FIRST DIVISION
[G.R. No. L-30822. July 31, 1975.]
EDUARDO CLAPAROLS, ROMULO AGSAM and/or CLAPAROLS STEEL
AND NAIL PLANT , petitioners, vs. COURT OF INDUSTRIAL RELATIONS,
ALLIED WORKERS' ASSOCIATION and/or DEMETRIO GARLITOS,
ALFREDO ONGSUCO, JORGE SEMILLANO, SALVADOR DOROTEO,
ROSENDO ESPINOSA, LUDOVICO BALOPENOS, ASER AMANCIO,
MAXIMO QUIOYO, GAUDENCIO QUIOYO, and IGNACIO QUIOYO ,
respondents.
Ruben G. Bala for petitioners.
Rolando N. Medalla for private respondents.
SYNOPSIS
Found guilty of union busting and of illegally dismissing the respondent workers,
petitioners were ordered to reinstate the former with backwages from date of dismissal
to reinstatement. Petitioners opposed the execution of the judgment as well as the order
directing the court examiner to compute the bonuses aside from backwages. They
contended that the company had ceased to operate and, therefore, pursuant to Sta. Cecilia
Sawmills v. CIR (L-19273, Feb. 20, 1964), the workers, assuming they are entitled to
backwages, should only be limited to three-months' pay. Respondent workers, however,
contended that the company was succeeded by another company which is controlled by
the same stockholders. The Court of Industrial Relations denied the opposition, and on
appeal, the Supreme Court sustained the industrial court.
Thereafter, the Court of Industrial Relations after the recomputation of the award again
directed the petitioners to pay the respective backwages and bonuses of the respondents.
When petitioners' opposition was denied, they again appealed to the Supreme Court.
The Supreme Court denied the appeal with treble costs against petitioner.
SYLLABUS
1. JUDGMENTS; LAW OF THE CASE; JUDGMENT IN A PRIOR CASE INVOLVING THE
SAME ISSUES CONSTITUTES THE LAW OF THE CASE IN A SUBSEQUENT CASE. — Where
the same issues invoked in a subsequent case were raised and decided in a prior case, the
resolution of the Supreme Court in the prior case which had long become final constitutes
the law of the case in the subsequent case.
2. LABOR RELATIONS; UNFAIR LABOR PRACTICE; REINSTATEMENT; WHEN
BACKWAGES INCLUDED BONUSES. — A bonus is not a demandable and enforceable
obligation, except when it is made part of the wage or salary compensation. Whether or
not bonus forms part of wages depends upon the condition or circumstances for its
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payment. If it is an additional compensation which the employer promised and agreed to
give without any condition imposed for its payment then it is part of the wage.
3. ID.; ID.; ID.; ID.; WHERE BONUS IS EARMARKED AS A MATTER OF TRADITION IT
FORMS PART OF RECOVERABLE WAGES FROM COMPANY. — An employee is not entitled
to bonus where there is no showing that it had been granted by the employer to its
employees periodically or regularly as to become part of their wages or salaries. The clear
implication is that bonus is recoverable as part of the wage or salary where the employer
regularly or periodically gives it to employees. Thus, where the bonus for a given year is
earmarked as a matter of tradition for distribution to employees, and the company
distributes bonuses even if the company has suffered losses, it becomes part of the
recoverable wages from the company.
4. ID.; CORPORATIONS; PIECING THE VEIL OF CORPORATE EXISTENCE. — The ruling
in Sta. Cecilia Sawmills to the effect that the recoverable backwages shall be limited to
only three (3) months where the company had ceased operations, does not apply to a case
where the company after ceasing it as operations is succeeded by another company,
which continued the operations of the first entity, and its emergence was skillfully timed to
avoid the financial liability that already attached to its predecessor, and where the
"avoiding-the-liability" scheme is patently shown by the fact that 90% of the subscribed
shares of stock of the second company was owned by the same person and all the assets
of the dissolved company were turned over to the new company. The second company
cannot seek the protective shield of a corporate function whose veil could and should be
pierced as it was deliberately and maliciously designed to evade its financial obligation to
its employees.
