**Facts:**
On August 6, 1957, the Allied Workers’ Association, represented by Demetrio Garlitos and accompanied by ten other workers, filed a complaint against Eduardo Claparols and the Claparols Steel and Nail Plant for unfair labor practices (ULP), specifically union busting and unwarranted dismissal due to union activities. The Court of Industrial Relations (CIR) initially decided in favor of the complainants on September 16, 1963, declaring Mr. Claparols guilty of ULP and ordering the company to cease such practices, to reinstate the workers with back wages, and to establish their bonuses.
Despite numerous motions for reconsideration by the petitioners, oppositions by the respondents, and several orders for computation and execution issued by the CIR, Claparols consistently refused to reinstate the workers or to comply with the directives regarding back wages and bonuses. The case saw a series of procedural steps, including recalculations of back wages and bonuses, motions, oppositions, and appeals which eventually led the matter to the Supreme Court.
The procedural history shows the petitioners’ persistent refusal to comply with the CIR’s orders—asserting in their defense the non-operation of the company due to financial difficulty—as well as a challenge to the inclusion of bonuses in the back wages, citing precedents such as the Sta. Cecilia Sawmills vs. CIR case. The Supreme Court had previously denied their petition for certiorari in G.R. No. L-27272, which directly questioned the inclusion of bonuses and the application of the doctrine established in the Sta. Cecilia Sawmills case.
**Issues:**
1. Whether bonuses should be included as part of recoverable wages in the computation of back wages.
2. The applicability of the doctrine from Sta. Cecilia Sawmills limiting recoverable back wages to three months in the context of Claparols’ operational cessation.
3. The concept of corporate succession and liability in regards to the continuity of business operations and obligations towards employees.
**Court’s Decision:**
The Court dismissed the petition, upholding the CIR’s decisions and computation which included bonuses as part of the back wages. It highlighted the established tradition of the company doling out bonuses, making them a part of the compensation and thus recoverable. The Court rejected the applicability of the Sta. Cecilia doctrine, noting the continuation of business between the Claparols Steel and Nail Plant and the Claparols Steel Corporation, essentially serving as a single entity designed to evade financial obligations to employees. It ruled in favor of the workers, affirming the directive for the payment of back wages and bonuses up until the operational cessation in December 1962.
**Doctrine:**
1. **Bonuses as Recoverable Wages:** A bonus, traditionally given and thus expected, becomes a part of the wage or salary and is demandable and enforceable.
2. **Corporate Succession and Liability:** When a new corporation emerges, effectively continuing the business operations of a previous entity to avoid financial liabilities, the veil of corporate fiction can be pierced, holding the new corporation liable for the obligations of its predecessor.
**Class Notes:**
– **Bonuses**: Traditionally given bonuses form part of the employee’s wage/salary and are hence recoverable as part of back wages.
– **Corporate Succession**: When a company deliberately restructures to avoid obligations (especially to employees), courts may disregard corporate separateness to enforce liability.
– **Limit on Back Wages**: The Court may deviate from limiting recoverable back wages to three months (as in Sta. Cecilia Sawmills) based on the continuity and intention behind the business’s operational cessation and re-emergence.
**Historical Background:**
This case reiterates important labor rights principles within the Philippine jurisdiction, highlighting worker protection against unfair labor practices. It clarifies the conditions under which bonuses become a mandatory component of an employee’s wages, directly impacting labor compensation practices. Additionally, it demonstrates the judiciary’s role in curbing corporate malpractices meant to evade financial responsibilities to employees, thereby reinforcing the integrity of labor rights protections.
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