Ando vs. Campo

A sheriff has no authority to attach the property of any person except that of the judgment debtor, and property registered in the name of a conjugal partnership cannot be levied to satisfy a judgment against a corporation, even where one spouse was sued only in a representative capacity as corporate president.

Petitioner Paquito V. Ando was the president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor contractor. Respondents were employed by PACSI as pilers or haulers, tasked with manually carrying bags of sugar from the warehouse of Victorias Milling Company and loading them onto trucks. In June 1998, respondents were dismissed from employment, prompting their illegal dismissal complaint before the NLRC.

Petitioner Paquito V. Ando served as president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor contractor. Respondents were hired by PACSI as pilers or haulers, tasked with manually carrying bags of sugar from the warehouse of Victorias Milling Company and loading them onto trucks. In June 1998, respondents were dismissed from employment and thereafter filed a case for illegal dismissal and money claims with the NLRC, Regional Arbitration Branch No. VI, Bacolod City.

On June 14, 2001, Labor Arbiter Phibun D. Pura promulgated a decision in respondents' favor, directing PACSI and petitioner to pay a total of ₱422,702.28, representing separation pay and attorney's fees. Petitioner and PACSI appealed to the NLRC, but in a decision dated October 20, 2004, the NLRC held that petitioner had failed to perfect his appeal because he did not pay the supersedeas bond. The NLRC affirmed the Labor Arbiter's decision with modification of the award for separation pay to four other similarly situated employees. Upon finality of the decision, respondents moved for its execution.

To satisfy the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of Sale on Execution of Personal Property over the property covered by Transfer Certificate of Title (TCT) No. T-140167, registered in the name of "Paquito V. Ando x x x married to Erlinda S. Ando." Petitioner thereupon filed an action for prohibition and damages with prayer for a temporary restraining order before the RTC, Branch 50, Bacolod City, claiming that the property belonged to him and his wife, not to the corporation, and could not be subject of the execution sale. He argued that since the corporation was the judgment debtor, execution should be made on the corporation's properties.

On December 27, 2006, the RTC denied the prayer for a TRO, holding that it had no jurisdiction to try and decide the case and that, pursuant to the NLRC Manual on the Execution of Judgment, petitioner's remedy was to file a third-party claim with the NLRC sheriff. Despite its finding of no jurisdiction, the RTC proceeded to decide the merits. Petitioner did not file a motion for reconsideration but instead filed a petition for certiorari under Rule 65 before the CA, which affirmed the RTC's dismissal for lack of jurisdiction and nullified all other pronouncements. Petitioner's motion for reconsideration was denied, prompting the present petition.

• Representative vs. Personal Capacity: Petitioner argued that he was never sued in his personal capacity but only in his representative capacity as president of PACSI, and that nothing in the body of the Labor Arbiter's decision indicated he was solidarily liable with the corporation.
• Wrongful Levy: Petitioner maintained that the writ of execution was issued improvidently and without authority, since the property to be levied belonged to him and his wife personally, not to the corporation, and that there was no evidence the sheriff ever attempted to execute against the properties of PACSI.
• Choice of Remedies: Petitioner contended that, pursuant to a ruling of the Supreme Court, a third party who is not a judgment creditor may choose between filing a third-party claim with the NLRC sheriff or filing a separate action with the courts.
• Nature of the Action: Petitioner asserted that the special civil action was purely civil in nature, involving the manner in which the writ of execution in a labor case would be implemented against property that was not corporate property of PACSI; what he sought to restrain was not the decision itself but the manner of its execution.
• Family Home: Petitioner claimed that the property levied had been constituted as a family home within the contemplation of the Family Code.

• Jurisdiction of the RTC: Whether the RTC has jurisdiction to hear and decide a complaint for prohibition seeking to restrain the implementation of a writ of execution issued by the Labor Arbiter in a labor case.
• Validity of the Levy: Whether property registered in the names of petitioner and his wife may be validly levied to satisfy a judgment against the corporation PACSI.
• Propriety of Remedy: Whether petitioner's proper remedy was to file a third-party claim with the NLRC sheriff rather than a separate action before the regular courts.

