SAMUEL CASAS LIM, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION AND VICTORIA R. CALSADO, RESPONDENTS.

These two cases have been consolidated because they relate to the
same factual antecedents and the same private respondent.  The issues are:

1. In G.R. No. 79975, whether or not the private respondent was an
employee of the petitioner and, if so, had been illegally dimissed;
and corollarily, whether or not the NLRC had
jurisdiction over their dispute.

2. In G.R. No. 79907, whether or not the petitioner could be held solidarily liable with Sweet Lines, Inc. to the private
respondent.

The record shows that private respondent Victoria Calsado was hired by Sweet Lines, Inc. on March 5, 1981, as
Senior Branch Officer of its International Accounts Department for a fixed
salary and a stipulated 5% commission on sales production.  On December 1, 1983, after tendering her
resignation to accept another offer of employment, she was persuaded to remain
with an offer of her promotion to Manager of the Department with corresponding
increase in compensation, which she accepted. 
She was also allowed to buy a second-hand Colt Lancer pursuant to a
liberal car plan under which one-half of the cost was to be paid by the company
and the other half was to be deducted from her salary.  Relations began to sour later, however, when
she repeatedly asked for payment of her commissions, which had accumulated and
were long overdue.  She also complained
of the inordinate demands on her time even when she was sick and in the
hospital.  Finally, on July 16, 1985, she
was served with a letter from Samuel Casas Lim, the
other petitioner, informing her that her “employment with Sweet
Lines” would terminate on August 5, 1985. 
Efforts were also taken by Sweet Lines to forcibly take the car from
her, culminating in an action for replevin against
her in the regional trial court of Manila.

On August 14, 1985, Calsado filed a complaint against both petitioners for
illegal dismissal, illegal deduction, and unpaid wages and commissions plus
moral and exemplary damages, among other claims.^[1] There followed an extended hearing where she
testified on the details of her employment, emphasizing her unsatisfactory
treatment by the management of Sweet Lines and especially the termination of
her services without the required notice and hearing and without valid
cause.  She also presented four other
witnesses to corroborate her charges.

The respondents’ defenses
were based mainly on the claim that Calsado was not
an employee of Sweet Lines but an independent contractor and that therefore
their dispute with her came under the jurisdiction of the civil courts and not
of the Labor Arbiter.^[2] On this matter the private respondent
pointedly comments:

At this point, private respondent would like to underscore the fact
that while private respondent in the proceedings before the Labor Arbiter presented five witnesses including
herself, all of whom were cross-examined by petitioners, and numerous documents
which were marked as Exhs. “A” to
“GG-8d” and 858 receipts and bills, all of which were duly identified
and testified to by private respondent and her witnesses and examined by
petitioners, petitioners failed to present any single evidence, testimonial or
documentary, to controvert private respondent’s evidence.  All that they presented were their
unsubstantiated pleadings not one of which was under oath, not even
their position paper which, under the NLRC rules (Sec. 2, Rule 7, Revised Rules
of the NLRC), have to be verified.^[3]

On December 29, 1986, decision was rendered against the two
petitioners by the Labor Arbiter,^[4]
who held them liable in solidum to the
complainant for the following amounts:

(a)  
Separation pay equivalent to one
month pay for every year of service based on her latest basic salary of
P2,500.00 plus allowance of P500.00, or a total monthly pay of P3,000.00;

(b)  
Backwages
based on her last monthly pay rate of P3,000.00 to be computed from the time of
her dismissal to the actual payment of her separation pay;

(c)  
Proportionate 13th month pay for
the year 1985;

(d)  
Sales commission in the sum of
P432,656.68;

(e)  
Moral damages of P100,000.00;

(f)    
Exemplary damages of P10,000.00;
and

(g)  
Attorney’s fees of P10,000.00 plus
25% of the total monetary awards in favor of the complainant.

The decision was appealed
to the National Labor Relations Commission and affirmed in toto except as to the attorney’s fees, which were reduced to 10% of the total award.^[5]  Both Sweet Lines and Lim then came to us in
separate petitions to raise the
above-stated issues.  On October 14,
1987, we issued a temporary restraining order
against the enforcement of the decision of the public respondent dated
September 11, 1987.^[6]
The petitions were consolidated on December 7, 1987, and given due course on
May 16, 1987, with the parties being required to submit their respective
memoranda.

On the first question, we hold that the employe-employer
relations between Calsado and Sweet Lines have been
sufficiently established.  The following
documents submitted by the former and not controverted
by the latter should belie the
claim that Calsado was only an independent contractor
over whom Sweet Lines had no control.

