Reform the Union v. Novelty Phils (G.R. No. 169218. August 5, 2015)


CASE DIGEST: G.R. No. 169218. REFORM THE UNION MOVEMENT IN NOVELTY, Petitioner, v. NOVELTY PHILIPPINES, INC., Respondent. August 5, 2015.

At bar is the petition for review on certiorari under Rule 45 filed by Reform the Union Movement in Novelty (the "Union") to assail the Decision[1] dated May 12, 2005 and the Resolution[2] dated August 10, 2005 issued by the Court of Appeals in CA-G.R. SP. No. 84672, entitled "Novelty Philippines, Inc. v. National Labor Relations Commission, et al."

Respondent Novelty Philippines, Inc. (NPI) was a corporation organized and registered under Philippine law to engage in the manufacture, export, sale and distribution of babies' and children's garments, men's and women's apparel, and other clothing and clothing materials. Petitioner was the recognized bargaining agent of the rank and file employees of said corporation.

The factual backdrop of this case was summed by the Court of Appeals in the assailed Decision in this wise:

On 25 September 2003, [NPI] filed a petition for Voluntary Dissolution pursuant to Section 119 of the Corporation Code.

On 26 September 2003, [NPI] informed the Department of Labor and Employment-National Capital Region (DOLE-NCR) that effective.

29 October 2003 it will permanently close its business due to continued financial losses. Said closure resulted to the loss of jobs of about two thousand three hundred fifty-four (2,354) employees of [NPI]. On even date, [NPPs] general manager issued a Memorandum to all employees informing them of the company's closure and that they need not report for work starting 28 September 2003 although they will be paid their salaries for the entire month of October.

On 13 October 2003, private respondents[3] Ana Marie Basco, et al. filed complaints for illegal closure, non-payment of salaries, 13l month pay, sick leave and vacation leave before the National Labor Relations Commission-National Capital Region (NLRC-NCR). On 03 November 2003, the Union filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) on the ground of illegal closure/lock out and illegal mass dismissal. And, on 07 November 2003, private respondents Carmelita de Jesus, et al., supervisory/managerial employees of the company, also filed a complaint for unfair labor practice with the NLRC-NCR.

On 07 November 2003, the Union filed a Petition for the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the labor dispute. On 18 November 2003, the Secretary issued an Order certifying the labor dispute to the NLRC pursuant to Article 263 (g) of the Labor Code, as amended and ordering the parties to cease and desist from taking any action that may exacerbate the situation. On 10 December 2003, the NLRC-Second Division ordered that all pending cases relative to this labor dispute are absorbed or subsumed by the certified case docketed as CC 000257-03.

Thereafter, the parties filed their respective Position Papers and Reply.

On 05 March 2004, the NLRC-Second Division issued a Resolution, ordering Novelty Philippines, Inc. to pay the individual complainants.

When the parties' respective motions for reconsideration of the National Labor Relations Commission (NLRC) resolution were denied, NPI elevated the matter to the Court of Appeals through a petition for certiorari on the grounds that: (a) the assumption and certification order was issued by the Secretary of Labor in grave abuse of discretion as it was void having been issued after the company's closure and its filing of a petition for voluntary dissolution with the Securities and Exchange Commission (SEC); (b) the NLRC decision rendered pursuant to the void assumption and certification order was likewise void; and (c) the NLRC acted in grave abuse of discretion in issuing a judgment contrary to law and jurisprudence.

In the assailed Decision dated May 12, 2005, the Court of Appeals granted NPI's petition after finding that the Secretary of Labor acted indiscriminately when he assumed jurisdiction over the case and certified the same to the NLRC since the proper venue to litigate the workers' claims was the liquidation proceedings.

Motions for reconsideration by the Union and NPI's employees were denied by the appellate court in the Resolution dated August 10, 2005.

Undaunted, the Union filed this petition for review under Rule 45, asserting that: (a) the Court of Appeals erred in not upholding the NLRC's resolutions and instead directing NPI's employees to re-litigate their claims anew in the liquidation proceedings before the SEC; (b) the appellate court should have dismissed NPI's petition outright for having been filed by its defunct Board of Directors instead of the SEC appointed liquidator; and (c) the Secretary of Labor was correct in assuming jurisdiction over the dispute considering that NPI is an enterprise vested with national interest.Efforts to serve processes on NPI failed in view of the fact that it could no longer be served at its given address and its counsel manifested that he had already withdrawn his appearance for the company at the appellate court level; that he was allegedly not authorized by NPI to appear before the Court; and that his own attempts to communicate with NPI and inform it of the status of the case proved futile. In a Resolution dated February 18, 2009, the Court considered as waived the filing of NPFs comment on the petition.

