ABS-CBN v. Honorato Hilario et al.

GR 193136, July 10, 2019

Facts:
 Petitioner is a domestic corporation primarily engaged in the business of international and local broadcasting of
television and radio content. ABS-CBN’s Scenic Department initially handled the design, construction and
provision of the props and sets for its different shows and programs.
 Subsequently, petitioner engaged independent contractors to construct its different sets and props
requirements. One of the independent contractors engaged by petitioner was Mr. Edmund Ty.
 In 1995, CCI was formed and incorporated by Ty together with some officers of petitioner, namely, Mr. Eugenio
Lopez III, Charo Santos-Concio, Felipe S. Yalong and Federico M. Garcia.
 It was organized to engage in the business of conceptualizing, designing and constructing sets and props for use
in television programs, theater presentations, concerts, conventions and/or commercial advertising.
 Ty became the Vice-President and Managing Director of CCI. On or about the time of CCI’s incorporation, the
Scenic Department of petitioner was abolished and CCI was engaged by petitioner to provide props and set
design for its shows and programs.
o On March 6, 1995, respondent Honorato was hired by CCI as Designer. He rose from the ranks until he
became Set Controller, receiving a monthly salary of P9,973.24 as of October 5, 2003.
o Respondent Banting, on the other hand, was engaged by CCI as Metal Craftsman in April 1999. He
likewise rose from the ranks and became Assistant Set Controller, with a monthly salary of P8,820.73 as
of October 5, 2003.
 Ty decided to RETIRE as an officer of CCI, by virtue of his retirement, and his paramount contribution to the
company has been missing due to his absence, the board of directors of CCI, decided to shorten the corporate
existence of CCI, by amending the articles, and such amendment was approved by the Board of directors.
 Ty decided to create a new corporation, engaged in similar business with CCI, namely Ty organized and created
Dream Weaver Visual Exponents, Inc. (DWVEI).
o Like CCI, DWVEI is primarily engaged in the business of conceptualizing, designing and constructing sets
and props for use in television programs and similar projects. With the incorporation of DWVEI,
petitioner engaged the services of DWVEI.
 Due to the cessation of the corporate business, the respondents received a letter informing them that they are
now dismissed from work due to the cessation of the business, though not performing badly to incur losses, but
the business is merely on a break-even scenario, hence is justified for its closure. The respondent’s received
separation pay and quitclaims, however, they filed an illegal dismissal against the petitioner, and contended that
the foreclosure of the said corporation was intended to circumvent labor laws, and unduly violated the security
of tenure, under the guise of a valid cessation of business.

The LA, NLRC and CA, affirmed in consensus and contended that Petitioner, indeed, illegally dismissed the private
respondents.
 
Issue:
1. Did ABS-CBN illegally dismiss the respondents?
2. Was the petitioner correctly held jointly and severally liable with CCI for payment of monetary award to
respondents?
 
Ruling:
1. YES. The Court held that the private respondents were illegally dismissed.
The Contention of Petitioner that the cessation of CCI were done in good faith failed to convince the court of such.
o It can be shown from the facts that cessation of business must fulfil the requirements provided for by law.
Specifically under Art 298. It provided three requirements;
i. service of a written notice to the employees and to the DOLE at least one month before the intended
date thereof;
ii. the cessation of business must be bona fide in character;
 iii. payment of the employees of termination pay amounting to one month pay or at least one-half month
pay for every year of service, whichever is higher.
 
Though the requirements were present it must be done in good faith. As can be shown, there is a necessity to
pierce the veil of corporate fiction, as such would tend to circumvent existing laws. CCI and DWEIVEX consists of
the same set of board of directors and employees, and are employed by Petitioner ABS-CBN, which the board of
directors of the latter is also the board of directors of CCI, which the cessation of CCI shows that it is only intended
to unduly remove some of its employees, while hiding under the corporate fiction so as to avoid liability . Since the
third instance of piercing the veil is present, it is only proper to see to it, that CCI and Ty, be treated as one and the
same person, together with the petitioner, thereby the court, rendered its judgment holding the petitioner guilty
of illegal dismissal of private respondents.
 
2. YES. The doctrine of piercing the veil of corporate fiction is a legal precept that allows a corporation's separate
personality to be disregarded under certain circumstances so that a corporation and its stockholders or
members, or a corporation and another related corporation should be treated as a single entity. In PNB v.
Hydro Resources Contractors Corp., 28 the Court said that:
 The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely:
1. Defeat public convenience as when the corporate fiction is used as a vehicle for the evasion of an
existing obligation;
2. Fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime;
3. Alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs are so conducted as to
make it merely an instrumentality, agency, conduit or adjunct of another corporation.
 The present case falls under the third instance where a corporation is merely a farce since it is a mere alter ego
or business conduit of person or in this case a corporation. "The corporate mask may be removed or the
corporate veil pierced when the corporation is just an alter ego of a person or of another corporation." By looking
at the circumstances surrounding the creation, incorporation, management and closure and cessation of
business operations of CCI, it cannot be denied that CCJ's existence was dependent upon Ty and petitioner.