5. CORPORATIONS; NOTION OF LEGAL ENTITY CANNOT BE USED TO DEFEAT PUBLIC
CONVENIENCE. — When the notion of legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, the law will regard the corporation as an
association of persons, or in the case of two persons, will merge them into one. Thus,
where a corporation is a dummy and serves no business purpose and is intended only as a
blind, the corporate fiction may be ignored. And where a corporation is merely an adjunct,
business conduct or alter ego of another corporation the fiction of separate and distinct
corporate entities should be disregarded.
DECISION
MAKASIAR , J : p
A petition for certiorari to set aside the order of respondent Court of Industrial Relations
dated May 30, 1969 directing petitioners to pay back wages and bonuses to private
respondents as well as its resolution of July 5, 1969 denying the motion for
reconsideration of said order in Case No. 32-ULP-Iloilo entitled "Allied Workers'
Association, et. al., versus Eduardo Claparols, et. al. . .
It appears that on August 6, 1957, a complaint for unfair labor practice was filed by herein
private respondent Allied Workers' Association, respondent Demetrio Garlitos and ten (10)
respondent workers against herein petitioners on account of the dismissal of respondent
workers from petitioner Claparols Steel and Nail Plant.
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On September 16, 1963, respondent Court rendered its decision finding "Mr. Claparols
guilty of union busting and" of having "dismissed said complainants because of their union
activities," and ordering respondents "(1) To cease and desist from committing unfair
labor practices against their employees and laborers; (2) To reinstate said complainants
to their former or equivalent jobs, as soon as possible, with back wages from the date of
their dismissal up to their actual reinstatement" (p. 12, Decision; p. 27, rec.).
A motion to reconsider the above decision was filed by herein petitioners, which
respondent Court, sitting en banc, denied in a resolution dated January 27, 1964.
On March 30, 1964, counsel for herein respondent workers (complainants in the ULP case)
filed a motion for execution of respondent Court's September 16, 1963 decision.
On May 14, 1964, respondent Court, in its order of September 16, 1963, granted execution
and directed herein petitioners.
"to reinstate the above complainants to their former or equivalent jobs within five
(5) days after receipt of a copy of this order. In order to implement the award of
back wages, the Chief of the Examining Division or any of his assistants is hereby
directed to proceed to the office of the respondents at Matab-ang, Talisay, Negros
Occidental, and examine its payrolls and other pertinent records and compute the
back wages of the complainants in accordance with the decision dated
September 16, 1963, and, upon termination, to submit his report as soon as
possible for further disposition" (p. 7, Brief for Respondents, p. 113, rec.).
which was reiterated by respondent Court in a subsequent order dated November 10,
1964 (pp. 7-8, Brief for Respondents, p. 113, rec.).
On December 14, 1964, respondent workers were accompanied by the Chief of Police of
Talisay, Negros Occidental to the compound of herein petitioner company to report for
reinstatement per order of the court. Respondent workers were, however, refused
reinstatement by company accountant Francisco Cusi for he had no order from plant
owner Eduardo Claparols nor from his lawyer Atty. Plaridel Katalbas, to reinstate
respondent workers.
Again, on December 15, 1964, respondent workers were accompanied by a police officer
to the company compound, but then, they were again refused reinstatement by Cusi on the
same ground.
On January 15, 1965, the CIR Chief Examiner submitted his report containing three
computations, to wit:
"The first computation covers the period February 1, 1957 to October 31, 1964.
The second is up to and including December 7, 1962, when the corporation
stopped operations, while the third is only up to June 30, 1957 when the Claparols
Steel and Nail Plant ceased to operate" (Annex B, Petition for Review on Certiorari,
p. 14, Brief for appellees, p. 113, rec.).
with the explanation that:
"6. Since the records of the Claparols Steel Corporation show that it was
established on July 1, 1957 succeeding the Claparols Steel and Nail Plant which
ceased operations on June 30, 1957, and that the Claparols Steel Corporation
stopped operations on December 7, 1962, three (3) computations are presented
herein for the consideration of this Honorable Court" (p. 2, Report of Examiner, p.
