Sarona

7/20/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 663
G.R. No. 185280. January 18, 2012.*

TIMOTEO H. SARONA, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, ROYALE
SECURITY AGENCY (FORMERLY SCEPTRE SECURITY
AGENCY) and CESAR S. TAN, respondents.
Labor Law; Money Claims; The prevailing party’s receipt of

the full amount of the judgment award pursuant to a writ of
execution issued by the labor arbiter does not close or terminate the
case if such receipt is qualified as without prejudice to the outcome
of the petition for certiorari pending with the Court of Appeals
(CA).—The petitioner’s receipt of the monetary award adjudicated
by the NLRC is not absolute, unconditional and unqualified. The
petitioner’s May 3, 2007 Motion for Release contains a
reservation, stating in his prayer that: “it is respectfully prayed
that the respondents and/or Great Domestic Insurance Co. be
ordered to RELEASE/GIVE the amount of P23,521.67 in favor of
the complainant TIMOTEO H. SARONA without prejudice to the
outcome of the petition with the CA.” In Leonis Navigation Co.,
Inc., et al. v. Villamater, et al., 614 SCRA 182 (2010), this Court
ruled that the prevailing party’s receipt of the full amount of the
judgment award pursuant to a writ of execution issued by the
labor arbiter does not close or terminate the case if such receipt is
qualified as without prejudice to the outcome of the petition for
certiorari pending with the CA.
Same; The finality of the National Labor Relations
Commission’s (NLRC’s) decision does not preclude the filing of a
petition for certiorari under Rule 65 of the Rules of Court.—The
finality of the NLRC’s decision does not preclude the filing of a
petition for certiorari under Rule 65 of the Rules of Court. That
the NLRC issues an entry of
_______________
* SECOND DIVISION.
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VOL. 663, JANUARY 18, 2012 395
Sarona vs. National Labor Relations Commission
http://www.central.com.ph/sfsreader/session/00000164b5b575e0cbcbd10d003600fb002c009e/t/?o=False 1/31
judgment after the lapse of ten (10) days from the parties’
receipt of its decision will only give rise to the prevailing party’s
right to move for the execution thereof but will not prevent the CA
from taking cognizance of a petition for certiorari on jurisdictional
and due process considerations. In turn, the decision rendered by
the CA on a petition for certiorari may be appealed to this Court
by way of a petition for review on certiorari under Rule 45 of the
Rules of Court. Under Section 5, Article VIII of the Constitution,
this Court has the power to “review, revise, reverse, modify, or
affirm on appeal or certiorari as the law or the Rules of Court may
provide, final judgments and orders of lower courts in x x x all
cases in which only an error or question of law is involved.”
Consistent with this constitutional mandate, Rule 45 of the Rules
of Court provides the remedy of an appeal by certiorari from
decisions, final orders or resolutions of the CA in any case, i.e.,
regardless of the nature of the action or proceedings involved,
which would be but a continuation of the appellate process over
the original case. Since an appeal to this Court is not an original
and independent action but a continuation of the proceedings
before the CA, the filing of a petition for review under Rule 45
cannot be barred by the finality of the NLRC’s decision in the
same way that a petition for certiorari under Rule 65 with the CA
cannot.
Same; Appeals; It is well-settled and oft-repeated that findings
of fact of administrative agencies and quasi-judicial bodies, which
have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but
finality when affirmed by the Court of Appeals (CA).—As a
general rule, this Court is not a trier of facts and a petition for
review on certiorari under Rule 45 of the Rules of Court must
exclusively raise questions of law. Moreover, if factual findings of
the NLRC and the LA have been affirmed by the CA, this Court
accords them the respect and finality they deserve. It is well-
settled and oft-repeated that findings of fact of administrative
agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by
the CA. Nevertheless, this Court will not hesitate to deviate from
what are clearly procedural guidelines and disturb and strike
down the findings of the CA and those of the labor tribunals if
there is a showing that they are unsupported by the evidence on
record or there was a patent misappreciation of facts. Indeed, that
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396 SUPREME COURT REPORTS ANNOTATED

the impugned decision of the CA is consistent with the findings of

the labor tribunals does not per se conclusively demonstrate the
correctness thereof. By way of exception to the general rule, this
Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence
presented.
Same; Procedural Rules and Technicalities; Technical rules
are not binding in labor cases and are not to be applied strictly if
the result would be detrimental to the working man.—Under
Section 4(c), Rule VI of the NLRC Rules, the NLRC shall limit
itself to reviewing and deciding only the issues that were elevated
on appeal. The NLRC, while not totally bound by technical rules
of procedure, is not licensed to disregard and violate the
implementing rules it implemented. Nonetheless, technicalities
should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties.
Technical rules are not binding in labor cases and are not to be
applied strictly if the result would be detrimental to the working
man. This Court may choose not to encumber itself with
technicalities and limitations consequent to procedural rules if
such will only serve as a hindrance to its duty to decide cases
judiciously and in a manner that would put an end with finality to
all existing conflicts between the parties.
Corporation Law; Piercing the Veil of Corporate Fiction; It has
a personality separate and distinct from the persons composing it,
as well as from any other legal entity to which it may be related.
Equally well-settled is the principle that the corporate mask may
be removed or the corporate veil pierced when the corporation is
just an alter ego of a person or of another corporation.—A
corporation is an artificial being created by operation of law. It
possesses the right of succession and such powers, attributes, and
properties expressly authorized by law or incident to its existence.
It has a personality separate and distinct from the persons
composing it, as well as from any other legal entity to which it
may be related. This is basic. Equally well-settled is the principle
that the corporate mask may be removed or the corporate veil
pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the
interest of justice, the corporate veil will justifiably be impaled
only when it becomes a shield for fraud, illegality or inequity
committed against third persons.
397
VOL. 663, JANUARY 18, 2012 397

