Dear Atty. Gab

Musta Atty! I hope you can shed some light on my situation. I worked as a warehouse supervisor for ‘Alpha Logistics Inc.’ here in Cebu City for nearly 12 years. Last January, management called a meeting and announced that Alpha Logistics was ceasing operations effective March 31 due to restructuring. We were all given termination letters citing ‘closure of business’ and offered separation packages.

I was hesitant, but needing the money, I accepted the separation pay amounting to roughly P150,000. During the announcement, they mentioned a ‘new’ company might take over and potentially rehire some of us. True enough, around April 1st, a company named ‘Omega Logistics Solutions’ started operating out of the exact same building, using the same equipment, and even retaining most of the old managers. They are doing the exact same logistics work Alpha did.

However, despite my long service and good record, Omega didn’t rehire me. They initially said they’d call, but nothing happened. I feel like the ‘closure’ was just a way to get rid of long-term employees like me without real cause. Was the closure of Alpha Logistics legitimate if Omega Logistics just continued the business under a new name? Am I considered illegally dismissed even if I accepted the separation pay? I’m really confused about my rights.

Thank you for any guidance you can provide.

Sincerely,
Carlos Mendoza

Dear Carlos

Thank you for reaching out and sharing your situation. It’s understandable why you feel confused and concerned about the circumstances surrounding your termination from Alpha Logistics Inc. and the subsequent emergence of Omega Logistics Solutions.

Based on your description, your intuition might be correct. Philippine labor law provides strong protection for employees’ security of tenure. A mere change in a company’s name or amendments to its articles of incorporation does not, by itself, extinguish the original corporation or automatically terminate its employees. If Alpha Logistics essentially continued its operations under the new name Omega Logistics Solutions, the ‘closure’ might be deemed not genuine, potentially making your dismissal illegal, regardless of your acceptance of separation pay.

When a New Name Doesn’t Mean a New Company

The core issue here revolves around the identity of the corporation and the principle of security of tenure. Under Philippine law, corporations have distinct legal personalities, but this veil of corporate fiction can be pierced when used to justify wrong, protect fraud, or defeat public convenience, such as circumventing labor laws.

A simple change in the corporate name is legally considered just that – a change of name, not the creation of an entirely new entity. The corporation’s identity, assets, rights, and crucially, its liabilities, generally remain the same.

“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, and its character is in no respect changed.”

Therefore, if Omega Logistics Solutions is essentially Alpha Logistics Inc. operating under a new name – using the same premises, equipment, management, and conducting the same business – it remains the same employer entity. This continuity means the obligations Alpha had towards its employees, including respecting their security of tenure, are carried over to Omega.

While Article 283 of the Labor Code recognizes closure or cessation of operation as an authorized cause for termination, it comes with a critical qualification.

“Article 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to […] the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. x x x.”

This means the closure must be bona fide, or in good faith. A closure is not considered genuine if it’s merely a pretext to get rid of employees or avoid labor obligations, only to continue the same business under a different guise. Factors like the continuation of the business using the same assets, location, and key personnel strongly suggest that a genuine closure did not occur.

If the closure was not bona fide, the termination based on this ground is illegal. The law mandates that dismissals must be for a just or authorized cause, and the employer bears the burden of proving the validity of the termination.

“Where there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause.”

Your acceptance of separation pay does not automatically bar you from questioning the legality of your dismissal, especially if the circumstances suggest you were led to believe the closure was legitimate when it might not have been. While acceptance of benefits can sometimes be seen as a waiver, courts often scrutinize this, particularly when an employee’s consent may have been vitiated or when the employer acted in bad faith.

Furthermore, if illegal dismissal is established, you may also be entitled to attorney’s fees, as you were compelled to incur expenses to protect your rights due to the company’s actions.

“[…] attorney’s fees could be awarded to a party whom an unjustified act of the other party compelled to litigate or to incur expenses to protect his interest.”

In essence, if Alpha’s ‘closure’ was merely a scheme to transition to Omega and potentially shed long-term employees without just cause, your termination could be contested as illegal dismissal.

Practical Advice for Your Situation

• Gather Evidence: Collect all documents related to your employment with Alpha (contract, payslips, IDs), your termination notice, the separation pay voucher/receipt, and any evidence showing the continuity between Alpha and Omega (photos of the premises, names of managers/colleagues working at Omega, Omega’s business activities).
• Document Communications: Write down details of any conversations where re-employment with the ‘new’ company was discussed or promised.
• Consult the DOLE: You can seek initial assistance and guidance from the Department of Labor and Employment (DOLE) through its Single Entry Approach (SEnA) program for potential mediation.
• Seek Legal Counsel: Consult a lawyer specializing in labor law to thoroughly evaluate the specifics of your case, the evidence you have, and the best legal strategy.
• Separation Pay Issue: Discuss with your lawyer the legal implications of accepting the separation pay in your specific circumstances. Generally, it doesn’t automatically preclude an illegal dismissal claim if the termination itself was invalid.
• Prescriptive Period: Be mindful of the time limit for filing an illegal dismissal complaint, which is generally four (4) years from the time of dismissal.
• Witnesses: Identify former colleagues who might be willing to corroborate your account regarding the nature of the ‘closure’ and the transition to Omega.

Your situation highlights a critical aspect of Philippine labor law designed to protect employees from corporate maneuvers aimed at circumventing tenure rights. Pursuing clarity on this matter is well within your rights.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.