352 Phil. 240
PURISIMA, J.:
In this special
civil action for Certiorari and Prohibition with Preliminary Injunction,
petitioners question the authority of respondent National Labor Relations
Commission to rule on the validity of the sale of properties between the
petitioners and Buda Enterprises, and to determine if fraud vitiated the sale
so as to evade payment of respondent Union’s claims against the said company.
The pertinent
facts are, as follows:
On August 31,
1987, judgment was rendered by Labor Arbiter Dominador M. Cruz for the complainant
(now private respondent) Confederation Labor Unions of the Philippines, Buda
Enterprises Chapter (CLUP, for short) against respondent Buda Enterprises in a
Complaint for unfair labor practice, illegal dismissal and various monetary
claims. The Labor Arbiter likewise ordered the respondent company to reinstate
the individual complainants and to pay them full backwages from the time of
their dismissal to actual reinstatement.
The decision
became final and executory and a writ of execution was then issued. Five parcels of land covered by
Transfer Certificates of Title Nos. T-154200, T-154201, T-154201, T-154203, and T-154204
allegedly belonging to Buda Enterprises but later found to be registered under
the names of the petitioners Co Tuan, Samuel D. Ang, Jorge J. Lim and Edwin
Gotamco, were levied upon.
On January 21,
1988, upon learning of such levy, the petitioners filed an Urgent Motion to
Quash the Writ of Execution, claiming that they hold valid and lawful title to
the said properties by virtue of the “Extra-judicial Settlement and Sale of the
Estate of the Deceased Edilberto Soriano” executed as early as August 25, 1987 by the heirs of the deceased
Edilberto Soriano, one of whom was
Lourdes Soriano, the proprietress and manager of Buda Enterprises. It was also
alleged that none of the heirs, except Lourdes Soriano, were parties in the
labor case.
The motion was
granted and complainants appealed to the National Labor Relations Commission
asking that the Labor Arbiter be ordered to implead the movants (herein
petitioners) as respondents, and praying that the sale between the movants and
the respondent company, Buda Enterprises, be declared void. Petitioners also
appealed, praying for the restitution or payment of the value of their properties.
On May 31, 1991,
the National Labor Relations Commission directed the Labor Arbiter of origin to
implead the movants and to conduct a hearing “...to determine whether the sale
was made by the respondents to herein movants-claimants to avoid the payment of
their claims and further to determine the legality of other incidents related
thereto...”
The case was
assigned to Labor Arbiter Numeriano
Villena who rendered on June 25, 1992 a decision holding that his Office was
incompetent to determine whether fraud tainted the questioned sale.
Complainants
again appealed such decision, contending that the Labor Arbiter gravely abused
its discretion in ignoring the directives of the Commission to implead the
movants and conduct a hearing.
On appeal, the
Commission ruled that:
“...the Labor Arbiter erred in not impleading the movants-claimants in view of the allegation x x x that the respondents have promised to pay them their claims out of the proceeds of the sale, implying that the sale was consummated to evade the fulfillment of their promise to pay their lawful claims...”
The decision
stated that if such allegation is proven, the next course of action would be to
pay the complainants’s claims out of the proceeds of the sale and that this
could only be done if the claimants/movants were impleaded. The order to
implead the movants and to conduct a hearing was reiterated.
Aggrieved,
petitioners have come to this Court, attributing grave abuse of discretion to
respondent Commission in rendering the
said decision and in issuing the aforementioned Order, theorizing that NLRC is
incompetent to determine the legality of the sale between the petitioners and
the respondent company, the task being judicial in nature.
Petitioners base
their stance on the case of Asian Footwear, etc. versus Antonio Soriano,
Hon.Benigno L. Vivar, Executive Labor Arbiter, et. al, (G.R. Nos. 711695-703,
May 20, 1986) where this Court ruled that if there is suspicion that the sale
of properties “...was not in good faith, i.e. was made in fraud of creditors, a government functionary like the
respondent labor arbiter is incompetent to make a determination. The task is
judicial and the proceedings must be adversary.”
Petitioners
likewise contend that since there is a third-party claim over subject properties,
the NLRC cannot mandate the enforcement of the writ of execution because “...the power of the NLRC to execute its
judgment extends only to properties unquestionably belonging to the judgment
debtor,” citing the case of Hon. Ariel Santos versus Hon. William Bayhon (G.R.