• Jurisdiction of the RTC: No. Regular courts have no jurisdiction over questions arising from and incidental to the enforcement of decisions rendered in labor cases; such matters fall within the NLRC's cognizance pursuant to the NLRC Manual on the Execution of Judgment and Articles 217, 218, and 224 of the Labor Code.
• Validity of the Levy: No. The property belonged to the conjugal partnership of petitioner and his wife, not to the corporate judgment debtor; the sheriff had no authority to attach property of any person except that of the judgment debtor, and the wife — a non-party — would be deprived of property without due process.
• Propriety of Remedy: While petitioner availed himself of the wrong remedy, the Court granted the petition on substantive grounds, looking beyond his procedural missteps in the interest of justice given the length of time elapsed since the levy.

• Jurisdiction of the RTC: The Court has long recognized that regular courts lack jurisdiction over questions arising from and incidental to the enforcement of decisions, orders, or awards rendered in labor cases by DOLE officers and tribunals; to hold otherwise would sanction splitting of jurisdiction, which is obnoxious to the orderly administration of justice. The NLRC Manual on the Execution of Judgment governs any question on execution of an NLRC judgment, with the Rules of Court applying only by analogy or in a suppletory character. Section 2 of the NLRC Manual sets out the procedure for third-party claims: the claimant files an affidavit of title with the sheriff, proceedings are automatically suspended, and the Labor Arbiter conducts a hearing and resolves the claim's validity within ten working days. The Court's ruling in Deltaventures Resources, Inc. vs. Hon. Cabato confirmed that a complaint challenging the legality of a levy under an alias writ of execution in a labor case is but an incident of the labor case, beyond the jurisdiction of regional trial courts. Jurisdiction, once acquired by the NLRC, continues until the case is finally terminated, and execution is an essential part of the proceedings. Article 254 of the Labor Code further prohibits injunctions in cases involving or growing out of labor disputes, except as provided in Articles 218 and 264.

• Validity of the Levy: The TCT of the property confirms that it belongs to petitioner and his wife. Even if petitioner were considered an agent of the corporation — and thus not a stranger such that the third-party claim provision would not apply to him — the property was registered not only in his name but also in his wife's. She stands to lose the property without ever having been a party to the case, which would amount to deprivation of property without due process. The power of the NLRC or the courts to execute judgment extends only to properties unquestionably belonging to the judgment debtor alone. A sheriff has no authority to attach the property of any person except that of the judgment debtor. There was also no showing that the sheriff ever attempted to execute on the corporation's properties. Accordingly, while petitioner availed himself of the wrong remedy, justice demanded that the Court look beyond his procedural missteps and grant the petition, particularly given the length of time that had passed since the levy.

• Propriety of Remedy: Petitioner's complaint was properly a third-party claim within the cognizance of the NLRC. Petitioner could be considered a "third party" in relation to the property subject of execution vis-à-vis the Labor Arbiter's decision, since the property belongs to the conjugal partnership, not to petitioner alone. At the very least, petitioner's wife is a third party within the contemplation of the law. The proper avenue was the NLRC sheriff and Labor Arbiter, not the RTC. Nevertheless, given the substantive merit of petitioner's position and the passage of time, the Court resolved the controversy rather than remanding it.

• Exclusivity of NLRC Jurisdiction over Execution Incidents — Regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by DOLE officers and tribunals. To hold otherwise sanctions splitting of jurisdiction, which is obnoxious to the orderly administration of justice. The NLRC Manual on the Execution of Judgment is the primary governing instrument; the Rules of Court apply only by analogy or in a suppletory character. Jurisdiction, once acquired by the NLRC, continues until the case is finally terminated, including the execution phase.

• Third-Party Claims in Labor Execution — Under Section 2, Rule VI of the NLRC Manual on the Execution of Judgment, a person not a party to the case who asserts title to or right of possession of property levied upon must file an affidavit of title with the sheriff, serve copies on the Labor Arbiter and the prevailing party, upon which all proceedings are automatically suspended. The Labor Arbiter then conducts a hearing and resolves the claim's validity within ten working days; the decision is appealable to the Commission within ten working days, and the Commission must resolve the appeal within the same period.

