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Case 2: PNB v.

Teresita Cruz
Facts:
Art 110: workers shall enjoy first preference with regard to wages due them and other
monetary claimesm any provision of law to the contrary notwithstanding, in case of
bankruptcy or liquidation of an employers business
History
AMEX laid off 70% of its employees because of business reverses
30% retained employees were not paid of their wages from 1980-1982 when AMEX
completely ceased operations and entered into an opearating agreement with T.M.
San Andres Dev Corp for leasing of equipment and machineries of AMEX
Unpaid employees file a complaint wth the Labor Arbiter, ordered AMEX to pay the
total amout of more than 200k
Necessary arrangement was made between respondents- AMEX, T.M. San Andres
Dev Corp and PNB; if AMEX cannot pay, will pay thru the proceeds of the
machineries and equipement operated by T.M. Amd thru lease of the same from PNB
AMEX did not appeal the decision but PNB, as mortgagee-creditor of AMEX file an
appeal with NLRC because workers lien covers unpaid wages only and not the
termination or severence pay which the latter also claims they are entitled to
NLRC denied appeal of PNB
Petitioner Grounds:
1. Art 110 of the Labor Code must be read in relation to Art 2241, 2242, 2243, 2244, and
2255 of Civil Code concerning the classificationm concurrence and preference of credits?
2. Should apply on the workers unpaid wages and not included termination or severence
pay cited in Sec 7, Rule 1, Book VI of Rules and Regulations of Labor Code, Art 283 of
the Labor Code which states that he separation from work of an employees for a just
cause does not entitle him to termination pay.
ISSUE:
1. WON Art 110 should apply and workers lien should take precedence over any other
claim?
2. WON even if workers lien apply to the instant case, the same should only cover the
unpaid wages excluding termination or severnce pay?
SC Ruling
Petition is dismissed and affirmed decision of NLRC
For Issue Number 1:

Petitioner barred from claiming that the workers lien applies only to the products of
their labor and not to the other properties of the employer which are encumbered by
mortgage contracts or otherwise due to failure of petitioner to question the same on
appeal
In regards to Art 110, phrase any provision of law to the contrary indicates that
such preference shall prevail despite the order set forth in Arts 2241 to 2245 of the
Civil Code because no exceptions were provided under Art 110 so none shall be
considered
Labor Code was signed into law after Civil code took effect; when two statutes of
different dates and of contrary tenor are of theoretical application to a particular case
the statute od later date must prevail being a later expression of legislative will
Reliance of petitioner on Republic v. Peralta is without basis; case involved tax
claims of the State which is of highest importance of the sovereign; Art 110 as
amended, unpaid wages and monetary claims of workers should be paid in full before
the claims of the government and other creditors
Art 110 of the Labor Code shall prevail because the purpose by which it was
intended is for the protection of the working class
For Issue Number 2:
AMEX failed to convince Court that the financial reverses were indeed serious
wages shouls also include all benefits under CBA like severence pay, educ
allowance, accrued vac leave earned but not enjoyed, as well as compensation
awards and unpaid salaries for services rendered
Termination pay forms part of the money benefits accruing to wprkers by reason of
their having previously rendered services