SUMIFRU v. BAYA, G.R. No. 188269, April 17, 2017; CorpLaw Case Digest by A.J. Gomez

 SUMIFRU (PHILIPPINES) CORPORATION (SURVIVING ENTITY IN A MERGER WITH DAVAO FRUITS CORPORATION AND OTHER COMPANIES) v. BERNABE BAYA, G.R. No. 188269,  April 17, 2017

FACTS:

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).

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. 

Upon AMSKARBEMCO's petition before the DAR, some 220 hectares of AMSFC's banana plantation were covered by the Comprehensive Agrarian Reform Law, and  eventually 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. 

Thereafter, Baya was again summoned, this time by a DFC manager, who told the former that he would be putting himself in a "difficult situation" if he will not shift his loyalty to SAFFPAI. Baya politely refused to betray his cooperative. 

A few days later, 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 on August 30, 2002, he was informed that there were no supervisory positions available; thus, he was assigned to different rank-and-file positions instead. 

On September 20, 2002, Baya's written request to be restored to a supervisory position was denied, prompting him to file the instant complaint. 

In their defense, AMSFC and DFC maintained that they did not illegally/constructively dismiss Baya.

The LA Ruling

The LA ruled in Baya's favor and, accordingly, ordered AMSFC and DFC to: 

1.  reinstate Baya to his former position as supervisor, or should reinstatement be impossible, to pay him separation pay; and 

2. pay Baya backwages and other benefits, as well as moral damages, exemplary damages, and attorney's fees.

The NLRC Ruling

The NLRC reversed and set aside the LA ruling except for the payment of 13th month pay which was affirmed with modification, and entered a new one dismissing the case for lack of merit.

Baya’s moved for reconsideration was, denied 

The CA Ruling

In a Decision23 dated May 14, 2008, the CA set aside the NLRC ruling and reinstated that of the LA with modification 

Petitioner’s  motion for reconsideration was, denied.

Meanwhile and during the pendency of the CA proceedings, petitioner Sumifru (Philippines) Corporation (Sumifru) acquired DFC via merger sometime in 2008. According to Sumifru, it only learned of the pendency of the CA proceedings on June 15, 2009, or after the issuance of the CA's Resolution dated May 20, 2009. Thus, Sumifru was the one who filed the instant petition on behalf of DFC.

ISSUES:

1. whether or not AMSFC and DFC are liable to Baya for separation pay, moral damages, and attorney's fees; and 

2. whether or not Sumifru should be held solidarily liable with AMSFC's for Baya's monetary awards.

The Court's Ruling

1. YES. Baya's constructive dismissal which resulted in an atmosphere of animosity and antagonism between Baya on the one hand, and AMSFC and DFC on the other, calls for the application of the doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Thus, it is more prudent that Baya be awarded separation pay, instead of being reinstated, as computed by the CA.

Further, the acts constitutive of Baya's constructive dismissal are clearly tainted with bad faith as they were done to punish him for the actions of his cooperative, AMSKARBEMCO, and for not switching his loyalty to the pro-company cooperative, SAFFPAI. This prompted Baya to litigate in order to protect his interest and to recover what is properly due him. Hence, the award of moral damages and attorney's fees are warranted.

2. YES. 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.

Petition DENIED. CA Decision AFFIRMED.