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G.R. No. 164856 August 29, 2007 JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, vs.

PHILIPPINE AIRLINES, INC., Respondent. QUISUMBING, J.: Facts: Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent PAL as Aircraft Furnishers Master "C" and Aircraft Inspector, respectively. They were assigned in the PAL Technical Center. A Notice of Administrative Charge was served on petitioners. They were allegedly "caught in the act of sniffing shabu inside the Toolroom Section," then placed under preventive suspension. Petitioners vehemently denied the allegations. Petitioners were dismissed for violation of the PAL Code of Discipline. Both simultaneously filed a case for illegal dismissal and damages. In the meantime, the SEC placed PAL under an Interim Rehabilitation Receiver due to severe financial losses. The Labor Arbiter rendered a decision in petitioners favor finding PAL guilty of illegal suspension and illegal dismissal and ordering them to reinstate complainants to their former position without loss of seniority rights and other privileges th and to pay jointly and severally unto the complainants backwages, 13 month pay and damages and attorneys fees. Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver. The Labor Arbiter issued a Writ of Execution and a Notice of Garnishment. PAL moved to quash the Writ of Execution and to lift the Notice of Garnishment. NLRC declared the Writ of Execution and Notice of Garnishment valid but suspended the said proceedings and referred the same to the Receiver of PAL for appropriate action. Issue: Whether petitioners are entitled to execution of the Labor Arbiters order of reinstatement even if PAL is under receivership. Held: No, Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs appeal to the NLRC, the same should have been suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving petitioners case for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver. Upon appointment by the SEC of a rehabilitation receiver, all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended. The purpose of the automatic stay of all pending actions for claims is to enable the 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 corporation. More importantly, the suspension of all actions for claims against the corporation embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. No other action may be taken, including the rendition of judgment during the state of suspension. It must be stressed that what are automatically stayed or suspended are the proceedings of a suit and not just the payment of claims during the execution stage after the case had become final and executory. Furthermore, the actions that are suspended cover all claims against the corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature.19 No exception in favor of labor claims is mentioned in the law.20
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