STATE INVESTMENT HOUSE, INC., PETITIONER, VS. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, EDGAR OBLIMAR, ABE ESTRADA AND THE 2,081 COMPLAINANTS-LABORERS IN NLRC CASE N…

These consolidated petitions involve properties formerly owned by
the Philippine Blooming Mills, Inc. (PBM) which is now under the rehabilitation
and receivership of the Securities and Exchange Commission (SEC Case No. 2250,
“In the matter of the Petition for Suspension of Payments”).

In G. R. No. 89767, the petitioner
questions the decision of the Court of Appeals which affirmed the validity of
the Order dated May 26, 1989 issued by the Securities and Exchange Commission
(SEC) in SEC Case No. 2250 granting the respondents’ motion for the issuance of
a break-open Order for the purpose of implementing the Certificate of Sale of
November 23, 1987 in NLRC Case No. 9-3296-84 covering certain PBM properties,
located at the PBM Compound in Balintawak, Quezon City which were earlier sold
at a public auction sale on the ground that the same properties already
belonged to the petitioner before the auction sale.

In G. R. No. 96056, the petitioner
questions the decision of the Court of Appeals which affirmed the earlier
decision of the Regional Trial Court (RTC) of Makati, Branch 60 validating the
auction sale of some PBM properties by respondent deputy sheriff Silvino Santos
of the Department of Labor and Employment (DOLE) on the ground that the same
properties already belonged to the government before the auction sale.

In G. R. No. 96437, the petitioner
questions the decision and resolution of the Court of Appeals which also
affirmed an earlier order of the Regional Trial Court of Pasig, Metro Manila,
Branch 151. The Pasig RTC denied the
petitioner’s motion to dismiss a complaint (with application for a writ of
preliminary attachment) seeking compliance with the provision of a deed of
sale, the subject matter of which are some properties of the PBM bought by
respondent Alfredo E. Asibar (also a respondent in G. R. No. 96056) as highest
bidder in an auction sale executed between Asibar as vendor and petitioner
Phoenix Iron and Steel Corporation (Piscor) as vendee on the ground that the
complaint states no cause of action.

In 1981, the PBM stopped operations due to business losses and
financial reverses. On April 1, 1982,
the PBM filed with the SEC a petition seeking for a declaration of a state of
suspension of payments. On April 6,
1982, the SEC assumed jurisdiction over the petition. On July 9, 1982, the SEC placed the PBM under rehabilitation
receivership and appointed rehabilitation receivers. The employees of PBM then filed a complaint for illegal dismissal
with money claims against PBM with the National Labor Relations Commission
(NLRC). Those who filed belonged to the
rank-and-file and managerial/technical employees identified and categorized by
groups. Common claims of the employees
were unpaid benefits under Wage Order No. 1, 15th month-pay, money value of
unearned vacation and sick leaves and holiday pay. The case was docketed as NCR Case No. 3-1250-83.

On December 28, 1983, Labor Arbiter Bienvenido Hermogenes
rendered a decision in favor of the employees. The employees were granted monetary benefits including separation pay.

On appeal, the Labor Arbiter’s decision was modified by the NLRC,
to wit:

“WHEREFORE, except for the modification dismissing the claim
for separation pay for lack of merit, the Decision appealed from is hereby
AFFIRMED in all other respects. The
injunction issued on 15 November 1984 is lifted.” (Rollo – G. R. No.
79202, p. 18)

In G. R. No. 79202, we affirmed the
NLRC decision in a resolution dated November 18, 1987. Thus, we dismissed the petition for certiorari
filed by the employees questioning the deletion of the award of separation pay
resulting from serious losses by PBM.

In the meantime, the employees of PBM numbering 2,081 filed
another complaint for illegal dismissal and money claims with the NLRC. The case was docketed as NCR Case No.
9-3296-84.

On May 28, 1987, Labor Arbiter Bienvenido V. Hermogenes rendered
a decision in favor of the employees including separation pay.

On appeal, the Labor Arbiter’s decision was affirmed by the NLRC
in a decision dated November 9, 1987. The NLRC ordered the remand of the records to the Labor Arbiter for the
issuance of a writ of execution.

On November 13, 1987, the Labor Arbiter issued a writ of
execution.

On November 17, 1987, Deputy Sheriff Silvino Santos of the NLRC
issued a “Notice of Levy and Sale of Personal Properties On
Execution” and scheduled a public auction of PBM properties to the highest
bidder for cash on November 23, 1987.

On November 19, 1987, PBM filed with us a petition to review the
decision of the NLRC on the ground that the November 9, 1987 decision did not
take into account the fact that as found by this Court in G. R. No. 71318 the
NLRC had already denied claims for separation pay of the employees. In addition, the petitioner prayed for the
issuance of a temporary restraining order enjoining the scheduled sale of the
properties. The petition was docketed
as G. R. No. 80580.

In a resolution dated December 1, 1987, G. R. Nos. 79202 and
80580 were consolidated.

On May 2, 1988, we issued a resolution in the consolidated
petitions, to wit:

“On November 18, 1987, the Court issued a resolution dismissing
the petition in G. R. No. 79202 for lack of merit. A motion for reconsideration was denied with finality on January
27, 1988. This Court has stated that in
various and more appropriate cases involving consortiums of banks trying to
recover even only a percentage of the loans extended to Philippine Blooming
Mills (PBM), it was determined that PBM not only incurred serious losses but
was in desperate straits leading to its collapse. This is a finding which remains beyond serious dispute and it is
pointless for the petitioners to keep on reiterating the same arguments on this
issue in any motion for reconsideration in this or other petitions.

Any claims of laborers, including those enjoying preference over
other credits, will have to be submitted in the course of the bankruptcy,
liquidation or rehabilitation proceedings.

xxx                   xxx                     xxx

In G. R. No. 80580, the Solicitor General has taken sides with the
petitioner and adopted the petitioner’s reply to the private respondents’
comment. No explanation is given and no
substantial distinctions are cited to explain why the National Labor Relations
Commission should take an action in G. R. No. 80580 which is different from and
conflicts with its stand in G. R. No. 79202. This being the case, the Court reiterates its ruling in G. R. No. 79202.

xxx                   xxx                     xxx

Considering the foregoing, the COURT RESOLVED to SET ASIDE the
decision of the National Labor Relations Commission dated November 9, 1987 in
G. R. No. 80580 and to permanently enjoin the sale of properties in NLRC Case
No. NCR-9-3296-84 until after the Securities and Exchange Commission in SEC
Case No. 2250 has determined the procedures for settling the many claims,
including the money claims for workers and employees, against the Philippine
Blooming Mills Co. Inc.” (Rollo – G. R. No. 80580, pp. 309-310)

The petitioners filed separate motions for clarification of the
resolution as regards the portion that permanently enjoins the sale of
properties of PBM until after the SEC has determined the procedures for
settling the various money claims against PBM.

It turned out that during the pendency of G. R. No. 80580, deputy
sheriff Silvino Santos pushed through with the scheduled auction sale of PBM
properties on November 23, 1987 in NCR Case No. 9-3296-84 as a result of which
a certificate of sale dated November 23, 1987 was issued in favor of the
highest bidder, Alfredo Asibar, the respondent in G. R. Nos. 96056 and
96437. We did not issue the prayed for
temporary restraining order to enjoin the scheduled auction sale on November
23, 1987.

On November 21, 1988, we issued a resolution, the pertinent
portion of which reads:

xxx                   xxx                     xxx

“The respondents claim that the injunction should not cover
properties already sold before May 2, 1988 or more particularly the certificate
of sale of November 23, 1987. On the
other hand, the petitioner states that the sale of properties in G. R. No.
71318 is not the same as the sale of properties in the instant case.

The issues raised by the respondents call for ascertainment of
facts. This Court is not a trier of
facts. The question of
exactly what properties may no longer
be included in the liquidation proceedings
but should be given to the workers
pursuant to the decision of the National
Labor Relations Commission is, therefore, referred
to the Securities and Exchange Commission
which is directed to hold hearings on
the matter. This petition
has been decided. A motion for
reconsideration has been denied with finality. Entry of judgment has been effected. No further motions of the same nature as the one before the Court will
be entertained.

CONSIDERING THE FOREGOING, THE COURT RESOLVED to REFER the
respondents’ motion for clarification to the Securities and Exchange Commission
for resolution. Counsel of the parties
are warned to follow regular procedures regarding their respective claims and
not indiscriminately pass on to this Court questions which call for
determination or action by other agencies or Tribunals.” (Rollo – G. R.
No. 96056, pp. 345-346, Emphasis supplied)

II

G. R. No.
89767

On July 20, 1983, the petitioner filed with the Regional Trial
Court of Pasig a complaint for foreclosure of mortgage with receivership
against PBM, Four Seas Trading Corporation (Four Seas) and Alfredo Ching. The case was docketed as C. C. No. 49997.

