Sarona v. NLRC, et al., G.R. No.

185280

Facts:

Petitioner, a security guard in Sceptre since April 1976, was asked by Sceptre’soperations manager 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On September 2003, he was informed that his assignment at WWWE Inc. was withdrawn because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 Royale’s office on October 1, 2003, he was informed that he would no longer be given any
assignment as instructed by Sceptre’s general manager. He thus filed a complaint for illegal dismissal.

Issue:

Whether or not Royale’s corporate fiction should be pierced for the purpose of compelling it to

recognize the petitioner’s length of service with Sceptre and for holding it liable for the benefits that
have accrued to him arising from his employment with Sceptre.

Ruling:

Yes. 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 petitioner’s
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 petitioner’s cash bond when he resigned and
Royale would have required the petitioner to post a new cash bond in its favour.

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.