MICHAEL PEÑALOSA, ET AL. AND SAMAHANG DIWANG MANGGAGAWA SA RMC-FFW CHAPTER AND ITS MEMBERS, PETITIONERS, VS. HON. CANDIDO P. VILLANUEVA AND DEVELOPMENT BANK OF THE PHILIPPINES, …

This original action for certiorari, prohibition and mandamus
being interrelated with Development Bank of the Philippines vs. Hon. Labor Arbiter Ariel Santos,
et al.,^[1]
recently decided by this Court and involving the same parties, we reproduce the
following summary of the facts therein which are equally relevant in the
present case:

“On November 29, 1984, in NLRC-NCR Case No. 2517-84 entitled
‘Philippine Association of Free Labor Unions (PAFLU-RMC Chapter) and its
Members v. Riverside Mills Corporation, et al.’, Labor Arbiter Manuel Caday
awarded separation pay, wage and/or living allowance increases and 13th month
pay to the individual complainants who comprise some of the respondents in this
case.

“On March 18, 1985, Labor Arbiter Teodorico Dogelio likewise
awarded separation pay, vacation and sick leave pay and unpaid increases in the
basic wage and allowances to the other private respondents herein in NLRC Case
No. NCR-7-2577-84 entitled ‘Michael Peñalosa, Jose Garcia and Apolinar Ray, et
al. v. Riverside Mills Corporation, et
al., and Samahang Diwang Manggagawa sa RMC-FFW Chapter, et al. v. Riverside
Mills Corporation (RMC).’ On March 29, 1985, after the judgment had become
final and executory, Dogelio issued a writ of execution directing NLRC Deputy
Sheriff Juanito Atienza to collect the total sum of Eighty Five Million Nine
Hundred Sixty One Thousand Fifty-Eight & 70/100 Pesos
(P85,961,058.70). The Deputy Sheriff,
however, failed to collect the amount so he levied upon personal and real
properties of RMC.

“On April 25, 1985, a notice of levy on execution of certain
real properties was annotated on the certificate of title filed with the
Register of Deeds of Pasig, Metro Manila, where all the said properties are
situated.

“Meanwhile in the other development which led to this case,
petitioner DBP obtained a writ of possession on June 7, 1985 from the Regional
Trial Court (RTC) of Pasig of all the properties of RMC after having
extra-judicially foreclosed the same at public auction earlier in 1983. DBP subsequently
leased the said properties to Egret Trading and Manufacturing Corporation,
Rosario Textile Mills and General Textile Mills.

“The   writ of possession
prevented    the scheduled auction sale of
the RMC properties which were levied upon by the private respondents. As a result, on June 19, 1985, the latter
filed an incidental petition with the NLRC to declare their preference over the
levied properties. The petition
entitled ‘PAFLU-RMC Chapter and its members, Michael Peñalosa, et al., and the
Samahang Diwang Manggagawa sa RMC-FFW
Chapter and its members v. RMC and DBP, et al.’, was docketed as NLRC Case No.
NCR-7-2577-84. Petitioner DBP filed its
position paper and memorandum in answer to the petition.

“On October 31, 1985,
Dogelio issued an order recognizing and declaring the respondents’ first
preference as regards wages and other benefits due them over and above all
earlier encumbrances on the aforesaid properties/assets of said company, particularly those being asserted by
respondent Development Bank of the Philippines.

“The petitioner appealed the order of Dogelio to the
NLRC. The latter in turn, set aside the
order and remanded the case to public respondent Labor Arbiter Santos for
further proceedings.

“Meanwhile, another set of complainants (who are also named as
respondents herein) filed, on April 7, 1986, a complaint for separation pay,
underpayment, damages, etc., entitled ‘Jaime Arada, et al. v. RMC, DBP,
Egret-Trading and Manufacturing Corp., docketed as NLRC Case NO.
NCR-4-1278-86.’ This case was
subsequently consolidated with the case pending before respondent Santos. Accordingly, the latter conducted several
hearings where the parties,
particularly DBP. General Textile
Mills, Inc., and Rosario Textile Mills, Inc., were given the opportunity to
argue their respective theories of the case. Eventually, all the parties agreed that the case shall be submitted for
decision after their filing of position papers and/or memorandums.

