Case Summary (G.R. No. 190187)
Key Dates and Procedural History
April 4, 2005 – Unocal Corporation, Blue Merger Sub Inc., and Chevron Texaco execute Merger Agreement.
January 31, 2006 – Unocal Philippines and the Union sign a Collective Bargaining Agreement (CBA).
October 20, 2006 – Union demands separation benefits under CBA, alleging implied dismissal from the merger.
January 15, 2008 – Department of Labor Decision awards separation pay, finding implied termination.
July 23, 2009 – Court of Appeals reverses, holding Unocal Philippines unaffected and not a merger party.
November 9, 2009 – CA denies union’s motion for reconsideration.
2016 – Supreme Court resolves petition for review.
Applicable Law
1987 Philippine Constitution: full protection of labor, security of tenure, collective bargaining rights.
Corporation Code Section 80: merger effects, survival of corporation and automatic transfer of assets, liabilities, and obligations.
Labor Code Articles on separation pay and security of tenure.
CBA Article XII, Section 2 & Memorandum of Agreement: separation pay only for redundancy, retrenchment, labor-saving devices, or closure/cessation.
Issue on Change of Theory
The Union argued Unocal Philippines shifted its argument on appeal from acknowledging participation in the merger before DOLE to disclaiming any merger party status before the CA. The Supreme Court found this a new factual theory introduced on appeal, violating fair-play rules against raising fresh issues without giving the adverse party opportunity to present counter-evidence.
Effect of Merger on Employment
Under Section 80 of the Corporation Code and reinforced by the BPI v. BPI Employees Union decisions, a surviving corporation automatically assumes employment contracts of an absorbed entity. Such automatic assumption safeguards security of tenure under the Constitution. Even if Unocal Philippines were a merger party, its employees would not suffer implied dismissal; their contracts subsist unless legally terminated or voluntarily renounced.
Separation Pay Entitlement
The CBA and its Annex B limit separation pay to instances of workforce reduction due to redundancy, retrenchment, installation of labor-saving device
...continue readingCase Syllabus (G.R. No. 190187)
Facts of the Case
- The Philippine Geothermal, Inc. Employees Union is the duly recognized bargaining agent of rank-and-file employees of Unocal Philippines, Inc.
- Unocal Philippines (formerly Philippine Geothermal, Inc.) is a California-incorporated geothermal energy company, wholly owned by Union Oil Company of California (Unocal California), itself a subsidiary of Union Oil Corporation (Unocal Corporation).
- Unocal Philippines operates geothermal steam fields in Tiwi, Albay and Makiling-Banahaw, Laguna under lease from the National Power Corporation.
- On April 4, 2005, Unocal Corporation entered into a Merger Agreement with Chevron Texaco Corporation (Chevron) and its wholly owned subsidiary, Blue Merger Sub, Inc.; Blue Merger Sub became the surviving corporation and subsequently changed its name to Unocal Corporation.
- On January 31, 2006, Unocal Philippines executed a Collective Bargaining Agreement (CBA) with the Union.
Dispute and Initial Demand
- On October 20, 2006, the Union demanded separation benefits under the CBA, alleging the merger implied closure of Unocal Philippines and dismissal of its employees.
- Unocal Philippines denied any closure or termination, asserting its operations continued unchanged and that no employee relations were severed.
- Failing to reach agreement, the parties engaged in DOLE’s Administrative Intervention for Dispute Avoidance Program without success.
- The Union filed, then withdrew, a Notice of Strike; on February 5, 2007, both parties agreed to voluntary arbitration before the Secretary of Labor and Employment.
Secretary of Labor Decision
- In OS-VA-2007-04, Secretary Arturo D. Brion ruled on January 15, 2008 that the merger impliedly terminated the Union’s members.
- The Secretary found new employment contracts with the surviving corporation required employee consent; absent consent, employment ceased.
- The Secretary awarded separation pay under Article XII, Section 2 and Annex B of the CBA.
- The decision was declared final and executory ten calendar days after receipt, without recourse to reconsideration.
Court of Appeals Ruling
- Unocal Philippines petitioned the Court of Appeals (CA-G.R. SP No. 102184) under Rule 43.
- On July 23, 2009, the Court of Appeals reversed and set aside the Secretary’s decision:
- Held Unocal Philippines is a distinct juridical person, not a party to the parent-corporation merger.
- Found Unocal Philippines remained undissolved and its workforce, tenure, salaries, and benefits intact.
- Noted the Union continued to function as bargaining agent mo