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Philippine Airlines, Inc. v. Zamora PDF
Philippine Airlines, Inc. v. Zamora PDF
Philippine Airlines, Inc. v. Zamora PDF
RESOLUTION
CHICO-NAZARIO , J : p
This Petition for Review on Certiorari under Rule 45 of the Rules of Court, as
amended, seeks to set aside the 13 August 2004 Decision 1 and 1 February 2005
Amended Decision 2 of the Court of Appeals in CA G.R. SP No. 68795 entitled
"Bernardin J. Zamora v. National Labor Relations Commission, et al." In the assailed
decisions, the Court of Appeals annulled and set aside the 27 April 2001 Resolution 3
and 31 October 2001 Decision 4 of the Third Division of the National Labor Relations
Commission (NLRC) in CA No. 013358-97, a) ordering the Labor Arbiter to forthwith
issue a Writ of Execution stating that "(1) complainant must be awarded, in lieu of
reinstatement, separation pay equivalent to one month's salary for every year of service
from February 9, 1981 to June 30, 2000; and (2) the award of backwages must be
computed from December 15, 1995 to June 30, 2000;" 5 and b) suspending the
proceedings of the case in view of the ongoing rehabilitation of petitioner Philippine
Airlines, Inc. (PAL) and accordingly referring the particular case to the permanent
rehabilitation receiver.
This case stemmed from a labor Complaint 6 led by herein respondent
Bernardin J. Zamora (Zamora) against herein petitioners PAL and Francisco X. Yngente
IV, Assistant Vice-President, PAL Cargo Sales and Services, for illegal dismissal, unfair
labor practice, non-payment of wages, damages and attorney's fees . The complaint
was docketed as NLRC NCR Case No. 00-03-01672-96. Later on, on respondent
Zamora's motion, Pag-asa C. Ramos, Manager, PAL Payroll and Timekeeping
Department, Jesus Federico V. Viray, Operations Director for International Cargo, PAL
Import Division, Ricardo D. Abuyuan, Supervisor for International Cargo, PAL Import
Division, and Gerardo V. Ignacio, Manager, PAL Import Operations Division, were
included as party-respondents in the labor case.
As culled from the records of the case, the facts are as follows:
Respondent Zamora had been in the employ of petitioner PAL since 9 February
1981 when the former was hired as a Cargo Representative at petitioner PAL's Import
Operations Division.
On 13 November 1995, respondent Zamora was dismissed from service for
having been found by petitioner PAL's management to be liable for insubordination,
neglect of customer, disrespect for authority and absence without official leave.
On 12 March 1996, respondent Zamora led a complaint against petitioners PAL
and Francisco X. Yngente IV 7 before the NLRC for illegal dismissal, unfair labor
practice, non-payment of wages, damages and attorney's fees.
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On 28 September 1998, the labor arbiter 8 rendered a Decision 9 dismissing
respondent Zamora's complaint for lack of merit, the dispositive portion of which
reads:
WHEREFORE, consistent with the foregoing tenor, judgment is hereby
entered dismissing the charges of illegal dismissal for lack of merit. Complainant
is, however, ordered to report to his new assignment at respondent PAL's
Domestic Cargo and for respondent PAL to accept him back to work under the
same terms and conditions of employment prior to the dispute as soon as it
resumes operations or, for respondent PAL to pay him his appropriate separation
pay in the event it finally closed shop.
The rest of the claims is (sic) likewise dismissed for lack of merit.
All other reliefs herein sought and prayed for are hereby DENIED for lack of
merit. 1 2
In setting aside the challenged Order of the labor arbiter, the NLRC gave premium
to the copy 3 6 of the structural organization of petitioner PAL's Cargo Services Sub-
Department showing that as of 30 June 2000, the Import Operations Division, to which
respondent Zamora's previous position actually belonged, had already been abolished.
It opined that:
. . . As it is common knowledge that respondent PAL implemented a
massive retrenchment program in 1998-1999, and since it is only the complainant
who stands to lose if the instant case were to be allowed to drag any longer, this
Commission nds that the technical rules of evidence applicable in the ordinary
courts of law must be set aside, and the respondent's contention that the
complainant's former position no longer exists may be considered to be
meritorious. 3 7
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The commission then proceeded to award respondent Zamora, in lieu of reinstatement
to the latter's former position, separation pay equivalent to one month's salary for every
year of service, that is, from 9 February 1981 to 30 June 2000. 3 8 Its award was based
on:
Section 4 (d), Rule VI of the Implementing rules of the Labor Code provides
that 'where (the employee's) former position no longer exists at the time of
reinstatement for reasons not attributable to the fault of the employer, the
employee shall be entitled to separation pay equivalent to at least one month
salary or to one month salary for every year of service, whichever is higher, a
fraction of at least six months being considered as one whole year. . . . . 3 9
The NLRC concluded that the award to respondent Zamora of backwages must
likewise be computed from 15 December 1995 until 20 June 2000.
