FACTS:

Asset Privatization Trust (APT) was a government entity created under Proclamation No. 50, Series of 1986, for the purpose of conserving, provisionally managing, and disposing of government assets for privatization or disposition. Bicolandia Sugar Development Corporation (BISUDECO) obtained loans from Philippine Sugar Corporation and Philippine National Bank, secured by its assets and properties. APT took over BISUDECO's loans from Philippine National Bank and entered into a Supervision and Financing Agreement with BISUDECO and Philippine Sugar Corporation.

Due to BISUDECO's failure to pay its loan obligations, APT filed for foreclosure of BISUDECO's properties. APT obtained a certificate of sale and decided to sell the assets and properties, resulting in the dismissal of BISUDECO's employees. The employees filed a complaint alleging unfair labor practice and union busting.

The Labor Arbiter dismissed the complaint but ordered APT to pay certain employees their separation pay and other benefits. APT deposited the monetary award and filed a Notice of Partial Appeal.

The case involves a Petition for Review filed by APT against the Court of Appeals' decision. The employees sought separation pay and other benefits for their illegal dismissal. The Labor Arbiter granted their claims, but the appeal filed by APT was dismissed for failure to comply with the statutory period. The Court of Appeals denied APT's Petition, stating that the benefits had already been granted to other complainants.

APT argued before the Supreme Court that there should have been a liberal application of procedural rules and that the employees' money claims had already prescribed.

In a previous case, it was held that APT could not be held liable for the money claims as it was not the employer of BISUDECO's employees.

The union members who were not recalled to work sought to hold APT liable for their separation benefits.

ISSUES:

1. Whether labor contracts are enforceable against the transferee of an enterprise.

2. Whether the petitioner is liable for the money claims of terminated employees.

3. Whether the resolution authorizing the payment of separation benefits covers all employees or only those who were not recalled to work.

4. Whether the petitioner can be held liable for separation benefits despite the serious business losses of the former employer.

5. Whether the petitioner, as the conservator of Bicolandia Sugar Development Corporation, is exempted from paying separation benefits to the terminated employees.

6. Whether the claim for separation benefits by the private respondents has already prescribed.

7. Whether or not the cause of action for illegal termination has prescribed.

8. Whether or not the claim for separation pay and other benefits has prescribed.

9. Whether or not the Labor Arbiter erred in ordering the release of separation benefits to the private respondents.

10. Whether money judgments against the government must be brought before the Commission on Audit (COA) before they can be satisfied.

11. Whether or not the claim for separation benefits by private respondents must first be filed before the Commission on Audit

RULING:

1. Labor contracts, such as collective bargaining agreements, are not enforceable against the transferee of an enterprise unless expressly assumed.

2. The petitioner is not liable for the money claims of terminated employees unless it specifically and categorically agrees to be liable for such claims.

3. The resolution authorizing the payment of separation benefits only covers employees who were not recalled to work by the former employer.

4. Despite the serious business losses of the former employer, the petitioner can still be held liable for separation benefits as it voluntarily bound itself to be liable for such benefits.

5. The petitioner, as the conservator of Bicolandia Sugar Development Corporation, is not exempted from paying separation benefits to the terminated employees. The exemption from paying separation pay due to serious business losses only applies to employers and not to the petitioner. Even if the petitioner became the substitute employer, the exemption would still not apply if the employer voluntarily assumes the obligation to pay terminated employees, regardless of the employer's financial situation.

6. The claim for separation benefits by the private respondents has not yet prescribed. The prescriptive period for money claims arising from employer-employee relations is three (3) years under Article 291 of the Labor Code. The private respondents filed their complaint within this prescribed period.

7. The cause of action for illegal termination has not prescribed since the complaint was filed within the prescriptive period specified in the Labor Code.

8. The claim for separation pay and other benefits has not prescribed. The prescriptive period begins to run only after the National Labor Relations Commission's decision becomes final and executory.

9. The Labor Arbiter did not err in ordering the release of separation benefits to the private respondents. The Constitution guarantees workers' rights to economic security and parity, and they should be granted all rights enjoyed by similarly situated workers.

10. Money judgments against the government must be brought before the Commission on Audit (COA) before they can be satisfied. This is based on the principle that public funds may only be released upon proper appropriation and disbursement. All money claims against the government must first be filed with the COA, which must act upon it within sixty days. Rejection of the claim by the COA will authorize the claimant to elevate the matter to the Supreme Court on certiorari and in effect sue the State. Entitlement to claims for allowances and pay may be adjudicated by the trial court, but a separate action must be filed before the COA for the satisfaction of the judgment award. The power of the courts ends when the judgment is rendered, and government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments.

11. The Court held that the claim for separation benefits by private respondents need not be filed before the Commission on Audit. It was found that the funds to be used for private respondents' separation benefits have already been appropriated and disbursed, as evidenced by the release of checks to their co-complainants. It would be unjust and a violation of private respondents' right to equal protection if they were not allowed to claim their entitlement in the same manner as their fellow workers. Thus, the Petition was denied.

PRINCIPLES:

• Labor contracts are in personam and are binding only between the parties unless they are expressly assumed by the transferee of an enterprise.

• Liability for money claims arising from an employer-employee relationship requires the specific and categorical agreement of the party.

• Separation benefits and other benefits incident to employment may be paid to terminated employees even upon the sale or disposition of assets of a company undergoing privatization.

• An employer may terminate employment to prevent business loss, but this does not absolve it from liability for separation benefits if it has voluntarily bound itself to be liable for such benefits.

• An employer may terminate employment to prevent business losses, but is required to pay separation pay to the affected employees. However, employers are exempted from paying separation pay if the closure was due to serious business losses.

• If an employer voluntarily assumes the obligation to pay terminated employees, regardless of the employer's financial situation, the exemption from paying separation pay does not apply.

• Money claims arising from employer-employee relations have a prescriptive period of three (3) years under Article 291 of the Labor Code.

• Money claims arising from employer-employee relations must be filed within three years from the accrual of the cause of action. (Article 291, Labor Code)

• The three-year prescriptive period for claims of labor benefits begins from the receipt of the National Labor Relations Commission's decision denying the motion for reconsideration.

• Workers are entitled to full protection of their rights, including economic security and parity. (Article II, Section 18 and Article XIII, Section 3, Constitution)

• Public funds may only be paid out upon proper appropriation and disbursement.

• Financial transactions and operations of any government agency must adhere to fundamental principles such as the approval of proper officials, complete documentation of claims against government funds, and observance of applicable laws and regulations.

• Money claims against the government must be supported by complete documentation and must be filed with the Commission on Audit (COA) for examination, audit, and settlement.

• The power of the courts ends when the judgment is rendered, and government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments.

• Entitlement to claims for allowances and pay may be adjudicated by the trial court, but a separate action must be filed before the COA for the satisfaction of the judgment award.

• The funds to be used for separation benefits may already be appropriated and disbursed when the checks are released to the affected employees.

• Private respondents have a right to equal protection and should not be denied their entitlement if their fellow workers were able to claim theirs without filing a separate money claim before the Commission on Audit.