On August 29, 1986, the court rendered a partial summary
judgment, the dispositive portion of which reads:

“WHEREFORE, premises considered, this Court hereby resolves to
GRANT plaintiff SIHI’s Motion for Partial Summary Judgment dated January 15,
1986 and hereby orders defendants Philippine Blooming Mills Co., Inc. and
Alfredo Ching to pay plaintiff State Investment House, Inc. jointly and
severally their unpaid obligations in the undisputed amount of P53,000,000.00
plus the stipulated attorney’s fees in the amount equivalent to 25% thereof, as
well as the costs of suit; and in the event the said defendants are unable to
satisfy said judgment within the period prescribed by law, this Court hereby
orders plaintiff State Investment House, Inc., as the court-appointed receiver,
to apply the proceeds of the Receiver’s sale of the mortgaged steel
inventories, including any earnings thereon, if any, in partial satisfaction of
said judgment and the Branch Sheriff of this Court is likewise ordered to sell
at public auction the real properties mortgages (Annexes “E”,
“E-1” to “E-9” and “F” and “F-1″,
Complaint) and that the proceeds thereof be applied in satisfaction of said
judgment and costs of suit, accordingly.” (Rollo, p. 5)

On October 5, 1987, the court issued an Order granting the
petitioner’s Motion to Order Sale of Mortgaged Real Properties. Accordingly, Deputy Sheriff Mario J. Tamang
sold at public auction said mortgaged properties belonging to PBM and Four
Seas. The highest bidder was the
petitioner as evidenced by two (2) separate certificates of sale executed by
the sheriff in its favor on November 9, and 10, 1987, respectively.

In response to the notice of levy and sale of personal properties
on execution issued by Deputy Sheriff Silvino Santos in connection with the
writ of execution in NCR Case No. 9-3296-84, setting for sale at public
auction, among others, some properties of PBM located at PBM Compound
Balintawak, Quezon City, the petitioner filed in Civil Case No. 49997 a motion
for issuance of a writ of preliminary injunction to restrain Silvino Santos
from selling at public auction the said properties. The petitioner contended that the said properties are among the
mortgaged properties of Four Seas which were sold to the petitioner on November
9 and 10, 1987.

On November 20, 1987, the court issued an Order temporarily
enjoining Silvino Santos from selling at public auction the questioned
properties. Despite this temporary
restraining order, Silvino Santos proceeded with the auction sale prompting the
petitioner to file a motion to cite the sheriff guilty of contempt of court and
declaring null and void the certificate of sale executed by him covering the
properties located at PBM compound in Balintawak, Quezon City. The lower court granted the motion.

Silvino Santos tried unsuccessfully to have the contempt order
set aside in both the Court of Appeals and this Court. The case docketed as G.R. No. 85242 will be
discussed later. Suffice it to say at
this point that the Court dismissed the petition for certiorari
questioning the affirmance by the Court of Appeals of the contempt Order issued
by the Regional Trial Court of Pasig.

As a result of our Resolution dated November 21, 1988 issued in
G.R. Nos. 79202 and 80580 the private respondents filed an urgent motion with
the SEC in SEC Case No. 2250 seeking clarification on the question of the scope
of injunction referred to said agency by the Court.

On February 9, 1989, the SEC issued an Order ruling that the said
injunction “does not cover properties already sold before May 2, 1988 or
more particularly, the certificate of sale on November 23, 1987 in NLRC Case
No. NCR-9-3296-84” (p. 100, Rollo, G.R. No. 89767)

On May 26, 1989, the SEC issued another Order granting the
private respondent’s motion for the issuance of a break-open Order, the
dispositive portion of which reads:

“WHEREFORE, the Urgent Motion For The Issuance of a Break-Open
Order dated April 12, 1989 should be, as it is hereby GRANTED, for the purpose
of implementing and carrying into effect the Certificate of Sale of November
23, 1987 in NLRC Case No. 9-3296-84 involving the properties subject-matter of
such sale located at the PBM Compound in Balintawak, Quezon City, and
Manggahan, Pasig, Metro Manila” (Rollo, p. 11)

The petitioner questioned the SEC Order by filing a petition for certiorari
with the Court of Appeals.

In a decision dated June 29, 1989, the appellate court denied due
course and dismissed the petition. A
motion for reconsideration was denied.

Hence, this petition.

G. R. NO.
96056

One of the creditors of PBM was the Philippine National Bank
(PNB). When PBM failed to pay its
obligations secured by mortgages, PNB extrajudicially foreclosed the real
estate mortgages executed in its favor. Thus, on November 2, 1983, the mortgaged properties – a) seven [7]
registered lots in Rosario, Pasig, Metro Manila, and b) seven [7] buildings and
machineries and equipment, were publicly auctioned by the Sheriff and sold to
PNB. The lots were sold for P21,930,000.00
(Exhibits B, B-1, and B-2), the buildings for P4,192,250.00 (Exhibits C and
C-1), and the machineries and equipment (Exhibits A to A-17), inclusive – for
P76,720,800.00 (Exhibit A).

In accordance with Administrative Order No. 14 implementing
Proclamation No. 50 of the President dated December 8, 1986 (Exhibit F-1-B),
PNB transferred to the national government through the Asset Privatization
Trust (APT) the assets acquired from PBM as evidenced by the deed of transfer
dated June 5, 1987.

The APT in turn sold machineries and equipment for P45,000,000.00
to Phoenix Iron and Steel Corporation and the others for P65 million to Killer
Realty.

When respondent sheriff Silvino Santos issued the notice of levy
and sale of the personal properties of PBM, and scheduled the public auction
sale on November 23, 1987 in NCR Case No. 9-3296-84, the PNB filed with the
NLRC a “NOTICE OF THIRD PARTY CLAIM” on November 20, 1987 (Exhibit
F-3).

As stated earlier, deputy sheriff Santos proceeded with the
scheduled auction sale on November 23, 1987. The highest bidder was respondent Asibar. His bid was P5,950,000.00. On the same day, Santos issued the corresponding Certificate of Sale in
favor of Asibar.

On November 24, 1987, Labor Arbiter Hermogenes issued a
“break open” order, ordering the “Sheriff assigned in the case and
his assistance” (sic) to gain access to the place (PBM Compound). Between November 24 and November 28, 1987,
some persons hauled and carried away personal properties from the
compound. The guards listed the
properties and the lists were given to the guards’ supervisor. (Rollo – G. R. No. 96056, p. 31)

On November 27, 1987, the national government through APT filed
an action for damages with preliminary injunction and/or temporary restraining
order against Labor Arbiter Hermogenes, Deputy Sheriff Silvino Santos, Asibar
and all the complainants in NCR Case No. 9-3296-­84 with the Regional Trial
Court of Makati, Metro Manila. The case
was raffled to Branch 60 and was docketed as Civil Case No. 18426.

After due trial, the trial court on December 29, 1989 rendered a
decision dismissing the complaint, to wit:

xxx                   xxx                     xxx

“WHEREFORE, the Court hereby renders judgment as follows:

The complaint dated November 25, 1987 is DISMISSED;

The Order dated December 16, 1987 (pp. 87-90, Records) as clarified
in the Order dated July 19, 1988 granting the plaintiffs’ application for a
writ of preliminary injunction (pp. 288-289, Id.) is LIFTED and SET ASIDE; and

The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and
BIENVENIDO HERMOGENES) are DISMISSED.” (Rollo, p. 42)

A motion for reconsideration filed by the petitioner APT was
denied.

Petitioner APT then filed a petition for certiorari and
prohibition with the Court of Appeals. The appellate court, however, dismissed the petition.

Hence, the instant petition.

On November 29, 1990, we issued a temporary restraining order
enjoining respondent Asibar from taking the machineries, engines, and equipment
(foreclosed chattels of the Philippine Blooming Mills, Co., Inc.) which were
transferred and assigned by the Philippine National Bank in favor of the
National Government as well as those already sold by the National Government to
Phoenix Iron and Steel Corporation.

On January 10, 1991 Phoenix Iron and Steel Corporation and the
Rehabilitation Receivers of PBM filed a motion for intervention alleging that
its intervention is imperative because its possession of the chattels sold to
it by the National Government and which are being used in the rehabilitation of
PBM are being threatened to be taken by the private respondent. We granted the motion in a Resolution dated
January 24, 1991.

The petition was given due course in the Resolution dated April
16, 1991.

