By:  Atty. Gregorio B. Austral, CPA

A change in the corporate name does not make a new corporation

Rodel F. Bantogon charged PVC Master Mfg. Corp. with illegal dismissal. In his Position Paper dated June 24, 2014, petitioner essentially alleged: On May 20, 2012, he was employed by Boatwin International Corporation as a helper. In less than a year, he got promoted to machine operator. On January 2014, Boatwin changed its trade name to PVC. On March 2014, petitioner was prevented from reporting for work because of his participation in the illegal dismissal case of his brother against PVC. When PVC learned of his participation in his brother’s illegal dismissal case, it refused to give him any further assignment which consequently equated to constructive termination. PVC failed to observe the fundamental requirements of due process in dismissing him, hence, was guilty of illegal dismissal. 

For its part, PVC countered that it commenced operations just a month before the alleged dismissal or on February 14, 2014. It asserted that it is a separate and distinct entity from Boatwin. It denied that petitioner was ever its employee.  It submitted the following documents: (1) PVC Mayor’s Permit; (2) PVC Application Form; (3) PVC Receipt for Application; (4) PVC Bill for Application; (5) PVC Securities and Exchange Commission (SEC) Registration; (6) PVC Articles of Incorporation; (7) PVC By-Laws; (8) Boatwin SEC Registration; and (9) Boatwin General Information Sheet. According to PVC, these documents are res ipsa loquitur and cannot be overturned by petitioner’s bare allegations that he was PVC’s employee and that he was illegally dismissed by PVC.

The above documents, however, show that Boatwin changed its corporate name to PVC.

Is PVC (instead of Boatwin) liable for illegal dismissal?

PVC is liable.

The sole argument of PVC is that it acquired Boatwin’s assets through the so-called assets sale. But the Court finds that there was no assets sale to speak of. What clearly happened was simply a change of corporate name from Boatwin to PVC. But what’s in a name?

In Zuellig Freight and Cargo Systems v. National Labor Relations Commission, the Court held that the mere change in the corporate name is not considered under the law as the creation of a new corporation. Hence, the renamed corporation remains liable for the illegal dismissal of its employee separated under that guise.

Likewise, in P.C. Javier & Sons, Inc. v. Court of Appeals, the Court ruled that 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. Its character is in no respect changed.

Significantly, aside from a change of corporate name from Boatwin to PVC, there were no other changes in PVC’s circumstances indicating that the supposed assets sale took place, much less, that it truly had a corporate existence distinct from that of Boatwin. To repeat, the so-called assets sale was never established.

Undoubtedly, PVC is the employer of petitioner. Hence, as petitioner’s employer, it had the burden to prove that petitioner’s termination of employment was valid. This PVC failed to do.

Here, it is clearly proven that PVC constructively dismissed petitioner when it abruptly prevented him from reporting for work without just or authorized cause. It failed to accord petitioner an opportunity to be heard and defend himself which is a basic requirement of due process in the termination of employment. PVC is, thus, guilty of illegal dismissal. (Bantogon v. PVC Master Mfg. Corp., G.R. No. 239433, [September 16, 2020)