Same; Same; Instances When the Doctrine of Piercing the

Corporate Veil Applies.—The doctrine of piercing the corporate
veil applies only in three (3) basic areas, namely: 1) defeat of
public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud cases or
when the corporate entity is used to justify a wrong, protect fraud,
or defend a crime; or 3) 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.
Same; Same; A settled formulation of the doctrine of piercing
the corporate veil is that when two business enterprises are owned,
conducted and controlled by the same parties, both law and equity
will, when necessary to protect the rights of third parties,
disregard the legal fiction that these two entities are distinct and
treat them as identical or as one and the same.—For the piercing
doctrine to apply, it is of no consequence if Sceptre is a sole
proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia,
et al., 639 SCRA 312 (2011), it is the act of hiding behind the
separate and distinct personalities of juridical entities to
perpetuate fraud, commit illegal acts, evade one’s obligations that
the equitable piercing doctrine was formulated to address and
prevent: A settled formulation of the doctrine of piercing the
corporate veil is that when two business enterprises are owned,
conducted and controlled by the same parties, both law and equity
will, when necessary to protect the rights of third parties,
disregard the legal fiction that these two entities are distinct and
treat them as identical or as one and the same. In the present
case, it may be true that Lubas is a single proprietorship and not
a corporation. However, petitioners’ attempt to isolate themselves
from and hide behind the supposed separate and distinct
personality of Lubas so as to evade their liabilities is precisely
what the classical doctrine of piercing the veil of corporate entity
seeks to prevent and remedy.
Labor Law; Separation Pay; Separation pay is computed from
the commencement of employment up to the time of termination,
including the imputed service for which the employee is entitled to
backwages, with the salary rate prevailing at the end of the period
of putative service being the basis for computation.—Effectively,
the petitioner cannot be deemed to have changed employers as
Royale
398
and Sceptre are one and the same. His separation pay should,
thus, be computed from the date he was hired by Sceptre in April
1976 until the finality of this decision. Based on this Court’s
ruling in Masagana Concrete Products, et al. v. NLRC, et al., the
intervening period between the day an employee was illegally
dismissed and the day the decision finding him illegally dismissed
becomes final and executory shall be considered in the
computation of his separation pay as a period of “imputed” or
“putative” service: Separation pay, equivalent to one month’s
salary for every year of service, is awarded as an alternative to
reinstatement when the latter is no longer an option. Separation
pay is computed from the commencement of employment up to the
time of termination, including the imputed service for which the
employee is entitled to backwages, with the salary rate prevailing
at the end of the period of putative service being the basis for
computation.
Same; Backwages; Backwages is a remedy affording the
employee a way to recover what he has lost by reason of the
unlawful dismissal.—Backwages is a remedy affording the
employee a way to recover what he has lost by reason of the
unlawful dismissal. In awarding backwages, the primordial
consideration is the income that should have accrued to the
employee from the time that he was dismissed up to his
reinstatement and the length of service prior to his dismissal is
definitely inconsequential. As early as 1996, this Court, in
Bustamante, et al. v. NLRC, et al., clarified in no uncertain terms
that if reinstatement is no longer possible, backwages should be
computed from the time the employee was terminated until the
finality of the decision, finding the dismissal unlawful.
Same; Separation Pay; In case separation pay is awarded and
reinstatement is no longer feasible, backwages shall be computed
from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime.—In case
separation pay is awarded and reinstatement is no longer
feasible, backwages shall be computed from the time of illegal
dismissal up to the finality of the decision should separation pay
not be paid in the meantime. It is the employee’s actual receipt of
the full amount of his separation pay that will effectively
terminate the employment of an illegally dismissed employee.
Otherwise, the employer-employee relationship subsists and the
illegally dismissed employee is entitled to backwages, taking into
account the increases and other benefits,
399
VOL. 663, JANUARY 18, 2012 399
including the 13th month pay, that were received by his co-
employees who are not dismissed. It is the obligation of the
employer to pay an illegally dismissed employee or worker the
whole amount of the salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been
normally entitled had he not been dismissed and had not stopped
working.
Same; Damages; Moral Damages; Exemplary Damages; Moral
damages may be recovered where the dismissal of the employee
was tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals, good
customs or public policy while exemplary damages are recoverable
only if the dismissal was done in a wanton, oppressive, or
malevolent manner.—Moral damages and exemplary damages at
P25,000.00 each as indemnity for the petitioner’s dismissal, which
was tainted by bad faith and fraud, are in order. Moral damages
may be recovered where the dismissal of the employee was
tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals,
good customs or public policy while exemplary damages are
recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Malabago Law Office for petitioner.
Leandro C. Hilongo for respondents.
REYES, J.:
This is a petition for review under Rule 45 of the Rules
of Court from the May 29, 2008 Decision1 of the Twentieth
Division of the Court of Appeals (CA) in CA-G.R. SP No.
02127 entitled “Timoteo H. Sarona v. National Labor
Relations
_______________
1 Penned by Associate Justice Francisco P. Acosta, with Associate
Justices Amy C. Lazaro-Javier and Florito S. Macalino, concurring; Rollo,
pp. 19-30.
400

Commission, Royale Security Agency (formerly Sceptre

Security Agency) and Cesar S. Tan” (Assailed Decision),
which affirmed the National Labor Relations Commission’s
(NLRC) November 30, 2005 Decision and January 31, 2006
Resolution, finding the petitioner illegally dismissed but
limiting the amount of his backwages to three (3) monthly
salaries. The CA likewise affirmed the NLRC’s finding that
the petitioner’s separation pay should be computed only on
the basis of his length of service with respondent Royale
Security Agency (Royale). The CA held that absent any
showing that Royale is a mere alter ego of Sceptre Security
Agency (Sceptre), Royale cannot be compelled to recognize
the petitioner’s tenure with Sceptre. The dispositive portion
of the CA’s Assailed Decision states:
“WHEREFORE, in view of the foregoing, the instant petition

is PARTLY GRANTED, though piercing of the corporate veil is
hereby denied for lack of merit. Accordingly, the assailed Decision
and Resolution of the NLRC respectively dated November 30,
2005 and January 31, 2006 are hereby AFFIRMED as to the
monetary awards.
SO ORDERED.”2
Factual Antecedents
On June 20, 2003, the petitioner, who was hired by

Sceptre as a security guard sometime in April 1976, was
asked by Karen Therese Tan (Karen), Sceptre’s Operation
Manager, to submit a resignation letter as the same was
supposedly required for applying for a position at Royale.
The petitioner was also asked to fill up Royale’s
employment application form, which was handed to him by
Royale’s General Manager, respondent Cesar Antonio Tan
II (Cesar).3
_______________
2 Id., at p. 29.
3 Id., at pp. 3, 4 and 21.
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VOL. 663, JANUARY 18, 2012 401

