G.R. No. 92598 - Manliguez vs. Court of Appeals

Case Summary (G.R. No. 92598)

Factual Background

Petitioners asserted ownership of Lot 109, Plan 11-5121-Amd., at Tipolo, Mandaue City, and alleged they had leased the lot to Inductocast Cebu under an agreement providing that improvements introduced into the leased premises, except machinery and equipment, would become the lessor's property upon termination of the lease. Petitioners alleged that they terminated the lease in November 1980 for nonpayment of rentals, repossessed the premises, and occupied them thereafter. Unknown to petitioners, a labor dispute between Inductocast and its employees resulted in a DOLE decision ordering Inductocast to pay P232,908, and the regional sheriff levied and publicly auctioned the buildings and improvements on Lot 109, which were sold to Inductocast’s former employees.

Trial Court Proceedings

On May 25, 1988, petitioners filed Civil Case No. Ceb-6917 in the RTC, seeking the lifting of the levy and annulment of the sale of the Tipolo properties and asserting ownership. Atty. Danilo Pilapil, identified in the complaint as John Doe, and the buyers intervened and filed motions to dismiss for lack of jurisdiction. The RTC initially denied the motions but, upon reconsideration, granted the intervenors’ motion and dismissed the civil case by Order dated April 18, 1989. The RTC reasoned that the action was in the nature of a quashal of the levy and certificate of sale arising from a dispute instituted before the Department of Labor and Employment, and therefore within the exclusive jurisdiction of the labor agency, relying on Pucan vs. Bengzon.

Court of Appeals Proceedings

Petitioners filed a petition for certiorari and preliminary injunction with the Court of Appeals, which docketed the matter as CA-G.R. SP No. 18017. The Court of Appeals, by its Special First Division, denied due course to the petition and dismissed it. The appellate court affirmed that jurisdiction over disputes emanating from labor controversies rests with the Department of Labor and Employment and concluded that the issue concerning the levy and sale pursuant to a writ of execution arising from a labor dispute properly pertained to DOLE. The court found no abuse of discretion by the RTC in dismissing the complaint.

Issues Presented on Appeal to the Supreme Court

The principal issue presented was whether the Court of Appeals erred in holding that the Department of Labor had exclusive jurisdiction over the subject matter and thereby affirming the dismissal of petitioners’ civil action asserting ownership of the levied and sold properties. Ancillary issues included whether the RTC could exercise jurisdiction over a third-party claim to property levied in execution in a labor case and whether the trial court’s action would impermissibly interfere with a writ of execution issued in the labor proceeding.

Petitioners’ Contentions

Petitioners contended that Civil Case No. Ceb-6917 was a regular civil action asserting title and possession to real property and not a labor case. They argued that no employer-employee relationship or labor-law issue existed between them and Inductocast that would bring their action within DOLE’s exclusive jurisdiction. Petitioners maintained that they sought independent adjudication of ownership under Section 17, Rule 39 of the Revised Rules of Court and that the trial court therefore had original jurisdiction under B.P. Blg. 129, Sec. 19(2), over civil actions involving title to real property.

Respondents’ Contentions

Respondents, including the Court of Appeals and the intervening buyers, argued that the RTC correctly dismissed the action because the complaint was in substance a quashal of a writ of execution issued in a labor case and therefore an incident of the labor dispute over which DOLE had exclusive jurisdiction. They relied on Pucan vs. Bengzon and other doctrines limiting regular courts from entertaining proceedings that attack or impede the execution of labor adjudications.

Ruling of the Supreme Court

The Supreme Court granted the petition for review, reversed and set aside the Decision of the Court of Appeals in CA-G.R. SP No. 18017 dated November 16, 1989, and ordered the Regional Trial Court of Cebu City, Branch 8, to try Civil Case No. Ceb-6917 on its merits. The Court imposed no costs.

