DATE: June 25, 2019

TO: Atty. Ricardo A. Sunga III

Director
Development Legal Aid Clinic
De La Salle University – College of Law

FROM: Gertrude Arquillo

Marydith Eusebio
Grace Hinanay
Yralli Mendoza
Miguel Monfort
Jasper Zalameda
Legal Intern

RE: Estafa Case against Hanjin Heavy Industries

__________________________________________________________________

Dear Atty. Sunga,

The case involves the claim for wages of Hanjin workers as they were only
paid half of their wages by the employer Hanjin Heavy Industries (HHI) prior to
its filing for bankruptcy early this year. Due to serious business losses, HHI filed
for voluntary rehabilitation under RA 10142 in the Regional Trial Court in Subic.
The employees now are contemplating between filing a claim in the insolvency
proceedings and filing a case for estafa under Article 315 paragraph 2(a) of the
Revised Penal Code.

The issue presented is whether the workers should file a claim in the
insolvency proceedings or file for a case of estafa to collect the unpaid wages due
them.

It is our opinion that the workers should file an estafa case against the
employer instead of filing a claim in the insolvency proceedings. Criminal cases
like one for Estafa under Article 315 paragraph 2(a) the Revised Penal Code is an
exception to the Suspension order in insolvency proceedings recognized under
Section 18 of the Financial Rehabilitation and Insolvency Act of 2010 (FRIA).

SEC. 18. Exceptions to the Stay or Suspension Order. — The Stay or

Suspension Order shall not apply:

xxx

(g) any criminal action against the individual debtor or owner,

partner, director or officer of a debtor shall not be affected by any
proceeding commenced under this Act.

The unpaid half of the workers must have been due to the payment of Hanjin
to its creditors first before giving the full payment to their workers but as stated in
the Labor Code cited below workers enjoy first preference regarding payment in
cases of insolvency of the employer.

Article 110 of the Labor Code and Section 10, Rule VIII, Book III of the
Revised Rules and Regulations Implementing the Labor Code provides:

Article 110. Worker preference in case of bankruptcy. - In the event of

bankruptcy or liquidation of an employer's business, his workers shall enjoy
first preference as regards their unpaid wages and other monetary claims,
any provision of law to the contrary notwithstanding. Such unpaid wages
and monetary claims shall be paid in full before the claims of the
Government and other creditors may be paid.

Section 10. Payment of wages in case of bankruptcy. - Unpaid wages

earned by the employees before the declaration of bankruptcy or judicial
liquidation of the employer's business shall be given first preference and
shall be paid in full before other creditors may establish any claim to a
share in the assets of the employer.

However, we still think that filing a claim under the insolvency proceedings
is not the better option given that the worker preference provided under Art. 110 of
the Labor Code makes their claims equivalent to an ordinary preferred credit under
the rules on concurrence and preference of credits under Art. 2244 the New Civil
Code (NCC). This means that taxes and all other special preferred credits found
under Articles 2241 and 2242 of the NCC must first be satisfied before the claims
of the workers are satisfied.

It is our recommendation therefore for the workers to file a case for estafa
under Article 315 of the Revised Penal Code, which states that:

Art. 315. Swindling (estafa). — Any person who shall defraud

another by any of the means mentioned hereinbelow shall be punished
by:
2. By means of any of the following false pretenses or
fraudulent acts executed prior to or simultaneously with the
commission of the fraud:

(a) By using a fictitious name, or falsely pretending to possess

power, influence, qualifications, property, credit, agency, business
or imaginary transactions, or by means of other similar deceits.

If the employees would file a case for estafa under Article 315, paragraph
2(a) of the Revised Penal Code, there must be evidence that the pretense of the
accused that he possesses property, etc. is false. In the absence of proof that the
representation of the accused was actually false, criminal intent to deceive cannot
be inferred.

Applying the same to the present case, the Hanjin workers must be able to
establish the representations made by the employer and prove that these
representations induced them into agreeing into the arrangement that they had with
the employer. According to Virgilio Rodrigo, general secretary of the workers'
group Samahan ng mga Manggagawa ng Hanjin, the workers were given the
promise that they would receive their salary for March and separation pay. This
means that Hanjin represented to the workers that Hanjin has in its possession or at
its disposal, the money needed to satisfy the claims of the workers.
 Further, there is no issue of prejudicial question because the insolvency
proceeding is a special proceeding. There is no need for the workers to wait for the
outcome of the insolvency proceeding before filing an estafa case against Hanjin.