After several weeks of being in floating status, Royale’s

Security Officer, Martin Gono (Martin), assigned the
petitioner at Highlight Metal Craft, Inc. (Highlight Metal)

from July 29, 2003 to August 8, 2003. Thereafter, the
petitioner was transferred and assigned to Wide Wide
World Express, Inc. (WWWE, Inc.). During his assignment
at Highlight Metal, the petitioner used the patches and
agency cloths of Sceptre and it was only when he was
posted at WWWE, Inc. that he started using those of
Royale.4
On September 17, 2003, the petitioner was informed
that his assignment at WWWE, Inc. had been withdrawn
because Royale had allegedly been replaced by another
security agency. The petitioner, however, shortly
discovered thereafter that Royale was never replaced as
WWWE, Inc.’s security agency. When he placed a call at
WWWE, Inc., he learned that his fellow security guard was
not relieved from his post.5
On September 21, 2003, the petitioner was once again
assigned at Highlight Metal, albeit for a short period from
September 22, 2003 to September 30, 2003. Subsequently,
when the petitioner reported at Royale’s office on October
1, 2003, Martin informed him that he would no longer be
given any assignment per the instructions of Aida
Sabalones-Tan (Aida), general manager of Sceptre. This
prompted him to file a complaint for illegal dismissal on
October 4, 2003.6
In his May 11, 2005 Decision, Labor Arbiter Jose
Gutierrez (LA Gutierrez) ruled in the petitioner’s favor and
found him illegally dismissed. For being unsubstantiated,
LA Gutierrez denied credence to the respondents’ claim
that the termination of the petitioner’s employment
relationship with Royale was on his accord following his
alleged employment in another company. That the
petitioner was no longer interested in being an employee of
Royale cannot be presumed from his
_______________
4 Id., at pp. 4-5, 21.
5 Id., at pp. 5-6.
6 Id., at pp. 5-6, 21.
402

request for a certificate of employment, a claim which, to

begin with, he vehemently denies. Allegation of the
petitioner’s abandonment is negated by his filing of a

complaint for illegal dismissal three (3) days after he was
informed that he would no longer be given any
assignments. LA Gutierrez ruled:
“In short, respondent wanted to impress before us that

complainant abandoned his employment. We are not however,
convinced.
There is abandonment when there is a clear proof showing that
one has no more interest to return to work. In this instant case,
the record has no proof to such effect. In a long line of decisions,
the Supreme Court ruled:
“Abandonment of position is a matter of intention
expressed in clearly certain and unequivocal acts,
however, an interim employment does not mean
abandonment.” (Jardine Davis, Inc. vs. NLRC, 225
SCRA 757).
“In abandonment, there must be a concurrence of
the intention to abandon and some overt acts from
which an employee may be declared as having no
more interest to work.” (C. Alcontin & Sons, Inc. vs.
NLRC, 229 SCRA 109).
“It is clear, deliberate and unjustified refusal to
severe employment and not mere absence that is
required to constitute abandonment.” x x x” (De Ysasi
III vs. NLRC, 231 SCRA 173).
Aside from lack of proof showing that complainant has
abandoned his employment, the record would show that
immediate action was taken in order to protest his dismissal from
employment. He filed a complaint [for] illegal dismissal on
October 4, 2004 or three (3) days after he was dismissed. This act,
as declared by the Supreme Court is inconsistent with
abandonment, as held in the case of Pampanga Sugar
Development Co., Inc. vs. NLRC, 272 SCRA 737 where the
Supreme Court ruled:
403
VOL. 663, JANUARY 18, 2012 403

“The immediate filing of a complaint for [i]llegal

[d]ismissal by an employee is inconsistent with
abandonment.”7
The respondents were ordered to pay the petitioner

backwages, which LA Gutierrez computed from the day he
was dismissed, or on October 1, 2003, up to the
promulgation of his Decision on May 11, 2005. In lieu of
reinstatement, the respondents were ordered to pay the

petitioner separation pay equivalent to his one (1) month
salary in consideration of his tenure with Royale, which
lasted for only one (1) month and three (3) days. In this
regard, LA Gutierrez refused to pierce Royale’s corporate
veil for purposes of factoring the petitioner’s length of
service with Sceptre in the computation of his separation
pay. LA Gutierrez ruled that Royale’s corporate
personality, which is separate and distinct from that of
Sceptre, a sole proprietorship owned by the late Roso
Sabalones (Roso) and later, Aida, cannot be pierced absent
clear and convincing evidence that Sceptre and Royale
share the same stockholders and incorporators and that
Sceptre has complete control and dominion over the
finances and business affairs of Royale. Specifically:
“To support its prayer of piercing the veil of corporate entity of

respondent Royale, complainant avers that respondent Royal (sic)
was using the very same office of SCEPTRE in C. Padilla St.,
Cebu City. In addition, all officers and staff of SCEPTRE are now
the same officers and staff of ROYALE, that all [the] properties of
SCEPTRE are now being owned by ROYALE and that ROYALE is
now occupying the property of SCEPTRE. We are not however,
persuaded.
It should be pointed out at this juncture that SCEPTRE, is a
single proprietorship. Being so, it has no distinct and separate
personality. It is owned by the late Roso T. Sabalones. After the
death of the owner, the property is supposed to be divided by the
heirs and any claim against the sole proprietorship is a claim
against Roso T. Sabalones. After his death, the claims should be
instituted against
_______________
7 Id., at p. 55.
404

the estate of Roso T. Sabalones. In short, the estate of the late

Roso T. Sabalones should have been impleaded as respondent of
this case.
Complainant wanted to impress upon us that Sceptre was
organized into another entity now called Royale Security Agency.
There is however, no proof to this assertion. Likewise, there is no
proof that Roso T. Sabalones, organized his single proprietorship
business into a corporation, Royale Security Agency. On the
contrary, the name of Roso T. Sabalones does not appear in the

Articles of Incorporation. The names therein as incorporators are:
Bruno M. Kuizon – [P]150,000.00
Wilfredo K. Tan – 100,000.00
Karen Therese S. Tan – 100,000.00
Cesar Antonio S. Tan – 100,000.00
Gabeth Maria K. Tan – 50,000.00
Complainant claims that two (2) of the incorporators are the
granddaughters of Roso T. Sabalones. This fact even give (sic) us
further reason to conclude that respondent Royal (sic) Security
Agency is not an alter ego or conduit of SCEPTRE. It is obvious
that respondent Royal (sic) Security Agency is not owned by the
owner of “SCEPTRE”.
It may be true that the place where respondent Royale hold
(sic) office is the same office formerly used by “SCEPTRE.”
Likewise, it may be true that the same officers and staff now
employed by respondent Royale Security Agency were the same
officers and staff employed by “SCEPTRE.” We find, however,
that these facts are not sufficient to justify to require respondent
Royale to answer for the liability of Sceptre, which was owned
solely by the late Roso T. Sabalones. As we have stated above, the
remedy is to address the claim on the estate of Roso T.
Sabalones.”8
The respondents appealed LA Gutierrez’s May 11, 2005

Decision to the NLRC, claiming that the finding of illegal
dismissal was attended with grave abuse of discretion. This
appeal was, however, dismissed by the NLRC in its
November 30, 2005 Decision,9 the dispositive portion of
which states:
_______________
8 Id., at pp. 53-54.
9 Id., at pp. 58-65.
405
VOL. 663, JANUARY 18, 2012 405

“WHEREFORE, premises considered, the Decision of the

Labor Arbiter declaring the illegal dismissal of complainant is
hereby AFFIRMED.
However[,] We modify the monetary award by limiting the
grant of backwages to only three (3) months in view of
complainant’s very limited service which lasted only for one
month and three days.
1. Backwages - [P]15,600.00

