G.R. No. 171118, 10 September 2012
Petitioner Park Hotel is a corporation engaged in the hotel business. Petitioners Gregg Harbutt and Bill Percy are the General Manager and owner, respectively, of Park Hotel. Percy, Harbutt and Atty. Roberto Enriquez are also the officers and stockholders of Burgos Corporation, a sister company of Park Hotel.
Respondent Manolo Soriano was hired by Park Hotel in July 1990 as Maintenance Electrician, and then transferred to Burgos in 1992. Respondent Lester Gonzales was employed by Burgos as Doorman, and later promoted as Supervisor. Respondent Yolanda Badilla was a bartender of J’s Playhouse operated by Burgos.
Soriano, Gonzales and Badilla were dismissed from work for allegedly stealing company properties. As a result, respondents filed complaints for illegal dismissal, unfair labor practice, and payment of moral and exemplary damages and attorney’s fees, before the Labor Arbiter (LA). In their complaints, respondents alleged that the real reason for their dismissal was that they were organizing a union for the company’s employees.
On the other hand, petitioners alleged that aside from the charge of theft, Soriano and Gonzales have violated various company rules and regulations contained in several memoranda issued to them.
The NLRC rendered a decision holding Park Hotel, Harbutt and Percy jointly and severally liable to respondents for illegal dismissal.
Hence, the instant petition.
Whether Park Hotel, Bill Percy and [Gregory] Harbutt, together with Burgos Corporation and its President, are one and the same entity, thus are jointly and severally liablefor the dismissal of respondents.
NO, Park Hotel and Burgos cannot be considered as one and the same entity, and Park Hotel cannot be held solidary liable with Burgos.
A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected. While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the 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. To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.
In the case at bar, respondents utterly failed to prove by competent evidence that Park Hotel was a mere instrumentality, agency, conduit or adjunct of Burgos, or that its separate corporate veil had been used to cover any fraud or illegality committed by Burgos against the respondents. The Court ruled that from the documents presented by Soriano, it appears that Soriano’s payroll passbookcontained withdrawals and deposits, made in 1991, and that Soriano’s payslipissued by Park Hotel covered the period from September to October 1990. Hence, these documents merely show that Soriano was employed by Park Hotel before he was transferred to Burgos in 1992. Nowhere in these documents does it state that Soriano continued to work for Park Hotel in 1992 and onwards. Clearly therefore, Park Hotel cannot be made liable for illegal dismissal as it no longer had Soriano in its employ at the time he was dismissed from work.
Nonetheless, although the corporate veil between Park Hotel and Burgos cannot be pierced, it does not necessarily mean that Percy and Harbutt are exempt from liability towards respondents. Section 31 of the Corporation Code makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. It also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and severally liable with the latter for respondents’ dismissal.
*Case digest by Doreena Pauline V. Aranal, JD – 4, Andres Bonifacio College, SY 2019 – 2020