In another Resolution dated November 26, 1991, we granted the
intervenors’ motion for leave to submit Additional Comment And/Or Argument.

G. R. NO.
96437

On February 10, 1988, a Deed of Sale was executed between
respondent Alfredo Asibar as vendor and petitioner Phoenix Iron and Steel
Corporation (co-petitioner Wilfredo Labayen is the vice-president of the
corporation) as vendee involving machineries and equipment inside all the
buildings at PBM compound in Manggahan, Pasig, Metro Manila. These properties were among the properties
bought by Alfredo Asibar in the auction sale conducted by Deputy Sheriff
Silvino Santos on November 23, 1987.

On December 26, 1988, respondent Asibar filed with the Regional
Trial Court of Pasig, Metro Manila, Branch 151, a complaint with application
for a writ of preliminary attachment, seeking the payment by the petitioners,
jointly and severally of the amount of P8.5 million which he alleged was the
balance already due at the time based on the terms of the contract, including
penalty for late payment, moral, exemplary damages, litigation expenses,
attorney’s fees and costs of suit. The
case was docketed as Civil Case No. 56806. On February 10, 1989, the petitioner filed a motion to dismiss on the
ground that the complaint fails to state a cause of action.

On May 10, 1989, the trial court issued an order denying the
motion. The petitioners were given ten
(10) days from receipt within which to file their answers to the complaint.

The petitioners then filed with the Court of Appeals a petition
for certiorari with prayer for the issuance of a writ of preliminary
injunction questioning the May 10, 1989 order.

The Court of Appeals, however, dismissed the petition and ordered
the return or remand of the records to the trial court for trial of the case on
the merits.

A motion for reconsideration filed by the petitioners was
denied. Hence, the instant petition.

On January 28, 1991, we issued a temporary restraining order
enjoining the Regional Trial Court of Pasig, Metro Manila, Branch 151, from
further proceeding with Civil Case No. 56806.

III

In G.R. No. 89767, the petitioner contends that:

“a)
By upholding the questioned Order of respondent SEC of 26 May 1989, the
respondent Court of Appeals has in effect reversed the ruling of this Honorable
Court in G.R. No. 85242.

b) By
allowing respondent SEC to seize from petitioner SIHI the properties in dispute
for the purpose of satisfying the money judgment obtained by the laborers of
PBM despite the adverse claim of petitioner SIHI over the said properties, the
respondent Court of Appeals has completely disregard the right of petitioner
SIHI to due process of law.

c) By
permitting respondent SEC to execute the money judgment obtained against PBM by
its laborers pending liquidation of PBM, the respondent Court of Appeals has in
effect granted the PBM- Laborers undue preference contrary to the ruling of
this Honorable Court.” (Rollo, p. 16)

In G. R. NO. 96056, the petitioner raises the following issues:

I. WHETHER OR NOT THE CA ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE
AUCTION SALE CONDUCTED BY SANTOS IS VOID.

III. WHETHER OR NOT THE CA ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE
PROPERTIES SOLD TO ASIBAR ARE THE SAME AS THOSE FORECLOSED BY PNB AND NOW
BELONGING TO THE NATIONAL GOVERNMENT. (Rollo – G. R. No. 96056, p. 9)

These petitions are discussed jointly as the issues raised are
interrelated.

In response to our directive in the November 21, 1988 resolution
in G.R. No. 80580 which referred the respondents’ motion for clarification
as to whether or not the certificate
of sale of November 23, 1987 is
included in the order of permanent injunction
to sell PBM properties in NLRC Case
No. NCR-9-3296-84 until after the SEC
in SEC Case No. 2250 (PBM liquidation
proceedings) has determined the procedures for
settling all the money claims against
PBM ordered in the resolution dated December
2, 1987 in G. R. Nos. 79202 and
80580, the SEC issued an order dated
February 9, 1989 in SEC Case No.
2250, to wit:

“Acting upon the Urgent Motion To Resolve Clarification dated
August 22, 1988 in G. R. No. 80580 which the Supreme Court referred to this
Honorable Commission For Resolution, as per Order of the Supreme Court in its
Resolution in G. R. No. 80580 dated November 21, 1988, filed by the counsel for
the 2,081 laborers of PBM in NLRC Case No. NCR 9-3296-­84, and considering the
Manifestation dated February 2, 1989, filed by the petitioner and the
rehabilitation receiver in the above-entitled case, the Hearing Panel
hereby rules that the injunction issued
therein, does not cover properties already
sold before May 2, 1988 or more
particularly the certificate of sale on
November 23, 1987 in NLRC Case No.
NCR-9-3296-84.” (Rollo – G. R. No. 85242, p. 330; Emphasis
supplied)

Another order dated May 26, 1989, was issued in SEC Case No. 2250
involving PBM properties claimed by the State Investment House, Inc. wherein
the SEC reiterated its February 9, 1989 clarificatory order regarding the
certificate of sale dated November 23, 1987. This order was the subject matter in CA-G. R. SP No. 17698. The Court of Appeals affirmed the order
prompting SIHI to challenge the appellate court’s decision by filing a petition
for certiorari with this Court. The case is docketed as G. R. No. 89767.

In G. R. No. 96056, the appellate
court is of the view that the February 9, 1989 order of the SEC clarified the
issue as to what properties are excluded from the liquidation proceedings but
which should be given to the workers pursuant to the decision of the NLRC in
Case No. NCR 9-3296-84 by ruling that “the hearing Panel hereby rules that
the injunction issued therein does not cover properties already sold before May
2, 1988 more particularly the certificate of sale in November 23, 1987 in NLRC
Case No. NCR 9-3296-84” (Rollo – G. R. No. 96056, p. 25) With this
finding, the appellate court, among others, dismissed the petition.

In this regard, we take note of another case (G. R. No. 85242
entitled Sheriff Silvino Santos, et al. v. Court of Appeals, et al.). In this petition, SIHI filed an action
before the Regional Trial Court of Pasig, Metro Manila, Branch 168 presided by
Judge Benjamin Pelayo, to enjoin the implementation of a writ of execution issued
in NLRC Case NCR No. 9-3296-84. Specifically, SIHI asked the court to enjoin Deputy Sheriff Silvino
Santos from selling at the public auction sale on November 23, 1987 PBM
properties which were allegedly owned by SIHI.

On November 20, 1987, Judge Pelayo issued an order, enjoining
Sheriff Santos to desist from selling the properties being claimed by SIHI.

Sheriff Santos, however, ignored the order and went ahead with
the November 23, 1987 auction sale. Judge Pelayo, then issued another order dated February 22, 1988
nullifying the sale and finding Sheriff Santos guilty of contempt.

Sheriff Santos then filed a petition for certiorari and
prohibition with preliminary injunction with the Court of Appeals alleging that
Judge Pelayo committed grave abuse of discretion and lack of jurisdiction in
blocking the NLRC’s writ of execution. The petition was dismissed.

Ricardo Zurita and 2,080 other laborers (complainants in NLRC
Case NO. 9-3296-84) in whose favor the writ of execution was issued by the NLRC
filed with the Court a motion for leave to intervene as co?petitioners.

In a resolution dated March 15, 1989, we denied the petition for
lack of merit. We stated:

xxx                   xxx                     xxx

“Insofar as the money claims of the co-­petitioners-intervenors
are concerned, the law on the case is that announced in G. R. No. 71318,
Philippine Blooming Mills Co., Inc. v. National Labor Relations Commission, et
al., January 20, 1986, where this Court ruled:

“‘Considering all the foregoing, the Court Resolved to DISMISS the
petition insofar as it seeks to nullify the decision of the National Labor
Relations Commission on benefits due the respondent laborers and to restrain
the disposition of properties in the satisfaction of the various obligations of
the petitioner. However, the
awards made by the Commission shall be
referred to the Securities and Exchange
Commission to determine the preference or
priority under the law in the settlement
of all claims. The
restraining order dated July 22, 1985 which reads in part:

xxx                   xxx                     xxx

‘ENJOINING the
respondents from enforcing the alias writ of execution and the sale of the
properties of petitioner, and if already enforced, from turning over to the
private respondents the proceeds of the auction sale in NLRC Case No.
3-1250-83, entitled ‘Pedro Ablaza, et al., Complainants, v. Philippine Blooming
Mills Company, Inc., Respondent’ of the National Labor Relations Commission,
Ministry of Labor and Employment.’

is clarified as not
covering the certificate of sale issued
on July 19, 1985. However, all proceeds of that sale
and earlier sales must be turned over
to the Securities and Exchange Commission
to be distributed according to law. This Court’s temporary restraining
order shall be lifted and set aside
once the Securities and Exchange Commission
has taken over the control of funds
and assets as above indicated.’

