SERGIO MEDADO, POLICARPIO MAGLASANG, LUISITO LAURON, ELISEO QUINAPUNDAN, PRIMO MELENDRES, REMEGIO LAURON, RESTITUTO LAURON, GENEROSO LAURON, IGNACIO IBALE, RODOLFO OSWA, JOVENO …

Medado versus Sandoval

The Case

This is a petition for review filed by the dismissed workers, led by Sergio Medado, against Vicente Sandoval and Sandoval Shipyard, Incorporated. The workers ask the Supreme Court to annul a Court of Appeals decision that had ordered the Regional Trial Court to try a complaint seeking to annul an auction sale held to satisfy a labor judgment. The case matters because it draws the boundary between the jurisdiction of the labor tribunals and that of the regular courts in the execution of labor awards, and because it fixes the three-year ceiling on backwages.

Procedural History

The workers obtained a judgment for backwages against Sandoval in a labor case before the National Labor Relations Commission. To satisfy that judgment, Sheriff Leahmon Tolo sold on execution certain properties of Sandoval and of Sandoval Shipyard, Incorporated. Sandoval and the corporation then sued the sheriff and the workers in the Regional Trial Court of Cebu City to annul the auction sale and to recover possession of the shipyard properties. The workers moved to dismiss on the ground that the matter belonged to the labor tribunal, and the trial court denied the motion. Later, after the workers had taken possession, Sandoval applied for a writ of preliminary mandatory injunction. The trial court, through Judge Fortunato Vailoces, dismissed the complaint for lack of jurisdiction.

Sandoval brought a petition for certiorari to the Supreme Court, which referred it to the Court of Appeals. The Court of Appeals reversed the dismissal, held that the complaint asserted title to real property and so fell within the jurisdiction of the Regional Trial Court, and ordered that court to try the case and to issue a writ of preliminary mandatory injunction restoring possession to Sandoval. The workers then came to the Supreme Court by certiorari, asking that the judgment of the Court of Appeals be annulled and the order of dismissal be confirmed.

Facts

On March 5, 1987, Sheriff Tolo sold on execution a large parcel of land in Consolacion, Cebu, registered in the name of Vicente Sandoval, together with several properties of Sandoval Shipyard, Incorporated, namely a fabrication office, a fiberglass fabrication plant, a bodega, a water tank, and a generating set. The sale was made to satisfy a judgment for backwages in favor of the workers.

Sandoval and the corporation complained that the sale was irregular because it included properties not specified in the notice of auction sale. They sued in the Regional Trial Court of Cebu City to annul the sale and asked for a writ of preliminary mandatory injunction to return possession of the shipyard properties to them. The workers moved to dismiss, arguing that the complaint was merely an offshoot of the labor case and that the labor tribunal, not the regular court, had jurisdiction.

On the strength of the final deed of sale executed in their favor, the workers entered the shipyard premises and ousted more than one hundred seventy employees and their families. Sandoval then applied for a writ of preliminary mandatory injunction to restore possession pending the determination of the legality of the sale. The trial court dismissed the complaint for lack of jurisdiction, but the Court of Appeals reversed and ordered the trial to proceed and possession restored to Sandoval. The records also showed that the original labor award granted backwages of 98,778 pesos for a period of two years and seven months, yet the second alias writ of execution issued by Labor Arbiter Bonifacio Tumamak on November 10, 1986 had raised the award to 614,510 pesos, spanning thirteen years.

Issues

• Whether or not the Regional Trial Court has jurisdiction over an action to annul an auction sale held to execute a final judgment of the National Labor Relations Commission.
• Whether or not the second alias writ of execution, which increased the backwages award to cover thirteen years, is valid.
• Whether or not the Court of Appeals correctly ordered the return of the shipyard properties to Sandoval.

Applicable Provisions

Article 244 of the Labor Code, as discussed in the decision, provides:

Any irregularities in the issuance of the alias writ of execution should be referred to the same administrative official or tribunal which rendered the decision being executed, for, despite the finality of the decision, the Minister of Labor retains control over its execution and implementation so that resort to regular courts would be an untenable recourse.

This provision anchors the ruling that the labor tribunal, not the regular court, has authority over the execution of its own final judgment.

Ruling

On the first issue, the Court held that the Court of Appeals erred on the jurisdictional question. Sandoval's action to annul the execution sale was, for all intents and purposes, a motion to quash the writ of execution in the labor case. The Court had ruled that the labor tribunal has the authority to look into the correctness of the execution of its decision, and that any irregularities in the issuance of an alias writ of execution should be referred to the same tribunal which rendered the decision being executed. The trial court therefore properly dismissed the complaint.

On the second issue, the Court held that the second alias writ of execution was excessive and therefore null and void. The workers were entitled to backwages for a period of not more than three years from the date of their unlawful dismissal. The original award covered only two years and seven months, but the second alias writ had expanded it to thirteen years. The Court declared that any decision or order granting backwages in excess of three years is null and void as to the excess, and because the writ was void, it infected the auction sale made under it.

On the third issue, the Court held that the Court of Appeals correctly annulled the sheriff's sale and ordered the return of the shipyard properties to Sandoval, since the sale rested on a void writ. The Court also affirmed the resolution of the labor tribunal limiting the backwages to three years and directing reinstatement, or separation pay where reinstatement was no longer practicable.

Doctrine

The labor tribunal that rendered a final judgment retains control over its execution and implementation, and any irregularity in the issuance of a writ of execution must be raised before that same tribunal, not before the regular courts. An action to annul an execution sale held under a labor judgment is in substance a motion to quash the writ, and the regular court has no jurisdiction over it. Backwages may be awarded only for a period of not more than three years from the date of unlawful dismissal, and any award in excess of three years is null and void as to the excess. A writ of execution that exceeds the judgment it implements is void, and the auction sale conducted under it is likewise void.

Disposition

The Court set aside the decision of the Court of Appeals insofar as it ordered the Regional Trial Court to hear and decide the complaint, affirmed the dismissal of that complaint, affirmed the order returning the shipyard properties to Sandoval, and directed the labor tribunal to execute its resolution without further delay.

Remember This

Memorize the rule that the labor tribunal retains control over the execution of its final judgment, so that an action to annul an execution sale is a motion to quash that belongs to it, and that backwages beyond three years are void as to the excess. Examiners use this case to test jurisdiction over execution proceedings and the three-year ceiling on backwages.