2011

Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-

Federation of Unions in BPI Unibank
G.R. No. 164301
October 19, 2011

TOPIC: Merger
FACTS:
Bangko Sentral ng Pilipinas approved the Articles of Merger executed on
January 20, 2000 by and between BPI, herein petitioner, and FEBTC on March
23, 2000.The Article and Plan of Merger was approved by the SEC on April 7,
2000. Under the Article and Plan of Merger, all the assets and liabilities of FEBTC
were transferred to and absorbed by BPI as the surviving corporation.
FEBTC employees, including those in its different branches across the
country, were hired by BPI as its own employees, with their status and tenure
recognized and salaries and benefits maintained. BPI Employees Union-Davao
Chapter - Federation of Unions in BPI Unibank, is the exclusive bargaining agent
of BPIs rank and file employees in Davao City.
The former FEBTC rank-and-file employees in Davao City did not belong
to any labor union during the time of the merger. Before the merger took effect
on March 31, 2000, respondent Union invited FEBTC employees to a meeting
about the Union Shop Clause of the existing CBA between petitioner BPI and
respondent Union. After the meeting, some of the former FEBTC employees
joined the Union, while others refused.
However, some of those who initially joined retracted later their
membership. Hence, the Union then sent notices to both the former FEBTC
employees who refused to join and those who retracted their membership, and
called them to a hearing regarding the matter. When these former FEBTC
employees refused to attend the hearing, the president of the Union requested
BPI to implement the Union Shop Clause of the CBA and to terminate their
employment pursuant to its provisions. Two months after the management
inaction on such request, Union informed BPI of its decision to refer the issue of
the implementation of the Union Shop Clause of the CBA to the Grievance
Committee. However, the issue remained unresolved so it was subsequently
submitted for voluntary arbitration by the parties.
BPI won the initial battle at the Voluntary Arbitrator level but BPIs position
was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators
interpretation of the Union Shop Clause contradicts with the spirit and rationale
why the Labor Code allows the existence of such provision.

When elevated, the Supreme Court affirmed the decision of CA holding

that former employees of the Far East Bank and Trust Company (FEBTC) were
absorbed by BPI pursuant to the two banks merger. The absorbed employees
were covered by the Union Shop Clause in the then existing collective bargaining
agreement (CBA) of BPI with respondent BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank (the Union). Petitioners moved for a Motion
for reconsideration of the decision.

ISSUE
Whether or not former employees were ipso jure absorbed in a merger of
the two corporations?

HELD
Yes.
It is more in keeping with the dictates of social justice and the State policy
of according full protection to labor to deem employment contracts as
automatically assumed by the surviving corporation in a merger, even in the
absence of an express stipulation in the articles of merger or the merger plan.
In the dissenting opinion of Justice Brion, he reasoned that: To my mind,
due consideration of Section 80 of the Corporation Code, the constitutionally
declared policies on work, labor and employment, and the specific FEBTC-BPI
situation i.e., a merger with complete body and soul transfer of all that
FEBTC embodied and possessed and where both participating banks were
willing (albeit by deed, not by their written agreement) to provide for the affected
human resources by recognizing continuity of employment should point this
Court to a declaration that in a complete merger situation where there is total
takeover by one corporation over another and there is silence in the merger
agreement on what the fate of the human resource complement shall be, the
latter should not be left in legal limbo and should be properly provided for, by
compelling the surviving entity to absorb these employees. This is what Section
80 of the Corporation Code commands, as the surviving corporation has the legal
obligation to assume all the obligations and liabilities of the merged constituent
corporation.
Not to be forgotten is that the affected employees managed, operated and
worked on the transferred assets and properties as their means of livelihood;
they constituted a basic component of their corporation during its existence. In a
merger and consolidation situation, they cannot be treated without consideration
of the applicable constitutional declarations and directives, or, worse, be simply
disregarded. If they are so treated, it is up to this Court to read and interpret the
law so that they are treated in accordance with the legal requirements of mergers
and consolidation, read in light of the social justice, economic and social
provisions of our Constitution. Hence, there is a need for the surviving
corporation to take responsibility for the affected employees and to absorb them
into its workforce where no appropriate provision for the merged corporations
human resources component is made in the Merger Plan.
By upholding the automatic assumption of the non-surviving corporations
existing employment contracts by the surviving corporation in a merger, the Court
strengthens judicial protection of the right to security of tenure of employees
affected by a merger and avoids confusion regarding the status of their various
benefits which were among the chief objections of our dissenting colleagues.
However, nothing in this Resolution shall impair the right of an employer to
terminate the employment of the absorbed employees for a lawful or authorized
cause or the right of such an employee to resign, retire or otherwise sever his
employment, whether before or after the merger, subject to existing contractual
obligations. In this manner, Justice Brions theory of automatic assumption may
be reconciled with the majoritys concerns with the successor employers
prerogative to choose its employees and the prohibition against involuntary
servitude. Notwithstanding this concession, the Court finds no reason to reverse
our previous pronouncement that the absorbed FEBTC employees are covered
by the Union Shop Clause.
[See the original Decision dated August 10, 2010, reversing the ruling on
the absorption of employees in a merger.]
SAN MIGUEL PROPERTIES PHILIPPINES, INC. vs. GWENDELLYN ROSE S.
GUCABAN
G.R. No. 153982: July 18, 2011