Any execution of the NLRC decision awarding benefits to the PBM
workers and any disposition of PBM properties arising from the NLRC awards must
be referred to the Securities and Exchange Commission pursuant to the above
resolution.

Any attempt to execute on properties
not belonging to PBM is properly a
concern of civil courts and not of
the NLRC. Either way,
the action of the petitioner sheriff is
premature or improper.” (Rollo – G. R. No. 85242, pp.
271-272; Underlining supplied)

xxx                   xxx                     xxx

The petitioner sheriff filed a motion for reconsideration. The movant-intervenors also filed a separate
motion for reconsideration with clarification. The movant-intervenors specifically mentioned the February 9,
1989 order of the SEC in SEC Case No. 2250 clarifying the issue as to
whether or not the certificate of sale dated November 23, 1987 in NLRC Case NCR
No. 9-3296-84 is included in the permanent injunction of the sale of PBM
properties under the resolution dated November 21, 1988 in G. R. No.
80580. The movant-intervenors
contended:

“It is an admitted fact that the properties subject of this
controversy are included in the certificate of sale of November 23, 1987 and
not by another execution which, this Honorable Court might misunderstand, and
which the same was already clarified by this Honorable Court through its
delegated authority, the Honorable Securities and Exchange Commission. It is very apparent and very important then,
that in so far as the certificate of sale of November 23, 1987 is concerned,
(which includes subject properties in controversy) be finally laid to rest as
this Honorable Court said in that particular resolution x x x.” (Rollo –
G.R. No. 85242, p. 306)

We denied the motions. We
said in our resolution dated April 5, 1989:

“The motion for reconsideration cites the Court’s resolution
dated March 15, 1989 out of context. The movant-intervenors play up paragraph 2, page 3 of the resolution but
ignore the first paragraph on the same page which is more important.

The resolution of this Court rules
that if, as the petitioners and the
movant-­intervenors insist, the disputed properties
really belong to the Philippine Blooming
Mills, then the execution must be referred
to the Securities and Exchange Commission
pursuant to the earlier resolution of
this Court. On the
other hand, if the properties belong to
persons other than the Philippine Blooming
Mills, the National Labor Relations Commission
has no jurisdiction because the matter
fall within the jurisdiction of the civil
courts.

Therefore, if the movant-intervenors are correct and the disputed
properties belong to the Philippine Blooming Mills, their action is premature
and must await a determination by the Securities and Exchange Commission
pursuant to the earlier resolutions in the Philippine Blooming Mills
cases. Once the SEC has decided the
cases, the execution shall issue from it and not from the NLRC.

The Court further reiterates its resolution in G. R. No. 80580 and
G. R. No. 79202 that the claims of the Philippine Blooming Mills’ laborers are
not denied. The Court simply rules that
all valid claims including those of the laborers must be submitted in the
course of bankruptcy, liquidation and rehabilitation proceedings. This is a function of the Securities and
Exchange Commission for appropriate action.” (Rollo – G. R. No. 85242, p.
335; Emphasis supplied)

xxx                   xxx                     xxx

From the different resolutions in all the cases involving PBM
properties in relation to SEC Case No. 2250 (liquidation proceedings of PBM) we
reiterate the following: 1) all PBM
properties including the proceeds of the various sales undertaken by the NLRC
to implement its final decision in NCR 9-3296-84 should be turned over to the
SEC for disposition according to law, and 2) for purposes of executing the NLRC
final decision awarding monetary benefits to the former workers of PBM, the
NLRC has no jurisdiction over properties belonging to persons other than PBM.

As far as the Sheriff’s sale dated November 23, 1987 is
concerned, the SEC issued the Order dated February 9, 1989, pursuant to our
directive in our resolution of November 21, 1988 clarifying that the injunction
against the sale of PBM properties does not include the November 23, 1987
certificate of sale. However, it does
not necessarily follow from the auction sale of PBM properties conducted by
Sheriff Santos resulting in the issuance of the certificate of sale dated
November 23, 1987 in favor of the highest bidder, respondent Asibar, that all
properties sold therein fall within the clarificatory order of the Securities
and Exchange Commission (SEC). A
distinction as to the ownership of these properties must be made. Thus, if some properties were sold which
belonged to other persons over whom the NLRC does not have jurisdiction,
necessarily, such properties must be considered not to fall within the February
9, 1989 order of the SEC. These should
be returned to their rightful owners.

Under these circumstances, the pivotal issue to be resolved
hinges on whether or not the disputed properties sold by Sheriff Santos belong
to petitioner SIHI in G. R. No. 89767 and APT in G. R. No. 96056.

In  G. R. No.
89767, the questioned Order dated May 26, 1989 of the SEC which was
affirmed by the Court of Appeals states:

“We found the grounds invoked by SIHI in its comment untenable
and without merit. Firstly, the
urgent motion for a break-open order is
but an implementation of our final order
of February 9, 1989 wherein it clearly
states that ‘the injunction issued therein,
does not cover properties already sold
before May 2, 1988 or more particularly
the certificate of sale on November 23,
1987 in NLRC Case No. NCR-9-3296-84’;
secondly, this Commission is legally authorized and duly empowered by the
Supreme Court pursuant to its Resolutions dated November 21, 1988 (G.R. No.
80580 and 79202) and April 5, 1989 (G.R. No. 86242) to determine the valid
claims of subject laborers in all these cases; and thirdly, it is
the function of this Commission to implement
the Certificate of Sale on November 23,
1987 in NLRC Case No. NCR-9-3296-84 for
the reason above-stated and to issue forthwith
any writ of execution, if necessary, to fully satisfy
the valid claims of these complainants-laborers, as clearly mandated in the
aforestated Resolution of the Supreme Court.” (Emphasis supplied, Rollo,
p. 32)

In affirming the Order, the appellate court said:

“The SEC issued the ‘Break-Open
Order’ contained in the Order now being
assailed for the purpose of implementing
and carrying into effect the certificate
of sale of properties involved in NLRC
Case No. 0-3296-84 wherein the claims
against PBM of private respondents — the
2,081 complainants former PBM laborers — were resolved. The authority of the SEC to act on this
particular matter emanates from the Supreme Court Resolutions of November 21,
1988, March 15, 1989 and April 5, 1989. The first above-named Resolution was issued by the Supreme Court upon
private respondents’ motion for clarification of the scope of the injunction
which the Court issued to stop the enforcement of the writ of execution already
mentioned, which had been issued by the NLRC, against properties foreclosed by
PBM creditors. In very certain terms,
the Supreme Court in said Order states that it ‘cannot supervise the
liquidation of PBM assets and declare what portion goes to laborers, what
portion goes to creditor banks, etc.’ and that this is a function of the SEC;
referred to the SEC the question of exactly what properties should be given to
the workers pursuant to the decision of the NLRC; and directed the SEC ‘to hold
hearings on the matter’. The other two
Resolutions (of March 15, 1989 and April 5, 1989) were issued by the Supreme
Court precisely on the petition for review of the order of the RTC of Pasig in
C.C. No. 49997, inter alia declaring null and void the
certificate of sale executed by the NLRC Deputy sheriff covering the properties
located at the PBM compound in Balintawak, Quezon City. In the March 15, 1989 order, the Supreme
Court categorically stated that ‘any execution of the NLRC decision awarding
benefits to the PBM workers and any disposition of PBM properties arising from
the NLRC awards must be referred to the Securities and
Exchange Commission.’ And in reiteration of said pronouncement, the Supreme
Court in the April 5, 1989 Order, explicitly ‘REFERRED’ the matter to the SEC
‘for appropriate action’ after stating that all valid claims against PBM including
those of the laborers ‘must be submitted‘ in the course of
the bankruptcy, liquidation and rehabilitation proceedings’ which ‘is a
function of the Securities and Exchange Commission.’ (Rollo, pp. 33-34)

Obviously, the SEC’s May 26, 1989 Order has for its basis, the
certificate of sale covering the Balintawak properties of PBM issued by Sheriff
Silvino Santos as a result of the auction sale Santos held on November 23, 1989
pursuant to the writ of execution issued by the NLRC in NCR Case No. 9-3296-84. It is to be noted, however, that the
certificate of sale issued to the highest bidder on the Balintawak properties
of PBM was declared null and void in Civil Case No. 49997 and such declaration
was affirmed by us in G.R. No. 85242.

