GR 118701; (December, 1995) (Digest)
G.R. No. 118701, December 12, 1995
Philippine Export and Foreign Loan Guarantee Corporation vs. The Hon. Court of Appeals and Raimund Diehl
FACTS
Private respondent Raimund Diehl, a resident alien, filed a complaint for illegal dismissal against Philippine German Wire Mesh Reinforcing Corporation (FILFORCE) with the National Labor Relations Commission (NLRC). A favorable judgment was rendered, ordering FILFORCE and its officers to pay Diehl monetary awards. The decision became final as to FILFORCE and one officer. To satisfy the judgment, the NLRC Sheriff levied on FILFORCE’s properties located in Bataan. Petitioner PHILGUARANTEE, a government-owned corporation, filed a third-party claim, asserting a superior lien as a mortgagee of the levied properties, the mortgage having been duly registered in 1983. Despite this claim and the posting of an indemnity bond by Diehl, the Sheriff proceeded with the auction sale, with Diehl as the winning bidder.
PHILGUARANTEE subsequently filed a complaint for “Annulment of Sale, Recovery of Possession and Injunction” before the Regional Trial Court (RTC) of Makati. The RTC issued a preliminary injunction. Diehl, the Labor Arbiter, and the Deputy Sheriff moved to dismiss the case for lack of jurisdiction, which the RTC denied. Diehl then filed a petition for certiorari with the Court of Appeals, which granted the petition, set aside the RTC orders, and directed the RTC judge to cease from hearing the case for lack of jurisdiction. PHILGUARANTEE elevated the matter to the Supreme Court via a petition for review on certiorari.
ISSUE
Whether the Regional Trial Court has jurisdiction over PHILGUARANTEE’s action to annul the execution sale conducted by the NLRC Sheriff and to assert its mortgage lien over the levied properties.
RULING
No, the Regional Trial Court has no jurisdiction. The Supreme Court affirmed the Court of Appeals’ decision. The Court held that the execution of a final and executory judgment by the Labor Arbiter is a function of the NLRC. Any question pertaining to the execution sale, including claims by third parties asserting rights over the levied property, must be resolved within the labor tribunal’s execution proceedings and not by a separate action in the regular courts. The proper remedy for an aggrieved third-party claimant like PHILGUARANTEE is to pursue its claim in the same labor case where the execution is pending.
The Court cited the established doctrine that the Labor Arbiter retains jurisdiction over incidents arising from the execution of its decisions. A separate civil action in the RTC would undermine this authority and could lead to conflicting decisions. While PHILGUARANTEE, as a mortgagee, may have a preferential right, this right must be asserted and adjudicated within the framework of the labor execution proceedings to ensure an orderly settlement of the debtor’s assets among all creditors. The RTC’s assumption of jurisdiction constituted an encroachment on the exclusive jurisdiction of the labor tribunal over matters arising from the execution of its final judgments. The petition was denied without prejudice to PHILGUARANTEE pursuing the appropriate recourse before the proper forum, the NLRC.