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29, rec.)
On January 23, 1965, petitioners filed an opposition alleging that under the circumstances
presently engulfing the company, petitioner Claparols could not personally reinstate
respondent workers; that assuming the workers are entitled to back wages, the same
should only be limited to three months pursuant to the court ruling in the case of Sta.
Cecilia Sawmills vs. CIR (L-19273-74, February 20, 1964); and that since Claparols Steel
Corporation ceased to operate on December 7, 1962, re-employment of respondent
workers cannot go beyond December 7, 1962.
A reply to petitioner's opposition was filed by respondent workers, alleging among others,
that Claparols Steel and Nail Plant and Claparols Steel and Nail Corporation are one and
the same corporation controlled by petitioner Claparols, with the latter corporation
succeeding the former.
On November 28, 1966, after conducting a series of hearings on the report of the
examiner, respondent Court issued an order, the dispositive portion of which reads:
WHEREFORE, the Report of the Examiner filed on January 15, 1965, is hereby
approved subject to the foregoing findings and dispositions. Consequently, the
Corporation Auditing Examiner is directed to recompute the back wages of
complainants Demetrio Garlitos and Alfredo Ongsuco on the basis of P200.00
and P270.00 a month, respectively; to compute those of complainant Ignacio
Quioyo as aforesaid; to compute the deductible earnings of complainants
Ongsuco, Jorge Semillano and Garlitos, as found in the body of this order; and to
compute the bonuses of each and every complainant, except Honorato Quioyo.
Thereafter, as soon as possible, the Examiner should submit a report in
compliance herewith of the Court's further disposition" (p. 24, Brief for
Respondents, p. 113, rec.)
On December 7, 1966, a motion for reconsideration was filed by petitioner, assailing
respondent Court's ruling that (1) the ruling in the case of Sta. Cecilia Sawmills Inc. CIR, et.
al. does not apply in the case at bar; and (2) that bonus should be included in the
recoverable wages.
On December 14, 1966, a counter-opposition was filed by private respondents alleging
that petitioners' motion for reconsideration was pro forma, it not making express
reference to the testimony or documentary evidence or to the provision of law alleged to
be contrary to such findings or conclusions of respondent Court.
On February 8, 1967, respondent Court of Industrial Relations dismissed petitioners'
motion for reconsideration for being pro forma.
Whereupon, petitioners filed a petition for certiorari with this COURT in G.R. No. L-27272 to
set aside the November 28, 1966 order of respondent Court, as well as its February 8,
1967 resolution. Petitioners assigned therein as errors of law the very same assignment of
errors it raises in the present case, to wit:
"I
"THE RESPONDENT COURT ERRED AND/OR ACTED WITH GRAVE
ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, IN
HOLDING IN THE ORDER UNDER REVIEW THAT BONUSES SHOULD BE PAID
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TO THE RESPONDENT WORKERS DESPITE THE FACT THAT THE SAME
WAS NOT ADJUDICATED IN ITS ORIGINAL DECISION.
"II
"THE RESPONDENT COURT ERRED AND/OR ACTED WITH GRAVE
ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, IN NOT
APPLYING THE DOCTRINE LAID DOWN BY THIS HONORABLE TRIBUNAL IN
THE CASE OF 'STA. CECILIA SAWMILLS, INC. VS. C.I.R., ET. AL.,' G.R. No. L-
19273-74, PROMULGATED ON FEBRUARY 29, 1964" (pp. 10-11, rec.)
On April 27, 1967, the Supreme Court denied petitioners' petition for certiorari (p. 77, rec.
of L-27272), which was reiterated on May 19, 1967 (p. 27, Respondent's Brief, p. 113, rec.;
p. 81, rec. of L-27272).
