RICARDO V.

CASTILLO
VS.
UNIWIDE WAREHOUSE CLUB, INC.
AND/OR JIMMY GOW
619 SCRA 641
GR NO. 169725

April 30, 2010

FACTS OF THE
CASE
 ACTIONS INVOLVED IN THE CASE

AUGUST 26, 2002

Action: Complaint for Illegal Dismissal
Petitioner: Ricardo V. Castillo
Respondent: Uniwide Warehouse Club, Inc. & its president,
Jimmy N. Gow
Prayer: Payment of
worked Saturdays for the year 2001;
holiday pay;
separation pay;
actual, moral, and exemplary damages
attorney's fees
 ACTIONS INVOLVED IN THE CASE
OCTOBER 18, 2002
Action: Motion to Suspend Proceedings
By Respondent
Ground:
That in June 1999, Uniwide had petitioned SEC for suspension of
payments and approval of its rehabilitation plan;
which SEC favorably ruled and ordered that all claims, actions, and
proceedings against Uniwide pending before any court, tribunal,
board, office, body or commission be suspended, and that
following the appointment of an interim receiver;
the suspension order had been extended to until February 7, 2000.
that on April 11, 2000, SEC declared Uniwide to be in a state of
suspension of payments and approved its rehabilitation plan.
ADMINISTRATIVE
BODIES
 LABOR ARBITER NLRC
FEBRUARY 17, 2003 SEPTEMBER 30, 2003
denied the Motion to Suspend sustained the LA

Proceedings in the present case. held that as early as Feb. 7, 2000

SEC's suspension order should be
considered already lifted and that
with the approval of the
rehabilitation plan;
the suspension of the proceedings in
the instant labor case would no
longer be necessary.
 NLRC'S RESOLUTION

Respondents moved for

December 30, 2003 reconsideration was denied.

COURT OF
APPEALS
RESPONDENT'S CONTENTION

that LA and NLRC

committed grave error in not
suspending the proceedings
of this labor case pursuant to
SEC's April 11, 2000
Resolution, placing Uniwide
under rehabilitation.
 COURT OF APPEALS
DECISION

Reversed the September 30, 2003 and
April 22, 2005 December 30, 2003 Resolutions of the

NLRC and ordered the suspension of
the proceedings in this case.
WHEREFORE, premises considered,
the instant petition is hereby
GRANTED.
 LABOR ARBITER NLRC
JULY 9, 2005
declared valid petitioner's

from LA's decision, both

termination,
parties filed their
dismissing all other claims for lack
of merit, and respective appeals with
ordering respondents to pay the the NLRC.
amount of P330,000 as
separation pay.
PETITIONER'S ARGUMENT RESPONDENT'S CONTENTION

that CA's suspension of the illegal

that the suspension of the
proceedings in the illegal dismissal dismissal case is among the actions for
case is not in order; claims that are automatically
that the viability of his claim and the suspended on the appointment of a
liability of herein respondent are yet management committee or receiver
to be determined; provided in Sec6 6, PD 902-A;
that Sec 6 expressly referred to
especially that SEC had approved
suspension of pending claims;
respondents rehabilitation plan and
the intent of the law is to bar the filing
that the company had been
of any such claims in order to maintain
operating on its own in accordance of
parity of status among the different
said plan
creditors of the distressed corporation
that NLRC is bound to proceed with
at least while the rehabilitation efforts
the case to determine whether his
are ongoing.
dismissal was valid and for the
determination of Uniwide's liability.
ISSUE:
WHETHER THE SUSPENSION
OF THE ILLEGAL DISMISSAL
CASE IS VALID IN RELATION
TO THE SUSPENSION ORDER
ISSUED BY SEC TO SUPPORT
THE REHABILITATION PLAN.
RULING:
YES, THE SUSPENSION OF THE
ILLEGAL DISMISSAL
PROCEEDING IS VALID AS A
MECHANISM IN THE ESSENTIAL
FUNCTION OF THE CORPORATE
REHABILITATION PLAN.
 RATIO
CORPORATE REHABILITATION CONNOTES THE RESTORATION OF THE DEBTOR TO A
POSITION OF SUCCESSFUL OPERATION AND SOLVENCY
if it is shown that its continued operation