Legal Basis and Reasoning

The Court held that Civil Case No. Ceb-6917 was not a labor case and therefore was not within the exclusive jurisdiction of the Department of Labor and Employment. The Court emphasized that no employer-employee relationship existed between petitioners and the other parties, and no question of labor-law interpretation, collective bargaining, or remedies under the Labor Code was presented. The action before the RTC asserted title and possession to real property and sought to vindicate ownership of the levied premises. The Court grounded jurisdiction in B.P. Blg. 129, Sec. 19(2), which vests the Regional Trial Courts with exclusive original jurisdiction in civil actions involving title to or possession of real property, and in Section 17, Rule 39 of the Revised Rules of Court, which authorizes a third person claiming ownership of levied property to vindicate such claim by an independent action.

The Court rejected the notion that adjudication of a third-party claim to property levied and sold in execution of a labor decision necessarily interferes impermissibly with the writ of execution. The Court reiterated established precedent that the rule against interference with property in custodia legis applies only where the property belongs to the defendant or where the defendant has proprietary interest; where the property is the stranger’s, the rule does not prevent the third party from pursuing an independent civil action. The Court cited jurisprudence including Manila Herald Publishing Co., Inc. v. Ramos, Uy, Jr. vs. Court of Appeals, and Santos vs. Bayhon to support the proposition that a third-party claimant may bring an independent action in the proper civil court to vindicate title and that the civil court may stop execution on property not

Case Syllabus (G.R. No. 92598)

Parties and Procedural Posture

Purificacion Y. Manliguez, Antonina Y. Luis and Benjamin C. Ybanez were the petitioners who filed Civil Case No. Ceb-6917 in the Regional Trial Court of Cebu City seeking to annul a levy and sale over Lot 109, Plan 11-5121-Amd., Tipolo, Mandaue City.
The original levy and sale were executed pursuant to a judgment of the Department of Labor and Employment (Region VII) against Inductocast Cebu, a partnership based in Mandaue City, ordering payment of PHP 232,908.00 to its former employees.
The trial court dismissed Civil Case No. Ceb-6917 on April 18, 1989 for lack of jurisdiction, and the petitioners sought relief by filing a petition for certiorari and preliminary injunction in the Court of Appeals docketed as CA-G.R. SP No. 18017.
The Court of Appeals denied the petition by Decision dated November 16, 1989, and the petitioners elevated the matter by certiorari to the Supreme Court.

Key Factual Allegations

Petitioners alleged ownership of Lot 109 and that they entered into a lease agreement with Inductocast Cebu under which, except for machinery and equipment, improvements on the leased premises would belong to the lessor upon termination.
Petitioners alleged that they terminated the lease in November 1980 for nonpayment of rent and thereafter took actual possession and occupation of the Tipolo properties.
Petitioners alleged they only became aware of the labor dispute and the subsequent public auction sale of the Tipolo properties after the sale was conducted by the regional sheriff.

Trial Court Proceedings

An action entitled "Purificacion Y. Manliguez, Antonina Y. Luib and Benjamin C. Ybanez represented by Taciana c. Ybanez vs. Emilio Lomontad, Celerino Villahermosa, Register of Deeds of Mandaue City, Mandaue City Assessor and John Doe" was docketed as Civil Case No. Ceb-6917 and raffled to Branch 8.
Atty. Danilo Pilapil, claiming to be John Doe, and the buyers of the Tipolo properties intervened and filed motions to dismiss for lack of jurisdiction, which the trial court initially denied.
On reconsideration, the trial court granted the intervenors' motion and dismissed Civil Case No. Ceb-6917 on April 18, 1989, holding that the dispute was connected with a labor case under the exclusive jurisdiction of the labor department and citing Pucan vs. Bengzon, 155 SCRA 692 (1987).

Court of Appeals Decision

The Court of Appeals held that jurisdiction over disputes emanating from labor controversies devolved upon the Department of Labor to the exclusion of regular courts and that the levy and sale executed pursuant to a writ of execution in a labor case were within DOLE's jurisdiction.
The Court of Appeals concluded that the trial court did not abuse its discretion in dismissing the case and denied certiorari relief on the ground that no grave abuse of discretion was shown.

Issues Presented

Whether the Regional Trial Court had jurisdiction to entertain Civil Case No. Ceb-6917 which sought to vindicate petitioners' alleged ownership and possession of the Tipolo properties.
Whether the trial court's dismissal