On May 3, 1967, private respondents moved to have the workers' back wages properly
recomputed. A motion to the same end was reiterated by private respondents on June 14,
1967.
On July 13, 1967, respondent Court directed a recomputation of the back wages of
respondent workers in accordance with its order dated November 28, 1966. The said
order in part reads:
"WHEREFORE, the Chief Auditing Examiner of the Court or any of his assistants, is
hereby directed to recompute the back wages of the workers involved in this case
in accordance with the Order of November 28, 1966, within 20 days from receipt
of a copy of this Order" (p. 28, Brief for Respondents, p. 113, rec.)
Then on March 21, 1968, the Chief Examiner came out with his report, the
disputed portion of which (regarding bonuses) reads:
"xxx xxx xxx
"4. The yearly bonuses of the employees and laborers of respondent
corporation are given on the following basis:
"Basic Additional:
"a. For every dependent 1% of monthly salary
"b. For every dependent in elementary grade 2% of monthly salary
"c. For every dependent in high school 3% of monthly salary
"d. For every dependent in college 5% of monthly salary
xxx xxx xxx
"7. The computed . . . bonuses after deducting the earnings elsewhere of
Messrs. Ongsuco, Garlitos and Semillano, are as follows:
"Name . . . Bonuses . . .
1. Alfredo Ongsuco P1,620.00
2. Demetrio Garlitos 1,200.00
3. Ignacio Quioyo 455.23
4. Aser Abancio 461.00
5. Ludovico Belopeños 752.05
6. Salvador Doroteo 714.70
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7. Rosendo Espinosa 1,075.40
8. Gaudencio Quioyo 1,167.92
9. Jorge Semillano 1,212.08
10. Maximo Quioyo 449.41
———
Total P9,107.79"
(Pp. 30-31, Respondent's Brief, p. 113, rec.).
On April 16, 1968, petitioners filed their opposition to the report of the Examiner dated
March 21, 1968 on grounds already rejected by respondent Court in its order dated
November 28, 1966, and by the Supreme Court also in its ruling in G.R. No. L-27272.
On May 4, 1968, a rejoinder to petitioners' opposition was filed by private respondents,
alleging among others "that the grounds of petitioners' opposition were the same grounds
raised by them before and passed upon by respondent Court and this Honorable Tribunal;
that this order of November 28, 1966 which passed upon these issues became final and
executory on June 3, 1967 from the Honorable Supreme Court. (Order of respondent Court
dated July 13, 1967)." [P. 32, Brief for Respondents, p. 113, rec.].
On July 26, 1968, private respondents filed their motion for approval of the Report of the
Examiner submitted on March 21, 1968, alleging, among others, that petitioners, in their
opposition, did not actually dispute the data elicited by the Chief Examiner but rather
harped on grounds which, as already stated, had already been turned down by the Supreme
Court.
On October 19, 1968, herein private respondents filed their "Constancia", submitting the
case for resolution of respondent Court of Industrial Relations.
On May 30, 1969, respondent Court issued an order, subject of the present appeal, the
dispositive portion of which reads:
"WHEREFORE, there being no proof offered to substantiate respondent Eduardo
Claparols' opposition, the Examiner's Report should be, and it is hereby,
APPROVED. Consequently, pursuant to the decision dated September 16, 1963,
respondent . . . (petitioners herein) are hereby directed to pay the respective back
wages and bonuses of the complainants (respondents herein) . . ." (p 35, Brief for
Respondents; p. 113, rec.; emphasis supplied).
On June 7, 1969, petitioners filed a motion for reconsideration on practically the same
grounds previously raised by them.
On June 30, 1969, respondents filed an opposition to petitioners' motion for
reconsideration, with the following allegations:
"1. The issues raised, namely, whether bonuses should be included in the
award for back wages had already been resolved by respondent court in its orders
dated November 28, 1966, and December 7, 1966, and in the Resolution of the
Honorable Supreme Court in G.R. No. L-27272 dated April 26, 1967 and May 19,
1967, and the same is already a settled and final issue.
