2001, the labor arbiter[30] issued an Order[31] citing petitioners PAL, et al. for indirect contempt for their failure to comply with the directive contained in the 26 July 1999 NLRC Decision. In finding them guilty of indirect contempt, the labor arbiter declared that "an order of reinstatement, being self-executory, does not require a writ of execution for its enforcement." Likewise embodied in the order of the labor arbiter was a pronouncement for the issuance of a writ of execution. The dispositive of the subject Order states that:
WHEREFORE, finding the motion to be well taken and in order, the same is granted and respondents are hereby cited for indirect contempt for their failure to comply with the order of the Hon. Commission. They are directed anew to reinstate complainant immediately to his former position as Cargo Representative, physically or in the payroll, and fined an amount of P100.00 per day from 16 August 1999 until compliance.

Further, let a writ of execution be issued.
Undaunted, petitioners PAL, et al. appealed the abovementioned 8 January 2001 Order of the labor arbiter before the NLRC. In their appeal,[32] they prayed for the reversal of said Order as well as for the suspension of the proceedings in the subject case considering that petitioner PAL, was, at that time, undergoing rehabilitation per 16 August 1999 Order[33] of the Securities and Exchange Commission (SEC) appointing a permanent rehabilitation receiver for petitioner PAL in SEC Case No. 06-98-6004 entitled "In the Matter of the Petition for the Approval of Rehabilitation Plan and for Appointment of a Rehabilitation Receiver."

Respondent Zamora reciprocated by filing a Motion To Expunge[34] dated 5 April 2001.

In a Resolution[35] dated 27 April 2001, the NLRC resolved to set aside the 8 January 2001 Order of the labor arbiter and, significantly, to issue a Writ of Execution implementing, albeit with modification, its 26 July 1999 Decision.  The fallo of the 27 April 2001 Resolution reads:
WHEREFORE, the Order appealed from is hereby SET ASIDE.

The Labor Arbiter is hereby advised to forthwith issue a Writ of Execution which, due to a supervening event, the abolition of PAL's Import Operations Division - must vary the terms of the final judgment to the extent that: (1) the complainant must be awarded, in lieu of reinstatement, separation pay equivalent to one month's salary for every year of service from February 9, 1981 to June 30, 2000; and (2) the award of backwages must be computed from December 15, 1995 to June 30, 2000.
In setting aside the challenged Order of the labor arbiter, the NLRC gave premium to the copy[36] of the structural organization of petitioner PAL's Cargo Services Sub-Department showing that as of 30 June 2000, the Import Operations Division, to which respondent Zamora's previous position actually belonged, had already been abolished.  It opined that:
x x x  As it is common knowledge that respondent PAL implemented a massive retrenchment program in 1998-1999, and since it is only the complainant who stands to lose if the instant case were to be allowed to drag any longer, this Commission finds that the technical rules of evidence applicable in the ordinary courts of law must be set aside, and the respondent's contention that the complainant's former position no longer exists may be considered to be meritorious.[37]
The commission then proceeded to award respondent Zamora, in lieu of reinstatement to the latter's former position, separation pay equivalent to one month's salary for every year of service, that is, from 9 February 1981 to 30 June 2000.[38] Its award was based on:
Section 4 (d), Rule VI of the Implementing rules of the Labor Code provides that 'where (the employee's) former position no longer exists at the time of reinstatement for reasons not attributable to the fault of the employer, the employee shall be entitled to separation pay equivalent to at least one month salary or to one month salary for every year of service, whichever is higher, a fraction of at least six months being considered as one whole year. x x x.[39]
The NLRC concluded that the award to respondent Zamora of backwages must likewise be computed from 15 December 1995 until 20 June 2000.

Displeased with the preceding resolution, both parties moved for the reconsideration of the same. In his motion, respondent Zamora disputed the NLRC's finding that the Import Operations Division had already been abolished as far back as 30 June 2000. On the other hand, petitioners PAL, et al. argued that it was patent error for the NLRC to order the issuance of a Writ of Execution considering the fact that petitioner PAL was then presently undergoing rehabilitation or under the stewardship of a SEC duly approved receiver.

On 31 October 2001, the NLRC disposed of the motions of the parties in this wise:
WHEREFORE, complainant's Motion for Partial Reconsideration is DENIED for lack of merit. Respondent's Partial Motion for Reconsideration is GRANTED. The instant case is hereby referred to the permanent rehabilitation receiver and the proceedings hereon are deemed SUSPENDED while respondent Philippine Airlines, Inc. is under rehabilitation receivership.[40]
The NLRC then ordered the suspension of the instant proceedings in light of the 7 June 1999 SEC Order reiterating and confirming its earlier approval of the Amended and Restated Rehabilitation Plan of petitioner PAL and, therein appointing a permanent rehabilitation receiver.

