Jiao vs.

National Labor Relations Commission

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 attorney’s
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 latter’s board of directors are also members of the former’s 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 Metrobank’s 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.