GR 160073; (October, 2005) (Digest)
G.R. No. 160073 October 24, 2005
ABUNDIO BARAYOGA and BISUDECO-PHILSUCOR CORFARM WORKERS UNION (PACIWU CHAP-TPC), Petitioners, vs. ASSET PRIVATIZATION TRUST, Respondent.
FACTS
Petitioners were employees of Bicolandia Sugar Development Corporation (BISUDECO). Due to BISUDECO’s failure to pay its loan obligations to the Philippine National Bank (PNB), its mortgaged assets were foreclosed. The Asset Privatization Trust (APT), which had been constituted as trustee over the government-acquired financial claim against BISUDECO, emerged as the sole bidder and purchaser at the foreclosure auction in April 1991. Subsequently, in October 1992, APT sold these foreclosed assets to Bicol-Agro-Industrial Cooperative (BAPCI). Meanwhile, the petitioners filed complaints for illegal dismissal and monetary claims against BISUDECO, later impleading APT. The Labor Arbiter and the National Labor Relations Commission (NLRC) held APT liable for the petitioners’ claims, reasoning that APT, having taken over the assets, should have treated the workers’ claims as a lien thereon.
ISSUE
Whether the Asset Privatization Trust (APT), as the mortgagee-creditor and subsequent purchaser of BISUDECO’s foreclosed assets at a public auction, can be held liable for the labor claims of BISUDECO’s employees.
RULING
No. The Supreme Court reversed the NLRC and held that APT cannot be held liable for the labor claims of BISUDECO’s employees. The legal logic is anchored on the distinct nature of a mortgage credit and the absence of an employer-employee relationship. A mortgage constitutes a lien on specific properties of the debtor, creating a real right. The mortgagee-creditor’s remedy is confined to foreclosing the mortgaged properties, and its rights are limited to the property itself. Crucially, the foreclosure and subsequent auction sale did not transfer the employer’s liabilities to APT. APT merely stepped into the shoes of a purchaser of assets, not a successor-in-interest to the employer-employee relationship. The Court emphasized that labor claims, while preferred credits under the Labor Code, are subordinate to specially preferred credits such as a mortgage lien. Since no employer-employee relationship ever existed between APT and the petitioners, APT cannot be compelled to answer for the obligations of BISUDECO, the original employer. The liability for unpaid wages and illegal dismissal remains solely with BISUDECO.