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PNB v.

Cruz (180 SCRA 186)

Facts:

Sometime in 1980 Aggregate Mining Exponents (AMEX) laid-off majority of its employees because it was
experiencing business reverses. But the remaining 30 % of the employees were not paid their wages. This
non-payment went on until July 1982 when AMEX completely ceased operations and instead
entered into an operating agreement with T.M. San Andres Development Corporation whereby the latter
would be leasing the equipment and machineries of AMEX. The unpaid employees sought redress from
the Labor Arbiter who, on August 27, 1986, decided in their favour, and ordered AMEX to pay the unpaid
wages and separation pay of the employees. AMEX did not appeal from this decision. But PNB, in its
capacity as mortgagee-creditor of AMEX interposed an appeal with the respondent NLRC, not being
satisfied with the outcome of the case. PNB alleged that the workers' lien does not cover the termination
or severance pay which the workers likewise claimed they were entitled to. In a resolution dated
October27, 1987, the NLRC affirmed the decision of Labor Arbiter.

Issues:

W/N the employees are entitled unpaid wages and separation pay.

Ruling:

PNB did not question the validity of the workers' claim for unpaid wages with respect to the mortgaged
properties of AMEX. Hence, it is now barred from claiming that the workers' lien applies only to the
products of their labor and not to other properties of the employer which are encumbered by mortgage
contracts or otherwise.

This Court must uphold the preference accorded to the private respondents in view of the provisions of
Article 110 of the Labor Code which are clear and which admit of no other interpretation.

The worker preference applies even if the employer's properties are encumbered by means of a mortgage
contract.

The unpaid wages and other monetary claims of workers should be paid in full before the claims of the
Government and other creditors nor does tax claims could have preference over the workers' claim.

AMEX failed to adduce convincing evidence to prove that the financial reverses were indeed serious."

It is essentially required that the alleged losses in business operations must be proved.

Termination pay is reasonably regarded as forming part of the remuneration or other money benefits
accruing to employees or workers by reason of their having previously rendered services..." Hence,
separation pay must be considered as part of remuneration for services rendered or to be rendered.

The workers' preference covers not only unpaid wages but also other monetary claims.

In line with this policy, measures must be undertaken to ensure that such constitutional mandate on
protection to labor is not rendered meaningless by an erroneous interpretation of the applicable laws.
DBP v. NLRC (218 scra 168)

Facts:

Private respondents Godofredo Morillo, Sunday Bacea, Alfredo Cos and Rogelio Villanueva were hired as
security guards by Confidential Investigation and Security Corporation ("CISCOR"). In the course of their
employment, private respondents were assigned to secure the premises, the Development Bank of the
Philippines ("DBP") which, in turn, assigned private respondents to secure one of its properties or assets,
the Riverside Mills Corporation.

Later on, respondents Morillo, Bacea and Cos followed suit in resigning from CISCOR. Thereafter, private
respondents claimed from CISCOR the return of their cash bond and payment of their 13th month pay
and service incentive leave pay. On 10 March 1988, CISCOR filed a motion with leave to implead petitioner
bank and averred therein that in view of its contract with the petitioner whereby, for a certain service fee,
CISCOR undertook to guard petitioner’s premises, both CISCOR and petitioner, under the Labor Code, are
jointly and severally liable to pay the salaries and other statutory benefits due the private respondents,
petitioner being an indispensable party to the case.

The Labor Arbiter rendered a decision in favor of the respondents. On January 24, 1991, the NLRC held
the petitioner DBP, CISCOR and Medina, as jointly and severally liable.

Issues:

W/N the respondents are entitled to the return of their cash bond and payment of their 13th month pay
and service incentive leave pay.

W/N petitioner was correctly held jointly and severally liable, alongside CISCOR and Medina, for the
payment of the private respondents’ salary differentials, 13th month pay, service incentive leave pay, rest
day pay, legal holiday pay, and the refund of their cash deposit.

Ruling:

The Supreme Court ruled that the rule is that, in job contracting, the principal is jointly and severally liable
with the contractor. The statutory basis for this joint and several liabilities is set forth in Articles 107 5and
109 6 in relation to Article 106 of the Labor Code. There is no doubt that private respondents are entitled
to the cash benefits due them. The petitioner is also, no doubt, liable to pay such benefits because the
law mandates the joint and several liabilities of the principal and the contractor for the protection of labor.

This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure
compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The
contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is
made the indirect employer of the contractor’s employees for purposes of paying the employees their
wages should the contractor be unable to pay them. This joint and several liability facilitates, if not
guarantees, payment of the workers’ performance of any work, task, job or project, thus giving the
workers ample protection as mandated by the 1987 Constitution.

We note that in the present case, there is no claim for wage differentials either in the complaints or in the
position paper filed by private respondents before the labor arbiter. Accordingly, no relief may be granted
on such matter. The private respondents are entitled to rest day and holiday pay.
Republic v. Peralta (150 SCRA 37)

Facts:

In May 1977, the private respondent Quality Tobacco Corporation commenced a voluntary insolvency
proceedings. On November 17, 1980, the trial court held that the claims of USTC and FOITAF for separation
pay of their respective members embodied in final awards of the National Labor Relations Commission
were to be preferred over the claims of the Bureau of Customs and the Bureau of Internal Revenue.

The Solicitor General contends that separation is given to a laborer for a separation from employment
computed on the basis of the number of years the laborer was employed by the employer. That it is a
form of penalty or damage against the employer in favor of the employee for the latter's dismissal or
separation from service.

Issue:

W/N the respondents’ claims were to be preferred over the claims of the Bureau of Customs and the
Bureau of Internal Revenue.

Ruling:

The Supreme Court held that if the Insolvent has inventories of processed or manufactured tobacco
products, such inventories must be subjected firstly to the claim of the Bureau of Internal Revenue for
unpaid tobacco inspection fees. The remaining value of such inventories after satisfaction of such fees will
be subject to a lien in favor of the Unions by virtue of Article 2241.

In case, upon the other hand, the Insolvent no longer has any inventory of processed or manufactured
product, then the claim of the Unions for separation pay would have to be satisfied out of the "free
property" of the Insolvent under Article 2244 of the Civil Code. as modified by Article 110 of the Labor
Code.

Turning to (b), should the Bureau of Customs no longer have any importations by the Insolvent still within
customs custody or control, or should the importations still held by the Bureau of Customs be or have
become insufficient in value for the purpose, customs duties and taxes remaining unpaid would have only
ninth priority by virtue of Article 2244, number 9. In respect therefore of the Insolvent's "free property, "
the claims of the Unions will enjoy first priority under Article 2244 as modified and will be paid ahead of
the claims of the Bureau of Customs for any customs duties and taxes still remaining unsatisfied.

Therefore, the petition for review is granted and the trial court are modified accordingly.

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