The Supreme Court found merit in this petition.

Firstly, NPI could no longer avail of the remedy of certiorari in order to overturn the Secretary of Labor's assumption and certification order considering that it filed its petition with the Court of Appeals long after the lapse of the sixty (60)-day reglementary period within which to file the same.

On the issue of the proper venue for the workers' claims against NPI, we find that the instant case should be distinguished from the cases cited by the Court of Appeals. Philippine Savings Bank v. Hon. Lantin, Jr.,[6] Development Bank of the Philippines v. Labor Arbiter Santos,[7] and Development Bank of the Philippines v. National Labor Relations Commission[8] did not directly deal with the issue of the conflicting jurisdictions of labor authorities and the SEC in cases concurrently being heard by them involving workers' money claims.

In Chua v. Labor Arbiter Cruz,[9] also relied upon by the appellate court, the company's liquidation committee intervened in the labor cases being heard by the Labor Arbiters and sought the suspension of proceedings in light of the order of suspension of payments by the SEC and the said motion to suspend the labor proceedings was echoed by most of the workers/complainants since they have voluntarily decided to pursue their claims in the liquidation proceedings. Notably here, unlike in Chua, the SEC order granting the petition for voluntary dissolution and the subsequent order staying the execution of any claims in NLRC Certified Case (CC) No. 000257-03 were issued AFTER the NLRC had decided the case. As the NLRC correctly observed, at the time it rendered its resolution disposing of the present labor dispute, there was nothing to prevent it from taking jurisdiction over the workers' claims and deciding the issues on the merits.

Thus, petitioner Union's reliance on Banco Filipino Savings and Mortgage Bank v. National Labor Relations Commission[10] is well taken. In that case, the Court ruled that it was the Labor Arbiter and the NLRC that had jurisdiction over the money claims of an employee against an insolvent bank under liquidation. We further reasoned:
But it will be noted that even in the quoted opinion, consideration was given of the possibility or practicality of certain claims being adjudicated by other tribunals besides the liquidation court. Thus, in the later case of Carandang v. Court of Appeals, No. L-44932, April 15, 1988, 160 SCRA 266, We upheld the jurisdiction of the then Court of First Instance of Laguna over that of the liquidation court, the Court of First Instance of Manila, considering that the cause of action of therein plaintiff was already fully litigated in the former court and to re-litigate would "mean more inconvenience to the parties, entailing waste of money and precious time." In other words, it is not a legal aberration that certain claims against an insolvent bank be litigated in another court where to do so would be more practical; and more so in this case where it is not legally possible to litigate Dizon's claims other than with the Labor Arbiter and the NLRC because of the express provision of the Labor Code.
This was precisely the situation in this case. The claims of NPI's employees had already been litigated and decided by the NLRC BEFORE the liquidation proceedings before the SEC began in earnest. To require the workers to re-litigate the same causes of action in the liquidation proceedings is not only grossly unjust but also an appalling waste of resources.

In any event, the Union has manifested before this Court that on January 11, 2010, the SEC approved a Revised Rehabilitation Plan submitted by NPI's Interim Liquidator and Assistant Interim Liquidator which allegedly adopted in toto the monetary awards to union members as decreed in the NLRC's resolutions in NLRC CC No. 000257-03 previously set aside by the Court of Appeals. Moreover, the Union informed the Court that most of its members have claimed their proportionate individual shares in the P15,000,000.00 that was allocated by the liquidators to all employees. This development evinces that the employees' monetary claims as awarded in NLRC CC No. 000257-03 have been presented in the liquidation proceedings and NPI has since accepted the validity and enforceability of said awards. For this reason, the Court no longer finds it necessary to pass upon the other issues raised in the petition.

[1] Rollo pp. 38-60; penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Lucas P. Bersamin (now a member of this Court) and Celia C. Librea-Leagogo, concurring.
[2] Id. at 61.
[3] In the appellate court, individual rank and file employees of NPI were impleaded as respondents in NPI's petition.
[4] Rollo, pp. 47-49.
[5] Id. at 60.
[6] 209 Phil. 382(1983).
[7] 253 Phil. 125(1989).
[8] 262 Phil. 355(1990).
[9] 268 Phil. 590, 608-609 (1990).
[10] 266 Phil. 770, 777-778 (1990).

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