MARSMAN & Company Vs Rodil Sta Rita

MARSMAN & COMPANY, INC vs. RODIL C. STA.
RITA
G.R. No. 194765, 23 April 2018
FACTS:
Marsman is engaged in the business of distribution/sale of pharmaceutical and consumer

products. Marsman purchased Metro Drug Distribution, which is now named Consumer
Products Distribution Services Inc. (CPDSI). The transition from Marsman to CPDSI brought
confusion as to who the employer of Rodil at the time of his dismissal.
Marsman hired Rodil (under a contract) as a warehouse helper in 1993. After his contract
expired in 1994, Marsman rehired him on a probationary status, and he eventually became a
regular employee. Rodil joined Marsman Employees Union. In 1995, Marsman purchased
Metro Drug Distribution, which is engaged in the same business. This led to the integration of
their employees as formalized in a Memorandum of Agreement (MOA) dated June 1996.
Marsman became the holding company while Metro Drug became the operating company. In
1997, Metro Drug changed its corporate name to CPDSI. CPDSI entered into a contract with
EAC wherein the former would provide warehousemen to the latter in its Libis Warehouse.
Marsman appointed Rodil as one of the warehousemen for EAC-Libis Warehouse stating that
the transfer is part of its cross-training Program. EAC’s use of the Libis Warehouse is
dependent on its lease contract with Valiant Distribution (Valiant). When Valiant terminated
EAC’s lease contract, CPDSI likewise terminated the employees assigned at EAC-Libis
Warehouse, including Rodil on the ground of redundancy.
Rodil filed an illegal dismissal complaint against Marsman. The Labor Arbiter found Marsman
guilty of illegally dismissal. On appeal, Marsman argued that the Labor Arbiter has no
jurisdiction over the complaint alleging that there is no employer-employee relationship (E-
ER) between it and Rodil. The NLRC ruled that there is no E-ER between Marsman and
Rodil. In a petition for certiorari, the Court of Appeals reversed the NLRC Decision.
Hence this petition.
ISSUE:
Whether or not an employer-employee relationship existed between Marsman and Rodil at

the time of his dismissal
RULING:
NO, Rodil was not able to prove that there is an E-ER between him and Marsman.
In an illegal dismissal case, the onus probandi rests on the employer to prove that its
dismissal of an employee was for a valid cause. However, before a case for illegal dismissal
can prosper, an E-ER must first be established. It is incumbent upon Rodil as the complainant
to prove the E-ER by substantial evidence, which he failed to do.
This is a case of a corporate spin-off, which brought about the integration and transfer of
employees from Marsman to CPDSI. Under the MOA, Marsman’s function was limited to a
holding company and made CPDSI as the main operating company. A corporate spin-off
occurs when a department, division or portions of the corporate business enterprise is sold-off
or assigned to a new corporation that will arise by the process which may constitute it into a
subsidiary of the original corporation.
The spin-off and the attendant transfer of employees are legitimate business interests of
Marsman. The transfer of employees through the MOA was proper and did not violate any
existing law or jurisprudence. The Court has upheld the transfer/absorption of employees
from one company to another, as successor employer, as long as the transferor was not in
bad faith and the employees absorbed by a successor-employer enjoy the continuity of their
employment status and rights and privileges with their former employer.
To assert that Marsman remained as Rodil’s employer even after the corporate spin-off
disregards the separate personality of Marsman and CPDSI. A corporation has a personality
that is separate and distinct from that composing it as well as from any other legal entity to
which it may be related.
Rodil failed to support his claim that Marsman and CPDSI were managed and operated by
the same persons or that Marsman had complete control over CPDSI’s operations. The
existence of interlocking directors, corporate officers and shareholders, without more, is not
enough to pierce the veil of corporate fiction. No bad faith can be imputed to Marsman since
the MOA guaranteed the tenure of employees, honored the CBA signed in 1995 and maintain
the salaries and benefits of the affected employees.
Rodil also failed to satisfy the four-fold test which determines the existence of E-ER, the
elements of which are: 1) selection and engagement of employees; 2) payment of wages; 3)
power of dismissal; and 4) power to control the employee’s conduct.
There is nothing in the MOA which negate CPDSI’s power to select its employees and when
to engage them. Rodil also failed to submit pay slips, salary vouchers, payrolls, certificate of
withholding tax on compensation income, SSS records (not just ID) or testimonies from
witnesses to prove the element of payment of wages. As to the power of dismissal, it was
evident in the notice of termination that CPDSI, and not Marsman terminated Rodil’s services
by reason of redundancy. The power of control over his employment at the time of his
dismissal was also not proven.
Thus, there being no E-ER between Marsman and Rodil, the latter’s complaint must be
dismissed for lack of jurisdiction on the part of the Labor Arbiter.

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MARSMAN & COMPANY, INC vs. RODIL C. STA.

Marsman is engaged in the business of distribution/sale of pharmaceutical and consumer

Hence this petition.

Whether or not an employer-employee relationship existed between Marsman and Rodil at

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