ABS-CBN Broadcasting Corporation v. Hilario

Facts: 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 create, provide and construct its different sets and props requirements. One of the independent contractors engaged by petitioner was Ty. CCI was formed and incorporated by Ty together with some officers of petitioner. 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 decided to retire as Managing Director of CCI. His decision was prompted by his intention to organize and create his own company. While Ty and the directors of his company were still in the process of setting up the company, Ty entered into a Consultancy Agreement. Without Ty to manage and lead CCI, and considering that CCI was not generating revenue but was merely "breaking even", the Board of Directors of CCI decided to close the company down by shortening its corporate term.

In August 2003, Ty organized and created DWVEI. 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. Petitioner engaged the services of DWVEI.

Respondents filed a complaint for illegal dismissal, illegal deduction, non-payment of meal allowances, with prayer for damages against CCI and petitioner before the NLRC Arbitration Branch. Respondents claimed that the closure of CCI was not due to any of the authorized causes provided by law but was done in bad faith for the purpose of circumventing the provisions of the Labor Code, as CCI was still conducting operations under the guise of DWVEI. The LA ruled that respondents were illegally dismissed. NLRC affirmed the LA’s decision. CA affirmed the LA’s decision.

Issue: Whether or not petitioner should be held jointly and severally liable with CCI for payment of monetary award to respondents.

Held:  Yes. In PNB v. Hydro Resources Contractors Corp., 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; or (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 CCI's existence was dependent upon Ty and petitioner.