On 28 January 2002, respondent Zamora questioned the immediately preceding twin resolutions before the Court of Appeals via a Petition for Certiorari docketed as CA G.R. SP No. 68795.

On 13 August 2004, the Court of Appeals promulgated its Decision granting respondent Zamora's petition for certiorari. Consequently, it set aside the 27 April 2001 NLRC Resolution, viz:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is ANNULLED and SET ASIDE. Petitioner Bernardin Zamora is hereby REINSTATED to his former position without loss of seniority rights as decreed in the NLRC decision dated July 26, 1999 which has already become final and executory.[41]
In said Decision, the Court of Appeals found the NLRC to have gravely abused its discretion amounting to lack or excess of jurisdiction when the latter, instead of enforcing its 26 July 1999 Decision by ordering respondent Zamora's reinstatement, varied the terms of said decision by suspending the proceedings and referring the case to petitioner PAL's rehabilitation receiver.  The appellate court ratiocinated that:
Zamora stands to lose his hard-earned victory if the instant case is allowed to drag any longer simply because of the expediency of a rehabilitation proceeding. The facts are clear that PAL illegally terminated Zamora and that there exists a final and executory order for his reinstatement. PAL's rehabilitation plan was submitted in 1999 and it has been almost five years since then. Disallowing the enforcement to the claim that it would unnecessarily add to the burden of management, does not justify the aggravation caused in the delay in execution of the judgment in favor of Zamora. x x x.[42]
The Court of Appeals also rejected the documents proffered by petitioner PAL which supposedly evidenced the abolition of the former position of respondent Zamora, that of a Cargo Representative at the Import Operations Division.  On the contrary, the Court of Appeals argued that a table appearing in the proffered documents, entitled Table of Organization of the Cargo Department, clearly showed that the position of Cargo Representative, although at the International Cargo Services Division and not at the Import Organizations Division, still existed - a total of 86 Cargo Representative positions in fact.

Petitioner PAL seasonably moved for the reconsideration of the aforequoted Court of Appeals Decision.  It also manifested to the appellate court that since 2 October 2000, respondent Zamora has been detained in jail after having been charged with the crime of murder.[43]

On 1 February 2005, the Court of Appeals promulgated an Amended Decision modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's Motion for Reconsideration in this wise:
WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive portion to read as follows:
'WHEREDORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is MODIFIED. Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be computed at one month salary for every year of service from February 9, 1981 and backwages to be computed from December 19, 1995, both up to October 1, 2000, the date of his incarceration.

SO ORDERED.'
Considering that PAL is still under receivership, the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits.[44]
The Court of Appeals took into account respondent Zamora's incarceration when it recalled its order of reinstatement. Anent its earlier pronouncement against the suspension of the proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate court only had this to say:
However, since PAL is still under receivership, the provisions of PD 902-A, should apply. The enforcement of the monetary claims of petitioner should be brought before the PAL Rehabilitation Receiver for proper disposition.[45]
In spite of such modification, petitioner PAL found fault with the decision. Hence, this petition for review on certiorari under Rule 45 of the Rules of Court, as amended, predicated on the following issues:[46]
I.

THE COURT OF APPEALS COMMITTED A SERIOUS AND GRAVE ERROR AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN DECLARING ILLEGAL THE DISMISSAL OF RESPONDENT ZAMORA AND THE DECISION OF THE NLRC DATED JULY 26, 1999 FINAL AND EXECUTORY. IN SO DOING, THE COURT OF APPEALS PREMATURELY RULED ON THE MERITS OF THE CASE;

II.

THE COURT OF APPEALS COMMITTED A PALPABLE ERROR IN ORDERING PAL TO PAY RESPONDENT ZAMORA HIS 'SEPARATION PAY, IN LIEU OF REINSTATEMENT, TO BE COMPUTED AT ONE MONTH SALARY FOR EVERY YEAR OF SERVICE FROM FEBRUARY 9, 1981AND BACKWAGES TO BE COMPUTED FROM DECEMBER 15, 1995, BOTH UP TO OCTOBER 12 (sic), 2000, THE DATE OF HIS INCARCERATION; and

III.

