ASIONICS PHILIPPINES, INC. and/or FRANK YIH vs.

NLRC, YOLANDA BOAQUINA, and JUANA GAYOLA 290 SCRA 164 FACTS: In this special civil action of certiorari, petitioners Asionics Philippines, Inc. ("API"), and its President and majority stockholder, Frank Yih, seek to annul and set aside the decision of the National Labor Relations Commission ("NLRC") which has ordered, inter alia, that they grant separation pay, computed at one-half (1/2) month per year of service, to private respondents Yolanda Boaquina and Juana Gayola. API is a domestic corporation engaged in the business of assembling semi-conductor chips and other electronic products mainly for export. When its business activity became critical, API was constrained to implement a company-wide retrenchment affecting one hundred five (105) employees from a work force that otherwise totalled three hundred four (304). Private respondents Boaquina and Gayola filed a complaint for illegal dismissal, violation of labor standards and separation pay, as well as for recovery of moral and exemplary damages against API and/or Frank Yih before the NLRC. It declared that private respondents were not illegally dismissed but were validly terminated due to the retrenchment policy implemented by API. Accordingly, private respondents were awarded separation pay and an additional one (1) month salary in favor of Juana Gayola by way of indemnity for petitioner API's failure to properly inform her of the retrenchment. Petitioners moved for a reconsideration,however, was denied. Hence, this petition. ISSUE: WHETHER OR NOT A STOCKHOLDER/DIRECTOR/OFFICER OF A CORPORATION CAN BE HELD LIABLE FOR THE OBLIGATION OF THE CORPORATION ABSENT ANY PROOF AND FINDING OF BAD FAITH? RULING: A corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. Where there is nothing on record is shown to indicate that Frank Yih, the President and majority stockholder of a corporation had acted in bad faith or with malice in carrying out the retrenchment program of the company he cannot be held solidarily and personally liable with the corporation.
Digest by: Jeniffer P. Sison

MANILA HOTEL CORPORATION (MHC) AND MANILA HOTEL INTERNATIONAL CO. LTD. (MHICL) VS. NATIONAL LABOR RELATIONS COMMISSION, 343 SCRA 1 FACTS: Marcelo Santos was an overseas worker, a printer at the Mazoon Printing Press, Sultanate of Oman when he was directly hired by the Palace Hotel, Beijing by its General Manager Gerhard Shmidt as he was recommended by Nestor Buenio, his friend. Santos resigned from Mazoon and thereafter signed an employment contract mailed to him. The contract stated it would be for a period of 2 years. After a short vacation in the Philippines and barely a year into the contract, Santos was terminated from his job due to retrenchment, and repatriated to the Philippines. Santos, through his lawyer, demanded full compensation pursuant to the employment agreement which Shmidt denied. Santos then filed a complaint with the NLRC against MHC, MHICL, the Palace Hotel and Shmidt for illegal dismissal. The Labor Arbiter grants payment of damages to Santos which was vacated on appeal by the NLRC. On a motion for reconsideration, the NLRC found Santos illegally dismissed and recommended that he be paid actual damages equivalent to his salaries for the unexpired portion of his contract. Motions were denied, hence this petition. ISSUE: WHETHER OR NOT MHC IS LIABLE TO SANTOS. RULING: No. The fact that MHC is an incorporator and owns 50% of the capital stock of MHICL is not enough to pierce the veil of the corporate fiction between MHICL and MHC. Even if we assume two things: (1)NLRC had jurisdiction over the case, and (2) that MHICL was liable for Santos retrenchment, still MHC, as a separate and distinct juridical entity, cannot be held liable. Piercing the veil of corporate entity is an equitable remedy. When the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons. It is done only when the corporation is a mere alter ego or business conduit of a person or another corp. Clear and convincing evidence is needed to pierce the veil of corporate fiction. There is no such evidence to show that MHICL and MHC are one and the same entity.

Digest by: Jeniffer P. Sison