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Abundio Barayoga and Bisudeco-Philsucor Corfarm Workers Union (Paciwu Chap-Tpc), Petitioners, vs. Asset Privatization Trust, Respondent. Facts

The Asset Privatization Trust (APT) took over management of BISUDECO, a sugar company, after BISUDECO failed to repay loans. APT later sold BISUDECO's assets to BAPCI. Former BISUDECO employees filed claims against APT for unpaid wages and benefits. The court ruled that APT was not liable because labor agreements are not enforceable against new owners unless the new owner explicitly assumes the liabilities. The court also noted that APT's mortgage on BISUDECO's assets was a "special preferred credit" that took priority over the employees' ordinary preferred credit claims.

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95 views2 pages

Abundio Barayoga and Bisudeco-Philsucor Corfarm Workers Union (Paciwu Chap-Tpc), Petitioners, vs. Asset Privatization Trust, Respondent. Facts

The Asset Privatization Trust (APT) took over management of BISUDECO, a sugar company, after BISUDECO failed to repay loans. APT later sold BISUDECO's assets to BAPCI. Former BISUDECO employees filed claims against APT for unpaid wages and benefits. The court ruled that APT was not liable because labor agreements are not enforceable against new owners unless the new owner explicitly assumes the liabilities. The court also noted that APT's mortgage on BISUDECO's assets was a "special preferred credit" that took priority over the employees' ordinary preferred credit claims.

Uploaded by

Ken Marcaida
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

ABUNDIO BARAYOGA and BISUDECO-PHILSUCOR CORFARM WORKERS UNION

(PACIWU CHAP-TPC), Petitioners, vs. ASSET PRIVATIZATION TRUST,


Respondent.

FACTS: Asset Privatization Trust (APT) is a public trust whose mandate is to


provisionally manage and dispose of non-performing assets of the government. When
former President Aquino issued AO No. 14, which identified certain assets of
government institutions that were to be transferred to the National government, among
those transferred assets were the financial claim of PNB against Bicolandia Sugar
Development Corp. (BISUDECO) in a form of a secured loan. BISUDECO is a sugar
plantation mill located in Camarines Sur. Consequently, APT was constituted as trustee
over BISUDECO’s account with PNB by virtue of a trust agreement between the
government and APT.

In August 1988, BISUDECO contacted the services of Philippine Sugar Corp (Philsucor)
to take over management of the sugar plantation and milling operation until August
1992. And because of the continued failure of BISUDECO to pay its outstanding loan
with PNB, its mortgage properties were foreclosed and subsequently sold in a public
auction to APT. In July 1992, APT accepted the offer of Bicol-Agro-Industrial Coop
(BAPCI) to buy the sugar plantation and mill. And in the event of the company’s
privatization, ATP authorized the payment of separation benefit’s to BISUDECO’s
employees. Then BAPCI purchased the foreclosed assets of BISUDECO and took over
its sugar milling operations under the trade name Peñafrancia Sugar Mill (Pensumil).

The Bisudeco-Philsucor Corfarm Workers Union filed a complaint for unfair labor
practice, illegal dismissal, illegal deduction and underpayment of wages and other labor
standard benefits plus damages in 1991. The again they filed a similar complaint in
1992. Then in 1993, they filed an amended complaint impleading as additional party
respondents APT and Pensumil.

In 1998 Labor Arbiter ordered APT to pay complainants of the mandatory employment
benefits. The NLRC affirmed APT’s liability for petitioners’ money claims. Respondent
sought relief from the CA and they ruled that APT should not be held liable for
petitioners’ claim.

ISSUE:
1. Whether or not the liabilities of the previous owners to their employees are
enforceable against the buyer or transferee who purchased the company’s
assets.
2. Whether or not ordinary preferred credits is the first choice over special preferred
credit.

RULING:
Any assumption of liability must be specifically and categorically agreed upon. Unless,
expressly assumed, labor contracts like collective bargaining agreements are not
enforceable against the transferee of an enterprise. Labor contracts are in personam
and thus binding only between the parties. The liabilities of the previous owner to its
employees are not enforceable against the buyer or transferee, unless (1) the latter
unequivocally assumes them; or (2) the sale or transfer was made in bad faith.

Under Art 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred
credit that enjoys preference with respect to a specific/determinate property of a debtor.
On the other hand, the workers preference under Art 110 of the Labor code is an
ordinary preferred credit. While this provision raises the worker’s money claim to first
priority in the order of preference established in Art 2244 of the Civil Code, the claim
has no preference over special preferred credits. Being a mortgage credit APT’s lien
on BISUDECO’s mortgaged assets is a special preferred lien that must be satisfied first
before the claims of the workers.
 

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