THE COURT OF APPEALS COMMITTED A SERIOUS AND GRAVE ERROR IN ORDERING THAT RESPONDENT ZAMORA'S MONETARY CLAIM BE PRESENTED TO THE PAL REHABILITATION RECEIVER, SUBJECT TO THE RULES ON PREFERENCE OF CREDITS.
At this point, notwithstanding the fact that the present petition alleges three issues, the resolution of the third one relating to the propriety of the execution of the NLRC's order of reinstatement[47] despite the verity of the 17 May 1999 SEC Order approving the Amended and Restated Rehabilitation Plan of petitioner PAL and appointing a "permanent rehabilitation receiver for the latter,"[48] is of paramount importance. The overriding legal significance to the instant case of the SEC mandated rehabilitation of petitioner PAL will affect the progress, development or advancement of the present petition.

Petitioners PAL, et al. are of the view that the proceedings in the instant case should have been suspended on account of the appointment of its permanent rehabilitation receiver.  They posit that "the suspension automatically applies on all stages of the proceedings including enforcement of final and executory judgments. The proceedings shall remain suspended until the receivership shall have been ordered lifted by the Securities and Exchange Commission. To date,[49] (petitioner) PAL is still under permanent Rehabilitation Receiver."[50]

Quite the reverse, respondent Zamora, in his Memorandum, opines that "contrary to the noble purpose of a receivership, that is, preservation of the distressed company's assets for ultimate distribution to all creditors and affected parties, petitioner's Amended and Restated Rehabilitation Plan (citation omitted) is actually for the restructuring and payment of petitioner's debts to certain creditors, excluding respondent and other employee-claimants."[51]

We disagree.

The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No. 902-A,[52] as amended.[53]  Particularly, Section 5(d) which reads:
SECTION 5.   In addition to the regulatory adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

x x x x

d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the [management of a rehabilitation receiver or] management committee created pursuant to this Decree.
and Section 6(c), to wit:
SECTION 6.   In order to effectively exercise such jurisdiction, the Commission shall possess the following:

x x x x

c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and /or protect the interest of the investing public and creditors: x x x  Provided, finally, That upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Emphasis supplied.)
The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a pecuniary nature. It means 'the assertion of a right to have money paid.'"[54]

In the case of BF Homes, Incorporated v. Court of Appeals,[55] speaking through Mr. Justice Isagani B. Cruz, this Court ruled therein that suspension of the action was in order; although the collection suit against the corporation was still at its initial stage in the Regional Trial Court when its Petition for Rehabilitation and for a Declaration in a State of Suspension of Payments was approved by the SEC.

The raison d'ĂȘtre behind the suspension of claims pending rehabilitation proceedings was explained in this wise:
In light of these powers, the reason for suspending actions for claims against the corporation should not be difficult to discover.  It is not really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body.  Obviously, the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company.  To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation.[56]  (Emphasis supplied.)
In the case of Rubberworld (Phils.), Inc. v. NLRC,[57] the preceding principle was applied to a case involving claims of employees. After placing Rubberworld (Phils.) under a management committee by the SEC, the former's alleged employees filed before the labor arbiter complaints for illegal dismissal, unfair labor practice, damages and payment of other benefits.  Rubberworld (Phils.) moved to suspend the proceedings of the labor cases predicated on the strength of the SEC order placing it under a management committee.  The labor arbiter denied the motion holding that the injunction contained in the SEC order applied only to the enforcement of established rights and did not include suspension of proceedings involving claims against Rubberworld (Phils.) which have yet to be ascertained.  The labor arbiter further held that the order of the SEC suspending all actions for claims against Rubberworld (Phils.) did not cover the claims of employees in the labor cases because said claims, and the concomitant liability of Rubberworld (Phils.), are still to be determined, thus carrying no dissipation of the assets of the latter.  In rejecting the postulations of the labor arbiter, we held that the actions of the workers before the labor arbiter are among the actions that are suspended upon the placing of the employer-corporation under management committee.  In unambiguous terms, this Court articulated that:
It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver," all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended. x x x.   (Emphasis supplied.)

