FACTS: Philippine
Geothermal, Inc. Employees Union is a legitimate labor union that stands as the
bargaining agent of the rank-and-file employees of Unocal Philippines. Unocal
Philippines, formerly known as Philippine Geothermal, Inc., is a foreign
corporation incorporated under the laws of the State of California, United
States of America, licensed to do business in the Philippines for the
“exploration and development of geothermal resources as alternative sources of
energy.” It is a wholly owned subsidiary of Union Oil Company of California
(Unocal California), which, in turn, is a wholly owned subsidiary of Union Oil
Corporation (Unocal Corporation).
Unocal Philippines operates two (2) geothermal steam fields
in Tiwi, Albay and Makiling, Banahaw, Laguna, owned by the National Power
Corporation.
On April 4, 2005, Unocal Corporation executed an Agreement
and Plan of Merger (Merger Agreement) with Chevron Texaco Corporation (Chevron)
and Blue Merger Sub, Inc. (Blue Merger). Blue Merger is a wholly owned
subsidiary of Chevron. Under the Merger Agreement, Unocal Corporation merged
with Blue Merger, and Blue Merger became the surviving corporation. Chevron
then became the parent corporation of the merged corporations: After the
merger, Blue Merger, as the surviving corporation, changed its name to Unocal
Corporation.
On January 31, 2006, Unocal Philippines executed a
Collective Bargaining Agreement with the Union.
However, on October 20, 2006, the Union wrote Unocal
Philippines asking for the separation benefits provided for under the
Collective Bargaining Agreement. According to the Union, the Merger Agreement
of Unocal Corporation, Blue Merger, and Chevron resulted in the closure and
cessation of operations of Unocal Philippines and the implied dismissal of its
employees.
ISSUE: Whether
or not the merger resulted to cessation of employees.
HELD: No. A
merger is a consolidation of two or more corporations, which results in one or
more corporations being absorbed into one surviving corporation. The separate
existence of the absorbed corporation ceases, and the surviving corporation “retains
its identity and takes over the rights, privileges, franchises, properties,
claims, liabilities and obligations of the absorbed corporation(s).”
If respondent is a subsidiary of Unocal California, which,
in turn, is a subsidiary of
Unocal Corporation, then the merger of Unocal Corporation
with Blue Merger and Chevron does not affect respondent or any of its
employees. Respondent has a separate and distinct personality from its parent
corporation.
Nonetheless, if respondent is indeed a party to the merger,
the merger still does not result in the dismissal of its employees.
The effects of a merger are provided under Section 80 of
the Corporation Code:
SEC. 80. Effects of merger or consolidation. — The merger
or consolidation, as provided in the preceding sections 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 taken and deemed
to be transferred to and vested in such surviving or consolidated corporation
without further act or deed; and
5.
The surviving or the 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 claim, action or proceeding pending by or against any of such
constituent corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the rights of creditors
nor any lien upon the property of any of such constituent corporations shall be
impaired by such merger or consolidation.
Although this provision does not explicitly state the
merger’s effect on the employees of the absorbed corporation, Bank of the
Philippine Islands v. BPI Employees UnionDavao Chapter Federation of Unions in
BPI Unibank has ruled that the surviving corporation automatically assumes the
employment contracts of the absorbed corporation, such that the absorbed
corporation’s employees become part of the manpower complement of the surviving
corporation.
Merger is not one of the circumstances where the employees
may claim separation pay. The only instances where separation pay may be
awarded to petitioner are: (a) reduction in workforce as a result of
redundancy; (b) retrenchment or installation of labor-saving devices; or (c)
closure and cessation of operations.
The terms do not provide that a merger is one of the
instances where petitioner may claim separation benefits for its members.
Neither can these circumstances be interpreted as to contemplate a merger with
another corporation. In any case, if the parties intended that petitioner ought
to be granted separation pay in case of a merger, it should have been
explicitly provided for in the contract. Absent this express intention,
petitioner cannot claim separation pay been explicitly provided for in the
contract. Absent this express intention, petitioner cannot claim separation
pay.
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