NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), represented by its Administrator, TEODORICO SANCHEZ, and NEA MANAGEMENT TEAM, represented by its Project Manager, DANILO CRUZ, Pet…

National Electrification Administration versus Saludares

The Case

This is a petition for review brought by the National Electrification Administration, joined by its Management Team, against Labor Arbiter Dominador Saludares and Deputy Sheriff Antonio Datu. The petitioners ask the Supreme Court to reverse the dismissal of their complaint for injunction and declaration of nullity of execution, which they had filed before the Regional Trial Court of Cabanatuan City to stop the enforcement of a labor award against the assets of a defunct electric cooperative. The case matters because it draws a bright jurisdictional line: a third party who claims property levied upon in execution of a labor judgment must litigate that claim before the labor tribunals, not before the regular courts, and by filing a third party claim and a motion to quash with the labor arbiter, that party submits itself to the labor tribunal's jurisdiction.

Procedural History

Former employees of the Nueva Ecija III Electric Cooperative, Inc., led by Josephine Manuel, filed complaints for illegal dismissal and money claims. Labor Arbiter Ariel Santos ruled in their favor, ordering reinstatement with backwages and attorney's fees. The cooperative and its acting general manager appealed to the National Labor Relations Commission, which dismissed the appeal for failure to post a supersedeas bond. The Supreme Court later dismissed their petition for certiorari, and the labor decision became final and executory.

When the employees moved for an alias writ of execution, Labor Arbiter Saludares issued an alias partial writ directing the sheriff to collect the award from the cooperative's properties. The National Electrification Administration filed a third party claim with the sheriff, which the labor arbiter denied. On the same day, the National Electrification Administration Management Team filed a complaint before the Regional Trial Court of Cabanatuan City for injunction and declaration of nullity of the execution, and the trial court issued a temporary restraining order. The trial court dismissed the complaint, holding that it had no power to restrain the labor arbiter and the sheriff, and that the proper remedy was to seek quashal of the writ. The Management Team's motion for reconsideration was denied. The petitioners then came to the Supreme Court by petition for review.

Facts

The Nueva Ecija III Electric Cooperative, Inc. fell into serious financial trouble from 1986 to 1988, unable to pay its maturing obligations to the National Power Corporation. To rescue it, the National Electrification Administration extended loans, secured by a mortgage over the cooperative's entire electric system. When the cooperative defaulted, it availed of a re-lending program, and under that agreement the National Electrification Administration designated a project supervisor and acting general manager to take charge of its operations. The National Electrification Administration disbursed 30,000,000 pesos to pay the National Power Corporation and rehabilitate the cooperative, but the cooperative still defaulted on its amortizations.

The National Electrification Administration Board approved the foreclosure of the mortgage on the cooperative's assets and later confirmed a transfer of ownership to the National Electrification Administration by dacion en pago, that is, payment of the debt through transfer of the property. Meanwhile, the cooperative's former employees obtained a final labor judgment for illegal dismissal. When execution was levied on the cooperative's properties, the National Electrification Administration protested through a third party claim, insisting it had never been impleaded in the labor case and that it held the properties as creditor and mortgagee.

The labor arbiter denied the third party claim for failure to establish ownership. The National Electrification Administration filed a motion to quash the alias writ before the labor arbiter, and on the very same day filed its injunction complaint before the trial court. The sheriff proceeded to levy and schedule the auction sale, prompting the trial court to issue a temporary restraining order, which it later lifted when it dismissed the complaint.

Issues

• Whether or not the Regional Trial Court has jurisdiction over a complaint that in substance challenges the legality of a levy and an alias writ of execution issued in a labor case.
• Whether or not the National Electrification Administration submitted itself to the jurisdiction of the National Labor Relations Commission by filing a third party claim and a motion to quash the alias writ.
• Whether or not the petitioners committed forum shopping by simultaneously seeking relief before the labor arbiter and the trial court.

Applicable Provisions

The decision anchors its jurisdictional ruling on the settled doctrine that labor tribunals have exclusive jurisdiction over the execution of labor judgments, as articulated in the ruling it quotes from Deltaventures Resources versus Cabato:

Precedents abound confirming the rule that said courts have no jurisdiction to act on labor cases or various incidents arising therefrom, including the execution of decisions, awards, or orders. Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official concerned under the Department of Labor and Employment. To hold otherwise is to sanction split jurisdiction which is obnoxious to the orderly administration of justice.

This rule disposes of the first issue, because the petitioners' complaint was in substance an incident of the labor case and therefore outside the trial court's competence.

The decision also states the doctrine on forum shopping, which governs the third issue:

There is forum-shopping when as a result of an adverse decision in one forum, or in anticipation thereof, a party seeks a favorable opinion in another forum through means other than appeal or certiorari.

This definition bears on the case because the petitioners pursued identical reliefs in two forums at the same time.

Ruling

On the first issue, the Court held that it is the National Labor Relations Commission, not the Regional Trial Court, that has jurisdiction over the move to quash the alias partial writ of execution. Although the complaint was ostensibly for recovery of possession and injunction, in essence it challenged the legality of the levy and the acts of the labor arbiter and the sheriff in implementing the writ. Such a challenge is but an incident of the labor case, and the regular courts have no jurisdiction over labor cases or incidents arising from them, including execution. To hold otherwise would sanction split jurisdiction, which is obnoxious to the orderly administration of justice.

On the second issue, the Court held that the National Electrification Administration submitted itself to the jurisdiction of the National Labor Relations Commission when it filed its third party claim with the deputy sheriff and its motion to quash the alias writ. Its argument that the labor tribunal never acquired jurisdiction over it did not persuade the Court, because by invoking the labor arbiter's authority it had voluntarily placed itself within that jurisdiction.

On the third issue, the Court found that the petitioners committed forum shopping. The remedies sought before the labor arbiter in the motion to quash were substantially the same as those sought before the trial court, the issues were the same, and the parties were the same given the intervention of Josephine Manuel and the other employees. The Court applied the test of identity of parties, rights or causes of action, and reliefs sought, and concluded that a final judgment in one case would amount to res judicata in the other.

Doctrine

Regular courts have no jurisdiction over labor cases or incidents arising from them, including the execution of labor decisions, awards, and orders; jurisdiction belongs exclusively to the proper labor official under the Department of Labor and Employment. A complaint that in substance challenges the legality of a levy and a writ of execution issued in a labor case is an incident of that labor case, however it is styled.

A third party who files a third party claim with the sheriff and a motion to quash the writ before the labor arbiter submits himself to the jurisdiction of the labor tribunal and cannot later deny that jurisdiction.

There is forum shopping when, as a result of an adverse decision in one forum or in anticipation of it, a party seeks a favorable opinion in another forum through means other than appeal or certiorari. It exists where two or more actions involve the same transactions, essential facts, and circumstances, and raise identical causes of action, subject matter, and issues, or where the elements of litis pendencia are present, namely identity of parties, of rights or causes of action, and of reliefs sought.

Disposition

The Supreme Court denied the petition and affirmed the dismissal of the complaint, with costs against the petitioners.

Remember This

Memorize this line: execution of a labor judgment, and every incident of it including a third party's claim to levied property, belongs to the labor tribunals and not to the regular courts. Examiners use this case to test jurisdiction over execution and the forum shopping rule, especially where a party files a third party claim with the sheriff and simultaneously sues in the Regional Trial Court.