2. Separation Pay - 5,200.00
3. 13th Month Pay - 583.34
[P]21,383.34
Attorney’s Fees - 2,138.33
Total [P]23,521.67
The appeal of respondent Royal (sic) Security Agency is hereby
DISMISSED for lack of merit.
SO ORDERED.”10
The NLRC partially affirmed LA Gutierrez’s May 11,

2005 Decision. It concurred with the latter’s finding that
the petitioner was illegally dismissed and the manner by
which his separation pay was computed, but modified the
monetary award in the petitioner’s favor by reducing the
amount of his backwages from P95,600.00 to P15,600.00.
The NLRC determined the petitioner’s backwages as
limited to three (3) months of his last monthly salary,
considering that his employment with Royale was only for
a period for one (1) month and three (3) days, thus:11
“On the other hand, while complainant is entitled to backwages,

We are aware that his stint with respondent Royal (sic) lasted
only for one (1) month and three (3) days such that it is Our
considered view that his backwages should be limited to only
three (3) months.
Backwages:
[P]5,200.00 x 3 months = [P]15,600.0012
_______________
10 Id., at pp. 64-65.
11 Id., at p. 64.
12 Id.
406

The petitioner, on the other hand, did not appeal LA

Gutierrez’s May 11, 2005 Decision but opted to raise the
validity of LA Gutierrez’s adverse findings with respect to
piercing Royale’s corporate personality and computation of
his separation pay in his Reply to the respondents’
Memorandum of Appeal. As the filing of an appeal is the
prescribed remedy and no aspect of the decision can be
overturned by a mere reply, the NLRC dismissed the
petitioner’s efforts to reverse LA Gutierrez’s disposition of
these issues. Effectively, the petitioner had already waived

his right to question LA Gutierrez’s Decision when he
failed to file an appeal within the reglementary period. The
NLRC held:
“On the other hand, in complainant’s Reply to Respondent’s

Appeal Memorandum he prayed that the doctrine of piercing the
veil of corporate fiction of respondent be applied so that his
services with Sceptre since 1976 [will not] be deleted. If
complainant assails this particular finding in the Labor Arbiter’s
Decision, complainant should have filed an appeal and not seek a
relief by merely filing a Reply to Respondent’s Appeal
Memorandum.”13
Consequently, the petitioner elevated the NLRC’s

November 30, 2005 Decision to the CA by way of a Petition
for Certiorari under Rule 65 of the Rules of Court. On the
other hand, the respondents filed no appeal from the
NLRC’s finding that the petitioner was illegally dismissed.
The CA, in consideration of substantial justice and the
jurisprudential dictum that an appealed case is thrown
open for the appellate court’s review, disagreed with the
NLRC and proceeded to review the evidence on record to
determine if Royale is Sceptre’s alter ego that would
warrant the piercing of its corporate veil.14 According to the
CA, errors not assigned on appeal may be reviewed as
technicalities should not serve as bar to the full
adjudication of cases. Thus:
_______________
13 Id.
14 Id., at pp. 24-25.
407
VOL. 663, JANUARY 18, 2012 407

“In Cuyco v. Cuyco, which We find application in the instant

case, the Supreme Court held:
“In their Reply, petitioners alleged that their petition
only raised the sole issue of interest on the interest due,
thus, by not filing their own petition for review, respondents
waived their privilege to bring matters for the Court’s
review that [does] not deal with the sole issue raised.
Procedurally, the appellate court in deciding the case
shall consider only the assigned errors, however, it is
equally settled that the Court is clothed with ample
authority to review matters not assigned as errors in an

appeal, if it finds that their consideration is necessary to
arrive at a just disposition of the case.”
Therefore, for full adjudication of the case, We have to
primarily resolve the issue of whether the doctrine of piercing the
corporate veil be justly applied in order to determine petitioner’s
length of service with private respondents.”15 (citations omitted)
Nonetheless, the CA ruled against the petitioner and

found the evidence he submitted to support his allegation
that Royale and Sceptre are one and the same juridical
entity to be wanting. The CA refused to pierce Royale’s
corporate mask as one of the “probative factors that would
justify the application of the doctrine of piercing the
corporate veil is stock ownership by one or common
ownership of both corporations” and the petitioner failed to
present clear and convincing proof that Royale and Sceptre
are commonly owned or controlled. The relevant portions of
the CA’s Decision state:
“In the instant case, We find no evidence to show that Royale

Security Agency, Inc. (hereinafter “Royale”), a corporation duly
registered with the Securities and Exchange Commission (SEC)
and Sceptre Security Agency (hereinafter “Sceptre”), a single
proprietorship, are one and the same entity.
Petitioner, who has been with Sceptre since 1976 and, as ruled
by both the Labor Arbiter and the NLRC, was illegally dismissed
by
_______________
15 Id.
408

Royale on October 1, 2003, alleged that in order to circumvent

labor laws, especially to avoid payment of money claims and the
consideration on the length of service of its employees, Royale was
established as an alter ego or business conduit of Sceptre. To
prove his claim, petitioner declared that Royale is conducting
business in the same office of Sceptre, the latter being owned by
the late retired Gen. Roso Sabalones, and was managed by the
latter’s daughter, Dr. Aida Sabalones-Tan; that two of Royale’s
incorporators are grandchildren [of] the late Gen. Roso Sabalones;
that all the properties of Sceptre are now owned by Royale, and
that the officers and staff of both business establishments are the
same; that the heirs of Gen. Sabalones should have applied for
dissolution of Sceptre before the SEC before forming a new

corporation.
On the other hand, private respondents declared that Royale
was incorporated only on March 10, 2003 as evidenced by the
Certificate of Incorporation issued by the SEC on the same date;
that Royale’s incorporators are Bruino M. Kuizon, Wilfredo
Gracia K. Tan, Karen Therese S. Tan, Cesar Antonio S. Tan II
and [Gabeth] Maria K. Tan.
Settled is the tenet that allegations in the complaint must be
duly proven by competent evidence and the burden of proof is on
the party making the allegation. Further, Section 1 of Rule 131 of
the Revised Rules of Court provides:
“SECTION 1. Burden of proof.—Burden of proof is the
duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of
evidence required by law.”
We believe that petitioner did not discharge the required
burden of proof to establish his allegations. As We see it,
petitioner’s claim that Royale is an alter ego or business conduit
of Sceptre is without basis because aside from the fact that there
is no common ownership of both Royale and Sceptre, no evidence
on record would prove that Sceptre, much less the late retired
Gen. Roso Sabalones or his heirs, has control or complete
domination of Royale’s finances and business transactions.
Absence of this first element, coupled by petitioner’s failure to
present clear and convincing evidence to substantiate his
allegations, would prevent piercing of the corporate veil.
Allegations must be proven by sufficient evidence. Simply
409
VOL. 663, JANUARY 18, 2012 409

stated, he who alleges a fact has the burden of proving it; mere
allegation is not evidence.”16 (citations omitted)
By way of this Petition, the petitioner would like this