TOPIC: Corporate Reorganization

FACTS:

Gwendellyn Gucaban, a licensed civil engineer, was hired by San Miguel

Properties Inc. (SMPI) in 1991 as a construction management specialist. From
1991 until her termination from service in 1998, she was promoted twice, to
technical services manager, then to project development manager. In January of
1998 Gucaban was suddenly hounded by management to sign a blank
resignation letter as the company was undergoing cost-cutting. When Gucaban
refused, she was alienated in work and kept from meetings, given ugly
performance reports, before she succumbed to pressure and submitted her
resignation to SMPI.
Gucaban filed a case for illegal dismissal against SMPI in the NLRC. The
Labor Arbiter found for SMPI and dismissed the case. On appeal, the NLRC
reversed and ordered Gucaban immediate reinstatement without loss of seniority
rights and full backwages. On appeal under Rule 24 of the Rules of Court to the
CA, the Court affirmed the decision of the NLRC but reduced the awarded moral
and exemplary damages.

ISSUE:
Whether or not Gwendellyn Gucaban was illegally dismissed?

HELD:
Yes, she was illegally dismissed.
Gucaban separation from the company was due to the fraudulent
representation to her that her office would be declared redundant, coupled with
the subsequent alienation which she suffered from the company by reason of her
refusal to tender resignation. Hence, the element of voluntariness in her
resignation is missing.
 In the instant case, the pressing matter is whether there was in place a
genuine reorganization plan awaiting immediate implementation in good faith at
or about the time Gucaban resolved to hand in her resignation letter. This issue is
primordial, because to reiterate, Gucaban indeed would not have opted to resign
without the company having laid out to her its prospect of a corporate
restructuring which SMPI failed to establish as existing at the time as well as the
certainty of a consequent termination should she not resign.
The Court held that in illegal dismissal cases, fundamental is the rule that
when an employer interposes the defense of resignation, on him necessarily
rests the burden to prove that the employee indeed voluntarily resigned, which in
this case they failed.

2012
Bank of the Philippine Islands vs Carlito Lee
G.R. no. 190144, August 1, 2012

TOPIC: Merger; Effects

FACTS:
Respondent Carlito Lee filed a complaint for sum of money with damages
and application for issuance of a writ of attachment against Trendline and Buelva.
He alleged that he was enticed to invest his money with Trendline upon Buelvas
misrepresentation that she was its duly licensed investment consultant or
commodity saleswoman. RTC issued a writ of preliminary attachment whereby
the savings account of Trendline with Citytrust Banking Corporation were
garnished. Subsequently it held defendants jointly and severally liable to Lee for
the full amount of his investment plus legal interest' attorneys fees and costs of
suit. Citytrust filed an urgent motion to release the amount garnished to pay
Trendlines obligation and a similar motion was also filed by Trendline with the
CA. the motion was denied.
Later on Citytrust and BPI merged with BPI as the surviving corporation.
The Articles of Merger provides among others that all liabilities and obligations of
Citytrust shall be transferred to and become the liabilities and obligations of BPI
in the same manner as if the BPI had itself incurred such liabilities or obligations.
Lee filed a motion for execution to release the garnished deposits of Trendline.
BPIs manager Mendoza denied having possession, control and custody of any
deposits or properties belonging to defendants, prompting Lee to seek the
production of their records of accounts with BPI. BPI said that it cannot locate the
defendants bank records with Citytrust.
Lee filed again a motion for execution and-or enforcement of garnishment
to enforce against BPI the garnishment of Trendlines deposit and other deposits
it may have had with Citytrust. Lee was denied. The CA then annulled RTCs
orders finding grave abuse of discretion on the part of RTC in denying
Leesmotion to enforce garnishment against Trendlines attached bank deposits
with Citytrust, which have been transferred to BPI by virtue of their merger.

