Facts:

The case involves Banco Filipino Savings and Mortgage Bank, hereinafter referred to as "Banco Filipino," represented by its liquidator, Ms. Carlota P. Valenzuela. The case was initiated after Banco Filipino was placed under receivership and subsequently ordered liquidated by the Monetary Board of the Central Bank. At the time of the bank's liquidation, Fortunato M. Dizon, Jr. held the position of Executive Vice President and Chief Operating Officer of the bank. On August 20, 1990, Dizon received a notification from the appointed liquidator stating that all management authority was assumed by the liquidators and that his employment was being terminated. Dizon filed a request with the liquidator for compensation related to his accumulated vacation and sick leave credits, as well as any unexpended reimbursable allowances. However, his claims were not fulfilled because the liquidator's counsel advised that Dizon's claims should be processed as creditor claims w

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Facts:

Background of the Case

• Banco Filipino Savings and Mortgage Bank was placed under receivership and subsequently ordered liquidated by the Monetary Board of the Central Bank.
• The bank's management was taken over by Central Bank-appointed liquidators, and its then Executive Vice President and Chief Operating Officer, Fortunato M. Dizon, Jr., received a letter from Liquidator Ms. Carlota P. Valenzuela informing him that his employment was terminated and that the management authority of the bank had been assumed by the liquidators.

Claims and Actions of Fortunato M. Dizon, Jr.

• Following his termination, Mr. Dizon submitted a request to the liquidator for the cash equivalent of his accumulated vacation and sick leave credits as well as for unexpended/unused reimbursable allowance.
• Based on counsels’ advice, the liquidator treated Mr. Dizon’s claim as that of a creditor, directing that it be processed pursuant to the liquidation plan approved by the Monetary Board.
• After repeated demands for payment were denied, Mr. Dizon filed a complaint on March 31, 1986, with the labor arbiter for recovery of unpaid salary, cash equivalent of accumulated leaves, separation pay under Article 283 of the Labor Code, and moral damages and attorney’s fees.

Proceedings in the Labor and Appellate Courts

• The liquidator, representing the bank, moved for the dismissal of the complaint on the ground that all claims against a bank under liquidation should be filed with the Regional Trial Court (as the designated liquidation court) following the provisions of Section 29 of the Central Bank Act.
• On November 14, 1986, the labor arbiter affirmed her jurisdiction and issued a decision in favor of Mr. Dizon (with the exception of moral damages and attorney’s fees).
• Both parties appealed to the National Labor Relations Commission (NLRC), which increased the award and at one stage ordered payment of actual and moral damages and attorney’s fees, though the moral damages award was later deleted in the resolution dated February 24, 1988.

Contentions Raised by the Liquidator

• The liquidator argued that, under Section 29 of the Central Bank Act (prior to its amendment), claims against a bank placed under liquidation are within the exclusive jurisdiction of the liquidation court and should not be adjudicated by labor arbiters or the NLRC under Article 217 of the Labor Code.
• The liquidator further contended that directing payment of certain claims outside of the liquidation process would result in undue preference for a particular creditor (i.e., Mr. Dizon).
• It was also emphasized that although employee claims for wages are given preferential treatment under Article 110 of the Labor Code, such preference should apply only within the confines of the liquidation process and not as an advancement of payment prior to determination of the bank’s distributable assets.

Extraneous Considerations

• The case noted the ongoing controversy regarding the bank’s solvency, with some stockholders claiming that the bank was financially sound and that its closure was illegal.
• A prior resolution (G.R. No. 70054) had temporarily enjoined the liquidation of the bank, pending a hearing where management and stockholders could contest the bank’s closure.
• Mr. Dizon argued that the absence of an active liquidation proceeding meant that his claims could justly be processed by the labor tribunal and the NLRC.

Issue:

Jurisdictional Issue

• Whether the special provisions of Section 29 of the Central Bank Act, which assign liquidation proceedings to a court, preclude the Labor Arbiter and the NLRC from adjudicating the money claims of a former employee of a bank under liquidation.
• Whether Article 217 of the Labor Code, which confers exclusive jurisdiction over employee money claims to labor tribunals, applies even when the employer is undergoing liquidation.

Substantive Claims of the Employee

• The validity and proper processing of Mr. Dizon’s claim for the cash equivalent of his accumulated vacation and sick leave credits and other monetary benefits amid liquidation proceedings.
• Whether the payment of separation pay under Article 283 of the Labor Code is warranted when the closure or cessation of operations is attributed to financial losses or other causes.
• Whether allowing Mr. Dizon’s claims to be processed outside the liquidation process constitutes an undue preference and violates the orderliness of the liquidation plan established for settling creditors’ claims.

Practical Considerations

• The impact of the ongoing restraining order on the liquidation of the bank on the proper forum for adjudicating the monetary claims.
• The balance between respecting the preferential rights of employees (as provided under Article 110 of the Labor Code) and ensuring equality among all creditors in the liquidation proceedings.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)