GR 45421; (September, 1977) (Digest)
G.R. No. L-45421 September 9, 1977
MDII SUPERVISORS & CONFIDENTIAL EMPLOYEES ASSOCIATION (FFW) and MDII EMPLOYEES & WORKERS ORGANIZATION (FFW), LEOPOLDO SANTIAGO and EMMANUEL DURANIE, petitioners, vs. PRESIDENTIAL ASSISTANT ON LEGAL AFFAIRS, Office of the President, MARIKINA DAIRY INDUSTRIES, INC., HOLLAND MILK PRODUCTS, INC., and GF EQUITY, INC., respondents.
FACTS
Petitioners, two labor unions representing employees of Marikina Dairy Industries, Inc. (MDII), were parties to collective bargaining agreements. In 1974, during negotiations for a cost-of-living allowance, MDII’s stockholders resolved to shorten its corporate life, citing heavy financial losses, and appointed liquidating trustees. The Securities and Exchange Commission approved this dissolution. MDII then applied for clearance to terminate all employees effective July 31, 1974. The unions opposed, alleging the dissolution was a malicious scheme to evade obligations. Subsequently, MDII’s plant and assets were sold to respondents GF Equity, Inc. and Holland Milk Products, Inc.
ISSUE
Whether the National Labor Relations Commission (NLRC) and the Secretary of Labor gravely abused their discretion in granting clearance for the termination of MDII’s employees and in not ordering the purchasing corporations to absorb said employees.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion. The NLRC and the Secretary of Labor correctly granted the clearance for termination, retroactive to October 31, 1974, based on MDII’s legitimate dissolution due to financial losses. The Court upheld the factual findings that the corporate closure was not a scheme to circumvent labor obligations, noting the company’s substantial indebtedness and the generous separation benefits awarded, which included extended salaries, retirement pay, and commutation of leaves.
On the issue of mandatory absorption by the asset purchasers, the Court ruled there is no existing law requiring a buyer of corporate assets to automatically absorb the seller’s employees. The most that could be directed, on grounds of public policy and social justice, was for the new operators to give preference to the qualified separated employees should vacancies arise, which the NLRC appropriately ordered. The decision balanced the competing interests and constituted an equitable resolution under the circumstances. The termination of the collective bargaining agreements was therefore not deemed arbitrary or oppressive.