ISSUE
Whether or not BPI may be held liable because of its merger with Citytrust
HELD
Yes. Petition is denied. Through the service of the writ of garnishment, the
garnishee becomes a virtual party to, or a forced intervenor in the case and the
trial court thereby acquires jurisdiction to bind him to compliance with all orders
and processes of the trial court with a view to the complete satisfaction of the
judgment of the court. Citytrust, therefore, upon service of the notice of
garnishment and its acknowledgment that it was in possession of defendants
deposit accounts in its letter became a virtual party to or a forced intervenor in
the civil case. As such, it became bound by the orders and processes issued by
the trial court despite not having been properly impleaded therein.
Consequently, by virtue of its merger with BPI on October 9, BPI as the
surviving corporation, effectively became the garnishee, thus the virtual party to
the civil case. Merger of two corporations produces 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 corporation
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.
Although Citytrust was dissolved, no winding up of its affairs or liquidation
of its assets, privileges, powers and liabilities took place. As the surviving
corporation, BPI simply continued the combined businesses of the two banks and
absorbed all the rights, privileges, assets, liabilities and obligations of Citytrust,
including the latters obligation over the garnished deposits of the defendants.
BPIs liability for the garnished deposits of the defendants has been clearly
established. By virtue of the writ of garnishment, the deposits of the defendants
with Citytrust were placed in custodia legis of the court. From that time onwards'
their deposits were under the sole control of the RTC and Citytrust holds them
subject to its orders until such time that the attachment or garnishment is
discharged, or the judgment in favor of Lee is satisfied or the credit or deposit is
delivered to the proper officer of the court.
Thus, Citytrust, and thereafter BPI, which automatically assumed the
formers liabilities and obligations upon the approval of their Articles of Merger, is
obliged to keep the deposit intact and to deliver the same to the proper officer
upon order of the court. The loss of bank records of a garnished deposit is not a
ground for the dissolution of garnishment. BPI cannot avoid the obligation
attached to the writ of garnishment by claiming that the fund was not transferred
to it, in light of the Articles of Merger which provides that all liabilities and
obligations of Citytrust shall be transferred to and become the liabilities and
obligations of BPI in the same manner as if the BPI had itself incurred such
liabilities or obligations' and in order that the rights and interest of creditors of
Citytrust or liens upon the property of Citytrust shall not be impaired by merger.
BPI is liable to deliver the fund subject of the writ of garnishment.

Jiao vs. National Labor Relations Commission

G.R. No. 182331. April 18, 2012

TOPIC: Acquisition of Assets/ Merger

FACTS:
The petitioners were regular employees of the Philippine Banking
Corporation (Philbank), each with at least ten years of service in the company.
Pursuant to its Memorandum dated August 28, 1970, Philbank established a
Gratuity Pay Plan (Old Plan) for its employees. Philbank merged with Global
Business Bank, Inc. (Globalbank), with the former as the surviving corporation
and the latter as the absorbed corporation, but the bank operated under the
name Global Business Bank, Inc. As a result of the merger, complainants
respective positions became redundant. A Special Separation Program (SSP)
was implemented and the petitioners were granted a separation package. As
their positions were included in the redundancy declaration, the petitioners
availed of the SSP, signed acceptance letters and executed quitclaims. In August
2002, respondent Metropolitan Bank and Trust Company (Metrobank) acquired
the assets and liabilities of Global bank through a Deed of Assignment of
Assets and Assumption of Liabilities. Subsequently, the petitioners filed separate
complaints for non-payment of separation pay with prayer for damages and
attorneys fees before the National Labor Relations Commission (NLRC). The
petitioners insist that Metrobank is liable because it is the parent company of
Global bank and that majority of the latters board of directors are also members
of the formers board of directors.
ISSUE:
Can Metrobank be held liable for the claims of petitioners?
HELD:
No, considering that the petitioners have already waived their right to file
an action for any of their claims in relation to their employment with Global bank,
the question of whether Metrobank can be held liable for these claims is now
academic. However, in order to put to rest any doubt in the petitioners minds as
to Metrobanks liabilities, we shall proceed to discuss this issue.
We hold that Metrobank cannot be held liable for the petitioners claims.
As a rule, a corporation that purchases the assets of another will not be liable for
the debts of the selling corporation, provided the former acted in good faith and
paid adequate consideration for such assets, except when any of the following
circumstances is present: (1) where the purchaser expressly or impliedly agrees
to assume the debts; (2) where the transaction amounts to a consolidation or
merger of the corporations; (3) where the purchasing corporation is merely a
continuation of the selling corporation; and (4) where the selling
corporation fraudulently enters into the transaction to escape liability for those
debts.