"2. Petitioners' motion for reconsideration is merely a rehash of previous
arguments, effete and unrejuvenated, pro forma, and intended merely to delay the
proceedings.
As correctly contended by private respondents, the present petition is barred by Our
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resolutions of April 26, 1967 and May 19, 1967 in G.R. No. L-27272 (Eduardo Claparols, et.
al. vs. CIR, et. al.) [pp. 77-83, rec. of L-27272], dismissing said case, wherein said
petitioners invoked the applicability of the doctrine in Sta. Cecilia Sawmills, Inc. vs. CIR, et.
al. (L-19273-74, Feb. 29, 1964, 10 SCRA 433) and impugned the illegality of the order of
respondent Court dated November 28, 1966 directing the computation and payment of
the bonuses, aside from back wages on the ground that these bonuses were not included
in the decision of September 16, 1963, which had long become final.
The aforesaid resolutions in G.R. No. L-27272 constitute the law of the instant case,
wherein herein petitioners raised again practically the same issues invoked in the above
mentioned case. The denial of the petition in G.R. No. L-27272 suffices to warrant the
denial of the present petition; and We need not go any further.
However, without lending a sympathetic ear to the obvious desire of herein petitioners of
this Court to re-examine — which would be an exercise in futility — the final ruling in G.R. No.
L-27272, which as above-stated is the law of the instant case, but solely to remind herein
petitioners, We reiterate the governing principles.
WE uniformly held that "a bonus is not a demandable and enforceable obligation, except
when it is made part of the wage or salary compensation" (Philippine Education Co. vs. CIR
and the Union of Philippine Co. Employees [NLU], 92 Phil. 381; Ansay, et. al. vs. National
Development Co., et. al., 107 Phil. 998, 999; Emphasis supplied).
In Atok Big Wedge Mining Co. vs. Atok Big Wedge Mutual Benefit Association (92 Phil.
754), this Court, thru Justice Labrador, held:
"Whether or not bonus forms part of wages depends upon the condition or
circumstance for its payment. If it is an additional compensation WHICH THE
EMPLOYER PROMISED AND AGREED to give without any condition imposed for
its payment . . . then it is part of the wage." (Emphasis supplied).
In Altomonte vs. Philippine American Drug Co. (106 Phil. 137), the Supreme Court held that
an employee is not entitled to bonus where there is no showing that it had been granted by
the employer to its employees periodically or regularly as to become part of their wages or
salaries. The clear implication is that bonus is recoverable as part of the wage or salary
where the employer regularly or periodically gives it to employees.
American jurisprudence equally regards bonuses as part of compensation or recoverable
wages.
Thus, it was held that ". . . it follows that in determining the regular rate of pay, a bonus
which in fact constitutes PART OF AN EMPLOYEE'S compensation, rather than a true gift
or gratuity, has to be taken into consideration." (48 Am. Jur. 2d, Labor and Labor Relations,
No. 1555, citing the cases of Triple "AAA" Co. vs. Wirtz and Haber vs. Americana
Corporation; Emphasis supplied). It was further held that ". . . the regular rate includes
incentive bonuses paid to the employees in addition to the guaranteed base rates
regardless of any contract provision to the contrary and even though such bonuses could
not be determined or paid until such time after the payday" (48 Am. Jur. 2d, Labor and
Labor Relations, No. 1555, citing the case of Walling vs. Harnischfeger Corp., 325 US 427,
89 L Ed 1711, 65 S Ct. 1246; Emphasis supplied).
Petitioners in the present case do not dispute that as a matter of tradition, the company
has been doling out bonuses to employees. In fact, the company balance sheets for the
years 1956 to 1962 contained bonus and pension computations which were never
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repudiated or questioned by petitioners. As such, bonus for a given year earmarked as a
matter of tradition for distribution to employees has formed part of their recoverable
wages from the company. Moreover, with greater reason, should recovery of bonuses as
part of back wages be observed in the present case since the company, in the light of the
very admission of company accountant Francisco Cusi, distributes bonuses to its
employees even if the company has suffered losses. Specifically, petitioner company has
done this in 1962 (t.s.n., p. 149, Sept. 20, 1965).