Court to revisit the computation of his backwages, claiming
that the same should be computed from the time he was
illegally dismissed until the finality of this decision.17 The
petitioner would likewise have this Court review and
examine anew the factual allegations and the supporting
evidence to determine if the CA erred in its refusal to
pierce Royale’s corporate mask and rule that it is but a
mere continuation or successor of Sceptre. According to the
petitioner, the erroneous computation of his separation pay
was due to the CA’s failure, as well as the NLRC and LA
Gutierrez, to consider evidence conclusively demonstrating
that Royale and Sceptre are one and the same juridical
entity. The petitioner claims that since Royale is no more
than Sceptre’s alter ego, it should recognize and credit his
length of service with Sceptre.18
The petitioner claimed that Royale and Sceptre are not
separate legal persons for purposes of computing the
amount of his separation pay and other benefits under the
Labor Code. The piercing of Royale’s corporate personality
is justified by several indicators that Royale was
incorporated for the sole purpose of defeating his right to
security of tenure and circumvent payment of his benefits
to which he is entitled under the law: (i) Royale was
holding office in the same property used by Sceptre as its
principal place of business;19 (ii) Sceptre and Royal have
the same officers and employees;20 (iii) on October 14, 1994,
Roso, the sole proprietor of Sceptre, sold to Aida, and her
husband, Wilfredo Gracia K. Tan (Wilfredo),21
_______________
16 Id., at pp. 26-27.
17 Id., at pp. 13-15.
18 Id., at pp. 7-13.
19 Id., at pp. 5, 6 and 9.
20 Id., at pp. 8-9.
21 Id., at pp. 74-80.
410

the property used by Sceptre as its principal place of

business;22 (iv) Wilfredo is one of the incorporators of
Royale;23 (v) on May 3, 1999, Roso ceded the license to
operate Sceptre issued by the Philippine National Police to
Aida;24 (vi) on July 28, 1999, the business name “Sceptre
Security & Detective Agency” was registered with the
Department of Trade and Industry (DTI) under the name
of Aida;25 (vii) Aida exercised control over the affairs of
Sceptre and Royale, as she was, in fact, the one who
dismissed the petitioner from employment;26 (viii) Karen,
the daughter of Aida, was Sceptre’s Operation Manager
and is one of the incorporators of Royale;27 and (ix) Cesar
Tan II, the son of Aida was one of Sceptre’s officers and is
one of the incorporators of Royale.28
In their Comment, the respondents claim that the
petitioner is barred from questioning the manner by which
his backwages and separation pay were computed. Earlier,

the petitioner moved for the execution of the NLRC’s
November 30, 2005 Decision29 and the respondents paid
him the full amount of the monetary award thereunder
shortly after the writ of execution was issued.30 The
respondents likewise maintain that Royale’s separate and
distinct corporate personality should be respected
considering that the evidence presented by the petitioner
fell short of establishing that Royale is a mere alter ego of
Sceptre.
The petitioner does not deny that he has received the
full amount of backwages and separation pay as provided
under
_______________
22 Id., at p. 82.
23 Id., at p. 44.
24 Id., at pp. 73-79.
25 Id., at pp. 73-80.
26 Id., at p. 12.
27 Id., at pp. 8, 44, 73-74.
28 Id.
29 Id., at pp. 58-65.
30 Id., at p. 49.
411
VOL. 663, JANUARY 18, 2012 411

the NLRC’s November 30, 2005 Decision.31 However, he

claims that this does not preclude this Court from
modifying a decision that is tainted with grave abuse of
discretion or issued without jurisdiction.32
Issues
Considering the conflicting submissions of the parties, a

judicious determination of their respective rights and
obligations requires this Court to resolve the following
substantive issues:
a. Whether 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; and
b. Whether the petitioner’s backwages should be

limited to his salary for three (3) months.
Our Ruling
Because his receipt of the proceeds of

the award under the NLRC’s November
30, 2005 Decision is qualified and with-
out prejudice to the CA’s resolution of
his petition for certiorari, the peti-
tioner is not barred from exercising his
right to elevate the decision of the CA to
this Court.
Before this Court proceeds to decide this Petition on its
merits, it is imperative to resolve the respondents’
contention that the full satisfaction of the award under the
NLRC’s November 30, 2005 Decision bars the petitioner
from question-
_______________
31 Id., at p. 77.
32 Id.
412

ing the validity thereof. The respondents submit that they

had paid the petitioner the amount of P21,521.67 as
directed by the NLRC and this constitutes a waiver of his
right to file an appeal to this Court.
The respondents fail to convince.
The petitioner’s receipt of the monetary award
adjudicated by the NLRC is not absolute, unconditional
and unqualified. The petitioner’s May 3, 2007 Motion for
Release contains a reservation, stating in his prayer that:
“it is respectfully prayed that the respondents and/or Great
Domestic Insurance Co. be ordered to RELEASE/GIVE the
amount of P23,521.67 in favor of the complainant
TIMOTEO H. SARONA without prejudice to the outcome of
the petition with the CA.”33
In Leonis Navigation Co., Inc., et al. v. Villamater, et
al.,34 this Court ruled that the prevailing party’s receipt of
the full amount of the judgment award pursuant to a writ
of execution issued by the labor arbiter does not close or
terminate the case if such receipt is qualified as without
prejudice to the outcome of the petition for certiorari

pending with the CA.
“Simply put, the execution of the final and executory decision

or resolution of the NLRC shall proceed despite the pendency of a
petition for certiorari, unless it is restrained by the proper court.
In the present case, petitioners already paid Villamater’s widow,
Sonia, the amount of P3,649,800.00, representing the total and
permanent disability award plus attorney’s fees, pursuant to the
Writ of Execution issued by the Labor Arbiter. Thereafter, an
Order was issued declaring the case as “closed and terminated”.
However, although there was no motion for reconsideration of this
last Order, Sonia was, nonetheless, estopped from claiming that
the controversy had already reached its end with the issuance of
the Order closing and terminating the case. This is because the
Acknowledgment Receipt she signed when she received
petitioners’ payment was without
_______________
33 Id., at p. 67.
34 G.R. No. 179169, March 3, 2010, 614 SCRA 182.
413
VOL. 663, JANUARY 18, 2012 413

