G.R. No. 160073
October 24, 2005
Facts
Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation (BISUDECO),a sugar plantation mill located in Himaao, Pili, Camarines Sur.
Respondent Asset Privatization Trust (APT) is a public trust mandated to take title to and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified for privatization or disposition.
BISUDECO contracted a loan obligation secured by a mortgage with PNB. Pursuant to EO No. 14, the financial claim of PNB against BISUDECO has been transferred to the National Government. By virtue of a Trust Agreement executed between the National Government and APT, the latter was constituted as trustee over BISUDECO’s account with the PNB.
Meanwhile, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take over the management of the sugar plantation and milling operations.
BISUDECO failed to pay its loan obligation. Hence, the mortgaged properties were foreclosed and sold to APT. Bicol-Agro-Industrial Cooperative purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling operations.
Thereafter, the union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages and other labor standard benefits plus damages. BISUDECO, Pensumil and APT all interposed the defense of lack of employer-employee relationship.
The Labor Arbiter and NLRC rendered APT liable for the money claims. However, the Court of Appeals ruled that APT is not liable since the latter was not the employer of petitioners, but was impleaded only for possessing BISUDECO’s mortgaged properties as trustee.
Issue
Whether APT can be held liable for the monetary claims of the employees.
Held
No.
Article 110 of the Labor Code provides that workers shall enjoy first preference as regards their unpaid wages and other monetary claims in the event of bankruptcy on the part of the employer. However, such rule is not absolute. A special preferred credit will prevail over the claims of the employees which are only considered as ordinary preferred credit.
Under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of the debtor. On the other hand, the worker’s preference under Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the worker’s money claim to first priority in the order of preference established under Article 2244 of the Civil Code, the claim has no preference over special preferred credits. In other words, responsibility for the liabilities of a mortgagor towards its employees cannot be transferred via an auction sale to a purchaser who is also the mortgagee-creditor of the foreclosed assets and chattels.
The rationale for the rule is that 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. he mortgage constitutes a lien on the determinate properties of the employer-debtor, because it is a specially preferred credit to which the worker’s monetary claims is deemed subordinate.
In this case, APT’s lien on BISUDECO’s mortgaged assets, being a mortgage credit, is a special preferred lien that must be satisfied first before the claims of the workers. Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have any preference over the latter’s mortgage credit.
Therefore, APT who is a mortgagee of the employer cannot be held liable for the monetary claims of the employees.