1.     
Certification issued by Sweet
Lines, Inc. dated May 21, 1984, stating that private respondent “is employed
with this company since March 5, 1982 up to the present, presently designated
as International Accounts Manager of the Sweet Lines, Inc., Manila
Branch.” (Exh. ”W”)

2.      Termination letter issued by Samuel Casas Lim
to private respondent reading:  “Your
employment with Sweet Lines, Inc. will cease effective August 15, 1985.  In connection with the foregoing, you are entitled to (1) separation pay
equivalent to one half month for every year of service x x
x; (2) The computed money value of unused vacation
leave x x x; (3) Thirteenth
month pay x x x;” (Exh. “V’)

3.     
Notice of private respondent’s
promotion effective December 1, 1982 from Senior Branch Officer to Manager,
International Accounts, with an increase in basic salary from P1,250 to P2,500
a month; (Exh. “D”)

4.      Computation of her salary, allowance and 13th month pay differentials
on account of her promotion, prepared and approved by the proper officials of
petitioner Sweet Lines, Inc. whose signatures appear thereon; (Exh. “E”)

5.     
Certification dated September 6,
1983 issued by the petitioner company, subscribed and sworn to before a notary
public declaring that private respondent was then an Account Executive of Sweet
Lines, Inc.; (Exh. “E”)

6.      Certification, notarized on January 10, 1985, by Atty. Gregorio
Francisco, counsel for petitioner company, that private respondent “is a bona
fide employee of Sweet Lines, Inc. and presently holding the position of
Manager, International Account.” (Exh. “Y”)

7.      Approved application for sick leave of private respondent for 15 days
from March 7, 1985 to April 3,
1985.  (Exh.
“I”)

There is in the above exhibits a consistent and categorical recognition of Calsado
as an employee of petitioner Sweet
Lines.  Indeed, its notarized
certification that Calsado was its bona fide employee is
irrefutable.  The petitioner cannot now
argue that the grant to her of the 13th month pay and even the differential pay
was a mere accommodation like the car plan (which, for that matter, is a
benefit usually extended only to employees). 
If it is true that Sweet Lines had no control over her and
left her free to determine her work schedule, there would have been no reason
at all for its approval of her application for sick leave from March 7, 1985 to
April 3, 1985.  The termination letter
itself, which was signed by the other petitioner as Vice President of Sweet
Lines, said she was
“entitled” to certain
payments as a result of the cessation of her
“employment with Sweet Lines, Inc.”

Sweet Lines has also failed to substantiate its allegation that Calsado was an independent contractor, as it should have, with evidence
showing inter alia that
she had the financial resources and other means or equipment to operate as
such.  One must prove what one alleges,
but Sweet Lines confined itself to mere denials.

At any rate, the determination of the existence of
employee-employer relations is a factual finding which this Court will not
disturb or reverse in the absence of a showing of grave abuse of
discretion.  We do not see such
justification here.  On the contrary, the
ascertainment of the employment status of the private respondent was made on
the basis of the criteria consistently employed by the Court in the determination of the employee-employer
relationship.^[7]
We find from the record that all
these tests have been satisfied.

Such relationship having been established, the third issue is
automatically resolved and requires not much elaboration.  Suffice it only to stress that the damages
claimed by private respondent as a result of her illegal dismissal and the violation of the terms and
conditions of her employment also come within the jurisdiction of the Labor
Arbiter as a contrary rule would result in the splitting of actions and the
consequent multiplication of suits.  So
we recently affirmed in Limquiaco v. Ramolete^[8] and more positively in National Union of
Bank Employees v. Lazaro,^[9] where we declared:

As we stated, the damages (allegedly) suffered by the petitioners
only form part of the civil component of the injury arising from the unfair
labor practice.  Under Article 247 of the
Code, “the civil aspects of all cases involving unfair labor practices
which may include claims for damages and other affirmative relief, shall be under the jurisdiction of the labor
arbiters.”

On the fourth issue, we
agree with petitioner Lim that he cannot be held personally liable with Sweet
Lines for merely having signed the letter informing Calsado
of her separation.  There is no evidence
that he acted with malice or bad faith. 
The letter, in fact, informed her not only of her separation but also of
the benefits due her as a result of the termination of her services.

It is true that Lim has
raised this matter rather tardily and also that he belongs to a closed
corporation controlled by the members of one family only.  But these circumstances should not be allowed
to operate against him if he is to be accorded substantial justice in the
resolution of the private respondent’s claim. 
As we said in Ortigas vs.
Lufthansa German Airlines,^[10] the Court is “clothed with ample authority
to review matters, even if they are not assigned as errors in the appeal,
if it finds that its consideration is necessary in arriving at a just decision of the case.” As for the second charge, the mere
fact that Lim is part of the family corporation does not mean that all its acts
are imputable to him directly and personally. 
His acts were official acts, done in his capacity as Vice President of
Sweet Lines and on its behalf.  There is
no showing that he acted without or in excess of his authority or was motivated
by personal ill-will toward Calsado.  The applicable decision is Sunio v. NLRC,^[11] where it was held:

Petitioner Sunio was impleaded
in the Complaint in his capacity as General Manager of petitioner corporation.  There
appears to be no evidence on record that he acted maliciously or in bad faith
in terminating the services of private
respondents.  His act, therefore, was
within the scope of his authority and was a corporate act.