prejudice to the final outcome of the petition for certiorari pending

before the CA.”35
The finality of the NLRC’s decision does not preclude the

filing of a petition for certiorari under Rule 65 of the Rules
of Court. That the NLRC issues an entry of judgment after
the lapse of ten (10) days from the parties’ receipt of its
decision36 will only give rise to the prevailing party’s right
to move for the execution thereof but will not prevent the
CA from taking cognizance of a petition for certiorari on
jurisdictional and due process considerations.37 In turn,
the decision rendered by the CA on a petition for certiorari
may be appealed to this Court by way of a petition for
review on certiorari under Rule 45 of the Rules of Court.
Under Section 5, Article VIII of the Constitution, this Court
has the power to “review, revise, reverse, modify, or affirm
on appeal or certiorari as the law or the Rules of Court may
provide, final judgments and orders of lower courts in x x x
all cases in which only an error or question of law is
involved.” Consistent with this constitutional mandate,
Rule 45 of the Rules of Court provides the remedy of an
appeal by certiorari from decisions, final orders or
resolutions of the CA in any case, i.e., regardless of the

nature of the action or proceedings involved, which would
be but a continuation of the appellate process over the
original case.38 Since an appeal to this Court is not an
original and independent action but a continuation of the
proceedings before the CA, the filing of a petition for review
under Rule 45 cannot be barred by the finality of the
NLRC’s decision in the same way that a petition for
certiorari under Rule 65 with the CA cannot.
_______________
35 Id., at pp. 193-194.
36 2011 NLRC Rules of Procedure, Rule VII, Section 14.
37 Id.
38 Cua, Jr. v. Tan, G.R. Nos. 181455-56, December 4, 2009, 607 SCRA ,
686-687.
414

Furthermore, if the NLRC’s decision or resolution was

reversed and set aside for being issued with grave abuse of
discretion by way of a petition for certiorari to the CA or to
this Court by way of an appeal from the decision of the CA,
it is considered void ab initio and, thus, had never become
final and executory.39
A Rule 45 Petition should be confined to
questions of law. Nevertheless, this Court
has the power to resolve a question of
fact, such as whether a corporation is a
mere alter ego of another entity or
whether the corporate fiction was invoked
for fraudulent or malevolent ends, if the
findings in assailed decision is not sup-
ported by the evidence on record or based
on a misapprehension of facts.
The question of whether one corporation is merely an
alter ego of another is purely one of fact. So is the question
of whether a corporation is a paper company, a sham or
subterfuge or whether the petitioner adduced the requisite
quantum of evidence warranting the piercing of the veil of
the respondent’s corporate personality.40
As a general rule, this Court is not a trier of facts and a
petition for review on certiorari under Rule 45 of the Rules
of Court must exclusively raise questions of law. Moreover,
if factual findings of the NLRC and the LA have been

affirmed by the CA, this Court accords them the respect
and finality they deserve. It is well-settled and oft-repeated
that findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because
their jurisdiction is
_______________
39 Leonis Navigation Co., Inc. v. Villamater, supra note 34 at p. 192.
40 China Banking Corporation v. Dyne-Sem Electronics Corporation,
527 Phil 80; 494 SCRA 493 (2006).
415
VOL. 663, JANUARY 18, 2012 415

confined to specific matters, are generally accorded not only

respect, but finality when affirmed by the CA.41
Nevertheless, this Court will not hesitate to deviate
from what are clearly procedural guidelines and disturb
and strike down the findings of the CA and those of the
labor tribunals if there is a showing that they are
unsupported by the evidence on record or there was a
patent misappreciation of facts. Indeed, that the impugned
decision of the CA is consistent with the findings of the
labor tribunals does not per se conclusively demonstrate
the correctness thereof. By way of exception to the general
rule, this Court will scrutinize the facts if only to rectify the
prejudice and injustice resulting from an incorrect
assessment of the evidence presented.
A resolution of an issue that has suppos-
edly become final and executory as the
petitioner only raised it in his reply to the
respondents’ appeal may be revisited by
the appellate court if such is necessary
for a just disposition of the case.
As above-stated, the NLRC refused to disturb LA
Gutierrez’s denial of the petitioner’s plea to pierce Royale’s
corporate veil as the petitioner did not appeal any portion
of LA Gutierrez’s May 11, 2005 Decision.
In this respect, the NLRC cannot be accused of grave
abuse of discretion. Under Section 4(c), Rule VI of the
NLRC Rules,42 the NLRC shall limit itself to reviewing
and deciding only the issues that were elevated on appeal.
The NLRC, while not totally bound by technical rules of
procedure, is not licensed
_______________
41 Reyes v. National Labor Relations Commission, G.R. No. 160233,
August 8, 2007, 529 SCRA 499.
42 New Rules of Procedure of the National Labor Relations
Commission (as amended by NLRC Resolution No. 01-02, Series of 2002).
416

to disregard and violate the implementing rules it

implemented.43
Nonetheless, technicalities should not be allowed to
stand in the way of equitably and completely resolving the
rights and obligations of the parties. Technical rules are
not binding in labor cases and are not to be applied strictly
if the result would be detrimental to the working man.44
This Court may choose not to encumber itself with
technicalities and limitations consequent to procedural
rules if such will only serve as a hindrance to its duty to
decide cases judiciously and in a manner that would put an
end with finality to all existing conflicts between the
parties.
Royale is a continuation or
successor of Sceptre.
A corporation is an artificial being created by operation
of law. It possesses the right of succession and such powers,
attributes, and properties expressly authorized by law or
incident to its existence. It has a personality separate and
distinct from the persons composing it, as well as from any
other legal entity to which it may be related. This is
basic.45
Equally well-settled is the principle that the corporate
mask may be removed or the corporate veil pierced when
the corporation is just an alter ego of a person or of another
corporation. For reasons of public policy and in the interest
of justice, the corporate veil will justifiably be impaled only
_______________
43 Del Monte Philippines, Inc. v. National Labor Relations Commission,
G.R. No. 87371, August 6, 1990, 188 SCRA 370.
44 Government Service Insurance System v. National Labor Relations
Commission, G.R. No. 180045, November 17, 2010, 635 SCRA 258.
45 General Credit Corporation v. Alsons Development and Investment
Corporation, G.R. No. 154975, January 29, 2007, 513 SCRA 237-238.
417
VOL. 663, JANUARY 18, 2012 417

when it becomes a shield for fraud, illegality or inequity

committed against third persons.46
Hence, any application of the doctrine of piercing the
corporate veil should be done with caution. A court should
be mindful of the milieu where it is to be applied. It must
be certain that the corporate fiction was misused to such an
extent that injustice, fraud, or crime was committed
against another, in disregard of rights. The wrongdoing
must be clearly and convincingly established; it cannot be
presumed. Otherwise, an injustice that was never
unintended may result from an erroneous application.47
Whether the separate personality of the corporation
should be pierced hinges on obtaining facts appropriately
pleaded or proved. However, any piercing of the corporate
veil has to be done with caution, albeit the Court will not
hesitate to disregard the corporate veil when it is misused
or when necessary in the interest of justice. After all, the
concept of corporate entity was not meant to promote
unfair objectives.48
The doctrine of piercing the corporate veil applies only
in three (3) basic areas, namely: 1) defeat of public
convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud
cases or when the corporate entity is used to justify a
wrong, protect fraud, or defend a crime; or 3) 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.49
_______________
46 Philippine National Bank v. Andrada Electric & Engineering
Company, 430 Phil. 894; 381 SCRA 244 (2002).
47 Id., at pp. 894-895; p. 254 citations omitted.
48 Supra note 45 at p. 238.
49 Id., at pp. 238-239.
418

