Facts:

The case involves ABS-CBN Broadcasting Corporation (petitioner) and respondents Honorato C. Hilario, substituted by Gloria Z. Hilario, and Dindo B. Banting. The events leading to the case began when ABS-CBN, a domestic corporation engaged in broadcasting, initially operated its Scenic Department for set design and props. In 1995, the Scenic Department was abolished, and Creative Creatures, Inc. (CCI) was formed by Edmund Ty and several ABS-CBN officers to take over these functions. Respondent Hilario was hired by CCI as a Designer in March 1995 and later became a Set Controller, while respondent Banting joined as a Metal Craftsman in April 1999 and rose to Assistant Set Controller.

In June 2003, Ty retired from CCI and entered into a consultancy agreement with ABS-CBN. Subsequently, CCI's Board decided to cease operations due to financial difficulties, with the closure effective October 5, 2003. Both respondents received termination letters citing the closure and were ...

Facts:

Background of the Parties and Corporate Structure

• ABS-CBN Broadcasting Corporation (petitioner) is a domestic corporation primarily engaged in international and local broadcasting.
• Initially, ABS-CBN operated its own Scenic Department for the design and construction of sets and props; later, it began engaging independent contractors.
• One such contractor, Mr. Edmund Ty, became instrumental in the design and construction services and later co-founded Creative Creatures, Inc. (CCI) in 1995 together with several high‑ranking ABS‑CBN officers.
• CCI was organized to conceptualize, design, and construct sets and props for television programs, theater, concerts, and other events, effectively taking over the functions of ABS‑CNB’s Scenic Department.
• CCI’s incorporation and operation were closely tied to ABS‑CBN, with majority shareholders and key officers overlapping between both corporations.

Employment and Operational Developments

• CCI hired personnel to serve its operational needs:
• Honorato C. Hilario was hired in 1995 as Designer, later promoted to Set Controller with a monthly salary of P9,973.24 as of October 5, 2003.
• Dindo B. Banting was engaged in April 1999 as a Metal Craftsman, later appointed Assistant Set Controller with monthly compensation of P8,820.73 as of October 5, 2003.
• In June 2003, Edmund Ty retired as Managing Director of CCI to set up his own company.
• Subsequent to Ty’s retirement, CCI’s Board of Directors, noting the company’s “breaking even” status and the loss of key leadership, decided to cease operations by shortening its corporate term until October 31, 2003.
• Shortly thereafter, in August 2003, Ty formed Dream Weaver Visual Exponents, Inc. (DWVEI) which, like CCI, was engaged in the same business of set and prop design.
• ABS‑CBN subsequently engaged DWVEI for its production needs.

Termination of Employment and Subsequent Actions

• On September 4–5, 2003, respondents (Honorato and Banting) received notices of termination due to the alleged closure of CCI effective October 5, 2003.
• Both respondents received quitclaim payments upon termination (Honorato received P118,205.87, and Banting received P66,383.54), and they executed releases in favor of CCI.
• The termination notices emphasized the cessation of operations and promised separation pay as the sole benefit.
• Despite the termination, evidence emerged that CCI had been created solely to serve ABS‑CBN’s requirements, and later, its services continued under DWVEI, raising questions on the bona fide nature of the closure.

Proceedings in the Labor and Appellate Forums

• Respondents filed a complaint for illegal dismissal, illegal deduction, and non-payment of allowances with the National Labor Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-09-11214-03.
• The Labor Arbiter (LA) ruled on March 1, 2006 that the termination was illegal and ordered ABS‑CBN and CCI to reinstate respondents with full backwages (from October 2003 to the date of reinstatement) and other allowances, subject to deduction of the amounts received as quitclaims.
• The NLRC, in a June 30, 2008 Decision, affirmed the LA’s ruling, holding petitioner and CCI jointly and severally liable for the illegal dismissal.
• The Court of Appeals (CA) in its March 4, 2010 Decision, partially modified the NLRC ruling by ordering that the amount received by respondents by way of quitclaims be deducted from their monetary award.
• Petitioner subsequently filed a motion for reconsideration, which was denied in a July 29, 2010 Resolution.
• Ultimately, ABS‑CBN elevated the case to the Supreme Court by petition for review on certiorari under Rule 45 of the Rules of Civil Procedure.

Issue:

Validity of the Termination

• Whether the termination of respondents due to the cessation of CCI’s operations was valid under the Labor Code.
• Whether the closure of CCI was bona fide or a simulation intended to circumvent employee protection provisions.

Joint and Several Liability

• Whether ABS‑CBN, despite having a separate corporate personality from CCI, should be held jointly and severally liable for the illegal dismissal of respondents.
• Whether the close affiliation, shared control, and overlapping managerial functions between ABS‑CBN and CCI justify disregarding the separate corporate personalities.

Proper Remedy

• Whether reinstatement is a viable remedy for respondents given the elapsed time and the alleged non‑existence of the positions they held, or whether separation pay should be awarded instead.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)