National Federation of Labor vs.

National Labor Relations Commission

G.R. No. 127718 (March 2, 2000)

Facts:

Petitioners are employees of the Patalon Coconut Estate in Zamboanga. With the advent of the

RA No. 6657 or the Comprehensive Agrarian Reform Law, the government sought the

compulsory acquisition of the land for agrarian reform. Because of this, the private respondents

who are owners of the estate decided to shut down its operation. Petitioners did not receive

any separation pay. Now, the petitioners pray, with the representation of their labor group,

claiming that they were illegally dismissed. They cite Article 283 of the Labor code where an

employer “may” terminate the employment of any employee due to the installation of labor

saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of

operation.

Issue:

Whether or not the Court should apply the legal maxim verbal legis in construing Article 283 of

the Labor Code as regards its applicability to the case at bar.

Held:

Yes, the legal maxim is applicable in this case. The use of the word “may,” in its plain meaning,

denotes that it is directory in nature and generally permissive only. Also, Article 283 of the

Labor Code does not contemplate a situation where the closure of the business establishment

is forced upon the employer and ultimately for the benefit of the employees. The Patalon
Coconut Estate was closed down because a large portion of the said estate was acquired by the

DAR pursuant to the CARP. The severance of employer-employee relationship between the

parties came about involuntarily, as a result of an act of the State. Consequently, complainants

are not entitled to any separation pay.

Reasoning:

Where the words of a statute are clear, plain and free from ambiguity, it must be given its

literal meaning and applied without attempted interpretation.

Policy:

Article 283 of the Labor Code applies in cases of closures of establishment and reduction of

personnel. The peculiar circumstances in the case at bar, however, involves neither the closure

of an establishment nor a reduction of personnel as contemplated under the article.

RCBC vs. IAC and BF Homes
Rizal Commercial Banking Corporation vs. Intermediate Appellate Court and BF Homes
G.R. No. 74851 (December 9, 1999)

Facts:

Petitioner RCBC is a mortgagor-creditor of the party respondent BF Homes. BF Homes, being a

distressed firm, filed before the Securities and Exchange Commission a Petition for
Rehabilitation and for Declaration of Suspension of Payments. Consequently, RCBC requested
the sheriff of Rizal to levy on execution the properties of party respondent, and consequently
obtained favorable judgment. RCBC being the highest bidder during the public auction is now
seeking for the transfer certificate of titles from the Register of Deeds issued in its name. It is
worthy to note that it was on October 26, 1984 that RCBC obtained favor over the execution of
the respondent’s properties, and it was only on March 18, 1985 that a Management Committee
was organized by the SEC for BF Homes.

Issue:

Whether or not the Court may depart from the words of the law which clearly provides that a
creditor may levy execution on a firm’s properties when such execution precedes SEC’s
organization of a Management Committee to act as its receiver.

Held:

PD 209-A states that suspension of claims against a corporation under rehabilitation is counted
or figured up only upon the appointment of a management committee or a rehabilitation
receiver. The holding that suspension of actions for claims against a corporation under
rehabilitation takes effect as soon as the application or a petition for rehabilitation is filed with
the SEC — may, to some, be more logical and wise but unfortunately, such is incongruent with
the clear language of the law. Suspension of actions for claims commences only from the time a
management committee or receiver is appointed by the SEC. Petitioner RCBC rightfully moved
for the extrajudicial foreclosure of its mortgage on October 26, 1984 because a management
committee was not appointed by the SEC until March 18, 1985.

Reasoning:

No matter how practical and noble a reason would be, in order to depart from the words of the
law stated in clear and unambiguous manner, would be to encroach upon legislative
prerogative to define the wisdom of the law. Such is plainly judicial legislation.

Policy:

Paragraph C Section 6 of PD 209-A states that upon appointment of a management committee

rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against
corporations, partnerships or associations under management or receivership, pending before
any court, tribunal, board or body shall be suspended accordingly.