Displeased with the preceding resolution, both parties moved for the
reconsideration of the same. In his motion, respondent Zamora disputed the NLRC's
nding that the Import Operations Division had already been abolished as far back as
30 June 2000. On the other hand, petitioners PAL, et al. argued that it was patent error
for the NLRC to order the issuance of a Writ of Execution considering the fact that
petitioner PAL was then presently undergoing rehabilitation or under the stewardship of
a SEC duly approved receiver.
On 31 October 2001, the NLRC disposed of the motions of the parties in this
wise:
WHEREFORE, complainant's Motion for Partial Reconsideration is DENIED
for lack of merit. Respondent's Partial Motion for Reconsideration is GRANTED.
The instant case is hereby referred to the permanent rehabilitation receiver and
the proceedings hereon are deemed SUSPENDED while respondent Philippine
Airlines, Inc. is under rehabilitation receivership. 4 0
The NLRC then ordered the suspension of the instant proceedings in light of the 7 June
1999 SEC Order reiterating and con rming its earlier approval of the Amended and
Restated Rehabilitation Plan of petitioner PAL and, therein appointing a permanent
rehabilitation receiver.
On 28 January 2002, respondent Zamora questioned the immediately preceding
twin resolutions before the Court of Appeals via a Petition for Certiorari docketed as
CA G.R. SP No. 68795.
On 13 August 2004, the Court of Appeals promulgated its Decision granting
respondent Zamora's petition for certiorari. Consequently, it set aside the 27 April 2001
NLRC Resolution, viz:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC
resolution dated April 27, 2001 is ANNULLED and SET ASIDE. Petitioner Bernardin
Zamora is hereby REINSTATED to his former position without loss of seniority
rights as decreed in the NLRC decision dated July 26, 1999 which has already
become final and executory. 4 1
In said Decision, the Court of Appeals found the NLRC to have gravely abused its
discretion amounting to lack or excess of jurisdiction when the latter, instead of
enforcing its 26 July 1999 Decision by ordering respondent Zamora's reinstatement,
varied the terms of said decision by suspending the proceedings and referring the case
to petitioner PAL's rehabilitation receiver. The appellate court ratiocinated that:
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Zamora stands to lose his hard-earned victory if the instant case is allowed
to drag any longer simply because of the expediency of a rehabilitation
proceeding. The facts are clear that PAL illegally terminated Zamora and that
there exists a nal and executory order for his reinstatement. PAL's rehabilitation
plan was submitted in 1999 and it has been almost ve years since then.
Disallowing the enforcement to the claim that it would unnecessarily add to the
burden of management, does not justify the aggravation caused in the delay in
execution of the judgment in favor of Zamora. . . . 4 2
The Court of Appeals also rejected the documents proffered by petitioner PAL
which supposedly evidenced the abolition of the former position of respondent
Zamora, that of a Cargo Representative at the Import Operations Division. On the
contrary, the Court of Appeals argued that a table appearing in the proffered
documents, entitled Table of Organization of the Cargo Department, clearly showed
that the position of Cargo Representative, although at the International Cargo Services
Division and not at the Import Organizations Division, still existed — a total of 86 Cargo
Representative positions in fact.
Petitioner PAL seasonably moved for the reconsideration of the aforequoted
Court of Appeals Decision. It also manifested to the appellate court that since 2
October 2000, respondent Zamora has been detained in jail after having been charged
with the crime of murder. 4 3
On 1 February 2005, the Court of Appeals promulgated an Amended Decision
modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's
Motion for Reconsideration in this wise:
WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED,
the dispositive portion to read as follows:
'WHEREFORE, in view of the foregoing, the petition is GRANTED.
The NLRC resolution dated April 27, 2001 is MODIFIED. Considering that
petitioner is a detention prisoner making reinstatement impossible, PAL is
hereby ordered to pay petitioner Zamora his separation pay, in lieu of
reinstatement, to be computed at one month salary for every year of
service from February 9, 1981 and backwages to be computed from
December 19, 1995, both up to October 1, 2000, the date of his
incarceration.