Since bonuses are part of back wages of private respondents, the order of May 30, 1969,
directing the payment of their bonuses, did not amend the decision of September 16, 1963
of respondent Court directing payment of their wages, which has long become final and
executory, in the same way that the previous order of May 14, 1964 granting execution of
said decision of September 16, 1963 also directed the computation of the wages to be
paid to private respondents as decreed by the decision of September 16, 1963. All the
orders of May 30, 1969, November 28, 1966 and May 14, 1964 merely implement the
already final and executory decision of September 16, 1963.
Petitioners insist that We adopt the ruling in the Sta. Cecilia Sawmills case wherein the
recoverable back wages were limited to only three (3) months: because as in the Sta.
Cecilia Sawmills case, the Claparols Steel and Nail Plant ceased operations due to
enormous business reverses.
Respondent Court's findings that indeed the Claparols Steel and Nail Plant, which ceased
operation of June 30, 1957, v. as SUCCEEDED by the Claparols Steel Corporation effective
the next day, July 1, 1957 up to December 7, 1962, when the latter finally ceased to
operate, were not disputed by petitioners. It is very clear that the latter corporation was a
continuation and successor of the first entity, and its emergence was skillfully timed to
avoid the financial liability that already attached to its predecessor, the Claparols Steel and
Nail Plant. Both predecessors and successor were owned and controlled by petitioner
Eduardo Claparols and there was no break in the succession and continuity of the same
business. This "avoiding-the-liability" scheme is very patent, considering that 90% of the
subscribed shares of stocks of the Claparols Steel Corporation (the second corporation)
was owned by respondent (herein petitioner) Claparols himself, and all the assets of the
dissolved Claparols Steel and Nail Plant were turned over to the emerging Claparols Steel
Corporation.
It is very obvious that the second corporation seeks the protective shield of a corporate
fiction whose veil in the present case could, and should, be pierced as it was deliberately
and maliciously designed to evade its financial obligation to its employees.
It is well remembering that in Yutivo & Sons Hardware Company vs. Court of Tax Appeals
(L-13203, Jan. 28, 1961, 1 SCRA 160), We held that when the notion of legal entity is used
to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will
regard the corporation as an association or persons, or, in the case of two corporations,
will merge them into one.
In Liddel & Company, Inc. vs. Collector of Internal Revenue (L-9687, June 30, 1961, 2 SCRA
632), this Court likewise held that where a corporation is a dummy and serves no business
purpose and is intended only as a blind, the corporate fiction may be ignored.
In Commissioner of Internal Revenue vs. Norton and Harrison Company (L-17618, Aug. 31,
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1964, 11 SCRA 714), We ruled that where a corporation is merely an adjunct, business
conduit or alter ego of another corporation, the fiction of separate and distinct corporate
entities should be disregarded.
To the same uniform effect are the decisions in the cases of Republic vs. Razon (L-17462,
May 29, 1967, 20 SCRA 234) and A.D. Santos, Inc. vs. Vasquez (L-23586, March 20, 1968,
22 SCRA 1156).
WE agree with respondent Court of Industrial Relations, therefore, that the amount of back
wages recoverable by respondent workers from petitioners should be the amount
accruing up to December 7, 1962 when the Claparols Steel Corporation ceased
operations.
WHEREFORE, PETITION IS HEREBY DENIED WITH TREBLE COSTS AGAINST PETITIONERS
TO BE PAID BY THEIR COUNSEL.
Castro (Chairman), Esguerra, Muñoz Palma and Martin, JJ., concur.
Teehankee, J., is on leave.
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