PEÑALOSA vs. VILLANUEVA G.R. No. 75305 (177 SCRA 478)

Facts: On November 29,1984, in NLRC-NCR Case No. 2517-84 entitled ‘Philippine Association of Free Labor Unions (PAFLU-RMC Chapter) and its Members v. Riverside Mills Corporation, et al.”, Labor Arbiter Manuel Caday awarded separation pay, wage and/or living allowance increases and 13th month pay to the individual complainants who comprise some of the respondents in this case. Labor Arbiter likewise awarded separation pay, vacation and sick leave pay and unpaid increases in the basic wage and allowances to the other private respondents herein in NLRC Case No. NCR-7- 2577-84 entitled ‘Michael Peñalosa, Jose Garcia and Apolinar Ray, et al. v. Riverside Mills Corporation, et al., and Samahang Diwang Manggagawa sa RMC-FFW Chapter, et al. v. Riverside Mills Corporation (RMC).’ On March 29,1985, after the judgment had become final and executory, Dogelio issued a writ of execution. The Deputy Sheriff, however, failed to collect the amount so he levied upon personal and real properties of RMC. On April 25, 1985, a notice of levy on execution of certain real properties was annotated on the certificate of title filed with the Register of Deeds of Pasig, Metro Manila, where all the said properties are situated. Meanwhile in the other development which led to this case, petitioner DBP obtained a writ of possession on June 7, 1985 from the Regional Trial Court (RTC) of Pasig of all the properties of RMC after having extra-judicially foreclosed the same at public auction earlier in 1983. DBP subsequently leased the said properties to Egret Trading and Manufacturing Corporation, Rosario Textile Mills and General Textile Mills.

On October 31, 1985, Dogelio issued an order recognizing and declaring the respondents’ first preference as regards wages and other benefits due them over and above all earlier encumbrances on the aforesaid properties/assets of said company, particularly those being asserted by respondent Development Bank of the Philippines. The petitioner appealed the order of Dogelio to the NLRC. The latter in turn, set aside the order and remanded the case to public respondent Labor Arbiter Santos for further proceedings.

Issue: Whether the disputed property did not belong to the judgment debtor could be validly levied upon by the sheriff for the satisfaction of the judgment?

Held: No, the disputed property did not belong to the judgment debtor, it could not be validly levied upon by the sheriff for the satisfaction of the judgment therein. Consequently, the SC rejected the objections raised by herein petitioners to the jurisdiction of the RTC to issue the questioned writs of preliminary injunction. The rule is settled that even if a writ of execution is issued by a co-equal court, and we place the National Labor Relations Commission in the same category for purposes of this case, respondent judge could validly issue the temporary restraining order and, later, the writs of preliminary injunction on the basis of DBP’s claim of ownership over the properties levied upon. Under Sec. 17 of Rule 39 a third person who claims property levied upon on execution may vindicate such claim by action. Obviously, a judgment rendered in his favor, declaring him to be the owner of the property, would not constitute interference with the powers or processes of the court which rendered the judgment to enforce which the execution was levied. If that be so-and it is so because the property being that of a stranger is not subject to levy-then an interlocutory order, such as injunction, upon a claim and prima facie showing of ownership by the claimant, cannot be considered as such interference either.