is economically feasible and
its creditors can recover by way of the present value of payments
projected in the rehabilitation plan;
more if the corporation continues as a going concern than it is
immediately liquidated.
it contemplates a continuance of corporate life and activities in an
effort to restore and reinstate the corporation to its former position
of successful operation and solvency;
the purpose being to enable the company to gain a new lease on life
and allow its creditors to be paid their claims out of its earnings.
 RATIO
AN ESSENTIAL FUNCTION OF CORPORATE REHABILITATION IS THE MECHANISM OF
SUSPENSION OF ALL ACTIONS AND CLAIMS AGAINST THE DISTRESSED
CORPORATION
this operates upon the due appointment of a management
committee or rehabilitation receiver goverened by Sec. 6(c), PD
No. 902-A.
the law mandates that upon appointment of a management
committee, rehabilitation receiver, board, or body, all actions for
claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal,
board, or body shall be suspended.
 RATIO
THE CLAIM ARISING FROM ALLEGED ILLEGAL DISMISSAL IS A CLAIM COVERED BY
SUSPENSION ORDER ISSUED BY SEC, AS IT IS ONE FOR PECUNIARY CONSIDERATION.
the term "claim" has been construed
to refer to:
debts or demands of a pecuniary nature, or the assertion to have
money paid (Finasia Investments and Finance Corporation v. CA)
as an action involving monetary consideration (In Arranza v. BF
Homes, Inc., )
as the right to payment, whether or not it is reduced to judgment,
liquidated or unliquidated, fixed or contingent, matured or
unmatured, disputed or undisputed, legal or equitable, and secured
or unsecured (Philippine Airlines v. Kurangking)
 RATIO
cover all claims against distressed corporation whether for
damages founded on breach of contract of carriage, labor
cases, collection suits or any other claims of a pecuniary nature.
moreover, the rules provide an all-encompassing definition and
thus include all claims or demands of whatever nature or
character against a debtor or its property, whether for money or
otherwise.
No doubt, the petitioner's claim from alleged illegal
dismissal is a claim covered by the suspension order issued
by SEC.
 RATIO
JURISPRUDENCE SUPPORTS THAT THE SUSPENSION OF PROCEEDINGS REFERRED BY
LAW UNIFORMLY APPLIES TO "ALL ACTIONS FOR CLAIMS" W/OUT DISTINCTION
filed against a corporation,
partnership or association under
management or receivership;
except only those expenses incurred in the ordinary course of
business
that the automatic suspension of an action for claims against a
corporation under a rehabilitation receiver or management
committee embraces all phases of the suit, that is, the entire
proceedings of an action or suit and not just the payment of claims
(Philippine Airlines vs. Zamora)
 RATIO
THE INDISCRIMINATE SUSPENSION OF ACTIONS FOR CLAIMS INTENDS TO EXPEDITE
THE REHABILITATION OF THE DISTRESSED CORPORATION

by enabling the management committee or rehabilitation receiver to

effectively exercise its/his powers free from any judicial or
extrajudicial interference that might unduly hinder or prevent the
rescue of the debtor company.
to allow such other actions to continue would only add to the
burden of the management committee or rehabilitation receiver,
whose time, effort and resources would be wasted defending
claims against the corporation, instead of being directed toward
its restructuring and rehabilitaion.
 RATIO
DATE WHEN THE CLAIM AROSE IS IMMATERIAL
what matters is that as long as the corporation is under a management
committee or rehabilitation receiver, all actions for claims against it,
whether for money or otherwise, must yield to the greater imperative of
corporate revival, excepting only as already mentioned, claims for
payment of obligations incurred by the corporation in the ordinary course
of business.
thus the subject action for illegal dismissal and damages against
Uniwide should have been suspended at the first instance considering
that at the time the labor case was filed on August 26, 2002, Uniwide was
undergoing rehabiliation proceedings and later on declared to be in a
state of suspension of payments.
 RATIO
In fact, a Certification issued by the SEC and signed by its General
Counsel, Vernette G. Umali-Paco, states that as of August 17,
2006, the petition of Uniwide Sales, Inc. for declaration of
suspension of payments and rehabilitations was still pending with
it, and that the company was still under its rehabilitation
proceedings.
Hence, since petitioner’s claim was one for wages accruing from
the time of dismissal, as well as for benefits and damages, the same
should have been suspended pending the rehabilitation
proceedings.
 RATIO
In other words, the Labor Arbiter should have abstained from
resolving the illegal dismissal case and, instead, directed
petitioner to present his claim to the rehabilitation receiver duly
appointed by the SEC, inasmuch as the stay or suspension order
was effective and it subsisted from issuance until the dismissal of
the petition for rehabilitation or the termination of the
rehabilitation proceedings.
The Court of Appeals was thus correct in directing the
suspension of the proceedings in NLRC NCR Case No. 08-
06770-2002.
DISPOSITIVE PORTION
WHEREFORE, premises considered,
the Petition is DENIED. The April 22,
2005 Decision and the September 9,
2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 83226 are
AFFIRMED.
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