In this regard, this Court finds cogent reason to reverse

the CA’s findings. Evidence abound showing that Royale is
a mere continuation or successor of Sceptre and fraudulent
objectives are behind Royale’s incorporation and the
petitioner’s subsequent employment therein. These are
plainly suggested by events that the respondents do not
dispute and which the CA, the NLRC and LA Gutierrez
accept as fully substantiated but misappreciated as
insufficient to warrant the use of the equitable weapon of
piercing.
As correctly pointed out by the petitioner, it was Aida
who exercised control and supervision over the affairs of
both Sceptre and Royale. Contrary to the submissions of
the respondents that Roso had been the only one in sole
control of Sceptre’s finances and business affairs, Aida took
over as early as 1999 when Roso assigned his license to
operate Sceptre on May 3, 1999.50 As further proof of Aida’s
acquisition of the rights as Sceptre’s sole proprietor, she
caused the registration of the business name “Sceptre
Security & Detective Agency” under her name with the DTI
a few months after Roso abdicated his rights to Sceptre in
her favor.51 As far as Royale is concerned, the respondents
do not deny that she has a hand in its management and
operation and possesses control and supervision of its
employees, including the petitioner. As the petitioner
correctly pointed out, that Aida was the one who decided to
stop giving any assignments to the petitioner and
summarily dismiss him is an eloquent testament of the
power she wields insofar as Royale’s affairs are concerned.
The presence of actual common control coupled with the
misuse of the corporate form to perpetrate oppressive or
manipulative conduct or evade performance of legal
obligations is patent; Royale cannot hide behind its
corporate fiction.
Aida’s control over Sceptre and Royale does not, by
itself, call for a disregard of the corporate fiction. There
must be a
_______________
50 Rollo, p. 79.
51 Id., at p. 80.
419
VOL. 663, JANUARY 18, 2012 419

showing that a fraudulent intent or illegal purpose is

behind the exercise of such control to warrant the piercing
of the corporate veil.52 However, the manner by which the
petitioner was made to resign from Sceptre and how he
became an employee of Royale suggest the perverted use of
the legal fiction of the separate corporate personality. It is
undisputed that the petitioner tendered his resignation and
that he applied at Royale at the instance of Karen and
Cesar and on the impression they created that these were
necessary for his continued employment. They orchestrated
the petitioner’s resignation from Sceptre and subsequent
employment at Royale, taking advantage of their
ascendancy over the petitioner and the latter’s lack of
knowledge of his rights and the consequences of his actions.
Furthermore, that the petitioner was made to resign from
Sceptre and apply with Royale only to be unceremoniously
terminated shortly thereafter leads to the ineluctable
conclusion that there was intent to violate the petitioner’s
rights as an employee, particularly his right to security of
tenure. 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 creation53 or which could not
have been intended by law to which it owed its being.54
For the piercing doctrine to apply, it is of no consequence
if Sceptre is a sole proprietorship. As ruled in Prince
Transport,
_______________
52 NASECO Guards Association-PEMA (NAGA-PEMA) v. National
Service Corporation, G.R. No. 165442, August 25, 2010, 629 SCRA 101.
53 Cf. Emilio Cano Enterprises, Inc. v. Court of Industrial Relations, et
al., 121 Phil. 276; 13 SCRA 290 (1965).
54 Land Bank of the Philippines v. Court of Appeals, 416 Phil. 774, 783;
364 SCRA 375, 383 (2001).
420

Inc., et al. v. Garcia, et al.,55 it is the act of hiding behind

the separate and distinct personalities of juridical entities
to perpetuate fraud, commit illegal acts, evade one’s
obligations that the equitable piercing doctrine was

formulated to address and prevent:
“A settled formulation of the doctrine of piercing the corporate veil

is that when two business enterprises are owned, conducted and
controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal
fiction that these two entities are distinct and treat them as
identical or as one and the same. In the present case, it may be
true that Lubas is a single proprietorship and not a corporation.
However, petitioners’ attempt to isolate themselves from and hide
behind the supposed separate and distinct personality of Lubas so
as to evade their liabilities is precisely what the classical doctrine
of piercing the veil of corporate entity seeks to prevent and
remedy.”56
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.57 Royale,
shortly after its incorporation, started to hold office in the
same property. These, the respondents failed to dispute.
The respondents do not likewise deny that Royale and
Sceptre share the same officers and employees. Karen
assumed the dual role of Sceptre’s Operation Manager and
incorporator of Royale. With respect to the petitioner, even
if he has already resigned from Sceptre and has been
employed by Royale, he was still using the patches and
agency cloths of Sceptre during his assignment at
Highlight Metal.
Royale also claimed a right to the cash bond which the
petitioner posted when he was still with Sceptre. If Sceptre
and
_______________
55 G.R. No. 167291, January 12, 2011, 639 SCRA 312.
56 Id., at p. 328.
57 Rollo, pp. 5, 54, 74 and 82.
421
VOL. 663, JANUARY 18, 2012 421

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 favor.
Taking the foregoing in conjunction with Aida’s control
over Sceptre’s and Royale’s business affairs, it is patent
that Royale was a mere subterfuge for Aida. Since a sole
proprietorship does not have a separate and distinct
personality from that of the owner of the enterprise, the
latter is personally liable. This is what she sought to avoid
but cannot prosper.
Effectively, the petitioner cannot be deemed to have
changed employers as Royale and Sceptre are one and the
same. His separation pay should, thus, be computed from
the date he was hired by Sceptre in April 1976 until the
finality of this decision. Based on this Court’s ruling in
Masagana Concrete Products, et al. v. NLRC, et al.,58 the
intervening period between the day an employee was
illegally dismissed and the day the decision finding him
illegally dismissed becomes final and executory shall be
considered in the computation of his separation pay as a
period of “imputed” or “putative” service:
“Separation pay, equivalent to one month’s salary for every year

of service, is awarded as an alternative to reinstatement when the
latter is no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination,
including the imputed service for which the employee is entitled
to backwages, with the salary rate prevailing at the end of the
period of putative service being the basis for computation.”59
It is well-settled, even axiomatic, that if

reinstatement is not possible, the period
covered in the computation of backwages
is from the time the employee was unlaw-
_______________
58 372 Phil. 459; 313 SCRA 576 (1999).
59 Id., at p. 481; p. 596.
422

