In The Matter of The Petition for Suspension of Payments With Application for Rehabilitation Receivership

[SEC CASE NO. 3061. August 31, 1987.] IN THE MATTER OF THE PETITION FOR SUSPENSION OF PAYMENTS WITH APPLICATION FOR REHABILITATION RECEIVERSHIP AND/OR CREATION OF MANAGEMENT COMMITTEE. AIRCON & REFRIGERATION INDUSTRIES, INC. , petitioner . O R D E R Submitted for resolution is petitioner Aircon & Refrigeration Industries, Inc.'s (hereinafter referred to as Aircon) application for the issuance of a writ of preliminary injunction seeking to enjoin, pending the resolution of the instant petition for rehabilitation receiver and/or management committee, Alfonso Balais, Jr., Acting Deputy Sheriff of the Department of Labor and Employment on one hand and Mssrs. Paz Mercado and Francisco Reyes, both Deputy Sheriffs of National Labor Relations Commission, Department of Labor and Employment who are allegedly acting in compliance with the writ of execution issued in the two labor cases (Case No. 2-576-87 and NCR Case No. LSFD-C1-4-137-87), their successors and/or persons acting on their behalf or under their instructions from enforcing the aforesaid writs of execution against the petitioner until further orders from this office. So far as can be determined from the evidence on record, the following are the uncontroverted facts: ISAaTH 1. On September 30, 1986, the petitioner Aircon filed with this Commission a petition for suspension of payment with application for rehabilitation/receiver and/or the creation of a management committee pursuant to the broad powers of this Commission mandated by Pres. Decree No. 902-A, as amended. 2. The aforesaid petition was subsequently given due course by this Honorable Office and under date of 9 October 1986, an Order was promulgated setting the petition for hearing. 3. Pending the outcome of the petition, the union on or about 16 February 1987 filed a complaint with the National Labor Relations Commission. The said complaint was purely a money claim against petitioner corporation pursuant to the jurisdiction vested with the Labor Arbiters under Art. 217 of the Labor Code as amended. The case was consequently docketed as NCR-Case No. 2-575-87 and was subsequently raffled to the Honorable Executive Arbiter Arthur L. Amansac. 4. On the other hand, the officers of the corporation including the managerial/supervisory level employees, who were not included in the complaint filed by the rank and file employees thru the union subsequently filed a similar complaint for unpaid wages and other money claims against the petitioner, the complaint however was filed with the Labor Standards and Enforcement Division of the Department of Labor and Employment, National Capital Region, pursuant to Art. 128, paragraph B of the Labor Code as amended, which grants to the aforesaid office jurisdiction in cases of money claims when the relationship of employer-employee relationship still exists at the time of the filing of the complaint. The said case was subsequently docketed as LSED-C1-4-137-87. 5. Under the date of 28 May 1987, the labor case instituted by the union pending before the Labor Arbiter of the National Labor Relations Commission was decided by the Hon. Arbiter Amansec finding in favor of the rank and file employees. In the said decision, the amount of TWO MILLION FIVE HUNDRED FIFTY EIGHT THOUSAND, NINE HUNDRED TWENTY THREE PESOS & 79/100 P2,558,923.79) was found to have been due in favor of the union members. Said amount represented unpaid wages which were not paid and remitted by the petitioner in favor of the individual complainants due to the unfavorable business conditions that brought about serious losses to the company. Consequently, under date of 22 July 1987, a writ of execution was issued by the Honorable Labor Arbiter Amansec against the properties of the petitioner directing the Commission's sheriff to levy on the properties of the petitioner to satisfy the decision earlier promulgated in favor of the rank and file employees. 6. On the other hand, unknown to the respondent union, the labor case instituted by the officers and other supervisory and/or managerial employees was also decided upon in favor of the officers and other supervisory and/or managerial employees. Thus, under date of 4 June 1987, a decision was rendered in Case No. LSED-C1-4-137-87 by the Hon. Maximo B. Lim of the NLRC, Department of Labor and Employment awarding in favor of the supervisors and officers of the petitioner the amount of SIX MILLION NINE HUNDRED FORTY FOUR THOUSAND SEVEN HUNDRED TWENTY PESOS AND 78/100 (P6,944,720.78); likewise representing unpaid wages and/or salaries of the individual complainants which petitioner failed to remit/pay. 7. Subsequently, a writ of execution was issued by the Hon. Maximo B. Lim for the enforcement of his earlier judgment awarding in favor of Vicente M. Mercado, et al. 8. On 8 July 1987, the Acting Deputy Sheriff of the Department of Labor and Employment, National Capital Region, Mr. Alfonso A. Balais, Jr. complying to the aforesaid writ of execution earlier issued by Hon. Maximo B. Lim levied on the properties of the petitioner located at Km. 14 South Superhighway, Paraaque, Metro Manila and thereafter, a Notice of Embargo/Sale on personal properties on execution was issued by sheriff Balasis scheduling a public auction for the sale of the aforesaid properties on July 24, 1987 at 11 o'clock in the morning. 