Under these circumstances, the SEC had no authority to order the
implementation of a certificate of sale which was earlier declared null and
void. True, the SEC pursuant to our
Resolutions in the other related PBM cases has jurisdiction over all properties
of the PBM which should be distributed among valid claimants including the
private respondents in the liquidation proceedings. Such jurisdiction, however, does not include the power to reverse
and set aside our own resolutions. It
cannot issue a “break-open order” arbitrarily and to the prejudice of
third persons seize PBM properties which were earlier in the lawful possession
of third persons.

In the instant case, the Balintawak properties of PBM covered by
the certificate of sale were earlier sold to the petitioner in an auction sale
involving the said properties. Thus, in
Civil Case No. 49997, the trial court issued an Order dated May 3, 1988, the
pertinent portion of which reads:

“In the light of the foregoing facts, the pertinent question
is whether plaintiff, as purchaser at the auction sale of the aforementioned
mortgaged properties, acquired valid titles not only to the land, subject of
the mortgage of defendant Four Seas Trading Corporation, but also to all the
buildings, improvements and machineries existing thereon. The answer to this question is determinative
of the question of whether this court had the jurisdiction to issue the
restraining order, and subsequently the writ of preliminary injunction, under
consideration whereby this court enjoined Sheriff Santos from proceeding with
the execution sale of the buildings, machineries and equipment located on the
land of defendant Four Seas Trading Corporation in satisfaction of the judgment
rendered against defendant Philippine Blooming Mills Co., Inc. in NLRC Case No.
NCR-9-3296-84.

It is an admitted fact that the land, on which the buildings,
machineries and equipment in question are located, are registered land in the
name of defendant Four Seas Trading Corporation. It is also an admitted fact that no reservation of title in the
name of defendant Philippine Blooming Mills Co., Inc. is noted in the
certificates of title of defendant Four Seas Trading Corporation with respect
to the buildings, machineries and equipment existing on the land covered by the
said titles.

Such being the case, this court finds no cogent reason to disturb
its findings contained in its Order, dated December 10, 1987, ordering the
issuance of a writ of preliminary injunction against Sheriff Santos. For under the law and existing jurisprudence,
plaintiff, as an innocent mortgagee and purchaser for value, acquires good and
valid titles to the properties in question.

As long as this decision is not set aside or modified in proper
legal proceedings, the SEC has no jurisdiction over the Balintawak properties,
much less, to issue a break-open Order to implement a voided certificate of
sale covering the said properties.

“The trial court has the competence to identify and to secure
properties and interests therein held by the judgment debtor for the satisfaction
of a money judgment rendered against him. (Section 15, Rule 39, Revised Rules of Court). The exercise of its authority is premised on one important
factor: that the properties levied
upon, or sought to be levied upon, are properties unquestionably owned
by the judgment debtor and are not exempt by law from execution. For the power of the Court in the execution
of its judgment extends only over properties belonging to the judgment debtor. (See Reyes v. Grey, 21 Phil. 73 [1911],
Misut v. West Coast San Francisco Life Insurance Co., 41, Phil. 258. [1920],
Herald Publishing Co. v. Ramos, 88 Phil. 94 [1951]; and Bayer Philippines, Inc.
v. Agana, 63 SCRA 355 [1975]; Consolidated Bank and Trust Corp v. Court of
Appeals, 193 SCRA 158 [1991])

In G. R. No. 96056 the petitioner
contends that the appellate court committed grave abuse of discretion amounting
to lack of jurisdiction in dismissing its petition for certiorari
accusing the trial court of grave abuse of discretion in ruling that there is
no identity between the PBM properties sold to the petitioner’s predecessor PNB
in 1983 and the PBM properties sold to respondent Asibar in the auction sale of
November 23, 1987 on the ground that the appellate court did not consider the
petitioner’s allegations and evidence.

Petitioner APT contends that what took place was a simulated
auction sale of properties already owned by PNB and transferred to the APT and
that the Sheriff sold for P5,950,000.00 properties for which PNB had bid
P76,720,800.00.

The petitioner claims that the Certificate of Sale (Exhibit
“A”, Annex “C”, Petition) issued in favor of PNB shows that
the chattels which were sold later by Sheriff Santos to Asibar in the
questioned auction sale are housed at the following: (1) Oxygen Plant No. 2; (2) Carpentry Shop; (3) Electrical Shop
and Instrumentation Building; (4) Machine Shop; (5) Scale house; (6) Wire
Drawing Plant; (7) Nail Plant; (8) Bolt and Nut Making Plant; (9) Motorpool and
Rebuilding Section; (10) Repair and Shifting Maintenance Section; (11) General
Utility and Fire Section; (12) Oxygen Plant No. 1; (13) Topy Mill (Rolling Mill
#1); (14) Rolling Mill No. 2; (15) Rolling Mill No. 3; (16) Wire Rod Mill; (17)
Open Hearth Furnace; (18) and those at Building Nos. 24, 25, 26, 28, 31, and 33
(Electric Arc Furnace), 34, 35 and 37 (Bailing Press Machine Building, Press
Machine Building, Scale House No. 2 and Pump House No. 2). According to the petitioner, all the
buildings, plants, shops, sections, and mills acquired in 1983 are located at
the PBM Compound, Pasig, Metro Manila. All these chattels were transferred, assigned and conveyed by PNB in
favor of the national government thru the Deed of Transfer dated February 27,
1987.

The petitioner claims that the Certificate of Sale issued to
Asibar by Sheriff Santos conclusively shows that chattels inside nine (9)
buildings which PNB bought, namely: Oxygen Plant No. 2, Carpentry Shop, Electrical Shop and Instrumentation
Building, Machine Shop, Scale House, Wire Drawing Plant, Nail Plant, Bolt and
Nut Making Plant, Motorpool and Rebuilding Section, Repair and Shifting
Maintenance Section, General Utility and Fire Section, Oxygen Plant No. 1, Topy
Mill (Rolling, Mill No. 1), Rolling Mill No. 2, Rolling Mill No. 3, Wire Rod
Mill, Open Hearth Furnace, and Bailing Press Machine Building all located at
PBM compound, Manggahan, Pasig, Metro Manila were also sold to Asibar by
Sheriff Santos.

It is to be noted that the appellate court’s decision has no
specific findings of facts regarding the issue as to whether or not the
properties sold to Asibar are different from the properties previously sold to
the PNB. Instead, the decision in a
sweeping statement stated that the lower court did not commit grave abuse of
discretion as the trial court’s findings are duly supported by substantial
evidence.

The lower court said:

“PROPERTIES

SOLD to PNB

13. The
plaintiff does not question in this case the auction sale of PBM’s properties
in Balintawak, Quezon City to ASIBAR. What
it questions only is the auction sale of PBM’s properties located in its
Compound in Manggahan, Pasig. It is
therefore necessary to determine what are the properties sold to PNB per the
certificates of sales (Exhs. A to A-147 inclusive; and Exhs. C and C01) and the
properties of PBM at its Manggahan, Pasig, Compound sold to Asibar per the
certificate of sale (Exhs. H, G-1 to E-4 or Exhs. 1, 1-A to 1-E-Asibar).

14. The
properties which PNB bought are:

14.1. The machineries and equipments in sixteen
(16) Buildings – Building Nos. 6 (Exhs. A-20 to A-32); 10 (Exh. A-32), 12
(Exhs. A-33 to A-43), 13 (Exhs. A-6; Exhs. A­-43 to A-59), 16 (A-43 to A-59),
21 (Exhs. A-59 to A-85), 22 (Exhs. A-86 to A-108), 24 (Exhs. A-108 to A-112),
25 (Exhs. A-109 to A-112), 26 (Exhs. A-112-A to A-114), 28 (Exh. A-114) 13
(Exhs. A-114 and A-115), 33 (Exhs. A-125 to A-133); A-138 to A-140), 34 (Exhs.
A-132 and A-133), 35 (Exhs. A-140 to A-147) and 37 (Exhs. A-134 to A-138) per
Exhs. A, A-1 to A­-147.

14.2. Four (4) buildings (sic) erected on the lots
covered by TCT Nos. 43445, 853, 30196 and 32897, Registry of Deeds of Rizal,
namely: (a) a CANTEEN 2-storey
semi-concrete; (b) one-storey electrical shop; (c) OPEN WAREHOUSE and carpentry
shop; and (d) scale house (wood and masonry) per Exhs. C and C-1.

