Labor case digest

10. INT'L. SCHOOL ALLIANCE VS. QUISUMBING [333 SCRA 13; G.R. NO. 128845; 1
JUN 2000]
Facts: Receiving salaries less than their counterparts hired abroad, the local-hires of
private respondent School, mostly Filipinos, cry discrimination. We agree. That the
local-hires are paid more than their colleagues in other schools is, of course, beside
the point. The point is that employees should be given equal pay for work of equal
value.
Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily
for dependents of foreign diplomatic personnel and other temporary residents. To
enable the School to continue carrying out its educational program and improve its
standard of instruction, Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws
that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. These
include housing, transportation, shipping costs, taxes, and home leave travel
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more
than local-hires. The School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor"
and (b) limited tenure.
Issue: Whether or Not the grants provided by the school to foreign hires and not to
local hires discriminative of their constitutional right to the equal protection clause.
Held: The foregoing provisions impregnably institutionalize in this jurisdiction the
long honored legal truism of "equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries. This rule applies to the School, its
"international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreign-hires. The Court finds this argument a little
cavalier. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This presumption is borne
by logic and human experience. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others

receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated
unfairly.
While we recognize the need of the School to attract foreign-hires, salaries should
not be used as an enticement to the prejudice of local-hires. The local-hires perform
the same services as foreign-hires and they ought to be paid the same salaries as
the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited
tenure also cannot serve as valid bases for the distinction in salary rates.
The Constitution enjoins the State to "protect the rights of workers and promote
their welfare," "to afford labor full protection." The State, therefore, has the right
and duty to regulate the relations between labor and capital. These relations are not
merely contractual but are so impressed with public interest that labor contracts,
collective bargaining agreements included, must yield to the common good. Should
such contracts contain stipulations that are contrary to public policy, courts will not
hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent School
to justify the distinction in the salary rates of foreign-hires and local hires to be an
invalid classification. There is no reasonable distinction between the services
rendered by foreign-hires and local-hires.
Wherefore, the petition is given due course. The petition is hereby granted in part.
The orders of the secretary of labor and employment dated June 10, 1996 and
march 19, 1997, are hereby reversed and set aside insofar as they uphold the
practice of respondent school of according foreign-hires higher salaries than localhires.

50. DEVELOPMENT BANK OF THE PHILIPPINES, vs.NATIONAL LABOR RELATIONS

COMMISSION,LABOR ARBITER ISABEL P. ORTIGUERRA, and LABOR ALLIANCE FOR
NATIONALDEVELOPMENT, G.R. NO. NOS. 82763-64 MARCH 19, 1990
FACTS:
Lirag Textile Mills, Inc. (LIRAG) was a mortgage debtor of DBP. Private respondent
Labor Alliance for National Development (LAND) was the bargaining representative
of the more or less 800 former rank and file employees of LIRAG. LIRAG started
terminating the services of its employees on the ground of retrenchment. LIRAG has
since ceased operations presumably due to financial reverses.
Joselito Albay, one of the employees dismissed filed a complaint before the National
Labor Relations Commission(NLRC) against LIRAG for illegal dismissal, LAND, on

