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ZUELLIG FREIGHT v. NLRC

FACTS:

San Miguel worked as a checker/customs representative for Zeta Brokerage Corporation (Zeta) since December 16, 1985. In January 1994, Zeta announced its intention to cease operations and terminate its affected employees, including San Miguel. San Miguel was informed of his termination effective March 31, 1994. However, Zeta offered San Miguel employment with the petitioner, albeit he was later terminated on April 15, 1994, without valid cause and due process. San Miguel argued that the changes in Zeta's articles of incorporation did not dissolve the corporation but merely changed its name, expanded its primary functions, and increased its capital stock. On the other hand, the petitioner contended that San Miguel's termination was lawful under the Labor Code, and their decision not to rehire him was neither irregular nor discriminatory. The Labor Arbiter ruled that San Miguel's termination was illegal because there was no cessation of Zeta's business operations. The decisions of the Labor Arbiter were affirmed by the National Labor Relations Commission (NLRC) and the Court of Appeals (CA).

ISSUES:

  1. Whether the NLRC committed grave abuse of discretion in ruling that the closure of the business operation of Zeta was not bona fide, resulting in the illegal dismissal of San Miguel.

  2. Whether the NLRC committed grave abuse of discretion in ordering petitioner to pay San Miguel attorney's fees.

  3. Whether or not the termination of employment of San Miguel from Zeta is within the ambit of Article 283 of the Labor Code.

RULING:

  1. The petition for review on certiorari is denied for lack of merit. The Court affirms the finding of the CA that there was no grave abuse of discretion committed by the NLRC. The burden lies on the petitioner to prove that the NLRC committed grave abuse of discretion, and in this case, the petitioner failed to demonstrate such abuse. The CA's decision is supported by the records and applicable laws and jurisprudence.

  2. The award of attorney's fees to San Miguel is justified. The petitioner's feigned closure of business operations compelled San Miguel to litigate and incur expenses to protect his rights and interests. The award of attorney's fees is in accordance with the provisions of the Civil Code and the Labor Code.

  3. The Court affirmed the decision of the Court of Appeals and held that the termination of San Miguel's employment was illegal and ineffectual. The Court ruled that the change of name of Zeta to petitioner did not dissolve Zeta as a corporation. Therefore, petitioner was the mere continuation of Zeta's corporate being and still held the obligation to honor all of Zeta's obligations, including the security of tenure of its employees. The Court also upheld the award of attorney's fees to San Miguel, as he was compelled to litigate and incur expenses to protect his rights and interests.

PRINCIPLES:

  • Where there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers it a case of illegal dismissal, and the burden is on the employer to prove the validity of the termination.

  • Findings of fact of the NLRC, when the NLRC and Labor Arbiter are in agreement, are binding and conclusive upon the Supreme Court.

  • In a special civil action for certiorari, the petitioner carries the burden of proving that the court or quasi-judicial body committed grave abuse of discretion. Mere abuse of discretion is not enough; there must be a demonstration that the abuse of discretion was grave.

  • A bona fide closure of business operations is a valid ground for termination of employment under Article 283 of the Labor Code. However, the cessation of business must be bona fide and not in violation of the law.

  • The award of attorney's fees may be justified when an employee was illegally dismissed and was compelled to litigate to protect his rights and interests. The award is in accordance with the provisions of the Civil Code and the Labor Code.

  • The change of name of a corporation does not create a new corporation and does not change its identity, rights, or liabilities.

  • The change of name does not dissolve the corporation or absolve it from its obligations.

  • The mere continuation of a corporation after a change of name retains all the obligations and liabilities of the previous corporation.

  • Attorney's fees may be awarded to a party who was compelled to litigate or incur expenses to protect his interests due to an unjustified act of the other party.