x x x x

x x x  The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly."  No exception in favor of labor claims is mentioned in the law.  Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. x x x.[58]
Similar to the instant petition is this Court's Resolution in the case of Philippine Airlines, Inc. v. NLRC.[59]  Therein, PAL questioned, albeit via a petition for certiorari under Rule 65 of the Rules of Court, before us, the decision of the NLRC awarding separation pay to Quijano, an employee of PAL.  During the pendency of the petition, however, PAL moved for the suspension of proceedings of the case by virtue of the SEC order which appointed an Interim Rehabilitation Receiver for PAL.  Before acting on said motion, we required the parties to submit memoranda and to address the issue of whether or not this Court should render judgment during the state of suspension of claims.  PAL argued therein that the continuance of actions for claims during receivership would add to the burden of the rehabilitation receiver; that if such claim was granted, the employee, as a money judgment creditor, would be in a position to assert a preference over other creditors.  The employee, however, contended that the claim for separation pay may be awarded despite PAL being under a state of receivership since said claim was secured by the supersedeas bond posted by the employer. The employee maintained that the suspension of proceedings provided in Section 6(c) of Presidential Decree No. 902-A refers to actions or suits for claims against corporations placed under receivership and not to petitions for certiorari initiated by the corporation under receivership.  In a Resolution dated 4 September 2000, this Court granted PAL's motion elucidating that:
In Rubberworld (Phils.), Inc. v. NLRC, we held that worker's claims before the NLRC and labor arbiters are included among the actions suspended upon the placing under receivership of the employer-corporations.  Although strictly speaking, the ruling in Rubberworld dealt with actions for claims pending before the NLRC and labor arbiters, we find that the rationale for the automatic suspension therein set out would apply to the instant case where the employee's claim was elevated on certiorari before this Court, x x x.

x x x x

The Court holds that rendition of judgment while petitioner is under a state of receivership could render violence to the rationale for suspension of payments in Section 6 (c) of P.D. 902-A, if the judgment would result in the granting of private respondent's claim to separation pay, thus defeating the basic purpose behind Section 6 (c) of P.D. 902-A which is to prevent dissipation of the distressed company's resources. (Emphasis supplied.)
And quite recently, in another PAL case, specifically, Philippine Airlines, Inc. v. Court of Appeals,[60] we resolved to grant PAL's Motion for Suspension of Proceedings before us by reason of the SEC Orders dated 23 June 1998 and 1 July 1998, appointing an Interim Rehabilitation Receiver and enjoining the suspension of all claims for payment against PAL, respectively. Therein we declared that this Court is "not prepared to depart from the well-established doctrines" essentially maintaining that all actions for claims against a corporation pending before any court, tribunal or board shall ipso jure be suspended in whatever stage such actions may be found upon the appointment by the SEC of a management committee or a rehabilitation receiver.

To emphasize, this Court's adherence to the abovestated rule has been resolute and steadfast as evidenced by its oft-repeated application in a plethora of cases.[61]

Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension - what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory.

The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of  the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature.[62]

In the case at bar, the appellate court's pronouncement that in "disallowing the enforcement to the claim x x x it would unnecessarily add to the burden of management, does not justify the aggravation caused in the delay in execution of the judgment in favor of Zamora," is quite myopic. In actual fact, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation.

As to the appellate court's amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits," the same is erroneous for there has been no declaration of bankruptcy or judicial liquidation. Thus, the rules on preference of credits do not apply.

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED in that herein proceedings are hereby SUSPENDED until further notice from this Court. Accordingly, petitioner Philippine Airlines, Inc. is hereby directed to quarterly update the Court as to the status of its ongoing rehabilitation. No costs.

SO ORDERED.

Ynares-Santiago, (Chairperson), Austria-Martinez, and Callejo, Sr., JJ., concur.



[1] Penned by Court of Appeals Associate Justice Eliezer R. De Los Santos with Associate Justices Delilah Vidallon-Magtolis and Arturo D. Brion concurring; rollo, pp. 78-89.

[2] Id. at 92-94.

[3] Penned by NLRC Commissioner Ireneo B. Bernardo with Commissioners Lourdes C. Javier and Tito F. Genilo concurring; id. at 168-173.

[4] Id. at 174-176.

[5] Id. at 173.

[6] CA rollo, p. 41.

[7] Assistant Vice-President for Cargo Sales and Services of petitioner PAL.

[8] Hon. Voltaire A. Balitaan.

[9] Rollo, pp. 97-105.

[10] Id. at 200.

[11] NLRC Decision dated 26 July 1999; id. at 179-202.

[12] Id. at 200-201.

[13] Id. at 203-209.

[14] Id. at 211-212.

[15] Id. at 213-214.

[16] Id. at 215-216.

[17] G.R. No. L-58781, 31 July 1987, 152 SCRA 555.

[18] CA rollo, pp. 84-86.

[19] Id. at 91-92.

[20] Id. at 93-98.

[21] Id. at 99-102.