PROPERTIES SOLD

TO ASIBAR

15. On the other hand, Asibar bought the
following properties per Exhs. 1 to 1-E-Asibar or Exhs. H to H-4;

15.1. Thirty four (34) buildings and fixtures,
embedded pipes and metals obtained from the total demolition thereof;

15.2. The mill/plant machineries, equipment,
materials, supplies, and all movable properties found in each of the
thirty-four (34) buildings; and

15.3. Scrap iron and other metals, discarded or
detached machine or equipment parts found in open areas and diggings.

NO IDENTITY

OF PROPERTIES SOLD TO

PNB AND TO ASIBAR

16. The question then is: were the properties sold to PNB as described
in paragraph 14, the same properties sold to Asibar as described in paragraph 15
hereof? The evidence does not show that
the properties sold to PNB are the same properties sold to Asibar. This is clear from the following
considerations.

16.1. Exhs. A and A-1 to A-147 do not show that the
materials and equipments found in the sixteen (16) buildings are located at the
PBM Compound in Manggahan, Pasig. They do
not state where these buildings are located. Exh. A simply states that the auction sale of properties listed in the ‘attached
Annexes’ took place on November 23, 1983 at 10:00 o’clock in the morning ‘at the
compound of the mortgagors, located at Barrio Rosario, PBM Compound, Pasig, Metro-Manila’. Exh. T however shows that PBM has
machineries and equipments in 12 buildings, namely Building Nos. 6, 12, 14, 16,
18, 20, 21, 22, 23, 25, 26 and 31, at the PBM Compound in Manggahan,
Pasig. Even if it were assumed that the
twelve (12) buildings are the same buildings bearing the same number referred
to in Exhs. A to A-147 the fact remains that the machineries and the equipments
found in these twelve (12) buildings have not been shown to be the same
machineries and equipments that may be found in the thirty four (34) buildings
described in Exhs. 1-C and 1-D-Asibar. For there is even no proof that the twelve (12) buildings are among the
thirty-four (34) buildings listed in Exhibits 1-C and 1-D-Asibar.

16.2. The four (4) buildings sold to PNB under
Exhibits C and C-1 have not been shown to be among the same thirty-four (34)
buildings. These four (4) buildings are
(note: not legible) lots covered by TCT
Nos. 43445, 853, 30196 and of Deeds of Rizal. This then suggests that the (not legible) the Province of Rizal. However, their x x x (not legible) Rizal has
not been established much less does the evidence show that they are within the
PBM Compound in Manggahan, Pasig, or that they are among the said thirty-four
(34) buildings.

16.2.1. True it is that among the thirty-four (34)
are: (a) scale house (No. 5, Exh.
1-C-Asibar); (b) a canteen (No. 27, Exh. 1-D-Asibar); (c) a carpentry/electrical
shop (No. 30, Exh. 1-D-Asibar). However
there is absolutely no proof that they are the same four (4) buildings
described in Exhs. C and C-­1.

16.3. PNB did not acquire any ‘scrap iron and
other metals, discarded or detached machine parts found in open areas and
diggings’ from PBM. They are not among
the properties which PNB acquired under the certificates of sale (Exhs. A, A-1
to A-147), B and B-1, C and C-1). PNB
did not transfer any such property to the RP under the deed of transfer (Exhs.
D to D-3). Obviously, these properties
belonged to PBM when they were sold to Asibar.

17. In
brief, RP failed to prove by any competent and satisfactory evidence that the
properties which it acquired from PNB are the same properties levied upon and sold
at public auction to ASIBAR.” (Rollo – G.R. No. 96056, pp. 31-33;
Decision-Civil. Case No. 18426, pp. 5-7)

In an order dated June 6, 1990, the trial court amended
“14.2” and “16.2” of the decision to read as follows:

xxx                                xxx                                   xxx

“14.2. Seven (7) buildings
erected on the lots covered by TCT Nos. 43445, 853, 30196 and 32897, Registry
of Deeds of Rizal, namely: (a) a
CANTEEN 2-storey semi-concrete; (b) one-storey electrical shop; (c) OPEN
WAREHOUSE and carpentry shop; (d) scale house (wood and masonry); (e) Wire and
Nail Plant (industrial) one-storey steel frame with an area of 6,489 erected on
the lots covered by TCT Nos. 43445, 43338, 853 and 30196, land records of
Rizal; (f) office building (commercial two-storey, wood and masonry, with an
area of 240 square meters, first floor erected a lot covered by TCT No. 32343,
Land records of Rizal; and (g) Mess Hall and dormitory, with a total area of
250 square meters, erected on the same above-mentioned lot (TCT No. 322843­-Rizal)
per Exhs. C and C-1”.

19.3. The
first sentence of paragraph 16.2 of the DECISION is AMENDED to read as follows:

16.2. The
seven (7) buildings sold to PNB under Exhs. C and C-1 have not been shown to be
among the said thirty-four (34) buildings.'”

xxx                  xxx                     xxx

(Rollo – G.R No. 96056, p
237)

Obviously, the trial court assumed that there are two (2) PBM
compounds in Pasig, Metro Manila, one at Manggahan and one at Rosario. Under this premise, the trial court ruled
that since the petitioner did not adduce evidence to prove that the buildings
housing the chattels sold to PNB are located at the PBM Compound in Manggahan
where the building machinery and equipment sold to Asibar were located, then
there is no identity of properties between those sold earlier to PNB and later
to Asibar. Such conclusion has no
factual basis.

Asibar, himself, in his “Answer with Counterclaim never
raised the issue as regards the location of the buildings machinery and
equipment sold to him. Under his Answer
with Counterclaim, captioned as SPECIAL AND AFFIRMATIVE DEFENSES”
Asibar alleged:

“Assuming without admitting that the plaintiff’s acquisition
of the properties of the PBM in the alleged auction sale on November 23, 1983
by virtue of a foreclosure proceedings under a mortgage contract is true, its
ownership is only limited to its rights as mortgagee and subject to other
superior liens. It cannot affect the
lien of the defendants Ricardo Zurita, et al. (complainants in NLRC Case No.
9-3296-84) over the properties of PBM already attached and existing to it at
the time of the foreclosure and/or the plaintiff’s acquisition of the PBM
properties being said lien is a laborer’s lien;

10. The lien of the defendants Ricardo Zurita,
et al. and other laborers numbering 2,081 in all, complainants in the NLRC Case
No. 9-3296-84 was already attached and existing over the PBM properties since
1981 the time when the said laborers were illegally dismissed or when PBM
ceased its operations allegedly due to bankruptcy, and at the time when the PNB
or the plaintiff allegedly acquired the PBM properties;

11. Said lien of the defendants Ricardo Zurita,
et al. (complainants in NLRC Case No. NCR-9-3296-84) is superior and enjoys
preference over the lien of the plaintiff as mortgagee and constitute an
automatic first lien above all other earlier encumbrances on the PBM properties
pursuant to the doctrine laid down by the Supreme Court in G. R. No. 68819-20,
Ferrer, et al. v. Romillo. Jr., et al. promulgated on February 7, 1985; PCIB v.
NAMAWU, 115 SCRA 873 and G.R. No. L-39742, Air Manila, Inc., et al. v. CIR;

12. The judgment award to the defendants Ricardo
Zurita, et al. in NLRC Case No. NCR. 9-3296-84 which is in the nature of
separation pay from PBM a corporation that had ceased operation due to bankruptcy,
is superior to the rights of PNB as mortgagee and that of the plaintiff who
just step into the shoes of the former over the properties of PBM pursuant to
the doctrine laid down by the Supreme Court in G.R. No. 75161-62, PNB v. Delta
Workers Union, et al., promulgated on April 1, 1987, that the rights of workers
to separation pay from a bankrupt corporation is superior to a mortgagee’s
credit in the foreclosed property, and considering further that Art. 110 of the
Labor Code is constitutional because Police Power prevails over non-impairment
of the obligation and contract clause in the Constitution;

13. So that what the PNB can rightfully claim on
the PBM properties is only the residue after the lien of the laborers of PBM
(defendants Ricardo Zurita, et al., complainants against the PBM in NLRC Case
No. NCR 9-3296-84) has been fully satisfied. Thus, this residue, if there is any, is the only thing that the
plaintiff can rightfully claim, and it cannot further claim that the properties
are already exempt from execution the fact that the plaintiff is the government
as it merely steps into the shoes of the PNB. It is elementary that water cannot rise higher than its source;

14. Herein defendant being the purchaser of the
properties of PBM transferred on account of the exercise of a superior and
automatic first lien above all earlier encumbrances attached to the properties,
evidenced by a certificate of sale, is therefore the rightful and legal owner
of the properties subject hereof over and above and superior and paramount from
the claim of ownership of the plaintiff;” (Rollo, pp. 215-­217)

In fine, Asibar’s defense to the complaint of the petitioner
centered on his allegation that his right to the properties is superior to the
right of the petitioner. The issue as
to the proper disposition of the PBM properties has already been decided
earlier by this court in the other PBM cases. The jurisprudence on the matter is now final and Asibar cannot resurrect
the issue as to which is superior, the PNB foreclosure and purchase of the
properties in 1983 or the claims of various creditors, including the workers,
which we decided in 1985.

