New Pangasinan Review, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: The Pangasinan Review, Inc. (PRI), whose corporate life expired on October 27, 1982, continued its operations until advised by the Securities and Exchange Commission (SEC) in January 1985 to liquidate. The Board of Directors passed a resolution to convey PRI's corporate properties to the newly incorporated New Pangasinan Review, Inc. (NPRI) via a Deed of Assignment, with NPRI assuming PRI's liabilities and obligations. Nineteen private respondents, employees of PRI, filed a claim for separation pay and ECOLA. This claim was docketed as NLRC Case No. SUB-RAB-I-1071-86. Procedural History: The Labor Arbiter ruled in favor of the employees, ordering PRI to pay separation pay. The National Labor Relations Commission (NLRC) affirmed this decision. Upon receipt of the record for execution, Labor Arbiter Ricardo N. Olairez issued a Special Order directing the collection of P180,764.00 from PRI and/or NPRI. NPRI filed a third-party claim on the levied/garnished properties, which was denied by Labor Arbiter Olairez. The garnished amount of P111,910.25 was released to the private respondents. The Petition: NPRI filed a petition for prohibition and certiorari (G.R. No. 85939) seeking to annul the NLRC proceedings and the execution against NPRI. Separately, Labor Arbiter Olairez and others filed a petition (G.R. No. 86968) assailing the Regional Trial Court's (RTC) assumption of jurisdiction and issuance of a temporary restraining order in a case filed by NPRI against the labor arbiter and respondents.
Issue(s)
Whether the proceedings in NLRC Case No. SUB-RAB-I-071-86 were null and void on the ground that the action was directed against the defunct Pangasinan Review, Inc. and was filed beyond the three-year period for liquidation. Whether the private respondents were entitled to separation pay, considering that the employer ceased operations due to the expiry of its corporate term. Whether the judgment against the defunct Pangasinan Review, Inc. can be enforced against petitioner New Pangasinan Review, Inc., which is a distinct corporation and not a party thereto. Whether the Regional Trial Court acted with grave abuse of discretion in assuming jurisdiction over Civil Case D-9187 and issuing a temporary restraining order against the execution of the NLRC decision.
Ruling
The Supreme Court affirmed the NLRC decision in G.R. No. 85939, dismissing NPRI's petition for certiorari and setting aside the temporary restraining order. In G.R. No. 86968, the Court granted the writ of certiorari, ordering the dismissal of Civil Case No. D-9187 for lack of jurisdiction. The Court also required NPRI's counsel to show cause why they should not be held in contempt for forum shopping.
Ratio Decidendi
On the validity of NLRC proceedings and the claim against the defunct corporation: The Court held that the proceedings in NLRC Case No. SUB-RAB-I-071-86 were valid. The claim for separation pay was not barred by prescription because the employees' letter dated June 17, 1985, to the Chairman of the Board of Liquidators constituted an extra-judicial demand that interrupted the prescriptive period. This demand was made within the three-year period for winding up corporate affairs, which commenced after the corporate charter expired. The Court found that the private respondents' monetary claim had not prescribed. On the entitlement to separation pay: The Court affirmed the private respondents' entitlement to separation pay. Citing Article 283 of the Labor Code, as amended, the Court stated that in cases of closure or cessation of operations not due to serious business losses or financial reverses, separation pay equivalent to at least one-half month's pay for every year of service is mandated. The cessation of PRI's operations was due to the expiration of its corporate term, not due to serious business losses, thus entitling the employees to separation pay. On the enforcement of the judgment against New Pangasinan Review, Inc. (NPRI): The Court ruled that the NLRC decision could be legally enforced against NPRI. NPRI, through the Deed of Assignment and Resolution No. 1985-2, explicitly assumed and undertook to pay all liabilities and obligations of the defunct PRI. The resolution also stated that claims against the defunct PRI could be presented as long as NPRI existed. Therefore, NPRI became the successor-employer and was liable for the monetary claims of the private respondents. On the Regional Trial Court's jurisdiction: The Court found that the RTC acted without jurisdiction and committed grave abuse of discretion in denying the motion to dismiss Civil Case D-9187 and issuing a temporary restraining order against the NLRC's execution. The RTC is not superior to the NLRC and cannot enjoin the execution of judgments rendered by the NLRC in labor disputes, as explicitly prohibited by Article 254 of the Labor Code. The Court also noted that NPRI engaged in forum shopping by filing the RTC case while a similar petition was pending before the Supreme Court.
Main Doctrine
A newly incorporated entity that assumes the liabilities and obligations of a defunct corporation through a deed of assignment is considered a successor-employer and can be held liable for the monetary claims of the defunct corporation's employees, even if the defunct corporation's corporate term has expired. Furthermore, courts of general jurisdiction cannot issue injunctions against the execution of judgments rendered by the National Labor Relations Commission in labor disputes.