GR 117932; (July, 1995) (Digest)
G.R. No. 117932 July 20, 1995
AVON DALE GARMENTS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LILIA DUMANTAY, ET AL., respondents.
FACTS
Private respondents were employees of petitioner Avon Dale Garments, Inc. and its predecessor, Avon Dale Shirt Factory. Following a labor dispute, a compromise agreement led to their termination with separation pay. However, a dispute arose when petitioner refused to include in the computation the period of private respondents’ prior employment with Avon Dale Shirt Factory. The employees thus filed a complaint for deficiency in separation pay, arguing their service with the predecessor should be credited as the entities were not distinct.
The Labor Arbiter dismissed the complaint, ruling the two entities were separate, noting Avon Dale Shirt Factory filed Articles of Dissolution with the SEC in 1978. On appeal, the NLRC reversed the decision. It found no evidence that the dissolved company’s employees, as creditors for separation pay, were ever paid. Consequently, it held petitioner, as successor-in-interest, liable for the unpaid claims.
ISSUE
Whether the National Labor Relations Commission committed grave abuse of discretion in holding petitioner Avon Dale Garments, Inc. liable for the separation pay covering private respondents’ employment with its alleged predecessor, Avon Dale Shirt Factory.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion by the NLRC. The Court emphasized that the mere filing of Articles of Dissolution with the SEC is insufficient to prove actual dissolution and establish separate corporate identity. Petitioner failed to substantiate that Avon Dale Shirt Factory underwent actual closure and cessation of operations.
The prevailing circumstances indicated continuity: the same owners, the same business venture, the same address, and the continued employment of the same workers. Established jurisprudence holds that where one corporation is merely a continuation of another, they cannot be deemed separate and distinct entities. A change in corporate name does not create a new corporation or affect its liabilities. Therefore, petitioner was correctly held liable to include the prior service period in computing separation pay. The assailed NLRC decision was in complete accord with law and evidence.