Case Summary (G.R. No. 79351)
Background of the Case
The case arises from a labor dispute initiated by private respondents against RMC, resulting in a decision dated July 3, 1985, which ordered RMC to pay back wages and separation benefits. A writ of execution was subsequently issued, but compliance was thwarted when RMC's property was padlocked and foreclosed by DBP due to non-payment of loans. Private respondents then sought the delivery of RMC properties from DBP for the satisfaction of their claims, invoking Article 110 of the Labor Code.
Orders and Motion for Reconsideration
The initial motion by private respondents was granted by Officer-in-Charge Romeo A. Young, stating they held a preferential lien over the mortgaged properties of RMC for the satisfaction of their judgment claims. DBP’s motions for reconsideration argued that Article 110 of the Labor Code was inapplicable due to the absence of bankruptcy proceedings, as the properties had already been foreclosed and sold.
Decision of the Undersecretary of Labor
On July 29, 1987, the Undersecretary of Labor denied DBP's motion for reconsideration, prompting DBP to file a special civil action for certiorari with the Court, seeking to nullify the order and enjoin enforcement thereof.
Jurisdictional Issues and Abuse of Discretion
The Court found merit in DBP's arguments and established that public respondent acted with grave abuse of discretion. It emphasized that the preferential rights under Article 110 of the Labor Code can only arise in circumstances involving formal bankruptcy or liquidation proceedings, which were not present in this case. The ruling highlighted that the plain meaning of Article 110 restricts its application to scenarios where the employer is undergoing bankruptcy or liquidation.
Foreclosure and Ownership of Properties
The ruling further examined the facts surrounding the foreclosure conducted by DBP in 1983, confirming that RMC had ceased to be the owner of the properties in question. Consequently, the order mandating a delivery of properties owned by DBP back to RMC for disposition was not only inappropriate but also violated the guiding principles of judgment execution, which are confined to properties undeniably belonging to the judgment debtor.
Clarification on Lien versus Preference of Credit
The Court clarified that Article 110 does not establish a lien but rather a preference of credit for e
...continue readingCase Syllabus (G.R. No. 79351)
Case Background
- The case involves the Development Bank of the Philippines (DBP) as the petitioner seeking to nullify an order issued on July 29, 1987, by the Undersecretary of Labor and Employment, affirming an earlier directive from the National Capital Region Officer-in-Charge, Romeo A. Young.
- The order directed DBP to deliver properties belonging to Riverside Mills Corporation (RMC) to the Ministry of Labor and Employment (MOLE) for proper disposition pursuant to Article 110 of the Labor Code.
- The underlying labor case (NCR-LSED-7-334-84) was initiated by private respondents against RMC, alleging illegal dismissal, unfair labor practices, illegal deductions from salaries, and violations of the minimum wage law.
Procedural History
- On July 3, 1985, a decision was rendered by Director Severo M. Pucaan ordering RMC to pay private respondents backwages and separation benefits.
- A writ of execution was issued on October 22, 1985, directing the collection of P1,256,678.76 from RMC, which included provisions for selling RMC's goods and chattels if necessary.
- However, by May 23, 1986, the writ was returned unserved because RMC's premises had been padlocked and foreclosed by DBP due to RMC's failure to meet its loan obligations.
Motion for Delivery of Properties
- In light of the foreclosure, private respondents filed a motion with MOLE requesting the delivery of RMC properties in DBP's possession, asserting their right to preferential treatment under Article 110 of the Labor Code.
- DBP opposed the motion, arguing that the proper