G.R. No.

185280 Promulgated: January 18, 2012

TIMOTEO H. SARONA,
Petitioner,
versus

NATIONAL LABOR RELATIONS COMMISSION, ROYALE SECURITY AGENCY
(FORMERLY SCEPTRE SECURITY AGENCY) and CESAR S. TAN,
Respondents.

FACTS:
Petitioner, a security guard in Sceptre since April 1976, was asked by Sceptres operations
manager on June 2003, to submit a resignation letter as a requirement for an application in
Royale and to fill up an employment application form for the said company. He was then
assigned at Highlight Metal Craft Inc. from July 29 to August 8, 2003 and was later transferred to
Wide Wide World Express Inc. On September 2003, he was informed that his assignment at
WWWE Inc. was withdrawn because Royale has been allegedly replaced by another security
agency which he later discovered to be untrue. Nevertheless, he was once again assigned at
Highlight Metal sometime in September 2003and when he reported at Royales office on
October 1, 2003 he was informed that he would no longer be given any assignment as
instructed by Sceptres general manager.
He thus filed a complaint for illegal dismissal. The LA ruled in petitioners favor as he found him
illegally dismissed and was not convinced by the respondents claim on petitioners
abandonment.
Respondents were ordered to pay back wages computed from the day he was dismissed up to
the promulgation of his decision on May 11, 2005.The LA also ordered for the payment of
separation pay but refused to pierce Royales corporate veil. Respondents appealed to the
NLRC claiming that the LA acted with grave abuse of discretion upon ruling on the illegal
dismissal of petitioner. NLRC partially affirmed the LAs decision with regard to petitioners illegal
dismissal and separation pay but modified the amount of back wages and limited it to only 3
months of his last month salary reducing P95, 600 to P15, 600 since he worked for Royale for only
1 month and 3 days.
Petitioner did not appeal to LA but raised the validity of LAs findings on piercing Royales
corporate personality and computation of his separation pay and such petition was dismissed
by the NLRC. Petitioner elevated NLRCs decision to the CA on a petition for certiorari, and the
CA disagreed with the NLRCs decision of not proceeding to review the evidence for
determining if Royale is Sceptres alter ego that would warrant the piercing of its corporate veil.




ISSUES:
1. Whether or not Royales corporate fiction should be pierced for the purpose of compelling it
to recognize the petitioners length of service with Sceptre and for holding it liable for the
benefits that have accrued to him arising from his employment with Sceptre.
2. Whether or not petitioners back wages should be limited to his salary for 3 months
RULING:
The doctrine of piercing the corporate veil is applicable on 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 respondents scheme reeks of bad faith and fraud and compassionate justice dictates that
Royale and Sceptre be merged as a single entity, compelling Royale to credit and recognize
the petitioners length of service with Sceptre.
The respondents cannot use the legal fiction of a separate corporate personality for ends
subversive of the policy and purpose behind its creation or which could not have been intended
by law to which it owed its being.
Also, Sceptre and Royale have the same principal place of business. As early as October 14,
1994, Aida and Wilfredo became the owners of the property used by Sceptre as its principal
place of business by virtue of a Deed of Absolute Sale they executed with Roso. Royale, shortly
after its incorporation, started to hold office in the same property. These, the respondents failed
to dispute.
Royale also claimed a right to the cash bond which the petitioner posted when he was still with
Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre should have released the
petitioners cash bond when he resigned and Royale would have required the petitioner to post
a new cash bond in its favor.
The way on how petitioner was made to resign from Sceptre then later on made an employee
of Royale, reflects the use of the legal fiction of the separate corporate personality and is an
implication of continued employment. Royale is a continuation or successor or Sceptre since the
employees of Sceptre and of Royale are the same and said companies have the same principal
place of business.
Because petitioners rights were violated and his employer has not changed, he is entitled to
separation pay which must be computed from the time he was hired until the finality of this
decision. Royale is also ordered to pay him back wages from his dismissal on October 1, 2003
until the finality of this decision.
However, the amount already received by petitioner from the respondents shall be deducted.
He is also awarded moral and exemplary damages amounting to P 25, 000.00 each for his
dismissal which was tainted with bad faith and fraud. Petition is granted.
CAs decision is reversed and set aside.