G.R. No. 188269, 17 April 2017

FACTS:

The instant case stemmed from a complaint for, inter alia, illegal/constructive dismissal filed by Baya against AMS Farming Corporation (AMSFC) and Davao Fruits Corporation (DFC) before the NLRC. Baya alleged that he had been employed by AMSFC since February 5, 1985, and from then on, worked his way to a supervisory rank on September 1, 1997. As a supervisor, Baya joined the union of supervisors, and eventually, formed AMS Kapalong Agrarian Reform Beneficiaries Multipurpose Cooperative (AMSKARBEMCO), the basic agrarian reform organization of the regular employees of AMSFC.

In June 1999, Baya was reassigned to a series of supervisory positions in AMSFC’s sister company, DFC, where he also became a member of the latter’s supervisory union while at the same time, remaining active at AMSKARBEMCO. Later on and upon AMSKARBEMCO’s petition before the Department of Agrarian Reform (DAR), some 220 hectares of AMSFC’s 513-hectare banana plantation were covered by the Comprehensive Agrarian Reform Law. Eventually, said portion was transferred to AMSFC’s regular employees as Agrarian Reform Beneficiaries (ARBs), including Baya.

Thereafter, the ARBs explored a possible agribusiness venture agreement with AMSFC, but the talks broke down, prompting the Provincial Agrarian Reform Officer to terminate negotiations and, consequently, give AMSKARBEMCO freedom to enter into similar agreement with other parties.

When AMSFC learned that AMSKARBEMCO entered into an export agreement with another company, it summoned AMSKARBEMCO officers, including Baya, to lash out at them and even threatened them that the ARBs’ takeover of the lands would not push through. After refusing to betray his cooperative, Baya received a letter stating that his secondment with DFC has ended, thus, ordering his return to AMSFC. However, upon Baya’s return to AMSFC he was informed that there were no supervisory positions available; thus, he was assigned to different rank-and-file positions instead.

In their defense, AMSFC and DFC maintained that they did not illegally/constructively dismiss Baya, considering that his termination from employment was the direct result of the ARBs’ takeover of AMSFC’s banana plantation through the government’s agrarian reform program. They even shifted the blame to Baya himself, arguing that he was the one who formed AMSKARBEMCO and, eventually, caused the ARBs’ aforesaid takeover. LA ruled in Baya’s favor. NLRC reversed and set aside the LA’s ruling. CA set aside the NLRC ruling and reinstated that of the LA with modification.

ISSUE:

Whether or not Sumifru should be held solidarily liable with AMSFC’s for Baya’s monetary awards.

RULING:

The petition is without merit.

Sumifru’s contention that it should only be held liable for the period when Baya stayed with DFC as it only merged with the latter and not with AMSFC[37] is untenable. Section 80 of the Corporation Code of the Philippines clearly states that one of the effects of a merger is that the surviving company shall inherit not only the assets, but also the liabilities of the corporation it merged with, to wit:

Section 80. Effects of merger or consolidation. – The merger or consolidation shall have the following effects:

1. The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation;
2. The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each of the constituent corporations; and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation without further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors or liens upon the property of any of such constituent corporations shall not be impaired by such merger or consolidation.

In this case, it is worthy to stress that both AMSFC and DFC are guilty of acts constitutive of constructive dismissal performed against Baya. As such, they should be deemed as solidarily liable for the monetary awards in favor of Baya. Meanwhile, Sumifru, as the surviving entity in its merger with DFC, must be held answerable for the latter’s liabilities, including its solidary liability with AMSFC arising herein. Verily, jurisprudence states that “in the merger of two existing corporations, one of the corporations survives and continues the business, while the other is dissolved and all its rights, properties and liabilities are acquired by the surviving corporation,” as in this case.

*Case Digest by Legine S. Ramayla, JD-IV, Andres Bonifacio College, SY: 2019-2020