Azcor v. NLRC

AZCOR MANUFACTURING INC., FILIPINAS PASO and/or ARTURO ZULUAGA/Owner vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND CANDIDO CAPULSO

1999 Feb 11, 2nd Division
G.R. No. 117963 BELLOSILLO, J.:
FACTS
Candido Capulso filed with the Labor Arbiter a complaint for constructive illegal dismissal and
illegal deduction of P50.00 per day for the period April to September 1989. Petitioners Azcor
Manufacturing, Inc. (AZCOR) and Arturo Zuluaga who were respondents before the Labor Arbiter
(Filipinas Paso was not yet a party then in that case) moved to dismiss the complaint on the ground that
there was no employer-employee relationship between AZCOR and herein respondent Capulso; that the
latter became an employee of Filipinas Paso effective 1 March 1990 but voluntarily resigned therefrom a
year after. Capulso later amended his complaint by impleading Filipinas Paso as additional respondent
before the Labor Arbiter.
The labor arbiter denied the motion to dismiss holding that the allegation of lack of employeremployee relationship between Capulso and AZCOR was not clearly established. Thereafter, the Labor
Arbiter ordered that hearings be conducted for the presentation of evidence by both parties.
The evidence presented by Capulso showed that he worked for AZCOR as ceramics worker for
more than two (2) years starting from 3 April 1989 to 1 June 1991 receiving a daily wage of P118.00
plus other benefits such as vacation and sick leaves. From April to September 1989 the amount of
P50.00 was deducted from his salary without informing him of the reason therefor.
In the second week of February 1991, upon his doctor's recommendation, Capulso verbally
requested to go on sick leave due to bronchial asthma. Capulso went back to petitioner AZCOR to
resume his work after recuperating from his illness. He was not allowed to do so by his supervisors who
informed him that only the owner, Arturo Zuluaga, could allow him to continue in his job. He returned
five (5) times to AZCOR but when it became apparent that he would not be reinstated, he immediately
filed the instant complaint for illegal dismissal.
On the other hand, petitioners alleged that Capulso was a former employee of AZCOR who
resigned on 28 February 1990 as evidenced by a letter of resignation and joined Filipinas Paso on 1
March 1990 as shown by a contract of employment; in February 1991 Capulso allegedly informed his
supervisor, Ms. Emilia Apolinaria, that he intended to go on terminal leave because he was not feeling
well; on 1 March 1991 he submitted a letter of resignation addressed to the President of Filipinas Paso,
Manuel Montilla; and, in the early part of June 1991 Capulso tried to apply for work again with Filipinas
Paso but there was no vacancy.
The Labor Arbiter rendered a decision dismissing the complaint for illegal dismissal for lack of
merit, but ordered AZCOR and/or Arturo Zuluaga to refund to Capulso the sum of P200.00 representing
the amount illegally deducted from his salary.
On appeal by Capulso, the NLRC modified the Labor Arbiter's decision by: (a) declaring the
dismissal of Capulso as illegal for lack of just and valid cause; (b) ordering petitioners to reinstate
Capulso to his former or equivalent position without loss of seniority rights and without diminution of
benefits; and, (c) ordering petitioners to jointly and solidarily pay Capulso his back wages computed
from the time of his dismissal up to the date of his actual reinstatement
Petitioners' motion for reconsideration was denied by the NLRC; hence, the instant petition.
Meanwhile, during the pendency of the case before this Court, Capulso succumbed to asthma and heart
disease.
ISSUE
Whether the NLRC committed grave abuse of discretion in declaring that private respondent
Capulso was illegally dismissed and in holding petitioners jointly and solidarily liable to Capulso for
back wages.
***
Petitioners also contend that they could not be held jointly and severally liable to Capulso for
back wages since AZCOR and Filipinas Paso are separate and distinct corporations with different
corporate personalities; and, the mere fact that the businesses of these corporations are interrelated and
both owned and controlled by a single stockholder are not sufficient grounds to disregard their separate
corporate entities.
We are not persuaded. The doctrine that a corporation is a legal entity or a person in law distinct
from the persons composing it is merely a legal fiction for purposes of convenience and to subserve the
ends of justice. This fiction cannot be extended to a point beyond its reason and policy.20 [13 Am. Jur.
2d 559] Where, as in this case, the corporate fiction was used as a means to perpetrate a social injustice
or as a vehicle to evade obligations or confuse the legitimate issues, it would be discarded and the two
(2) corporations would be merged as one, the first being merely considered as the instrumentality,
agency, conduit or adjunct of the other.21 [See Pabalan v. National Labor Relations Commission, G.R.
No. 89879, 20 April 1990, 184 SCRA 495, 500]
In this particular case, there was much confusion as to the identity of Capulso's employer whether it was AZCOR or Filipinas Paso; but, for sure, it was petitioners' own making, as shown by the
following: First, Capulso had no knowledge that he was already working under petitioner Filipinas Paso
since he continued to retain his AZCOR Identification card; Second, his payslips contained the name of
AZCOR giving the impression that AZCOR was paying his salary; Third, he was paid the same salary
and he performed the same kind of job, in the same work area, in the same location, using the same tools
and under the same supervisor; Fourth, there was no gap in his employment as he continued to work
from the time he was hired up to the last day of his work; Fifth, the casting department of AZCOR
where Capulso was working was abolished when he, together with six (6) others, transferred to Filipinas
Paso; and Sixth, the employment contract was signed by an AZCOR personnel officer, which showed
that Capulso was being hired from 1 March 1990 to 31 August 1990 by AZCOR to do jobs for Filipinas
Paso. The employment contract provided in part:
***
Interestingly, petitioners likewise argue that it was grave abuse of discretion for the NLRC to
hold them solidarily liable to Capulso when the latter himself testified that he was not even an employee
of Filipinas Paso. After causing much confusion, petitioners have the temerity to use as evidence the
ignorance of Capulso in identifying his true employer. It is evident from the foregoing discussion that
Capulso was led into believing that while he was working with Filipinas Paso, his real employer was
AZCOR. Petitioners never dealt with him openly and in good faith, nor was he informed of the
developments within the company, i.e., his alleged transfer to Filipinas Paso and the closure of AZCOR's
manufacturing operations beginning 1 March 1990. Understandably, he sued AZCOR alone and was
constrained to implead Filipinas Paso as additional respondent only when it became apparent that the
latter also appeared to be his employer.
In fine, we see in the totality of the evidence a veiled attempt by petitioners to deprive Capulso
of what he had earned through hard labor by taking advantage of his low level of education and
confusing him as to who really was his true employer - such a callous and despicable treatment of a
worker who had rendered faithful service to their company.
***

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AZCOR MANUFACTURING INC., FILIPINAS PASO and/or ARTURO ZULUAGA/Owner vs.

NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND CANDIDO CAPULSO

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