181 Ricardo V. Castillo, petitioner v. Uniwide Warehouse Club, Inc.

and/or Jimmy Gow, respondents

G.R. No. 169725 / 30 April 2010

TOPIC: R.A. No. 10142 – Financial Rehabilitation and Insolvency Act of 2010

FACTS: On 26 August 2002, a complaint for illegal dismissal was filed by Ricardo Castillo before the
National Labor Relations Commission against Uniwide Warehouse Club, Inc. and its president, Jimmy
Gow. The complaint contained a prayer for the payment of worked Saturdays for the year 2001; holiday
pay; separation pay; actual, moral and exemplary damages; and attorney’s fees. On 18 October 2002,
the respondents submitted a Motion to Suspend Proceedings, stating that in June 1999, the Uniwide
Group of Companies had petitioned the Securities and Exchange Commission for suspension of
payments and for approval of its proposed rehabilitation plan. It appears that the SEC ruled favorable on
the petition and ordered that all claims, actions and proceedings against respondents be suspended, and
that following the appointment of an interim receiver, the suspension order had been extended to until
7 February 2000. The SEC approved the rehabilitation plan on 11 April 2000.

In an order, the labor arbiter denied the Motion to Suspend Proceedings. The NLRC sustained the labor
arbiter. However, the Court of Appeals, on appeal, reversed the NLRC decision. Meanwhile, the labor
arbiter also issued a decision on the illegal dismissal of Castillo and ordered the respondents to pay him
his separation pay. The other claims of Castillo (i.e., holiday pay, worked Saturday pay, etc.) were
dismissed. Both Castillo and respondents appealed with the NLRC.

ISSUE: Whether or not Castillo’s action for claim may be suspended while rehabilitation efforts on the
respondent company is ongoing

RATIO/HOLDING:
Yes, Castillo’s claim is a claim covered by the suspension order by the SEC. Corporate rehabilitation
connotes the restoration of the debtor to a position of successful operation and solvency. An essential
function of corporate rehabilitation is the mechanism of suspension of all actions and claims against the
distressed corporation, upon the due appointment of a management committee or rehabilitation
receiver. The actions that were suspended cover all claims against a distressed corporation whether for
damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of
a pecuniary nature. Moreover, the new rules on corporate rehabilitation provide an all-encompassing
definition of the term and, thus, include all claims or demands of whatever nature or character against a
debtor or its property, whether for money or otherwise.

DISPOSITIVE: The petition is DENIED. The decision and resolution of the Court of Appeals are AFFIRMED.