Republic v. Pantranco North Express, Inc.

G.R. No. 178593 (February 15, 2012)

Facts:

The case revolves around a dispute involving the Privatization and Management Office (PMO) and Pantranco North Express, Inc. (PNEI), along with the Pantranco Employees Association (PEA-PTGWO) and several retrenched employees. The background of the case dates back to May 27, 1993, when a Labor Arbiter ruled in favor of the employees, ordering PNEI to pay a total of approximately P11.3 million in back wages and attorney's fees due to illegal retrenchment. This decision was affirmed by the National Labor Relations Commission (NLRC) and became executory on November 3, 1993.

Despite several attempts to execute the judgment, including the issuance of multiple alias writs of execution, the payments remained unsatisfied. On September 6, 2001, a fifth alias writ of execution was issued, leading to the levying of certain properties owned by PNEI, which were scheduled for auction on September 18, 2001.

On September 17, 2001, PMO filed a Notice of Third-Party Claim over the levied properties, asserting that these properties were mortgaged to the National Government through the Asset Privatization Trust (APT), which later became PMO. PMO contended that the National Government had a superior lien over the properties, and thus, the claims of the retrenched employees should not be satisfied before the government's claims.

In response, the employees argued that PMO had no legal right to the properties and that the takeover was solely for privatization purposes to pay the employees' claims. PMO later changed its argument, claiming ownership of the properties based on a series of loan accommodations and mortgage agreements with the National Investment and Development Corporation (NIDC) and the Philippine National Bank (PNB).

The Labor Arbiter denied PMO's third-party claim, stating that PMO failed to provide sufficient evidence of its ownership or mortgage rights over the properties. The NLRC affirmed this decision on September 27, 2006. PMO then filed a petition for certiorari with the Court of Appeals (CA) without first seeking reconsideration from the NLRC, which the CA dismissed as premature.

Legal Issues:

1. Did the Court of Appeals err in dismissing PMO's petition for certiorari on the grounds of failure to file a prior motion for reconsideration with the NLRC?
2. Was PMO's claim to the properties valid, given the prior rulings of the Labor Arbiter and the NLRC?

Arguments:

• Petitioner (PMO): PMO argued that the CA's dismissal was erroneous because a motion for reconsideration would have been futile, given the urgency of the matter and the public interest involved. PMO contended that the properties in question belonged to the National Government and could not be used to satisfy the employees' claims.

• Respondents (Employees): The employees maintained that PMO had no legal basis to claim ownership of the properties and that the execution of the Labor Arbiter's decision should proceed. They argued that PMO's takeover of PNEI's assets was intended to benefit the employees, not to obstruct their claims.

Court's Decision and Legal Reasoning:

The Supreme Court upheld the CA's dismissal of PMO's petition. The Court emphasized that the failure to file a motion for reconsideration with the NLRC was a fatal procedural defect, as it is a mandatory requirement before resorting to a special civil action for certiorari. The Court noted that the rationale behind this rule is to allow the NLRC the opportunity to correct any errors before judicial intervention.

The Court acknowledged that while there are exceptions to this rule, PMO failed to demonstrate that its case fell within any of those exceptions. The Court also found that PMO did not provide sufficient justification for bypassing the motion for reconsideration requirement.

Furthermore, even if the procedural issue were set aside, the Court found no error or grave abuse of discretion in the NLRC's decision to deny PMO's third-party claim. The Court noted that PMO had not provided concrete evidence to support its ownership claim over the properties and reiterated that the assets of PNEI remained subject to execution to satisfy the employees' claims.

Significant Legal Principles Established:

1. The requirement of filing a motion for reconsideration with the NLRC is a jurisdictional and mandatory prerequisite before seeking certiorari under Rule 65 of the Rules of Civil Procedure.
2. The exceptions to the motion for reconsideration requirement are limited and must be substantiated with compelling reasons.
3. The rights of judgment creditors, such as employees in this case, to execute on the assets of a debtor company are upheld, even in the context of government claims over those assets.