“On March 31, 1987, public respondent Santos rendered the
questioned decision, the dispositive portion
of which reads:

‘WHEREFORE, it is hereby declared that all the complainants
in the above-entitled cases, as former employees of respondent Riverside Mills
Corporation, enjoy first preference as regards separation pay, unpaid wages and
other benefits due them over and above
all earlier encumbrances on all of the assets/properties of RMC specifically
those being asserted by respondent DBP.

‘As a consequence of the above declaration, the decision dated
March 18, 1983 of the then Hon.
Arbiter Teodorico Dogelio should be immediately enforced against DBP who is
hereby directed to pay all the monetary claims of complainants who were former
employees of respondent RMC.

‘Anent the Arada case, DBP is hereby directed to pay all the
amounts as indicated opposite the names
of complainants listed from page 1 to page 5 of Annex ‘A’ of complainants’
complaint provided that their names are not among those listed in the Peñalosa
case.

‘It is hereby also declared that former employees whose names are
not listed in the complainants’ position papers but can prove that they were
former employees of RMC prior to
its bankruptcy, should also be paid the
same monetary benefits being granted to
herein complainants.

‘Finally, DBP is hereby
ordered to deposit with the
National Labor Relations Commission the
proceeds of the sale of the assets of RMC between DBP on one hand and General Textile Mills, Inc. and/or Rosario Textile Mills, Inc., on
the other hand, and that future payment being
made by the latter to the former should also be deposited with the National
Labor Relations Commission for proper disposition.’“

During the pendency of the abovementioned cases, on June 26, 1985
herein private respondent Development Bank of the Philippines (DBP) filed with
the Regional Trial Court, Branch CXLIV, Makati, Metro Manila, a complaint for
injunction and damages, with preliminary injunction, docketed as Civil Case No.
10945.^[2] The defendants impleaded were Michael
Peñalosa, Samahang Diwang Manggagawa sa RMC-FFW Chapter, et al. Deputy Sheriff
Juanito Atienza and Deputy Sheriff Romeo de la Cruz. The complaint sought to enjoin the therein defendants, their
agents or deputies from implementing the writ of execution issued in NLRC Case
No. NCR-7-2577-84 and for the return of the properties that Sheriff Atienza had
allegedly caused to be taken out from the RMC compound. Private respondent bank also prayed to be
declared the rightful owner of the properties involved in the case. On the same date, a temporary restraining
order was issued in connection with said case.^[3]

On July 5, 1985, an urgent motion to dismiss the complaint and to
lift and dissolve the temporary restraining order was filed by petitioners. Said motion was denied by the trial court in its order of June 30, 1986
which, at the same time approved private respondent’s application for writs of
preliminary prohibitory and mandatory injunction upon posting of a bond in the
amount of P50,000.00. Petitioners were
required to file an answer within fifteen days from receipt of the order.^[4]

On the part of the petitioners, on April 9, 1986 they filed Civil
Case No. 53333 in Branch 158 of the Regional Trial Court at Pasig, Metro
Manila, for the nullification of the lease agreement between private respondent
and Egret Trading, Inc. which were made defendants therein,^[5] which
case appears in the records to still be pending.

In the present petition
filed on July 31, 1986, a jurisdictional question is raised by the
petitioners. It is averred that
“(i)n denying petitioner’s Motion to dismiss Complaint, lift and dissolve
the ex parte restraining Order, and in assuming
jurisdiction over the same Complaint, by granting the writs sought by respondent bank and by requiring the
petitioners herein to file their Answer to the Complaint, the Honorable Candido P. Villanueva has acted without jurisdiction, in excess of
jurisdiction and with grave abuse of discretion.”^[6] This
contention is premised on the claim that the properties involved in the
aforesaid case before the trial court are the same properties litigated in the National Labor Relations
Commission as NLRC-NCR Case No. 7-2577-84 wherein the resolution of the
principal issue of preferential right and/or lawful ownership over said
properties was sought. Petitioners
contend that the “NLRC having taken jurisdiction over the subject matter of the case, involving as they do
similar or identical causes of action with the civil complaint with the RTC,
should continue to exercise jurisdiction until the whole dispute is
resolved” since to allow both actions to proceed would result in the
splitting of a cause of action.^[7]

Several months after the filing of the present petition, another
petition for certiorari was filed on May 8, 1987 by private respondent
DBP, this time questioning the March 31, 1987 decision of Labor Arbiter Ariel
Santos, the decretal portion and factual background of which have been earlier
set forth.

