Monday, June 24, 2019

[CASE DIGEST] ZUELLIG FREIGHT AND CARGO SYSTEMS v. NATIONAL LABOR RELATIONS COMMISSION and RONALDO V. SAN MIGUEL (G.R. No. 157900)

July 22, 2013

Ponente: Bersamin, J.

SUMMARY: 

Ronaldo San Miguel worked as a checker/customs representative of Zeta Brokerage Corporation (Zeta). He was subsequently terminated upon the supposed cessation of operations of the corporation, which, following amendments to its articles of incorporation, was renamed Zuellig Freight and Cargo Systems (Zuellig). San Miguel filed a complaint before the Labor Arbiter for illegal dismissal, arguing that the amendments of the articles of incorporation of Zeta were for the purpose of changing its corporate name, broadening its primary functions, and increasing its capital stocks, all of which did not mean that Zeta had been thereby dissolved. The LA, NLRC, and the CA all ruled in favor of San Miguel. The SC affirmed the uniform holdings of the LA, NLRC, and the CA, ruling that the change of name of Zeta into Zuellig did not give it the license to terminate San Miguel without just or authorized cause.

FACTS:

Ronaldo San Miguel started working at Zeta Brokerage Corporation (Zeta) in 1985 as a checker/customs representative. 

In 1994, he and other employees were informed that Zeta would cease operations, and that all affected employees, including him, would be separated.

By a letter dated February 1994, Zeta informed San Miguel of his termination effective March 31, 1994 due to the company’s cessation of business operations.

He reluctantly accepted his separation pay subject to the standing offer to be hired to his former position by Zeta.

Subsequently, Zeta amended its articles of incorporation and changed its name to Zuellig Freight and Cargo Systems (Zuellig).

On April 15, 1994, San Miguel was summarily terminated without any valid cause and due process. Consequently, he filed a complaint before the Labor Arbiter for illegal dismissal.

SAN MIGUEL: Zeta did not really cease its operations. The amendments of the articles of incorporation of Zeta were for the purpose of changing the corporate name, broadening the primary functions, and increasing the capital stock; and that such amendments could not mean that Zeta had been thereby dissolved.

ZETA/ZUELLIG: The dismissal was in accordance with the Labor Code because the company had ceased operations and closed its business.

LABOR ARBITER: San Miguel was illegally dismissed. Contrary to the company’s claim of cessation of operations, there was merely a change of business name and primary purpose and upgrading of stocks of the corporation. Granted, Zuellig and Zeta are legally the same person and entity. The company is therefore ordered to pay San Miguel his backwages, attorney’s fees, plus costs of the suit.
NLRC: Affirmed the LA’s ruling.

CA: Affirmed the NLRC ruling. Zeta’s closure of business operations was not validly made. The factual milieu of the case, considered in its totality, shows that there was no closure to speak of. The termination of services allegedly due to cessation of business operations of Zeta was illegal. Notwithstanding San Miguel’s receipt of separation benefits from Zuellig, the former is not estopped from questioning the legality of his dismissal.

Hence, the instant petition.



RULING

Petition denied. CA ruling affirmed.

Whether the amendments of the articles of incorporation of Zeta to change its corporate name to Zuellig Freight and Cargo Systems, Inc., resulted in the dissolution of Zeta as a corporation. – NO.

A change in the corporate name does not make a new corporation, whether effected by a special act or under a general law. It has no effect on the identity of the corporation, or on its property, rights, or liabilities. The corporation, upon such change in its name, is in no sense a new corporation, nor the successor of the original corporation. It is the same corporation with a different name, and its character is in no respect changed.

The changing of the name of a corporation is no more the creation of a corporation than the changing of the name of a natural person is begetting of a natural person. The act, in both cases, would seem to be what the language which we use to designate it imports – a change of name, and not a change of being.

The Corporation Code defined and delineated the different modes of dissolving a corporation, and amendment of the articles of incorporation was not one of such modes.
In other words, the mere change in the corporate name is not considered under the law as the creation of a new corporation.

As such, the effect of Zeta’s change of name to Zuellig was not a change of its corporate being.
Whether San Miguel was illegally dismissed. – YES.

Where there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause.

Despite its new name, Zuellig remains to be the mere continuation of Zeta’s corporate being. As such, it has the obligation to honor all of Zeta’s obligations, one of which was to respect San Miguel’s security of tenure. The dismissal of San Miguel from employment on the pretext that Zuellig, being a different corporation, had no obligation to accept him as its employee, was illegal and ineffectual.

Zuellig’s defense that San Miguel's dismissal was due to his failure to receive the termination letter from Zeta despite due notice and from there sign a new employment contract with Zuellig is of no moment in view of the circumstances. 

The dismissal remained illegal for the said condition (i.e., accepting the termination letter and signing a new employment contract) was null and void. In point of facts and law, San Miguel remained an employee of Zuellig.

DOCTRINE:

A change in the corporate name does not make a new corporation, whether effected by a special act or under a general law. It has no effect on the identity of the corporation, or on its property, rights, or liabilities. The corporation, upon such change in its name, is in no sense a new corporation, nor the successor of the original corporation. It is the same corporation with a different name, and its character is in no respect changed.