LINGKOD MANGGAGAWA SA RUBBERWORLD, ADIDAS-ANGLO, its officers and members as represented by SONIA ESPERANZA, Petitioners, vs.

RUBBERWORLD (PHILS.) INC. and ANTONIO YANG, LAYA MANANGHAYA SALGADO & CO., CPA’s (In its capacity as liquidator of Rubberworld (Phils., Inc.), Respondents. G.R. No. 153882 January 29, 2007 GARCIA, J.: FACTS: On August 26, 1994, Rubberworld filed with the Department of Labor and Employment (DOLE) a Notice of Temporary Partial Shutdown due to severe financial crisis, therein announcing the formal actual company shutdown a copy of which was served on the recognized labor union of Rubberworld, the Bisig Pagkakaisa-NAFLU, the union with which the corporation had a collective bargaining agreement. On September 1, 1994, Bisig Pagkakaisa-NAFLU staged a strike. It set up a picket line in front of the premises of Rubberworld and even welded its gate. As a result, Rubberworld's premises closed prematurely even before the date set for the start of its temporary partial shutdown. On September 9, 1994, herein petitioner union, the Lingkod Manggagawa Sa Rubberworld, Adidas-Anglo (Lingkod, for brevity), represented by its President, Sonia Esperanza, filed a complaint against Rubberworld and its Vice Chairperson, Mr. Antonio Yang, for unfair labor practice (ULP), illegal shutdown, and non-payment of salaries and separation pay. The said complaint was referred to Labor Arbiter Ernesto Dinopol for appropriate action. On November 22, 1994, while the aforementioned complaint was pending with Labor Arbiter Dinopol, Rubberworld filed with the SEC a Petition for Declaration of a State of Suspension of Payments with Proposed Rehabilitation Plan. Notwithstanding the SEC's aforementioned suspension order and despite Rubberworld's submission on January 10, 1995 of a Motion to Suspend Proceedings, Labor Arbiter Dinopol went ahead with the ULP case and rendered his decision denying respondents motion to suspend proceedings and declaring respondent Rubberworld Phils., Inc. to have committed unfair labor practice. Its motion for reconsideration of the same Order having been denied by the NLRC in its Resolution 7 of March 29, 1996, Rubberworld directly went to the Supreme Court on a Petition for Certiorari. On April 22, 1998, the SEC issued an Order finding that the continuance in business [of Rubberworld] would neither be feasible/profitable nor work to the best of interest of the stockholders, parties-litigants, creditors, or the general public, xxx Rubberworld Philippines, Inc. was hereby declared as DISSOLVED under Section 6(d) of P.D. 902-A. Accordingly, the suspension Order is LIFTED. Eventually, in the herein assailed Decision dated January 18, 2002, the CA granted Rubberworld’s petition in CA–G.R. SP. No. 53356 on the finding that the Labor Arbiter had indeed committed grave abuse of discretion when it proceeded with the ULP case despite the SEC’s suspension order of December 28, 1994, and accordingly declared the proceedings before it, including the subsequent orders by the NLRC dismissing Rubberworld’s appeal and the writ of execution, null and void. Hence, the petition was filed. ISSUES: 1) Whether the CA had committed grave abuse of discretion amounting to lack of jurisdiction or an excess in the exercise thereof when it gave due course to the petition filed by Rubberworld (Phils.), Inc. and annulled and set aside the decisions rendered by the labor arbiter a quo and the NLRC, when the said decisions had become final and executory warranting the outright dismissal of the aforesaid petition; 2) Whether the CA had committed grave abuse of discretion and reversible error when it applied Section 5(d) and Section 6 (c) of P.D. No. 902-A, as amended, to the case at bar; RULING: 1. NEGATIVE. CA did not commit grave abuse of discretion. It cannot be said that the decision of the Labor Arbiter, or the decision/dismissal order and writ of execution issued by the NLRC, could ever attain final and executory status. The Labor Arbiter completely disregarded and violated Section 6(c) of Presidential Decree 902-A, as amended, which categorically mandates the suspension of all actions for claims

or associations under management or receivership pending before any court. As such. which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: x x x Provided. board or body shall be suspended accordingly. the applicability of the provisions of Section 5 (d) and Section 6 (c) of P. partnerships or associations to be declared in the state of suspension of payments in cases where the corporation. including the dismissal by the NLRC of Rubberworld’s appeal. In other words. all proceedings upon which the judgment is founded are equally worthless. The Labor Arbiter's decision in this case is void ab initio. which respectively read: Section 5. partnerships. Section 6. The Court addressed the more substantial issue in this case. neither should this Court. could not have achieved a final and executory status. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. The CA did not commit grave abuse of discretion.D. partnership or association has no sufficient assets to cover its liabilities. NEGATIVE. a void judgment is regarded as a nullity. It accordingly leaves the party-litigants in the same position they were in before the trial. reorganizing the SEC. Allowing labor cases to proceed clearly defeats the purpose of the automatic stay and severely encumbers the management committee's time and resources. all actions for claims against corporations. even if the NLRC awards the claims of private respondents. non-existent. namely. 2. A void judgment is in effect no judgment at all. the rehabilitation receiver. In order to effectively exercise such jurisdiction." No exception in favor of labor claims is mentioned in the law. All acts performed under it and all claims flowing out of it are void. tribunal. No rights are divested by it nor obtained from it. vesting it with additional powers and placing it under the Office of the President. the Labor Arbiter’s decision. 902-A. pursuant to this Decree. it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx d) Petitions of corporations. Thus. WHEREFORE. Since the law makes no distinction or exemptions. The said committee would need to defend against these suits. 1994. the proceedings before the Labor Arbiter and the order and writ subsequently issued by the NLRC are all null and void for having been undertaken or issued in violation of the SEC suspension Order dated December 28. It neither binds nor bars anyone. Being worthless in itself. but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree. No. In addition to the regulatory adjudicative functions of the Securities and Exchange Commission over corporations. partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation. That upon appointment of a management committee. [Emphasis supplied] xxx xxx xxx x x x The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver. to the detriment of its primary and urgent duty to work towards rehabilitating the corporation and making it viable again. . as amended. the Commission shall possess the following powers: xxx xxx xxx c) To appoint one or more receivers of the property. and the situation is the same as it would be if there were no judgment. real or personal. board or body. its ruling could not be enforced as long as the petitioner is under the management committee. To rule otherwise would open the floodgates to other similarly situated claimants and forestall if not defeat the rescue efforts. Besides. finally. all claims for actions "shall be suspended accordingly. and therefore. Ubi lex non distinguit nec nos distinguere debemos.against a corporation placed under a management committee by the SEC. the instant petition is DENIED and the assailed decision and resolution of the CA are AFFIRMED.

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