On March 8, 1989, this Court promulgated its decision, quoted in
part at the outset, in said DBP case holding that said labor arbiter
“committed grave abuse of discretion in
ruling that the private respondents may enforce their first preference
in the satisfaction of their claim over those of the petitioner (DBP) in the
absence of a declaration of bankruptcy or judicial liquidation of RMC.”
Consequently, the aforesaid decision of the labor arbiter of March 31, 1987 was
annulled and set aside. Nevertheless,
it was ruled that there is nothing to prevent the respondents in that case who
are petitioners herein, from instituting involuntary insolvency or other
appropriate proceedings against their employer RMC where their claims can be
asserted with respect to their employer’s assets.

With the foregoing final decision in G.R. No. 78261-62, there is no further legal basis or necessity
to decide the issue of preferential right claimed by petitioners over the
property of Riverside Mills Corporation in NLRC-NCR Case No. 7-2577-84. Furthermore, that very property subject of
their aborted claim of first preference is alleged by DBP as no longer owned by
said judgment debtor corporation at the time the writ of execution issued by
the commission was sought to be enforced, hence said private respondent filed
Civil Case No. 10945 seeking, inter alia, a declaration of its
ownership thereover.

As found by the Court in G.R. Nos. 78261-62 and hereinbefore
quoted, “DBP obtained a writ
of possession on June 7, 1985 from the Regional Trial Court (RTC) of Pasig of
all the properties of RMC after having extra-judicially foreclosed the same at
public auction earlier in 1983.” The records of said cases
contain a copy of Transfer Certificate of Title No. (50170) 21602 of the
Registry of Deeds for Metro Manila (Province of Rizal), consisting of 10,776
square meters, located at Barrio Rosario, Pasig, Rizal, in the name of
Riverside Mills Corporation.^[8] The
following inscription appears on the original of said certificate of title:

“Entry No.
102414/0-346-CERTIFICATE OF SALE in favor of the DEVELOPMENT BANK OF THE
PHILIPPINES, covering the parcel of land described, for the sum of P42,486.25
in accordance with Cert. of Sale issued by the Regional Sheriff of Pasig, Metro
Manila, dated Aug. 19,
1983. The date of redemption will
expire after one (1) year after the date of registration of this cert. of sale.

Date of the
inscription-March 6, 1984 at 10:20 a.m.”

The writ of execution in question is mentioned in a much later
inscription on said certificate of title as follows:

“Entry No.
5910.0-346 – NOTICE OF LEVY AND EXECUTION affecting whatever rights, interests and participation, of defendant, over the property described herein, issued
by Dionisio M. de la Cruz, Actg. Deputy
Sheriff, National Labor Relations Commission, NCR, Mla. NLRC Case No.
7-2577-84, entitled Michael Peñalosa, et al. and Samahang
Diwang Manggagawa sa RMC-FFW-Complainant vs. Riverside Mills Corporation, Respondent.

Date of the instrument –
April 25, 1985

Date of the inscription,
April 25, 1985.”

If the disputed property
did not belong to the judgment debtor in NLRC Case No. 7-2577-84, it could not
be validly levied upon by the sheriff for the satisfaction of the judgment
therein. We, consequently, reject the
objections raised by herein petitioners to the jurisdiction of Branch CXLIV,
Makati, Metro Manila, presided over by respondent judge, to entertain the
aforesaid Civil Case No. 10945
and to issue the questioned writs of preliminary injunction.