Moreover, it is worthy to note that respondent Sheriff Santos in
itemizing the properties which he sold during the auction sale identified them
as “Properties Located at PBM Compound, Pasig Metro Manila” (p. 194,
Rollo, G.R. No. 96056) which signifies that there is only one PBM compound in
Pasig, Metro Manila.

That there is only one PBM compound in Pasig is confirmed by the certification
of Mayor Mario S. Raymundo of Pasig (Annex “B”, Additional Argument
filed by intervenor Phoenix Inc and Steel Corporation (PISCOR), to wit:

“C E R T I F I C A T I O N

TO WHOM IT MAY CONCERN:

THIS IS TO CERTIFY that since 1981 up to the present time there is
only one facility referred to as the Philippine Blooming Mills (P.B.M.)
Compound in the Municipality of Pasig, Metro Manila.

The above-mentioned facility is located at the boundary of Barangay
Rosario and Manggahan. And, therefore,
the P.B.M. Compound is sometimes part of Barangay Manggahan. In any case, there is only one facility
known as the P.B.M. Compound in the Municipality of Pasig.

This certification is issued at the request of the Phoenix Iron and
Steel Corporation (PISCOR) for location reference purposes.

Given this 5th day of March 1991 at Pasig, Metro Manila

(Sgd.) MARIO S.
RAYMUNDO

Municipal
Mayor”

(Rollo – G. R. No.
96056, p. 797)

Another certification issued by the Assessor’s Office through
Senior Taxmapper Bonifacio C. Maceda, Jr. clears the confusion as regards the
address of the PBM Compound in Pasig which is referred to as Manggahan by some
and Rosario by others, to wit:

“October 30, 1991

TO WHOM IT MAY CONCERN:

This is to certify that as per Real Property Tax Records of this
office, the properties of the former facility known as the Philippine Blooming
Mills Co., Inc., located in the Municipality of Pasig, are officially part of
Manggahan and not part of Rosario based on the Tax Declaration of the said
property.

Furthermore, although the Pasig facility of the Philippine Blooming
Mills Co., Inc. since existence carried the address of Rosario; the tax mapping
of the Municipality of Pasig initiated by this office in the period between
1987-1988 officially pegged the boundary of Rosario and Manggahan to be the
point where the Litton Mills property ends and where the former Philippine
Blooming Mills Co., Inc. begins.

This certification is issued for whatever purpose it may serve.

(Sgd.) BONIFACIO
C. MACEDA, JR.

Sr. Taxmapper”

(Rollo – G. R. No.
96056, p. 798)

Any doubts regarding the existence of only one PBM Compound
located at Pasig instead of two (2) as implied by the trial court is dispelled
by Volume 2 of the 1989-1990 Metro Manila Citiguide (The Encyclopedic Map of
Metro Manila) where Map 130 shows the PBM Compound, and Map 131 a portion
thereof which indicates that the PBM compound in Pasig is only one and not made
of two (2) parts, one in Rosario and another in Manggahan. (Annex “D”, Additional Argument
filed by PISCOR).

The location of the PBM Compound was never in issue before the
trial court. It appears from the
records that it was assumed to be a matter known to all the parties, that the
parties were aware of the exact whereabouts of the compound in Pasig.

From the sole fact that some documents bore the address PBM,
Rosario, Pasig, while other documents carried the address PBM, Manggahan,
Pasig, the trial court jumped to the conclusion that there are two (2) PBM
compounds in the same town, in two barangays adjacent to each other, with each
compound containing identical sets of buildings and the buildings containing
identical but separate sets of extremely expensive machineries and equipment.

It was relatively easy for the trial court, if it wanted to
decide the case on a matter not fully litigated by the parties, to ascertain
the correct factual bases for its conclusion.

The PBM compound is at the boundary of the two barangays. This explains why in some documents, it used
Rosario as an address while in others it used Manggahan. It is not logical for a steel company to
establish two huge industrial complexes in two adjacent barangays of the same
town and to treat them, as the trial court did, as two separate and distinct
industrial complexes. The court should
have received evidence to clearly establish what now appears from the records
of these and earlier cases to be a wrong conclusion.

The chattels are clearly identified and numbered in the PNB and
APT records of ownership. Conveniently
for the private respondent, properties acquired by PNB for P76,720,800.00 in
1983 were sold to Asibar for only P5,950,000.00 as scrap and machineries in lots,
each lot being the contents of one entire building, with no specifying details
and no identification as to what types of machineries, serial numbers, etc.
were sold for a nominal sum.

The well-entrenched principle that findings of facts of the Court
of Appeals are conclusive and binding upon this Court is not without exceptions. Such exceptions include the following: when the findings are not supported by the
record, glaringly erroneous as to constitute grave abuse of discretion or when
the findings are grounded entirely on speculation, surmise or conjecture. (See Chan v. Court of Appeals, 33 SCRA 737
[1970]; Baniqued v. Court of Appeals, 127 SCRA 596 [1984]; Moran, Jr. v. Court
of Appeals, 133 SCRA 88 [1984]; Collector of Customs of Manila v. Intermediate
Appellate Court, 137 SCRA 3 [1985]; Premier Insurance and Surety Corporation v.
Intermediate Appellate Court, 141 SCRA 423 [1986]; Director of Lands, et al v.
Funtilar, et al., 142 SCRA 57 [1986]; Manlapaz v. Court of Appeals, 147, SCRA
236 [1987]; Chua Giok Ong v. Court of Appeals, 149 SCRA 115 [1987]; Francisco
v. Mandi, 152 SCRA 711 [1987]; Knecht v. Court of Appeals, 158 SCRA 80 [1988];
Garcia v. Court of Appeals, 33 SCRA 623 [1970]; Tolentino v. De Jesus, 56 SCRA
167 [1974]; Ramos v. Court of Appeals, 63 SCRA 331 [1975]; Rizal Cement Co.,
Inc. v. Villareal, 135 SCRA 15 [1985]; Municipality of Meycauayan v.
Intermediate Appellate Court, 157 SCRA 640 [1988]; Remalante v. Tibe, et al.,
158 SCRA 138 [1988]; Bunag v. Court of Appeals, 158 SCRA 306 [1988]; Santa Ana,
Jr. v. Hernandez, 18 SCRA 973 [1966]; Joaquin v. Navarro, 93 Phil. 257 [1953];
Cruz v. Court of Appeals, G.R. No. 85685 September 11, 1991)

Certainly, the trial court’s ruling that there is no identity as
between the PBM properties sold to PNB and those sold to Asibar because the
petitioners did not prove the location of the same, whether they are at the PBM
compound located at Manggahan or at the PBM Compound located at Rosario on the
premise that there are two (2) PBM Compounds in Pasig is patently and glaringly
erroneous amounting to a grave abuse of discretion.

Morover, the trial court’s finding that the petitioner failed to
show that the machineries and equipment sold to PNB found inside twelve (12)
buildings inside the PBM compound are the same as those sold to Asibar found in
the thirty four (34) buildings and that the twelve (12) buildings are the same
twelve buildings forming part of thirty four (34 buildings) in which
machineries and equipment were sold to Asibar is patently erroneous and not
supported by the record.

The record shows that the petitioner mentions at least nine (9)
buildings which are among the thirty four (34) buildings and that the
machineries and equipment inside the said nine buildings were also sold to
Asibar as indicated by Exhibits 1 to 1-“D”, Annex “D”
Petition). These are: (1) Scale House which is Bid Item No. 5; (2)
Machine Shop which is Bid Item No. 8; (3) Open Hearth Furnace which is Bid Item
No. 12; (4) Oxygen Plant which is Bid Item No. 14; (5) Rolling Mills which is
Bid Item No. 19; (6) Boiling Press Machine Building which is Bid Item No. 24;
(7) Carpentry and Electrical Shop which is Bid item No. 30; (8) Nail Plant
which is Bid Item No. 30; and (9) Motor Pool which is Bid Item No. 33. The certificate of sale (Annex “C”
Petition) issued to PNB indicates that the chattels inside these buildings
found at PBM Compound, Barrio Rosario, Pasig Metro Manila were sold to
PNB. The certificate of sale describes
with particularity the chattels found in these buildings. For example, citing only one building:

“Nail Plant

Nail Making Machine “Yamamura” built 1950, weight 420,
type YA, 500 rpm, Serial No. 244.

