EN BANC
G.R. No. 107487 September 29, 1997
THE MANILA BANKING CORPORATION ("Manilabank") and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES and 14 other Senior Mangers similarly situated; AURORA VILLACERAN and 34 others Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.
G.R. No. 107902 September 29, 1997
THE MANILA BANKING CORPORATION ("Manilabank") and ARNULFO B. AURELIANO in his capacity as Statutory Receiver of Manilabank, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION-NCR, LABOR ARBITER FELIPE PATI and VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES, JOSE BELMONTE and 14 other Senior Managers and 53 Managers similarly situated; AURORA VILLACERAN and 34 other Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.
Separate Opinions
VITUG, J., concurring:
I concur with Mr. Justice Santiago M. Kapunan in his ponencia for I find it unjust, if not absurd, to order Manilabank to share its profits where there evidently are no profits to speak of. Since 1984, Manilabank appears to have been placed under controllership by the Central Bank due to its precarious financial condition. I should like, however, to elaborate a bit on Article 110 of our Labor Code, as amended on 21 March 1989 by Republic Act No. 6715; this article provides:
Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid.
The implications of the amendment were explained in great detail by the Court in Development Bank of the Philippines vs. National Labor Relations Commission,1 viz:
The amendment expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate.1aшphi1
x x x x x x x x x
Notably, the terms "declaration" of bankruptcy or "judicial" liquidation have been eliminated. Does this mean then that liquidation proceedings have been done away with?
We opine in the negative, upon the following considerations:
1. Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits.
x x x x x x x x x
2. In the same way that the Civil Code provisions on classification of credits and the Insolvency Law have been brought into harmony, so also must the kindred provisions of the Labor Law be made to harmonize with those laws.
3. In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvents's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated (De Barretto vs. Villanueva, No. L-14938, December 29, 1962, 6 SCRA 928). The rationale therefore has been expressed in the recent case of DBP vs. Secretary of Labor (G.R. No. 79351, 28 November 1989), . . . .
4. A distinction should be made between a preference of credit and a lien.£A⩊phi£ A preference applies only to claims which do no attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.
x x x x x x x x x
6. Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean "absolute preference," the same should be given only prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4, Civil Code). Thereby, any infringement on the constitutional guarantee on non-impairment of the obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of fact, DBP's mortgage credit antedated by several years the amendatory law, RA No. 6715. To give Article 110 retroactive effect would be to wipe out the mortgage in DBP's favor and expose it to a risk which it sought to protect itself against by requiring a collateral in the form of real property.
In fine, the right of preference given to workers under Article 110 of the Labor Code cannot exist in any effective way prior to the time of its presentation in distribution proceedings. It will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the "claims of the Government and other creditors" may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest, since those proceedings are proceedings in rem, and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony.2
The ruling has since been reiterated in a number of cases such as in Bolinao, Jr., vs. Padolina;3 in the Development Bank of the Philippines vs. National Labor Relations Commission Cases4 and in Hautea vs. National Labor Relations Commission.5 In Banco Filipino Savings and Mortgage Bank vs. National Labor Relations Commission,6 the Court allowed the debtor-petitioner to invoke Article 110 of the Code not only to protect its own interest but also for the benefit of the creditors as well.
Footnotes
1 183 SCRA 328.
2 At pp. 336-339.
3 186 SCRA 368.
4 186 SCRA 841; 218 SCRA 183; 229 SCRA 350; 236 SCRA 117.
5 230 SCRA 119.
6 188 SCRA 700.
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