9. As stated earlier, on 22 July 1987, a writ of execution was issued by the Hon. Labor Arbiter Amansec, in the other case before the National Labor Relations Commission, (NLRC-NCR-2-576-87) enforcing his prior judgment awarding in favor of the rank and file employees of petitioner for the satisfaction of the amount of TWO MILLION FIVE HUNDRED FIFTY EIGHT THOUSAND NINE HUNDRED TWENTY THREE PESOS AND SEVENTY NINE CENTAVOS (2,558,923.79). 10. There being an imminent sale of the properties of the petitioner scheduled on 24 July 1986 by virtue of the writ of execution issued by the Hon. Maximo Lim, other creditors who came to know of the execution sale immediately filed with this Honorable Office a petition to enjoin the sale of the petitioner's properties which were to be sold pursuant to two different writs of execution issued by different offices of the Department of Labor and Employment. 11. That this Commission (SEC) acting pursuant to the aforesaid petition to enjoin the sale on execution scheduled on July 24, 1987 issued a temporary restraining order prohibiting Sheriff Balais to conduct the execution sale. However, the temporary restraining order was good for the period of only twenty (20) days. 12. Under date of 4 August 1987, deputy Sheriff Paz Mercado and Francisco Reyes enforcing the writ of execution issued by the Labor Arbiter, Hon. Amansec, posted a notice of auction sale on the very same properties previously levied on by Sheriff Balais which were all likewise located in the compound of the petitioner at South Superhighway. The properties levied on execution by the aforesaid deputy sheriffs were the very same properties which were previously scheduled to be sold on 24 July 1987, had not this Commission enjoin the same in the interest of justice and equity in favor of the other creditors of the herein petitioner who would have been adversely affected by a premature sale on execution of the leviable assets/properties of herein petitioner. SDATEc 13. The execution sale on the properties subsequently levied by sheriffs Mercado and Reyes was scheduled on Wednesday, 12 August 1987. The fundamental issues to be resolved herein is whether petitioner Aircon has established a clear positive right entitling it to the injunctive relief prayed for. As aptly pointed out by petitioner that as early as September 30, 1986, herein petitioner already being in distress due to the adverse business conditions prevalent all over the country, had already filed a petition with us for suspension of payment with appointment of a rehabilitation receiver and/or the creation of a management committee pursuant to P.D. No. 902-a as amended, the pertinent provisions of which reads as follows: "SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx c) To appoint one or more receivers of the property, real and personal, which is the subject of the auction pending before the Commission in accordance with the pertinent provision of the rules of court, and in such other cases whenever necessary in order to preserve the rights of parties-litigants and/or protect the interest of the investing public and creditors; Provided, however, That the Commission may, in appropriate cases, appoint a rehabilitation receiver of corporation, partnerships or other associations not supervised or regulated by other government agencies who shall have, in addition to the powers of a regular receiver under the provision of the rules of the court, such functions and powers as are provided for in the succeeding paragraph d) hereof: Provided, further, That the Commission may appoint a rehabilitation receiver of corporations, partnerships or other associations supervised or regulated by other government agencies, such as banks and insurance companies, upon request of the government agency concerned: Provided, finally, That upon appointment of a management committee, rehabilitation receiver, board or body, pursuant to this decree, all actions for claims against corporation, partnership, or association under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (As amended by PD No. 1758 and 1799)." xxx xxx xxx The aforequoted provisions of said decree specifically empowers the Commission to suspend all actions involving claims of whatever nature against the petitioner corporation such as herein petitioner. To allow, therefore, a sale on execution against the assets of the petitioner at this point in time would prejudice all other creditors who are not employees of the petitioner. Furthermore, it is our well-considered opinion that a sale or execution thereof by the Sheriffs of the Department of Labor and Employment would render Aircon's petition for rehabilitation and/or creation of a Management Committee moot and academic. WHEREFORE, let a writ of preliminary injunction be issued, upon the filing of a bond in the amount of twenty thousand (P20,000.00) Pesos, to answer for damages, if any, should the Commission later on decide that petitioner is not entitled thereto, ordering Alfonso Balais, Jr., Acting Deputy Sheriff of the Department of Labor and Employment on one hand and Mssrs. Paz Mercado and Francisco Reyes, Deputy Sheriffs of National Labor Relations Commission of the Department of Labor and Employment, their agent and/or successor and/or persons acting in their behalf or under their instructions from taking possession of and/or selling all assets of Aircon and Refrigeration Industries, Inc. AEHCDa SO ORDERED. (SGD.) EMMANUEL R. SISON Hearing Officer (SGD.) JAMES K. ABUGAN (SGD.) NAPOLEON M. TUMAMAO Hearing Officer Hearing Officer