9 Nail Making Machine “Yamamura” built 1950, weight 550,
type YB, 400 rpm, Serial Nos. 252, 246, 245, 217, 218, 251, 250, and 249. (Rollo – G. R. No. 96056, p. 80)

xxx                   xxx                     xxx

On the other hand, the certificate of sale issued to Asibar by
Sheriff Santos referred to the chattels found in the thirty four (34) buildings
which include the aforesaid nine (9) buildings sold to Asibar as follows:

“x x x building materials and fixtures
including imbedded pipes and metals and all kinds of materials obtained from
the total demolition of each building, structure, or bid item described below;
and all MILL/PLANT MACHINERY, EQUIPMENT, MATERIALS AND SUPPLIES and all movable
properties found inside each building/structure described below.”

Undoubtedly, the foregoing description of properties includes all
chattels found inside the thirty four (34) buildings including those already
sold to PNB in the nine (9) buildings.

Under these circumstances, the appellate court committed a
reversible error in ruling that the lower court did not commit a grave abuse of
discretion in its finding that there is no identity of PBM properties sold to
PNB and Asibar.

With these findings, the inevitable conclusion is that the
auction sale conducted by Sheriff Santos is null and void. As discussed earlier the NLRC has no
jurisdiction over PBM properties which are already owned by third persons. As revealed by the records, the questioned
PBM properties which were levied under a writ of execution dated November 13,
1987 issued in NLRC Case No. 9-3296-84 and subsequently sold in a public
auction sale were already owned by PNB as evidenced by a certificate of sale
dated November 23, 1983. The validity
of the sale was not challenged by the respondents at the time of the said
properties’ levy. We ruled in a long
line of cases that the power of the court to execute its judgment extends only
to properties unquestionably owned by the judgment debtor. (See Consolidated Bank and Trust Corporation
(Solid Bank) supra.

IV

The main issue in G. R. No. 96437 centers on whether or not the
complaint filed by respondent Asibar against the petitioner states a cause of
action.

In the lower court, the petitioner contended that the complaint
is premature since paragraph 2 of the Deed of Sale states that the balance
shall be payable only upon the dismissal of Civil Case No. 18426 (subject of
the petition in G. R. No. 96056) and the same shall be secured within two (2)
weeks from the signing of the Deed of Sale on February 10, 1988. In other words, the balance would be paid
only when it is finally ascertained as to who between the APT and Asibar owns
the properties sold by the latter. According to the petitioner, the private respondent still has to present
proof of the dismissal of Civil Case No. 18426. Hence, the petitioner argues that based on the Deed of Sale, the
contract between the two (2) parties, the private respondent possessed no
demandable right arising from the Deed of Sale.

The appellate court dismissed the petition on the ground that it
has become moot and academic in view of the December 29, 1989 decision of the
Regional Trial Court of Makati, Branch 60 in Civil Case No. 18426. The dispositive portion of the decision
reads:

“WHEREFORE, the Court hereby renders judgment as follows:

The COMPLAINT dated November 25, 1987 is DISMISSED;

The Order dated December 16, 1987 (pp. 87-90, Records) as clarified
in the Order dated July 19, 1988 granting the plaintiffs application for a writ
of preliminary injunction (pp. 288-289, Id.) is LIFTED and SET ASIDE; and

The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and
BIENVENIDO HERMOGENES) are DISMISSED.” (Rollo- 96056, p. 42)

The appellate court ruled that the decision dismissing Civil Case
No. 18426 and lifting the injunction rendered the petition moot and academic.

The petitioner now contends that the appellate court committed
grave abuse of discretion in dismissing its petition for certiorari for
being moot and academic. It argues that
the dismissal of Civil Case No. 18426 provided in the Deed of Sale refers to a
decision which is final and executory considering that Civil Case
No. 18426 is for the annulment of the auction sale and certificate of sale from
which respondent Asibar derived the properties which he sold to the
petitioner. Until, therefore, the sale
of these properties are declared valid by a final and executory decision, the
respondent has no right and interest in the same properties which he could
transfer and sell to the petitioner.

The well-settled rule is that when a party files a motion to
dismiss the complaint for lack of cause of action he is deemed to
hypothetically admit the allegations thereof. (Nicanor G. De Guzman, Jr. v. Court of Appeals, G. R. Nos. 92029-30,
December 20, 1990)

It is clear from the Deed of Sale which was attached to the
complaint and in fact the basis for the complaint, that the vendee, the
petitioner herein, is obligated under that contract to pay the amount of
P9,500,000.00 as follows:

xxx                   xxx                     xxx

b. Fourteen (14) days from the date Civil Case
No. 18426 pending in Branch 60, is dismissed, the VENDEE shall pay the amount
of Four Million Pesos (P4,000,000.00) to the VENDOR;

xxx                   xxx                     xxx

x x x In the event the restraining order is lifted, the payments
under the above-schedule shall be resumed;” (pp. 1-4, Deed of Sale, Annex
“B”, Petition)

When, therefore, the trial court rendered its decision and
dismissed Civil Case No. 18426 and at the same time lifted the injunction
issued therein, the vendor, respondent Asibar, acquired a demandable right in
against the petitioners in relation to their contract, the Deed of Sale.

“The cause of action must always consist of
two elements: (1) the plaintiff’s
primary right and the defendant’s corresponding primary duty, whatever may be
the subject to which they relate – person, character, property or contract; and
(2) the delict or wrongful act or omission of the defendant, by which the primary
right and duty have been violated. The
cause of action is determined not by the prayer of the complaint but by the
facts alleged. (R.C.L. 489 21; Section
126, C.C.P.I.; Cagibao v. Lim, 50 Phil. 844 [1924]; see Martin, supra)
(De Guzman, Jr. v. Hon. Court of Appeals, et al. supra)

Under the facts as they then stood, the Court of Appeals did not
commit grave abuse of discretion in dismissing the petition for being moot and
academic.

Whether or not the Regional Trial Court’s dismissal of Civil Case
No. 18426 refers to a dismissal that is final and executory was a defense which
should be raised in the answer and determined in the course of the proceedings
of the case.

However, the issues in G. R. No. 96437 are inextricably
intertwined with the issues in G. R. No. 96056. Since we have found that the Sheriff’s sale to Asibar was null
and void, it follows that Asibar could not have sold to Phoenix Iron and Steel
Corporation the properties which did not lawfully belong to him.

This case started as a complaint seeking the payment to Asibar by
petitioner Phoenix Iron and Steel Corporation (PISCOR) and Wilfredo Labayen,
vice-president of PISCOR of the alleged balance based on the deed of sale
executed by respondent Asibar in favor of PISCOR. The deed of sale covers PBM properties which Asibar acquired in
the auction sale which is the subject matter in G.R. No. 96056 to wit:

“WHEREAS, the VENDOR is the purchaser at an auction sale
conducted in NLRC Case No. 9­-3296-84 of machineries and equipment located inside
all the buildings in the realty covered by TCT No. (11486) 41183, per
certificate of sale dated November 23, 1987, executed and issued by Silvino S.
Santos, as an incident in the execution of the decision in the aforementioned
case entitled Ricardo Zurita, et al. v. Philippine Blooming Mills, Co., Inc.,
(PBM) and BPI Investment Corporation, xxx” (Rollo – G. R. No. 96437, p.
38)

Considering our ruling in G.R. No. 96056 where we annulled the
auction sale of February 23, 1987 conducted by Sheriff Silvino Santos,
respondent Asibar has no rights and/or interest over the PBM properties, the
same properties of which are concededly subject of the deed of sale between
Asibar as vendor and petitioner PISCOR as vendee. In view of this development Asibar’s complaint against the
petitioner to recover the payment of the balance of the consideration agreed
upon by the parties in the deed of sale has no more legal basis and should now
be dismissed.

WHEREFORE, the Court renders judgment as follows:

1. In G.R. No. 89767, the petition is
GRANTED. The questioned decision and
resolution of the Court of Appeals are hereby reversed and set side. The May 26, 1989 Order of the Securities and
Exchange Commission is declared null and void;

2. In G.R. No. 96056, petition is GRANTED. The questioned decision of the Court of
Appeals is hereby SET ASIDE. The
questioned auction sale conducted by Sheriff Silvino Santos is declared null
and void and the certificate of sale issued to respondent Alfredo Asibar is
cancelled. The Temporary Restraining
Order issued on November 29, 1990 is made PERMANENT; and

3. In G. R. No. 96437, the petition is
declared MOOT and ACADEMIC. The
Regional Trial Court of Pasig Branch 151 is ordered to DISMISS Civil Case No.
56806.

SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Bidin,
Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero, and Nocon, JJ., concur.

Padilla, J., no part.