behalf of 180 dismissed members, also filed a Complaint against LIRAG.In a

Decision, Labor Arbiter Apolinar L. Sevilla ordered LIRAG to pay the individual
complainants. The NLRC affirmed. Judgment Writ of Execution was issued. DBP
extrajudicially foreclosed the mortgaged properties for failure of LIRAG to pay its
mortgage obligation. As the only bidder at the foreclosure sale, DBP acquired said
mortgaged properties. Since DBP was the sole mortgagee, no actual payment was
made, the amount of the bid having been merely credited in partial satisfaction of
LIRAG's indebtedness. By reason of said foreclosure, the Writ of Execution issued in
favor of the complainants remained unsatisfied. A Notice of Levy on Execution on
the properties of LIRAG was then entered. LAND filed a "Motion for Writ of
Execution and Garnishment" of the proceeds of the foreclosure sale.
Labor Arbiter Sevilla granted the Writ of Garnishment and directed DBP to remit to
the NLRC the sum of P6,292,380.00 out of the proceeds of the foreclosed properties
of LIRAG sold at public auction in order to satisfy the judgment previously rendered.
DBP sought reconsideration. Public respondent, Labor Arbiter Isabel P. Ortiguerra
denied reconsideration. DBP appealed that denial to the NLRC. In the meantime, by
virtue of Proclamation Nos. 50 and 50-A, the Asset Privatization Trust (APT) became
the transferee of the DBP foreclosed assets of LIRAG. A partial Compromise
Agreement was entered into between APT and LAND (Litex Chapter) whereby APT
paid the complainants-employees, ex gratia,the sum of P750,000.00 "in full
settlement of their claims, past and present, withrespect to all assets of LITEX
transferred by DBP to APT." That amount was received by LAND's local President.
LAND, through its national President,NLRC affirmed the appealed Order and
dismissed the DBP appeal.
ISSUE:
WON the proceeds of LIRAG's properties foreclosed by DBP should first satisfy the
unpaid wages of theworkers HELD:
NO.
Development Bank of the Philippines vs
.
Santos
categorically stated:It is quite clear from the provision that a declaration of
bankruptcy or a judicial liquidation must be present before theworkers preference
may be enforced. Thus, Article 110 of the Labor Code and its implementing rule
cannot beinvoked by the respondents in this case absent a formal declaration of
bankruptcy or a liquidation order. Art. 110.
Worker preference in case of bankruptcy

. - In the event of bankruptcy or liquidation of an employer'sbusiness, his workers

shall enjoy first preference as regards their unpaid wages
and other monetary claims,
anyprovision of law to the contrary notwithstanding.
Such unpaid wages and monetary claims
shall be paid in full
beforethe claims of the Government and other creditors may be paid
.Section 10, Rule III, Book III of the Omnibus Rules Implementing the Labor Code:.
Payment of wages and other monetary claims in case of bankruptcy
. - In case of bankruptcy or liquidation of the employer's business, the unpaidwages
and other monetary claims of the employees shall be given first preference and
shall be paid in full before theclaims of government and other creditors may be
paid.In the event of insolvency, a principal objective should be to effect an equitable
distribution of the insolvent's property
among his creditors. To accomplish this there must first be some proceeding where
notice to all of the insolvents
creditors may be given and where the claims of preferred creditors may be
bindingly adjudicated A preference of credit bestows upon the preferred creditor an
advantage of having his credit satisfied first ahead of other claims which may be
established against the debtor. The preferential right of credit attains significance
onlyafter the properties of the debtor have been inventoried and liquidated, and the
claims held by his various creditorshave been established. A distinction should be
made between a preference of credit and a lien. A preference applies only to claims
which donot attach to specific properties. A lien creates a charge on a particular
property. The right of first preference asregards unpaid wages recognized by Article
110 does not constitute a lien on the property of the insolvent debtor infavor of
workers. It is but a preference of credit in their favor, a preference in application. It
is a method adopted todetermine and specify the order in which credits should be
paid in the final distribution of the proceeds of theinsolvent's assets. It is a right to a
first preference in the discharge of the funds of the judgment debtor.The right to
preference given to workers under Article 110 of the Labor Code cannot exist in any
effective way prior tothe time of its presentation in distribution proceedings. It will
find application when, in proceedings such asinsolvency, such unpaid wages shall
be paid in full before the "claims of the Government and other creditors" may
bepaid. But, for an orderly settlement of a debtor's assets, all creditors must be
convened, their claims ascertained andinventoried, and thereafter the preferences
determined in the course of judicial proceedings which have for their object the

subjection of the property of the debtor to the payment of his debts or other lawful
obligations. Thereby, anorderly determination of preference of creditors' claims is
assured.