SO ORDERED.'
Considering that PAL is still under receivership, the monetary claims of
petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject
to the rules on preference of credits. 4 4
The Court of Appeals took into account respondent Zamora's incarceration when
it recalled its order of reinstatement. Anent its earlier pronouncement against the
suspension of the proceedings of the case owing to the present rehabilitation of
petitioner PAL, the appellate court only had this to say:
However, since PAL is still under receivership, the provisions of PD 902-A,
should apply. The enforcement of the monetary claims of petitioner should be
brought before the PAL Rehabilitation Receiver for proper disposition. 4 5
In spite of such modi cation, petitioner PAL found fault with the decision. Hence,
this petition for review on certiorari under Rule 45 of the Rules of Court, as amended,
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predicated on the following issues: 4 6
I.
THE COURT OF APPEALS COMMITTED A SERIOUS AND GRAVE ERROR
AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN DECLARING
ILLEGAL THE DISMISSAL OF RESPONDENT ZAMORA AND THE DECISION OF
THE NLRC DATED JULY 26, 1999 FINAL AND EXECUTORY. IN SO DOING, THE
COURT OF APPEALS PREMATURELY RULED ON THE MERITS OF THE CASE;
II.
THE COURT OF APPEALS COMMITTED A PALPABLE ERROR IN ORDERING PAL
TO PAY RESPONDENT ZAMORA HIS 'SEPARATION PAY, IN LIEU OF
REINSTATEMENT, TO BE COMPUTED AT ONE MONTH SALARY FOR EVERY
YEAR OF SERVICE FROM FEBRUARY 9, 1981 AND BACKWAGES TO BE
COMPUTED FROM DECEMBER 15, 1995, BOTH UP TO OCTOBER 12 (sic), 2000,
THE DATE OF HIS INCARCERATION; and
III.
THE COURT OF APPEALS COMMITTED A SERIOUS AND GRAVE ERROR IN
ORDERING THAT RESPONDENT ZAMORA'S MONETARY CLAIM BE PRESENTED
TO THE PAL REHABILITATION RECEIVER, SUBJECT TO THE RULES ON
PREFERENCE OF CREDITS. IADaSE
At this point, notwithstanding the fact that the present petition alleges three
issues, the resolution of the third one relating to the propriety of the execution of the
NLRC's order of reinstatement 4 7 despite the verity of the 17 May 1999 SEC Order
approving the Amended and Restated Rehabilitation Plan of petitioner PAL and
appointing a "permanent rehabilitation receiver for the latter," 4 8 is of paramount
importance. The overriding legal signi cance to the instant case of the SEC mandated
rehabilitation of petitioner PAL will affect the progress, development or advancement
of the present petition.
Petitioners PAL, et al. are of the view that the proceedings in the instant case
should have been suspended on account of the appointment of its permanent
rehabilitation receiver. They posit that "the suspension automatically applies on all
stages of the proceedings including enforcement of nal and executory judgments. The
proceedings shall remain suspended until the receivership shall have been ordered
lifted by the Securities and Exchange Commission. To date, 4 9 (petitioner) PAL is still
under permanent Rehabilitation Receiver." 5 0
Quite the reverse, respondent Zamora, in his Memorandum, opines that "contrary
to the noble purpose of a receivership, that is, preservation of the distressed
company's assets for ultimate distribution to all creditors and affected parties,
petitioner's Amended and Restated Rehabilitation Plan (citation omitted) is actually for
the restructuring and payment of petitioner's debts to certain creditors, excluding
respondent and other employee-claimants." 5 1
We disagree.
The relevant law dealing with the suspension of actions for claims against
corporations is Presidential Decree No. 902-A, 5 2 as amended. 5 3 Particularly, Section 5
(d) which reads:
SECTION 5. In addition to the regulatory adjudicative functions of the
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Securities and Exchange Commission over corporations, partnerships and other
forms of associations registered with it as expressly granted under existing laws
and decrees, it shall have original and exclusive jurisdiction to hear and decide
cases involving:
The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A,
refers "to debts or demands of a pecuniary nature. It means 'the assertion of a right to
have money paid.'" 5 4
In the case of BF Homes, Incorporated v. Court of Appeals , 5 5 speaking through
Mr. Justice Isagani B. Cruz, this Court ruled therein that suspension of the action was in
order; although the collection suit against the corporation was still at its initial stage in
the Regional Trial Court when its Petition for Rehabilitation and for a Declaration in a
State of Suspension of Payments was approved by the SEC.
