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CLAPAROLS v.

CIR
G.R. No. L-30822 July 31, 1975 Makasiar Hermosisima
petitioners Eduardo Claparols, Romulo Agsam and/or Claparols Steel and Nail Plant
respondents CIR, Allied Workers’ Association and/or Demetrio Garlitos, Alfredo Ongsuco, Jorge Semillano,
Salvador Doroteo, Rosendo Espinosa, Ludovico Balopenos, Aser Amancio, Maximo Quioyo,
Gaudencio Qiuoyo, Ignacio Quoyo
summary ULP case got down to the issue of whether bonuses should be included in the
computation of backwages and whether the backwages should be computed until the
death of the corporation which succeeded the employer of the respondents. Court ruled
that since the bonuses were given regularly, then it should be considered as wages and
should thus be computed. As for the argument that the company respondents used to
work in already closed down, the court agreed with the CIR that such was but just a
successor of the old company to evade the responsibility to the employees. According to
the court, when a new corporation is formed to avoid the liability of the old, the former
will just be considered as a continuation of the second and could thus be made liable.

facts of the case


- On August 6 1957, a complaint for unfair labor practice was filed by Allied Workers Assoc and other
respondents against herein petitioner on account of their dismissal from Clarapols Steel and Nail Plant.
- September 1963 The CIR found Mr. Claparols guilty of union busting and dismissing respondents
because of their activities. As such, the CIR ordered the petitioners herein to cease and desist from
committing ULPs and to reinstate respondents. MR was denied
- March 30 1964 counsel for respondents moved for an execution of the CIR’s order. This was granted by
the court. Its orders were
o For petitioners to reinstate respondents to their former or equivalent jobs within 5 days of
receipt
o For the Chief Examining Officer of the CIR to go to the office of Claparols and examine its
payrolls and other pertinent records to compute the respondents’ backwages and submit a
report thereon
- December 14 and 15 1964 respondents went to the compound of petitioner in Negros Occidental,
accompanied by the police to report for reinstatement. However on both dates they were refused
reinstatement by the company accountant for he had no order from Eduardo Claparols or his attorney.
- On Jan 1965, the Chief Examining Officer submitted his report containing 3 computations covering 3
periods:
o Why were there 3 computations? Because it appears that Claparols Steel and Nail Company
ceased operations on June 30 1957 (to be replaced by Claparols Steel Corporation on July 1
1957) and that the Claparols Steel Corporation stopped operations on December 7 1962
o Feb 1 1957 to October 31 1964
o Up to and including December 7 1962
o Feb 1 1957 to June 30 1957
- Of course petitioners filed an opposition to said computations alleging that under the circumstances Sta
Cecilia Sawmills v CIR should apply to them so that the backwages shouldn’t exceed 3 months and
since Claparols Steel closed on December 7 1962, re-employment cannot go beyond that date.
- On November 1966, CIR approved Chief Examining Officer’s report. An MR of this decision was
denied. Petitoiner filed a petition for certiorari with the SC (not this case) to set aside the Nov 1966
order and denial of MR. SC denied the petition.

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- Respondents moved for recomputation of back wages. CIR directed a recomputation. The Chief
Examining Officer, in its recomputation, included the bonuses of the employees of
o For every dependent 1% of monthly salary
o For every dependent in elementary 2% of monthly salary
o For every dependent in high school 3% of monthly salary
o For every depdendent in college 5% of monthly salary
- Pets opposed said recomputation, but the CIR easily got rid of the opposition since they were based on
grounds they used the last time (Sta Cecilia and closed na plant)
- After the CIR approved the recomputation, private respondents filed a Constancia submitting the case
for resolution of CIR.
- Hence, the May 30 1969 ruling which is the subject of this case, where CIR ordered petitioners to pay
the backwages of the respondents based on the recomputation.
issue
Whether this case should prosper. NO, because questions in this case were already answered by a previous
case submitted to the SC. Nevertheless, the court discussed the topic below
Whether bonuses should be included. YES since it was shown that such bonuses were given regularly even
when the company was experiencing losses

Ratio
- The court first reminded petitioners of their previous petition for certiorari filed before the SC which
was denied. According to the court, such constitutes the law of the case. Still, the SC reiterated the
governing principles of why it denied the earlier petition.
- Citing numerous cases, the SC stated the doctrine that “ a bonus is not a demandable and enforceable
obligation, except when it is part of the wage or salary compensation”
o In Altomonte, SC held that an employee is not entitled to bonus where there is a showing that it
had been granted by the employer periodically or regularly as to become a part of their salaries
or wagers
o American cases are of the same tenor also
- Petitioners in this case do not dispute that as a matter of tradition, the company has been doling out
bonuses. In fact the balance sheets from 1956-62 contained bonuses and pension computationswhich
were never repudiated by petitioners. What supports the computation of bonuses as part of backwages
even more is the fact that the company distributes bonuses to its employees even if the company
suffered losses (as admitted by company accountant Francisco Cusi (miscusi))

As to amount of backwages (whether it should only cover the life of Claparols Steel and Nail Plant or should
cover also the life of Claparols Steel Corporation)
- At this late stage, petitioners are still insisting that Sta Cecilia Sawmills be applied to them. In that case,
the recoverable back wages were limited to only 3 months since the Sawmill (which was operated in
Sta. Cecilia) ceased operations due to enormous business reverses
- However, the petitioners did not dispute the fact that the Claparols Steel and Nail Plant (which ceased
ops on June 30) was succeeded by the Claparols Steel Corporation effective July 1 1957 up to December
7, 1962. It’s very clear that Claparols Steel was a continuation and successor of the 1st entity, and its
emergence was skillfully timed to avoid the financial liability that attached to its predecessor. 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.
- According to the court, this “avoiding-the-liability” scheme is very patent, considering that 90% of the
subscribed shares of stock of Claparols Steel was owned by Claparols himself. It is very obvious
that the 2nd corporation seeks the protective shield of a corporate fiction whose veil in this case should
be pierced as it was deliberately and maliciously designed to evade its financial obligations to its
employees.

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o In Yutivo Sons v CTA, SC 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
o In Liddel v CIR, the SC also 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.
o In CIR v Norton and Harrison, the Court 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.
- The Court thus agreed with the CIR in ordering that backwages be computed until December 7 1962, or
the period when the successor Claparols Steel ceased operations.

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