It is basic that a corporation is invested by law with a personality
separate and distinct from those of the persons composing it as well as from
that of any other entity to which it may be related.  Mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock of a corporation
is not of itself sufficient ground for disregarding the separate corporate personality. 
Petitioner Sunio, therefore, should not have
been made personally answerable for the payment of private respondents’ back
salaries.

The case of Ransom v.
NLRC^[12] is not in point because there the debtor
corporation actually ceased operations after the decision of the Court of
Industrial Relations was promulgated against it, making
it necessary to enforce it against
its former president.  Sweet Lines is still existing and able to
satisfy the judgment in favor of the private respondent

The Solicitor General,
invoking equity rather than law, observes that making Lim solidarily
liable with Sweet Lines will ensure
payment of Calsado’s claim.  But this precaution, even assuming it to be
valid, is really unnecessary.  In fact,
as a condition for the issuance of our temporary restraining order of October
14, 1987, Sweet Lines posted as required a bond in the amount of P850,000.00,
which should cover the amounts awarded to the private
respondent.^[13]

We especially uphold the award of moral and exemplary damages in view of the acts of
harassment and bad faith testified to by the private respondent and not refuted by Sweet Lines.  Her treatment
during her employment, the delays in the payment of her commissions, the
pressures exerted upon her even when she was sick in the hospital, the
suggestion of one of the company officers that she discuss her complaints with
him alone in a private place, her arbitrary separation, the questionable
attempts to get the vehicle from her after her dismissal, among other
aggravations, clearly demonstrate the validity of the private respondent’s
complaints.

Finally, we hold
that the contention of Sweet Lines that separation pay and back wages are inconsistent
with each other is not well-taken. 
Separation pay is granted where reinstatement is no longer advisable
because of strained relations between the employee and the employer.  Back wages represent compensation that should
have been earned but were not collected because of the unjust dismissal.  The bases for computing the two are
different, the first being usually the length of the employee’s service and the
second the actual period when he was unlawfully prevented from working.

We have ordered the payment of both in proper cases^[14]
as otherwise the employee might
be deprived of benefits justly due him. 
Thus, if an employee who has worked only one year is sustained by the
labor court after three years from his unjust dismissal, granting him separation
pay only would entitle him to only one month salary.  There is no reason why he should not also be
paid three years back wages corresponding to the period when he could not
return to his work or could not find employment elsewhere.

WHEREFORE, subject to the modification that the award of
back wages shall be limited to only three years, in accordance with existing
policy, G.R. No. 79975 is DISMISSED, with costs against the petitioner.  G.R. No. 79907 is GRANTED and petitioner
Samuel Casas Lim is hereby absolved of liability in
his personal capacity.  The temporary
restraining order dated October 14, 1987, is LIFTED. It is so ordered.

Narvasa, (Chairman), Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Rollo, p. 29, (Annex “A” of Petition),
G.R. No. 79975.

^[2]
Ibid., p. 110.

^[3]
Id., p. 342, Private
Respondent’s Memorandum, p. 6.

^[4]
Nestor C. Lim.

^[5]
Rollo, p.
148.  G.R. No. 79975.

^[6]
Ibid., p. 151.

^[7]
To determine whether an employer-employee relationship exists, the following
elements are generally considered:  (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished as held in Bautista v. Inciong,
158 SCRA 665; Broadway Motors, Inc. v. NLRC, 156 SCRA 522; Besa v. Trajano, 146 SCRA
501; Rosario Brothers, Inc. v. Ople, 131 SCRA
72; Shipside, Inc. v. NLRC, 118 SCRA 99; Mafinco
Trading Corp. v. Ople, 70 SCRA 139.

^[8]
156 SCRA 162.

^[9]
157 SCRA 123.

^[10]
64 SCRA 610, Perez vs. Court of Appeals, 127 SCRA 636; Ernesto vs.
Court of Appeals, 131 SCRA 347; Asiatic Integrated Corporation v. Alikpala, 67 SCRA 60.

^[11]
127 SCRA 390.

^[12]
142 SCRA 269.

^[13]
Rollo, p. 162, G.R. No. 79975.

^[14]
City Trust Finance Corp. v. NLRC, 157 SCRA 87; Santos v. NLRC,
154 SCRA 166; Metro Drug v. NLRC, et al., 143 SCRA 132; Luzon Brokerage v.
Luzon Labor Union 7 SCRA 116.