The raison d'être behind the suspension of claims pending rehabilitation
proceedings was explained in this wise:
In light of these powers, the reason for suspending actions for claims
against the corporation should not be di cult to discover. It is not really to enable
the management committee or the rehabilitation receiver to substitute the
defendant in any pending action against it before any court, tribunal, board or
body. Obviously, the real justi cation is to enable the management committee or
rehabilitation receiver to effectively exercise its/his powers free from any judicial
or extra-judicial interference that might unduly hinder or prevent the "rescue" of
the debtor company. To allow such other action to continue would only add to the
burden of the management committee or rehabilitation receiver, whose time,
effort and resources would be wasted in defending claims against the corporation
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instead of being directed toward its restructuring and rehabilitation. 5 6 (Emphasis
supplied.)
In the case of Rubberworld (Phils.), Inc. v. NLRC , 5 7 the preceding principle was
applied to a case involving claims of employees. After placing Rubberworld (Phils.)
under a management committee by the SEC, the former's alleged employees led
before the labor arbiter complaints for illegal dismissal, unfair labor practice, damages
and payment of other bene ts. Rubberworld (Phils.) moved to suspend the
proceedings of the labor cases predicated on the strength of the SEC order placing it
under a management committee. The labor arbiter denied the motion holding that the
injunction contained in the SEC order applied only to the enforcement of established
rights and did not include suspension of proceedings involving claims against
Rubberworld (Phils.) which have yet to be ascertained. The labor arbiter further held
that the order of the SEC suspending all actions for claims against Rubberworld (Phils.)
did not cover the claims of employees in the labor cases because said claims, and the
concomitant liability of Rubberworld (Phils.), are still to be determined, thus carrying no
dissipation of the assets of the latter. In rejecting the postulations of the labor arbiter,
we held that the actions of the workers before the labor arbiter are among the actions
that are suspended upon the placing of the employer-corporation under management
committee. In unambiguous terms, this Court articulated that:
It is plain from the foregoing provisions of law that "upon the appointment
[by the SEC] of a management committee or a rehabilitation receiver," all actions
for claims against the corporation pending before any court, tribunal or board
shall ipso jure be suspended. . . . (Emphasis supplied.)
The Court holds that rendition of judgment while petitioner is under a state
of receivership could render violence to the rationale for suspension of payments
in Section 6 (c) of P.D. 902-A, if the judgment would result in the granting of
private respondent's claim to separation pay, thus defeating the basic purpose
behind Section 6 (c) of P.D. 902-A which is to prevent dissipation of the
distressed company's resources. (Emphasis supplied.)
And quite recently, in another PAL case, speci cally, Philippine Airlines, Inc. v.
Court of Appeals, 6 0 we resolved to grant PAL's Motion for Suspension of Proceedings
before us by reason of the SEC Orders dated 23 June 1998 and 1 July 1998, appointing
an Interim Rehabilitation Receiver and enjoining the suspension of all claims for
payment against PAL, respectively. Therein we declared that this Court is "not prepared
to depart from the well-established doctrines" essentially maintaining that all actions
for claims against a corporation pending before any court, tribunal or board shall ipso
jure be suspended in whatever stage such actions may be found upon the appointment
by the SEC of a management committee or a rehabilitation receiver.
To emphasize, this Court's adherence to the abovestated rule has been resolute
and steadfast as evidenced by its oft-repeated application in a plethora of cases. 6 1
Otherwise stated, no other action may be taken in, including the rendition of
judgment during the state of suspension — what are automatically stayed or
suspended are the proceedings of an action or suit and not just the payment of claims
during the execution stage after the case had become final and executory.
The suspension of action for claims against a corporation under rehabilitation
receiver or management committee embraces all phases of the suit, be it before the
trial court or any tribunal or before this Court. Furthermore, the actions that are
suspended cover all claims against a distressed corporation whether for damages
founded on a breach of contract of carriage, labor cases, collection suits or any other
claims of a pecuniary nature. 6 2
In the case at bar, the appellate court's pronouncement that in "disallowing the
enforcement to the claim . . . it would unnecessarily add to the burden of management,
does not justify the aggravation caused in the delay in execution of the judgment in
favor of Zamora," is quite myopic. In actual fact, allowing such actions to proceed
would only increase the work-load of the management committee or the rehabilitation
receiver, whose precious time and effort would be dissipated and wasted in defending
suits against the corporation, instead of being channeled toward restructuring and
rehabilitation.
