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    Vis The Assets of The Debtor, Nor Have Such Claims Accrued After The Effectivity of

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    Merlo Sebasthian Silva
    The Development Bank of the Philippines (DBP) petitioned to reverse a decision that held it liable for unpaid wages and benefits to former employees of Atlas Textile Development Corporation (ATLAS). ATLAS had taken out a loan from DBP and used its assets as collateral. When ATLAS defaulted, DBP foreclosed on the assets. The court ruled that under Article 110 of the Labor Code, the workers' preference for unpaid wages took precedence over DBP's lien on the assets. The Supreme Court granted DBP's petition, finding that Article 110 must be read with Civil Code provisions on creditor claims, requiring judicial proceedings to adjudicate such claims against a debtor's assets. Amendments expanding worker preferences also applied

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    Vis The Assets of The Debtor, Nor Have Such Claims Accrued After The Effectivity of

    Uploaded by

    Merlo Sebasthian Silva
    13 views2 pages
    The Development Bank of the Philippines (DBP) petitioned to reverse a decision that held it liable for unpaid wages and benefits to former employees of Atlas Textile Development Corporation (ATLAS). ATLAS had taken out a loan from DBP and used its assets as collateral. When ATLAS defaulted, DBP foreclosed on the assets. The court ruled that under Article 110 of the Labor Code, the workers' preference for unpaid wages took precedence over DBP's lien on the assets. The Supreme Court granted DBP's petition, finding that Article 110 must be read with Civil Code provisions on creditor claims, requiring judicial proceedings to adjudicate such claims against a debtor's assets. Amendments expanding worker preferences also applied

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    DBP v

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    The Development Bank of the Philippines (DBP) petitioned to reverse a decision that held it liable for unpaid wages and benefits to former employees of Atlas Textile Development Corporation (ATLAS). ATLAS had taken out a loan from DBP and used its assets as collateral. When ATLAS defaulted, DBP foreclosed on the assets. The court ruled that under Article 110 of the Labor Code, the workers' preference for unpaid wages took precedence over DBP's lien on the assets. The Supreme Court granted DBP's petition, finding that Article 110 must be read with Civil Code provisions on creditor claims, requiring judicial proceedings to adjudicate such claims against a debtor's assets. Amendments expanding worker preferences also applied

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views2 pages

    Vis The Assets of The Debtor, Nor Have Such Claims Accrued After The Effectivity of

    Uploaded by

    Merlo Sebasthian Silva
    The Development Bank of the Philippines (DBP) petitioned to reverse a decision that held it liable for unpaid wages and benefits to former employees of Atlas Textile Development Corporation (ATLAS). ATLAS had taken out a loan from DBP and used its assets as collateral. When ATLAS defaulted, DBP foreclosed on the assets. The court ruled that under Article 110 of the Labor Code, the workers' preference for unpaid wages took precedence over DBP's lien on the assets. The Supreme Court granted DBP's petition, finding that Article 110 must be read with Civil Code provisions on creditor claims, requiring judicial proceedings to adjudicate such claims against a debtor's assets. Amendments expanding worker preferences also applied

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    DBP v. NLRC, G.R. No. 86227, 19 January 1994.

    Facts: A petition for certiorari was filed by the Development Bank of the
    Philippines(DBP), which seeks the reversal of the decision of the National Labor
    Relations Commission, affirming that of the Labor Arbiter, which holds the petitioner,
    along with Atlas Textile Development Corporation (ATLAS), liable to the private
    respondents for wage differentials, "illegal" salary deductions, separation pay, and
    similar money claims. The private respondents were employees of ATLAS, a textile
    firm, which hypothecated its certain assets to DBP. After ATLAS defaulted in its
    obligations, DBP foreclosed on the mortgage in March 1985. The latter acquired the
    mortgaged assets by virtue of the foreclosure sale. The private respondents filed their
    aforementioned claim,on 30 October 1985, against both ATLAS and DBP. The Labor
    Arbiter ruled for the private respondents. On appeal by DBP, the decision was
    sustained by the NLRC. Hence, the instant petition. The petitioner contends that it is
    error on the part of the public respondent to consider the workers' preference under
    Article 110 of the Labor Code over that of DBP's mortgage lien.

    ISSUE: Whether or not public respondent erred in considering the workers'


    preference under Article 110 of the Labor Code over that of DBP's mortgage lien.

    RULING: The case at bench concerns monetary claims of workers that are not
    involved in judicial proceedings in rem in adjudication of claims of creditors vis-a-
    vis the assets of the debtor, nor have such claims accrued after the effectivity of
    Republic Act 6715. The petition thus raises issues heretofore squarely resolved in our
    aforequoted decisions. To recapitulate.

    (1) Article 110 of the Labor Code, as amended, must be viewed and read in
    conjunction with the provisions of the Civil Code on concurrence and preferences of
    credits;
    (2) The aforesaid provisions of the Civil Code, including Article 110 of the Labor
    Code, require judicial proceedingsin rem in adjudication of creditors' claims against
    the debtor's assets to become operative;

    (3) Republic Act No. 6715 has the effect of expanding the "worker preference" to
    cover not only unpaid wages but also other monetary claims of laborers, to which
    even claims of the Government must be deemed subordinate; and

    (4) The amendatory provisions of Republic Act 6715, which took effect on 21 March
    1989, should only be given prospective application.

    Wherefore, the petition is GRANTED.

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