Almirante: Liability of a purchasing corporation

Dominador A. Almirante
Labor case digest

THE petitioners were regular employees of the Philippine Banking Corp. (Philbank). In February 2000, Philbank merged with Global Business Bank, Inc. (Global Bank), with the former as the surviving corporation and the latter as the absorbed corporation, but the bank operated under the name Global Business Bank, Inc.

In August 2002, respondent Metropolitan Bank and Trust Company (Metrobank) acquired the assets and liabilities of Globalbank through a Deed of Assignment and Assumption of Liabilities.

Subsequently, the petitioners filed separate complaints for non-payment of separation pay with prayer for damages and attorney’s fees impleading, among others, Metrobank as a respondent. Can the petitioners’ claims against Metrobank prosper?

Ruling: No.

As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the purchaser expressly or impliedly agrees to assume the debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts.

Under the Deed of Assignments of Assets and Assumption of Liabilities between Globalbank and Metrobank, the latter accepted the former’s assets in exchange for assuming its liabilities.

The liabilities that Metrobank assumed, which were clearly set out in Annex “A” of the instrument, are: deposit liabilities; interbank loans payable; bills payable; manager’s checks and demand drafts outstanding; accrued taxes, interest and other expenses; and deferred credits and other liabilities.

Based on this enumeration, the liabilities that Metrobank assumed can be characterized as those pertaining to Globalbank’s banking operations. They do not include Globalbank’s liabilities to pay separation pay to its former employees. This must be so because it is understood that the same liabilities ended when the petitioners were paid the amounts embodied in their respective acceptance letters and quitclaims.

Hence, this obligation could not have been passed on to Metrobank.

The petitioners insist that Metrobank is liable because it is the “parent” company of Globalbank and that majority of the latter’s board of directors are also members of the former’s board of directors.

While the petitioners’ allegations are true, one fact cannot be ignored – that Globalbank has a separate and distinct juridical personality. The petitioners’ own evidence – Global Business Holdings, Inc.’s General Information Sheet filed with the Securities and Exchange Commission – bears this out (Ma. Corina C. Jiao, et. al. vs. NLRC, et. al., G.R. No. 182331, April 18, 2012).