FACTS:

Rubberworld (Phils.), Inc. is a corporation engaged in manufacturing footwear, bags, and garments. Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia M. San Pedro, and Felomena Tolin were employed by Rubberworld in various positions. On August 26, 1994, Rubberworld filed a notice of temporary shutdown of operations to take effect on September 26, 1994, but was forced to prematurely shut down before that date. On November 11, 1994, the employees filed a complaint against Rubberworld for illegal dismissal and non-payment of separation pay. On November 22, 1994, Rubberworld filed a petition for declaration of suspension of payments with a proposed rehabilitation plan. The Securities and Exchange Commission (SEC) issued an order on December 28, 1994, suspending all actions for claims against Rubberworld. On January 24, 1995, petitioners submitted a motion to suspend the proceedings before the labor arbiter based on the SEC order, but the labor arbiter did not act on the motion. The labor arbiter eventually rendered a decision on December 10, 1995, finding Rubberworld guilty of illegal shutdown and ordering them to pay separation pay to the complainants, as well as moral and exemplary damages. Rubberworld appealed the decision to the NLRC, which issued a resolution on August 30, 1996, affirming the decision but deleting the moral and exemplary damages. Rubberworld's motion for reconsideration was denied by the NLRC, prompting them to file this petition before the Supreme Court to annul the NLRC resolution.

ISSUES:

1. Whether or not the Department of Labor and Employment, the Labor Arbiter, and the National Labor Relations Commission may legally act on the claims of respondents despite the order of the Securities and Exchange Commission suspending all actions against a company under rehabilitation by a management committee created by the Securities and Exchange Commission.

RULING:

1. The Supreme Court granted the petition and set aside the decision of the labor arbiter and the resolution of the NLRC. The Court held that the labor case should be suspended in accordance with Presidential Decree No. 902-A, which provided for the automatic stay of all actions for claims against corporations under management or receivership. The Court explained that the purpose of the automatic stay was to enable the management committee or the rehabilitation receiver to effectively exercise their powers without any undue interference. Allowing the labor case to proceed would hinder the rescue efforts and waste the time, effort, and resources of the management committee. The Court further stated that any resolution, decision, or order rendered or issued without jurisdiction is a nullity.

PRINCIPLES:

• The automatic stay provision under Presidential Decree No. 902-A applies to all actions for claims against corporations, partnerships, or associations under management or receivership.

• The purpose of the automatic stay is to allow the management committee or rehabilitation receiver to effectively exercise their powers without interference.

• Allowing labor cases to proceed during the suspension period would hinder the rescue efforts and waste the resources of the management committee.

• Any resolution, decision, or order rendered or issued without jurisdiction is considered a nullity.