• Limitation on Sheriff's Authority in Execution — The power of the NLRC or the courts to execute judgment extends only to properties unquestionably belonging to the judgment debtor alone. A sheriff has no authority to attach the property of any person except that of the judgment debtor. Levying on property belonging to a non-party — such as a spouse who was never impleaded — constitutes deprivation of property without due process.

• "The Court has long recognized that regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice." — This passage articulates the ratio decidendi on the exclusivity of labor tribunal jurisdiction over execution incidents, a principle frequently cited to oust regular courts of jurisdiction over labor-related execution disputes.

• "The power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor." — This formulation defines the doctrinal limitation on execution, establishing that property registered in the name of a conjugal partnership cannot be levied for a corporate judgment debt.

• "She stands to lose the property subject of execution without ever being a party to the case. This will be tantamount to deprivation of property without due process." — This passage links the invalidity of the levy to the constitutional guarantee of due process, explaining why the Court intervened despite petitioner's procedural misstep.

• Deltaventures Resources, Inc. vs. Hon. Cabato, 384 Phil. 252 (2000) — Controlling precedent followed. The Court relied on this case to hold that a complaint challenging the legality of a levy under an alias writ of execution in a labor case is but an incident of the labor case, beyond the jurisdiction of regional trial courts. The broad powers granted to the Labor Arbiter and the NLRC under Articles 217, 218, and 224 of the Labor Code vest jurisdiction over such incidents in the labor tribunals to the exclusion of regular courts.

• Air Services Cooperative vs. CA, 354 Phil. 905 (1998) — Cited for the proposition that regular courts have no jurisdiction over questions arising from and incidental to the enforcement of labor decisions, which would sanction splitting of jurisdiction.

• Go vs. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107 — Cited for the rule that the power to execute judgment extends only to properties unquestionably belonging to the judgment debtor alone.

• Johnson and Johnson (Phils.), Inc. vs. CA, 330 Phil. 856 (1996) — Cited for the principle that a sheriff has no authority to attach the property of any person except that of the judgment debtor.

• Section 16, Rule 39, Rules of Court — Governs third-party claims in ordinary execution proceedings: if property levied upon is claimed by a person other than the judgment obligor, the claimant files an affidavit of title with the sheriff and serves copies on the judgment obligee; the officer is not bound to keep the property unless the judgment obligee files an indemnity bond. Nothing therein prevents the claimant from vindicating his claim in a separate action. The Court cited this provision alongside the NLRC Manual to illustrate the parallel framework, while emphasizing that the NLRC Manual governs in labor cases.

• NLRC Manual on the Execution of Judgment, Rule VI, Sections 1 and 2 — Section 1 defines a third-party claim as one where a person not a party to the case asserts title to or right of possession of property levied upon. Section 2 sets out the procedure: the claimant files an affidavit with the sheriff, proceedings are automatically suspended, and the Labor Arbiter conducts a hearing and resolves the claim within ten working days, with the decision appealable to the Commission. The Court held this Manual to be the primary governing instrument for execution questions in NLRC cases.

• Article 254, Labor Code — Prohibits temporary or permanent injunctions or restraining orders in cases involving or growing out of labor disputes, except as provided in Articles 218 and 264. The Court cited this provision to further underscore the RTC's lack of jurisdiction to issue injunctive relief in a labor execution matter.

• Articles 217, 218, and 224, Labor Code — Vest broad powers in the Labor Arbiter and the NLRC over incidents arising from, in connection with, or relating to labor disputes, to the exclusion of regular courts. The Court interpreted these provisions as conferring jurisdiction over execution incidents on the labor tribunals.

Justice Antonio T. Carpio (Chairperson), Justice Diosdado M. Peralta, Justice Roberto A. Abad, and Justice Jose Catral Mendoza concurred.