Sarona v. NLRC

G.R. No. 185280 (January 18, 2012)

SC ruled Timoteo H. Sarona reinstated, awarded backwages for illegal dismissal from Royale Security.

Facts:

Timoteo H. Sarona was employed as a security guard by Sceptre Security Agency since April 1976. On June 20, 2003, he was asked by Karen Therese Tan, Sceptre's Operations Manager, to submit a resignation letter to facilitate his application for a position at Royale Security Agency, which was a newly established entity. Following this, he was placed in a floating status and subsequently assigned to Highlight Metal Craft, Inc. and later to Wide Wide World Express, Inc. During his assignment at Highlight Metal, he wore Sceptre's uniforms, but began using Royale's uniforms at WWWE, Inc.

On September 17, 2003, Sarona was informed that his assignment at WWWE, Inc. was withdrawn due to Royale being replaced by another security agency. However, he later discovered that this was not true. After a brief reassignment back to Highlight Metal, he was informed on October 1, 2003, that he would no longer receive assignments, which led him to file a complaint for illegal dismissal on October 4, 2003.

The Labor Arbiter ruled in Sarona's favor, finding that he was illegally dismissed. The Arbiter rejected the respondents' claim of abandonment, noting that Sarona's immediate filing of a complaint was inconsistent with such a claim. The Arbiter ordered the respondents to pay Sarona backwages and separation pay based on his tenure with Royale, which was only for a short period.

The respondents appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's finding of illegal dismissal but modified the monetary award, limiting backwages to three months due to Sarona's brief service with Royale. Sarona did not appeal the NLRC's decision regarding the computation of his separation pay.

Sarona subsequently filed a petition for certiorari with the Court of Appeals, seeking to pierce Royale's corporate veil to recognize his length of service with Sceptre. The Court of Appeals affirmed the NLRC's decision, ruling that Sarona failed to provide sufficient evidence to establish that Royale was merely an alter ego of Sceptre.

Legal Issues:

  1. Whether the corporate veil of Royale Security Agency should be pierced to recognize Sarona's length of service with Sceptre Security Agency.
  2. Whether Sarona's backwages should be limited to three months based on his employment duration with Royale.

Arguments:

  • Petitioner (Sarona):

    • Sarona argued that Royale was established as an alter ego of Sceptre to evade labor obligations and that he should be credited for his entire length of service with Sceptre.
    • He presented evidence of common ownership, shared management, and the same business premises to support his claim that Royale and Sceptre were essentially the same entity.

  • Respondents (Royale Security Agency and Cesar S. Tan):

    • The respondents contended that Royale was a separate legal entity, incorporated independently of Sceptre, and that Sarona's claims lacked sufficient evidence to justify piercing the corporate veil.
    • They maintained that Sarona's receipt of the monetary award from the NLRC constituted a waiver of his right to appeal the computation of his separation pay.

Court's Decision and Legal Reasoning:

The Supreme Court granted Sarona's petition, reversing the Court of Appeals' decision. The Court found that Royale was indeed a mere continuation or successor of Sceptre, and that the corporate veil should be pierced due to the fraudulent intent behind the establishment of Royale. The Court noted that Aida Sabalones-Tan exercised control over both entities, and the circumstances surrounding Sarona's resignation and subsequent employment at Royale indicated a scheme to circumvent labor laws.

The Court ruled that Sarona was entitled to full backwages and separation pay computed from his initial employment with Sceptre in 1976 until the finality of the decision. The Court emphasized that backwages should be calculated from the time of illegal dismissal until the decision's finality, and that the length of service prior to dismissal was relevant for determining separation pay.

Significant Legal Principles Established:

  1. Piercing the Corporate Veil: The Court reiterated that the corporate veil may be pierced when a corporation is merely an alter ego of another entity, particularly when used to evade legal obligations or commit fraud.
  2. Backwages and Separation Pay Computation: The ruling clarified that backwages should be computed from the time of illegal dismissal until the finality of the decision, and that separation pay should consider the entire length of service, even if the employee was technically employed by a different entity at the time of dismissal.