G.G. SPORTSWEAR MANUFACTURING CORP. AND NARI K. GIDWANI, PETITIONERS, VS. THE HON. NATIONAL LABOR RELATIONS COMMISSION, THE HON. LABOR ARBITER FACUNDO LEDA, EMILY REFUGIO, PRISC…

G.G. Sportswear Manufacturing versus National Labor Relations Commission

The Case

This is a petition for review on certiorari brought by G.G. Sportswear Manufacturing Corporation and its president, Nari K. Gidwani, against the National Labor Relations Commission, Labor Arbiter Facundo Leda, and the worker-complainants led by Emily Refugio and Priscilla Gaddi. The company asks the Supreme Court to reverse the Court of Appeals, which had refused to annul the labor arbiter's order granting execution of a judgment that had become final. The case matters because it teaches the consequences of a party's inattention to its own labor case: service of judgment at the address of record, the effect of a counsel's withdrawal, and the rule that a mere petition for suspension of payments does not stay execution.

Procedural History

Several consolidated complaints for illegal dismissal, illegal rotation or constructive dismissal, illegal suspension, and money claims were filed before the labor arbiter. In a consolidated decision dated December 28, 1999, Labor Arbiter Facundo Leda found the complainants illegally dismissed and ordered reinstatement and payment of backwages, attorney's fees, and thirteenth month pay, with joint and several liability on the company and Gidwani. The petitioners did not appeal. Gaddi moved for execution, and the labor arbiter granted the motion in an order dated January 21, 2002, issuing the writ of execution on February 28, 2002. The petitioners then went to the Court of Appeals on a petition for certiorari under Rule 65, charging grave abuse of discretion. The Court of Appeals dismissed the petition, holding that the mere filing of a suspension of payments petition did not suspend actions against the corporation absent the appointment of a management committee or rehabilitation receiver. The petitioners moved for reconsideration, which was denied, so they elevated the matter to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Priscilla Gaddi worked as an export staff of the company from February 1995 until she was required to go on leave in January 1998 because of alleged financial difficulties. She was never asked to return, and her thirteenth month pay and other benefits went unpaid. The other complainants claimed that after they filed a case for underpayment of wages, they were harassed, placed on work rotation, and eventually dismissed without investigation or hearing.

During the January 14, 1999 hearing, their counsel, Atty. Cesar Vitales, manifested that he was withdrawing his appearance, and he filed a formal motion to withdraw on February 8, 1999. The labor arbiter directed the parties to file position papers, and the order was sent to Atty. Vitales and to the company's Mandaluyong address. The complainants complied; the petitioners did not, and were deemed to have waived their right to be heard.

The labor arbiter's decision was sent by registered mail to the company and to Gidwani at the Mandaluyong address, and both were received and signed for there. The petitioners later claimed they never received the decision and that their real office was in Makati. They only responded after a notice of hearing on the motion for execution, again sent to Mandaluyong, reached them and a new counsel appeared to oppose it.

Issues

• Whether or not the pendency of the company's petition for suspension of payments before the Securities and Exchange Commission barred the labor arbiter from issuing the writ of execution.
• Whether or not there was valid service of the labor arbiter's decision upon the petitioners at their Mandaluyong address, despite the withdrawal of their counsel and their claim of a Makati office.
• Whether or not the Court of Appeals committed reversible error in upholding the order of execution and the writ of execution.

Applicable Provisions

Article 224 of the Labor Code, which the petitioners themselves invoked, governs service of decisions and orders, and provides:

Copies of all decisions, orders, or awards of the Commission, the Labor Arbiter, or the Regional Director shall be furnished the parties and their counsels of record.

This provision bears on the case because it fixes the address and the persons to whom service must be made, and the Court held that service on the petitioners themselves was proper once their counsel of record had withdrawn.

Section 6 of Presidential Decree Number 902-A, as discussed by the Court of Appeals, defines when actions against a petitioning corporation are suspended, and states:

Upon the appointment of a management committee, rehabilitation receiver, board or body, 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.

This provision bears on the case because it shows that only the appointment of a management committee or receiver, and not the mere filing of a petition, suspends actions for claims.

Ruling

On the first issue, the Court held that the pendency of the suspension of payments petition had been rendered moot, since the petitioners themselves admitted that the petition had been dismissed in another case. The Court agreed with the Court of Appeals that the filing of the petition, without further action by the Securities and Exchange Commission on the appointment of a receiver, was not sufficient reason to prevent the labor tribunal from acting.

On the second issue, the Court held that service at the Mandaluyong address was valid. The records showed that the complainants had entered Mandaluyong as the place of work, that summons and notices of hearing had been sent there, and that the petitioners' representative had responded to them. The petitioners never advised the labor arbiter that they had vacated Mandaluyong and held office solely in Makati. The Court stressed that the decision was duly served and received at the address of record pursuant to Article 224 of the Labor Code, and that in the absence of a counsel of record who had then withdrawn, service on the petitioners themselves was proper.

On the third issue, the Court found no reversible error. It noted that the petitioners never questioned that Atty. Vitales had in fact withdrawn, yet they failed to engage new counsel, failed to file a position paper, failed to inform the labor arbiter of any change of address, and failed to appeal seasonably. Their claim of non-receipt of the decision was, on deeper consideration, a mere afterthought, raised only after the writ of execution had issued.

Doctrine

A petition for suspension of payments does not by itself suspend actions for claims against a corporation; only the appointment of a management committee, rehabilitation receiver, board or body produces that effect. Service of a labor arbiter's decision at the party's address of record is valid, and a party who changes address without notifying the tribunal cannot complain of service at the old address. When counsel of record withdraws, service on the party personally is proper under Article 224 of the Labor Code. Finally, a judgment that is not appealed within the reglementary period becomes final and executory, and the losing party's own inattention to its case is not a ground for relief.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the decision and resolution of the Court of Appeals, leaving the order of execution and the writ of execution in force.

Remember This

The one line to memorize: a petition for suspension of payments does not stay execution; only the appointment of a management committee or rehabilitation receiver does. Examiners use this case to test service of judgment at the address of record, the effect of counsel's withdrawal, and the finality of an unappealed labor arbiter's decision.