DBP vs.

SEC OF LABOR

Private respondents won a case for illegal dismissal, unfair labor practice, illegal deductions
from salaries and violation of the minimum wage law against Riverside Mills Corporation.
Consequently, a writ of execution was issued, against the goods and chattel of RMC. Said
assets however had already been foreclosed by petitioner Development Bank of the
Philippines (DBP) through an extra-judicial proceeding.
Private respondents, in a motion, moved for the delivery of RMC properties in possession of
DBP, relying on the provisions of Article 110 of the Labor Code giving them first preference
over the mortgaged properties of RMC for the satisfaction of the judgment rendered in their
favor. Which motion was granted. On appeal, the decision was affirmed.

ISSUE: Whether or not Article 110 of the Labor Code finds application on the instant case.

RULING: The Supreme Court held that Article 110 cannot be applied in the instant case because the
important requisite that employer's business must be bankrupt is lacking. The Supreme Court ruled
that in the Philippine jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings
are the only means to establish that a business is bankrupt or insolvent. Absent of such judicial
declaration, the business cannot be considered bankrupt for the purpose of applying the provisions
of Article 110.