No.88643, July 23, 1991).
The private
respondent, CLUP, on the other hand, agrees with the decision of the NLRC,
averring that the authority of NLRC
proceeds from Section 2, Rule VI of the NLRC Manual of Instructions for
Sheriffs which provides:
“Section 2. Proceedings. If property levied upon be claimed by any person other than the losing party or his agent, such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and shall file the same with the sheriff and copies therof served upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt of the third-party claim, all proceedings with respect to the execution of the property subject of the third-party claim shall automatically be suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all parties concerned and resolve the validity of the claim within ten (10) working days from receipt thereof and his decision is appealable to the Commission within ten (10) working days from notice, and the Commission shall likewise resolve the appeal within the same period.(emphasis supplied).”
Private
respondent union also alleged that the petitioners are estopped from
questioning the jurisdiction of NLRC after submitting themselves to the
jurisdiction of the Commission when
they interposed their Motion to Quash. It is theorized that they cannot now be
allowed to question the jurisdiction of the Commission after obtaining
affirmative relief from it.
In its Comment,
public respondent NLRC seeks the denial of the petition under consideration
on the ground of prematurity, there being a plain, speedy and adequate remedy
in the ordinary course of law such as a motion for reconsideration of the
assailed decision.
The Solicitor
General, in the Manifestation and Motion filed in lieu of a Comment, pointed
out that the NLRC erred in ordering the holding of a hearing to prove that the
respondent company did promise to pay complainants’ claims out of the proceeds
of the questioned sale. It was pointed
out that such a hearing would serve no useful and legal purpose as the
commitment cannot in any way bind the petitioners who were not parties to said
commitment.
As regards the
NLRC Manual cited by private respondents, the Solicitor General noted that the
same was lifted from Section 17, Rule 39 of the Revised Rules of Court, and its
application is limited to a determination of whether the sheriff has acted
correctly in enforcing the writ of execution.
The Petition is
impressed with merit.
As aptly argued
by petitioners, the issue posed before this Court by the petition is not of
first impression. It was ruled upon in the case of Asian Footwear vs. Soriano
(supra) decided on May 20, 1986. In the said case, parcels of land bought by
Asian Footwear Rubber Corporation from
Jacinto Rubber and Plastics Company were levied upon by the Deputy Sheriff on
the strength of an alias writ of execution issued by the Labor Arbiter. Asian
resisted the execution, claiming that the properties sought to be levied upon
were its own and not Jacinto’s, having bought subject properties when Jacinto
had already ceased its business operations. The sheriff’s report to the Arbiter intimated that Asian was a purchaser
in bad faith and therefore the writ of execution could be enforced against it.
Acting on the
case, this Court pronounced that “... if there is nonetheless suspicion that
the sale of the Jacinto properties was not in good faith, i.e. was made in fraud of creditors, a government
functionary like the respondent labor arbiter is incompetent to make a
determination. The task is judicial and the proceedings must be adversary.”
The respondents cannot be reproached for their
reliance upon the authority of Section 2, Rule VI of the NLRC Manual of
Instructions for Sheriffs quoted above. As provided under the Revised Rules of
the NLRC (Section 4, Rule IX), the sheriff of the Commission, or other officer
acting as such, must “...be guided strictly by the Sheriff’s Manual which shall form part of these Rules”; and under Sec. 2, Rule VI of the
said Manual, when a third party claims the property subject of the execution
and files an affidavit thereto, the Labor Arbiter shall “...conduct a hearing x
x x and resolve the validity of the claim...”
A cursory
reading of the above rule indicates that, indeed, there appears to be an inconsistency between the said rule and
the decided case. However, such Rule prescribes the procedure to be followed by
the sheriff (or the arbiter or officer
of the Commission) if the levied property is claimed by any person other than
the losing party or his agent. It applies only to the sheriff and such other
officers; and only when the third-party claimant chooses to file his claim with
the Labor Arbiter or the NLRC. It does not limit the procedure to be followed by the third-party claimant himself.
It should be
noted that a person having a third-party claim has two options by which he or
she can maintain his right of action.
