G.R. No. 79329 . March 28, 1990
MOBIL EMPLOYEES ASSOCIATION (MEA) and INTER-ISLAND LABOR ORGANIZATION-IBMEWA (ILO), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION; MOBIL OIL PHILIPPINES, INC. (MOPI), MOBIL PHILIPPINES, INC. (MPI), MOBIL PETROLIUM COMPANY, INC. (MOBILPET), J.P. BAILLEAUX, E.G. JAVELOSA, V.S. TINTOC and F.U. UMALI; CALTEX (PHILIPPINES), INC. (CPI) and A.R. GUTIERREZ and OTHER MEMBERS OF THE BOARD OF DIRECTORS, respondents.

FACTS

Mobil Oil Philippines, Inc. (MOPI), a domestic corporation, was sold by its foreign parent, Mobil Petroleum Company, to another foreign entity, Caltex Petroleum Company. This sale, negotiated offshore, resulted in MOPI’s complete cessation of business operations and subsequent dissolution. MOPI informed its employees of the termination of their employment effective August 31, 1983, due to the company’s withdrawal from business. It provided a separation package, which was later improved, and complied with the Labor Code requirement of serving notices to the employees and the Ministry of Labor. The petitioners, labor unions with existing Collective Bargaining Agreements (CBAs) with MOPI, filed a complaint for unfair labor practice and illegal dismissal. They argued the closure was a sham designed to circumvent the CBA, noting that a new subsidiary, Mobil Philippines, Inc. (MPI), was formed by the same parent company and hired some former MOPI employees.

ISSUE

The core issue was whether MOPI’s cessation of operations and the consequent termination of all employees constituted an illegal dismissal or an unfair labor practice designed to evade obligations under the existing CBAs.

RULING

The Supreme Court dismissed the petition, upholding the findings of the National Labor Relations Commission. The legal logic centered on the employer’s right to close or cease operations for bona fide reasons under Article 283 of the Labor Code. The Court found the closure was genuine and not undertaken to circumvent the law or the CBA. The sale of MOPI was a significant, irreversible business decision between two foreign corporations, resulting in the dissolution of the corporate entity and the transfer of its primary assets and business lines. The formation of MPI, which engaged in a residual and different line of business (marketing chemicals and aviation fuels, as opposed to MOPI’s general petroleum marketing), and its hiring of some former employees on a contractual basis to wind up MOPI’s affairs, did not prove bad faith. The Court emphasized that the mere continuity of some directors or the hiring of a few former employees does not invalidate a bona fide closure. Since the closure was legitimate, the duty to pay separation benefits was fulfilled, and any ancillary obligations, such as union dues check-off, ceased with the termination of operations. Petitioners failed to substantiate their claim of unfair labor practice or prove that the NLRC committed grave abuse of discretion.