As to the appellate court's amended directive that "the monetary claims of
petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the
rules on preference of credits," the same is erroneous for there has been no declaration
of bankruptcy or judicial liquidation. Thus, the rules on preference of credits do not
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apply.
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED
in that herein proceedings are hereby SUSPENDED until further notice from this Court.
Accordingly, petitioner Philippine Airlines, Inc. is hereby directed to quarterly update the
Court as to the status of its ongoing rehabilitation. No costs.
SO ORDERED.
Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Footnotes
1. Penned by Court of Appeals Associate Justice Eliezer R. De Los Santos with Associate
Justices Delilah Vidallon-Magtolis and Arturo D. Brion concurring; rollo, pp. 78-89.
2. Id. at 92-94.
3. Penned by NLRC Commissioner Ireneo B. Bernardo with Commissioners Lourdes C. Javier
and Tito F. Genilo concurring; id. at 168-173.
4. Id. at 174-176.
5. Id. at 173.
6. CA rollo, p. 41.
7. Assistant Vice-President for Cargo Sales and Services of petitioner PAL.
38. According to the 27 April 2001 Resolution of the NLRC, length of service shall be computed
up to 30 June 2000, the date when the Import Operations Division was abolished; and
because "it is settled that an award of separation pay in lieu of reinstatement does not
have the effect of terminating the services of an illegally dismissed employee."
39. Rollo, pp. 171-172.
43. Respondent Zamora died on 9 January 2005 at the Ospital ng Muntinlupa due to Cardio
Pulmonary Arrest. Manifestation and Motion, CA rollo, pp. 574-575.
47. But was later on modified to one of payment of separation pay for every year of service.
53. On 15 December 2000, the Supreme Court, in A.M. No. 00-8-10-SC, adopted the Interim
Rules of Procedure on Corporate Rehabilitation and directed to be transferred from the
SEC to Regional Trial Courts all petitions for rehabilitation filed by corporations,
partnerships, and associations under Presidential Decree No. 902-A in accordance with
the amendatory provisions of Republic Act No. 8799. The rules require trial courts to
issue, among other things, a stay order in the "enforcement of all claims, whether for
money or otherwise, and whether such enforcement is by court action or otherwise,"
against the corporation under rehabilitation, its guarantors and sureties not solidarily
liable with it.
Although the jurisdiction of SEC over rehabilitation and suspension of payments cases
was transferred to the Regional Trial Courts pursuant to Republic Act No. 8799,
otherwise known as The Securities Regulation Code, which took effect on 8 August
2000, the SEC, pursuant to Section 5.2 of the same law, retains jurisdiction over pending
suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed.
54. Sobrejuanite v. ASB Development Corporation, G.R. No. 165675, 30 September 2005, 471
SCRA 763, 771.
55. G.R. No. 76879 and G.R. No. 77143, 3 October 1990, 190 SCRA 262.
56. Id. at 269.
59 Promulgated by the Third Division of the Supreme Court, G.R. No. 123294, 4 September
2000.
60. Supreme Court's Second Division Resolution, G.R. No. 123238, 11 July 2005.
61. Alemar's Sibal and Sons, Inc. v. Elbinias, G.R. No. 75414, 4 June 1990, 186 SCRA 94; BF
Homes, Inc. v. Court of Appeals, G.R. No. 76879, 3 October 1990, 190 SCRA 262; Bank of
the Philippine Islands v. Court of Appeals, G.R. No. 97178, 10 January 1994, 229 SCRA
223; Rubberworld (Phils.) Inc. v. National Labor Relations Commission, 365 Phil. 273
(1999); Philippine Airlines v. National Labor Relations Commission, G.R. No. 123294, 4
September 2000 (Resolution); Philippine Airlines, Inc. v. Sps. Kurangking, 438 Phil. 375
(2002); Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 123238, 11 July 2005,
(Resolution); Sobrejuanite v. ASB Development Corporation, G.R. No. 165675, 30
September 2005, 471 SCRA 763. aEDCSI
62. Finasia Investments and Finance Corp. v. Court of Appeals, G.R. No. 107002, 7 October
1994, 237 SCRA 446.