The rule is settled that
even if a writ of execution is issued by a co-equal court, and we place the
National Labor Relations Commission in the same category for purposes of this
case, respondent judge could validly issue the temporary restraining order and,
later, the writs of preliminary injunction on the basis of DBP’s claim of
ownership over the properties levied upon. We have heretofore ruled that –

“Under Sec. 17 of Rule 39 a third person who claims property
levied upon on execution may vindicate such claim by action. Obviously, a judgment rendered in his favor,
declaring him to be the owner of the property, would not constitute
interference with the powers or processes of the court which rendered the
judgment to enforce which the execution was levied. If that be so – and it is so because the property being that of a
stranger is not subject to levy – then an interlocutory order, such as
injunction, upon a claim and prima facie showing of ownership by the claimant,
cannot be considered as such
interference either.”^[9]

It is true that, as a rule, no temporary or permanent injunction
or restraining order in any case involving or growing out of labor disputes
shall be issued by any court.^[10] It
is likewise conceded that the judgment account of Riverside Mills Corporation
arose out of its labor dispute with the herein petitioners who were the
complainants in NLRC Case No. NCR-7-2577-84. The foregoing notwithstanding, where the writ of execution issued by
said commission is sought to be enforced upon property of a stranger to the
labor dispute, even upon a mere prima facie showing of ownership
of such claimant, a separate action for injunctive relief against such levy may
be maintained in court since said action neither involves nor grows out of a
labor dispute insofar as the third party is concerned.

We have merely to reproduce what we said in National Mines
and Allied Workers’ Union, et al. vs.
Vera, etc., et al.”^[11]

“Petitioners’ reliance on the provisions of Art. 254 of the
New Labor Code x x x which prohibits injunctions or restraining orders in any case involving or growing out of a ‘labor
dispute’ is not well-taken. This has no
application to the case at bar. Civil
Case No. 2749 is one which neither ‘involves’ nor ‘grows out’ of a labor
dispute. What ‘involves’ or ‘grows out’
of a labor dispute is the NLRC case between petitioners and the judgment
debtor, Philippine Iron Mines. The
private respondents are not parties to the said NLRC case. Civil Case No. 2749 does not put in issue
either the fact or validity of the proceeding in the NLRC case nor the decision
therein rendered, much less the writ of execution rendered thereunder. It does not seek to enjoin the execution of
the decision against the properties of the judgment debtor. What is sought to be tried in Civil Case No.
2749, is whether the NLRC’s decision and writ of execution, above mentioned,
shall be permitted to be satisfied against properties of private respondents,
and not of the judgment debtor named in the NLRC decision and writ of
execution. Such a recourse is allowed
under the provisions of Section 17, rule 39 of the Rules of
Court.”

The foregoing statements, mutatis mutandis, could very well have been said of the
proceedings before respondent judge which are assailed in the petition at bar.

On either of the foregoing considerations, it is indisputable
that the present petition cannot prosper since the issue of first preference
claimed by petitioners has been foreclosed by G.R. Nos. 78261-62, while the
proceedings and incidents in Civil Case No. 10945 are within the jurisdiction of
respondent judge. We make no
pronouncement with respect to DBP’s prayer for a declaration of ownership and
payment of damages sought in said Civil Case No. 10945 which, if still pending,
should be definitively resolved as early as practicable by the lower court.

ACCORDINGLY, the instant petition should be, as it is
hereby DISMISSED.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, Padilla, and Sarmiento, JJ., concur.

^[1]
G.R. No. 78261-62, Mar. 8, 1989.

^[2]
Petition, Annex N; Rollo, 101-110.

^[3]
Id., Annex O; ibid., 111.

^[4]
Id., Annex W; ibid., 170-174.

^[5]
Id., Annex T; ibid.,
139-153.

^[6]
Rollo, 28-29.

^[7]
Ibid., 29-30.

^[8]
Annex E, Petition; Rollo, G.R. Nos. 78261-62, 64-65.

^[9]
Abiera, et al. vs. Court of Appeals, et al., 45 SCRA 314 (1972). See also Bayer Phil., Inc., et al. vs.
Agana, et al., 63 SCRA 355 (1975); Arabay, Inc. vs. Salvador, et al., 82
SCRA 139 (1978); Polaris Marketing Corporation vs. Plan, et al., 69 SCRA
93 (1976); Santos vs. Sibug, et al., 104 SCRA 520 (1981); Special
Servicing Corporation vs. Centro La Paz, 121 SCRA 748 (1983).

^[10]
Art. 254, P.D. 442, Labor Code.

^[11]
133 SCRA 259 (1984).