Under Section 17, Rule 39 of the Revised Rules of Court, after which the
aforecited section of the Sheriff’s Manual has been patterned, a third person
who claims that his property has been wrongfully seized, may file an action for
damages against the sheriff within 120
days from the filing of the bond (this remedy is known as terceria).
The same rule
gives the third party claimant another option to bring an entirely separate and
distinct action from that in which the execution issued - “..nothing herein shall prevent such claimant or any
third person from vindicating his claim to the property by any proper action.”
More so when the action arises out of an entirely different transanction.
In the case at bench,
assuming arguendo that respondent Buda Enterprises had committed to pay its
employees’ claims out of the proceeds of the sale of properties between the
said company and the petitioners, such sale is a transaction entirely distinct
from the agreement with the employees. It is worth noting that as evidenced by
a public document, the sale was executed between the heirs of Edilberto Soriano
and the petitioners and none of these heirs were parties to the labor case
instituted by the union against the company except Lourdes Soriano who was its
proprietress and manager.
Furthermore, as
held in the case of Ong vs. Tating, 149 SCRA 267, Rule 39, Section 17 is
limited to a determination of whether or not the sheriff has acted correctly in
enforcing the writ of execution. “The Court does not and cannot pass upon the
question of title to the property with any character of finality. The rights of
a third party claimant over properties levied upon by the sheriff cannot be decided in the action where the
third party claims have been presented but in the separate action instituted by
such claimants.”(see also Bayer vs. Agana 63 SCRA 355; Palaris vs. Plan 69 SCRA 93; Lorenzana vs. Cayetano
78 SCRA 485; Roque vs. CA 93 SCRA 540).
In a long line
of cases, this Court has pronounced that the power of the court, or the NLRC,
for that matter, to execute its judgment extends only to properties
unquestionably belonging to the
judgment debtor.(Santos vs. Bayhon, 199 SCRA 525; Special Servicing Co. vs.
Centro La Paz, 121 SCRA 748; New Owners/Management of TML Garments Inc. vs.
Zaragosa, 170 SCRA 563). Therefore, if the property under levy does not belong
to the judment debtor in the NLRC case, it could not be validly levied upon by
the sheriff for the satisfaction of the judgment therein. Even upon a mere
prima facie showing of ownership by the third party claimant, if the third
party claim does not involve nor grows out of, a labor dispute, a separate
action for injunctive relief against such levy may be maintained in court. (Peñalosa
vs. Villanueva, 177 SCRA 77 citing the case of National Mines and Alllied Workers’ Union vs. Vera, 133 SCRA 259).
Anent respondent
NLRC’s submission that the present petition is premature for not resorting to a
motion for reconsideration before the Commission, we rule in the negative.
Although the filing of a motion for reconsideration is a condition sine qua
non in order that certiorari shall lie, this rule is subject to
certain recognized exceptions (Liberty Insurance Corp. vs. CA, 222 SCRA 37).
In the case of
Klaveness Maritime Agency vs. NLRC, 232 SCRA 448, this Court ruled that a prior
motion for reconsideration is not indispensable for the commencement of certiorari
proceedings if the errors sought to be corrected had been duly heard and passed
upon.
In this case,
the appealed decision of the respondent Commission, as admitted by the
Commission itself, and contained in the dispositive portion of its decision, is
but a reiteration of its first ruling which ordered the remanding of the case
to the Labor Arbiter to implead the petitioners and to conduct a hearing.
Hence, it was already given the
opportunity to pass upon and correct its mistakes, which is the primary purpose
of a motion for reconsideration, and the issue of its authority to decide on
the validity of the questioned sale had been duly heard.
Finally, the
contention of private respondent Union that the petitioners are estopped from
assailing the authority of the NLRC after having submitted itself to its jurisdiction through the filing of a
Motion to Quash the Writ of Execution, is untenable. Precisely, the reason why
petitioners moved to quash the writ of execution was because the NLRC’s
jurisdiction over the properties sought to be levied upon was put in issue.
WHEREFORE, the petition is GRANTED and the decision of respondent National Labor
Relations Commission dated September 12, 1994 in NLRC NCR 3-1145-86 is REVERSED
and SET ASIDE. No pronouncement as to costs.
SO ORDERED.