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[ G.R. No. 123294. September 4, 2000]

PAL, INC., vs. NLRC, et al.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated SEPT 4 2000.

G.R. No. 123294 (Philippine Airlines, Inc., vs. NLRC, Aida Quijano.)

This is a petition for certiorari under Rule 65 of the Revised Rules of Court assailing the decision of the National Labor Relations Commission ("NLRC")awarding separation pay to private respondent. On September 11, 1998, petitioner filed a Motion for Suspension of Proceedings based on Section 6(c) of Presidential Decree No. 902-A ("P.D. 902-A") which reads, in part:

That upon appointment of an management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnership or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Underscoring supplied)

The motion refers to an Order dated June 23, 19981 Annex "B" of Motion to Suspend Proceedings; Rollo, 393-396. of the Securities and Exchange Commission ("SEC") which appointed an Interim Rehabilitation Receiver for petitioner pursuant to P.D. 902-A.2 Under Section 6(d) of P.D. 902-A, the Interim Receiver is vested with the power to ---

"xxx take custody of, and control over, all the existing assets and property of such entities under management; to evaluate the existing assets and liabilities, earnings and operations of such corporations, partnerships or other associations; to determine the best way to salvage and protect the interest of the investors and creditors; to study, review and evaluate the feasibility of continuing operations and restructure and rehabilitate such entities if determined to be feasible by the Commission until dissolved by the order of the Commission. xxx" Another SEC Order, dated July 1, 1998,3 Annex "C" of Motion to Suspend Proceedings; Rollo, 397-398. enjoined that "all claims against PAL are deemed suspended."

On October 5, 1998, the motion was noted by the First Division of the Court. The case was unloaded to the Third Division on March 9, 1999.

In a resolution by this Division of the Court dated March 8, 2000, the parties were required to submit memoranda addressing the question whether or not the Court should render judgment during the state of suspension of claims. Petitioner reiterated its position as laid out in the Motion to Suspend Proceedings, invoking the rationale for section 6(c) of P.D. 902-A as explained in BF Homes, Inc. vs. Court of Appeals, 190 SCRA 262, which provides that the continuance of actions for claims during receivership would add to the burden of the rehabilitation receiver; also, if such claim is granted, private respondent would be in a position to assert a preference - as a money judgment creditor - over other creditors.4 Citing Alemar's Sibal and Sons vs. Elbinias, 186 SCRA 94. On the other hand, private respondent contended that the claim for separation pay may be awarded despite the existence of the receivership for it is secured by the supersedeas bond posted by petitioner upon the filing of this petition. Also, the suspension of proceedings provided in Section 6(c) of P.D. 902-A pertains to "actions for claims against corporations xxx"5 Emphasis supplied. placed under receivership and not to petitions for certiorari, as the one before us, initiated by the corporation under receivership.

In Rubberworld (Phils.), Inc. vs. NLRC, 6 305 SCRA 721. we held that workers' claim before the NLRC and labor arbiters are included among the actions suspended upon the placing under receivership of the employer-corporations. Although strictly speaking, the ruling in Rubberworld dealt with actions for claims pending before the NLRC and labor arbiters, we find that the rationale for the automatic suspension therein set out would apply to the instant case where the employee's claim was elevated on certiorari before this Court,7 With the promulgation of St. Martin Funeral Home vs. NLRC, 295 SCRA 494, all petitions for certiorari under Rule 65 of the Revised Rules of Court were required to be filed with the Court of Appeals, and not with the Supreme Court, in strict observance of the doctrine on the hierarchy of courts. whether the petition was initiated by the employer-corporation or the employee.

The justification for the suspension of all actions for claims under Section 6(c) of P.D. 902-A is to enable the rehabilitation receiver to exercise his powers free from any judicial or extra-judicial interference that might unduly hinder or prejudice the rescue of the debtor company.8 Rubberworld (Phils.), Inc. vs. NLRC, 305 SCRA 721; BF Homes, Inc. vs. Court of Appeals, 190 SCRA 262. During rehabilitation receivership, the assets are held in trust for the equal benefit of all creditors to preclude one from obtaining an advantage or preference over another by the expediency of an attachment, execution, or otherwise.9 Alemar's Sibal and Sons vs. Elbinias, supra. Thus, where foreclosure is undertaken despite the fact that a petition for rehabilitation has been filed, the certificate of sale shall not be delivered pending rehabilitation. If this has already been done, no transfer certificate of title shall be effected within the period of rehabilitation.10 Bank of the Philippine Island vs. Court of Appeals, 229 SCRA 223; Rizal Commercial Banking Corporation vs. Court of Appeals, 213 SCRA 830. In one instance, execution of a judgment in a collection case, which judgment was in fact final and executory, was stayed in the higher interest of keeping intact the assets of the corporation under rehabilitation.11 Alemar's vs. Elbinias, supra.

In sum, the rationale for the automatic stay of claims during receivership is (1) to conserve the distressed company's time, effort and resources and channel the same towards its rehabilitation, and (2) to keep creditors from gaining undue advantage over each other by "freezing" the assets of the corporation pending determination of an equitable scheme of distribution of the same among the creditors.

The Court holds that rendition of judgment while petitioner is under a state of receivership could render violence 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.

We also cannot uphold private respondent's argument that her claim for separation pay is secured by the supersedeas bond filed at the inception of this petition. Such bond is clearly intended to secure the payment of any damages as she may incure by reason of the temporary restraining order issued in the instant case. It was not intended to secure the satisfaction of her claim for separation pay.

IN VIEW THEREOF, the Motion for Suspension of Proceedings of petitioner is GRANTED.

SO ORDERED.

Very truly yours,

(Sgd.) JULIETA Y. CARREON

Clerk of Court

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