[22] Id. at 103-107.

[23] Id. at 108-114.

[24] Rollo, pp. 248-249.

[25] CA rollo, pp. 117-143.

[26] Now before this Court, docketed as G.R. No. 164267.

[27] Id. at 144-149.

[28] Id. at 150-156.

[29] Id. at 157-160.

[30] Hon. Joselito Cruz Villarosa.

[31] CA rollo, pp. 247-249; respondent Zamora moved to have the appeal expunged from the records of the NLRC arguing that inasmuch as the contemptuous act was committed against the NLRC, the power to punish for contempt belonged solely to the Commission; therefore, the remedy against a finding of indirect contempt was not an appeal to the Court of Appeals but a motion for reconsideration filed before the NLRC.  Petitioners PAL, et al. opposed the motion to expunge.

[32] Id. at 250-260.

[33] Id. at 161-162.

[34] Id. at 261-264.

[35] Rollo, pp. 168-173.

[36] CA rollo, pp. 392-408.

[37] Rollo, p. 171.

[38] According to the 27 April 2001 Resolution of the NLRC, length of service shall be computed up to 30 June 2000, the date when the Import Operations Division was abolished; and because "it is settled that an award of separation pay in lieu of reinstatement does not have the effect of terminating the services of an illegally dismissed employee."

[39] Rollo, pp. 171-172.

[40] See note 4.

[41] Rollo, p. 89.

[42] Id. at 86-87.

[43] Respondent Zamora died on 9 January 2005 at the Ospital ng Muntinlupa due to Cardio Pulmonary Arrest.  Manifestation and Motion, CA rollo, pp. 574-575.

[44] Id. at 93-94.

[45] Id. at 93.

[46] Petition for Review on Certiorari, p. 9; rollo, p. 58.

[47] But was later on modified to one of payment of separation pay for every year of service.

[48] In the person of Mr. Renato Z. Francisco; rollo, p. 293.

[49] 10 February 2006.

[50] Memorandum of Petitioner PAL, p. 20; rollo, p. 854.

[51] Id. at 815.

[52] SEC Law.

[53] On 15 December 2000, the Supreme Court, in A.M. No. 00-8-10-SC, adopted the Interim Rules of Procedure on Corporate Rehabilitation and directed to be transferred from the SEC to Regional Trial Courts all petitions for rehabilitation filed by corporations, partnerships, and associations under Presidential Decree No. 902-A in accordance with the amendatory provisions of Republic Act No. 8799.  The rules require trial courts to issue, among other things, a stay order in the "enforcement of all claims, whether for money or otherwise, and whether such enforcement is by court action or otherwise," against the corporation under rehabilitation, its guarantors and sureties not solidarily liable with it.

Although the jurisdiction of SEC over rehabilitation and suspension of payments cases was transferred to the Regional Trial Courts pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code, which took effect on 8 August 2000, the SEC, pursuant to Section 5.2 of the same law, retains jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

[54] Sobrejuanite v. ASB Development Corporation, G.R. No. 165675, 30 September 2005, 471 SCRA 763, 771.

[55] G.R. No. 76879 and G.R. No. 77143, 3 October 1990, 190 SCRA 262.

[56] Id. at 269.

[57] 365 Phil. 273 (1999).

[58] Id. at 280-282.

[59] Promulgated by the Third Division of the Supreme Court, G.R. No. 123294, 4 September 2000.

[60] Supreme Court's Second Division Resolution, G.R. No. 123238, 11 July 2005.

[61] Alemar's Sibal and Sons, Inc. v. Elbinias, G.R. No. 75414, 4 June 1990, 186 SCRA 94; BF Homes, Inc. v. Court of Appeals, G.R. No. 76879, 3 October 1990, 190 SCRA 262; Bank of the Philippine Islands v. Court of Appeals, G.R. No. 97178, 10 January 1994, 229 SCRA 223; Rubberworld (Phils.) Inc. v. National Labor Relations Commission, 365 Phil. 273 (1999); Philippine Airlines v. National Labor Relations Commission, G.R. No. 123294, 4 September 2000 (Resolution); Philippine Airlines, Inc. v. Sps.  Kurangking, 438 Phil. 375 (2002); Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 123238, 11 July 2005, (Resolution); Sobrejuanite v. ASB Development Corporation, G.R. No. 165675, 30 September 2005, 471 SCRA 763.

[62] Finasia Investments and Finance Corp. v. Court of Appeals, G.R. No. 107002, 7 October 1994, 237 SCRA 446.

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