Case Summary (G.R. No. 193136)
Petitioner
ABS-CBN Broadcasting Corporation, a domestic corporation engaged in international and local television/radio broadcasting.
Respondents
• Honorato C. Hilario – Hired by CCI as Designer on March 6, 1995; promoted to Set Controller; P9,973.24 monthly salary as of October 5, 2003
• Dindo B. Banting – Hired by CCI as Metal Craftsman in April 1999; promoted to Assistant Set Controller; P8,820.73 monthly salary as of October 5, 2003
Key Dates
• 1995 – Incorporation of CCI; abolition of ABS-CBN Scenic Department; CCI engagement by petitioner
• March 6, 1995 & April 1999 – Respondents’ hiring dates
• June 30, 2003 – Ty’s retirement and consultancy agreement with petitioner
• July 15, 2003 – CCI board approves cessation of operations effective October 5, 2003
• September 4–5, 2003 – Notices of cessation served on respondents
• September 24, 2003 – Illegal dismissal complaint filed before NLRC
• March 1, 2006 – Labor Arbiter decision of illegal dismissal
• June 30, 2008 – NLRC decision affirming Labor Arbiter
• March 4, 2010 & July 29, 2010 – Court of Appeals decision and denial of reconsideration
• September 2, 2015 – Death of respondent Hilario during pendency of appeal
• July 10, 2019 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution – Guarantee of security of tenure
• Labor Code, Article 279 (security of tenure) and Article 298 (bona fide cessation of operations)
• Doctrine of piercing the corporate veil
Factual Background
ABS-CBN’s in-house Scenic Department was replaced in 1995 by CCI, a corporation formed by Edmund Ty and key ABS-CBN officers to provide set design and prop construction. Respondents were regular CCI employees. Upon Ty’s retirement and concurrent consultancy with ABS-CBN, CCI’s board resolved to cease operations effective October 5, 2003. Respondents received separation pay and executed quitclaims. Petitioner then engaged Ty’s new company, DWVEI, for the same services. Respondents filed for illegal dismissal, alleging the closure was a subterfuge to circumvent their security of tenure.
Labor Arbiter’s Decision
The Labor Arbiter (March 1, 2006) held that CCI’s cessation was a ruse to evade Labor Code protections. It found ABS-CBN and CCI jointly liable, ordered reinstatement of respondents with full backwages from October 2003 to December 2005, plus meal allowances (less quitclaim amounts).
NLRC’s Decision
The NLRC (June 30, 2008) affirmed the Labor Arbiter, treating ABS-CBN and CCI as a single entity due to petitioner’s control over CCI. It directed immediate reinstatement and compliance within ten days.
Court of Appeals’ Decision
The CA (March 4, 2010) upheld illegal dismissal but modified the award: quitclaim amounts to be deducted from backwages, computed from October 5, 2003 until actual reinstatement. Reconsideration was denied on July 29, 2010.
Issues Presented
- Validity of respondents’ termination for cessation of business operations
- Joint and several liability of petitioner with CCI
- Appropriateness of reinstatement under circumstances
Supreme Court’s Analysis on Bona Fide Cessation
Under Article 298, valid cessation requires: (a) one-month written notice to DOLE and employees; (b) bona fide intent; and (c) payment of statutory separation pay. Although CCI complied with notice and pay requirements, the closure lacked bona fide character. Evidence showed that soon after CCI’s shutdown, petitioner engaged DWVEI—Ty’s new company—to perform identical functions, and rehired most CCI personnel, indicating a scheme to evade labor protections. The uniform findings of bad faith by the Labor Arbiter, NLRC, and CA enjoy substantial evidence and govern.
Supreme Court’s Analysis on Piercing the Corporate Veil
The Court applied the alter-ego doctrine: CCI was organized, managed, and dissolved under petitioner’s control, served petitioner’s exclusive needs, and shared directors/stockholders. Ty was treated as a regular employee of both entities. These fact
Case Syllabus (G.R. No. 193136)
Facts of the Case
- ABS-CBN’s Scenic Department originally designed and constructed show sets in-house; later, independent contractors were engaged for this purpose.
- In 1995, Creative Creatures, Inc. (CCI) was formed by Edmund Ty together with officers and stockholders of ABS-CBN to take over props and set design services.
- The Scenic Department was abolished; CCI became ABS-CBN’s principal provider of set and prop services.
- Honorato C. Hilario and Dindo B. Banting were hired by CCI in March 1995 and April 1999, respectively, and rose through the ranks to Set Controller (P9,973.24/month) and Assistant Set Controller (P8,820.73/month) by October 5, 2003.
- In mid-2003 Ty retired, formed Dream Weaver Visual Exponents, Inc. (DWVEI), and entered into a consultancy agreement with ABS-CBN for similar services.
- CCI’s board then unanimously approved cessation of operations effective October 5, 2003, and served written notices to employees and the DOLE, offering separation pay.
- Hilario and Banting received P118,205.87 and P66,383.54 respectively, executed quitclaims, and CCI filed required notices with DOLE, BIR, and HDMF.
Procedural Posture
- September 24, 2003: Respondents filed before NLRC-NCR a complaint for illegal dismissal, illegal deduction, and non-payment of benefits against CCI and ABS-CBN.
- Labor Arbiter (LA) rendered a decision on March 1, 2006 finding illegal dismissal, ordering joint reinstatement and backwages.
- NLRC affirmed on June 30, 2008, directing immediate reinstatement and joint liability of ABS-CBN and CCI.
- Court of Appeals (CA) on March 4, 2010 partially granted petitioner’s appeal by allowing deduction of quitclaim amounts from respondents’ monetary awards.
- CA denied reconsideration on July 29, 2010.
- Petitioner filed a Rule 45 petition for certiorari before the Supreme Court, challenging (a) separate corporate personality of CCI and ABS-CBN, (b) validity of termination, and (c) feasibility of reinstatement.
Issues Presented
- Whether the cessation of CCI’s operations and consequent termination of respondents was bona fide and legal under Article 298 of the Labor Code.
- Whether ABS-CBN and CCI should be treated as a