fully terminated until the finality of the

decision finding illegal dismissal.
With respect to the petitioner’s backwages, this Court
cannot subscribe to the view that it should be limited to an
amount equivalent to three (3) months of his salary.
Backwages is a remedy affording the employee a way to

recover what he has lost by reason of the unlawful
dismissal.60 In awarding backwages, the primordial
consideration is the income that should have accrued to the
employee from the time that he was dismissed up to his
reinstatement61 and the length of service prior to his
dismissal is definitely inconsequential.As early as 1996,
this Court, in Bustamante, et al. v. NLRC, et al.,62 clarified
in no uncertain terms that if reinstatement is no longer
possible, backwages should be computed from the time the
employee was terminated until the finality of the decision,
finding the dismissal unlawful.
“Therefore, in accordance with R.A. No. 6715, petitioners are

entitled on their full backwages, inclusive of allowances and other
benefits or their monetary equivalent, from the time their actual
compensation was withheld on them up to the time of their actual
reinstatement.
As to reinstatement of petitioners, this Court has already ruled
that reinstatement is no longer feasible, because the company
would be adjustly prejudiced by the continued employment of
petitioners who at present are overage, a separation pay equal to
one-month salary granted to them in the Labor Arbiter’s decision
was in order and, therefore, affirmed on the Court’s decision of 15
March 1996. Furthermore, since reinstatement on this case
is no longer feasible, the amount of backwages shall be
computed from
_______________
60 De Guzman v. National Labor Relations Commission, 371 Phil. 202 ; 312
SCRA 266 (1999).
61 Velasco v. National Labor Relations Commission, et al., 525 Phil. 749, 761-
762; 492 SCRA 686, 700 (2006).
62 332 Phil. 833; 265 SCRA 61 (1996).
423
VOL. 663, JANUARY 18, 2012 423

the time of their illegal termination on 25 June 1990 up to

the time of finality of this decision.”63(emphasis supplied)
A further clarification was made in Javellana, Jr. v.

Belen:64
“Article 279 of the Labor Code, as amended by Section 34 of

Republic Act 6715 instructs:
Art. 279. Security of Tenure.—In cases of regular

employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his
actual reinstatement.
Clearly, the law intends the award of backwages and similar
benefits to accumulate past the date of the Labor Arbiter’s
decision until the dismissed employee is actually reinstated. But
if, as in this case, reinstatement is no longer possible, this Court
has consistently ruled that backwages shall be computed from the
time of illegal dismissal until the date the decision becomes
final.”65 (citation omitted)
In case separation pay is awarded and reinstatement is

no longer feasible, backwages shall be computed from the
time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is
the employee’s actual receipt of the full amount of his
separation pay that will effectively terminate the
employment of an illegally dismissed employee.66
Otherwise, the employer-employee relationship subsists
and the illegally dismissed employee is entitled to
backwages, taking into account the increases and other
_______________
63 Id., at p. 843; p. 71.
64 G.R. No. 181913, March 5, 2010, 614 SCRA 342.
65 Id., at pp. 350-351.
66 Rasonable v. National Labor Relations Commission, 324 Phil. 191,
200; 253 SCRA 815, 823 (1996).
424

benefits, including the 13th month pay, that were received

by his co-employees who are not dismissed.67 It is the
obligation of the employer to pay an illegally dismissed
employee or worker the whole amount of the salaries or
wages, plus all other benefits and bonuses and general
increases, to which he would have been normally entitled
had he not been dismissed and had not stopped working.68
In fine, this Court holds Royale liable to pay the

petitioner backwages to be computed from his dismissal on
October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from
the respondents in satisfaction of the November 30, 2005
Decision shall be deducted accordingly.
Finally, moral damages and exemplary damages at
P25,000.00 each as indemnity for the petitioner’s dismissal,
which was tainted by bad faith and fraud, are in order.
Moral damages may be recovered where the dismissal of
the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a
manner contrary to morals, good customs or public policy
while exemplary damages are recoverable only if the
dismissal was done in a wanton, oppressive, or malevolent
manner.69
WHEREFORE, premises considered, the Petition is
hereby GRANTED. We REVERSE and SET ASIDE the
CA’s May 29, 2008 Decision in C.A.-G.R. SP No. 02127 and
order the respondents to pay the petitioner the following
minus the amount of (P23,521.67) paid to the petitioner in
satisfaction of the NLRC’s November 30, 2005 Decision in
NLRC Case No. V-000355-05:
_______________
67 Id.
68 St. Louis College of Tuguegarao v. National Labor Relations
Commission, 257 Phil. 1008; 177 SCRA 151 (1989), citing East Asiatic Co.,
Ltd. v. Court of Industrial Relations, 148-B Phil. 401, 429; 40 SCRA 521,
547 (1971).
69 Norkis Trading Co., Inc. v. National Labor Relations Commission,
504 Phil. 709, 719-720; 467 SCRA 461, 473 (2005).
425
VOL. 663, JANUARY 18, 2012 425

a) full backwages and other benefits computed

from October 1, 2003 (the date Royale illegally
dismissed the petitioner) until the finality of this
decision;
b) separation pay computed from April 1976 until
the finality of this decision at the rate of one month
pay per year of service;
c) ten percent (10%) attorney’s fees based on the
total amount of the awards under (a) and (b) above;
d) moral damages of Twenty-Five Thousand

Pesos (P25,000.00); and
e) exemplary damages of Twenty-Five Thousand
Pesos (P25,000.00).
This case is REMANDED to the labor arbiter for
computation of the separation pay, backwages, and other
monetary awards due the petitioner.
SO ORDERED.
Carpio (Chairperson), Perez, Sereno and Perlas-

Bernabe,** JJ., concur.
Petition granted, judgment reversed and set aside.
Notes.—To deny the Court the exercise of its judicial

review power over RA 9591 is to contend that this Court
has no power to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of
the Government. (Aldaba vs. Commission on Elections, 615
SCRA 564 [2010])
Technical Rules of procedure are not binding in labor
cases. (Oriental Shipmanagement Co., Inc. vs. Bastol, 622
SCRA 352 [2010])
——o0o——
_______________
** Additional Member in lieu of Associate Justice Arturo D. Brion per
Special Order No. 1174 dated January 9, 2012.
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7/20/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 663

G.R. No. 185280. January 18, 2012.*

Labor Law; Money Claims; The prevailing party’s receipt of

VOL. 663, JANUARY 18, 2012 395

Sarona vs. National Labor Relations Commission

396 SUPREME COURT REPORTS ANNOTATED

Sarona vs. National Labor Relations Commission

the impugned decision of the CA is consistent with the findings of

VOL. 663, JANUARY 18, 2012 397

Sarona vs. National Labor Relations Commission

Same; Same; Instances When the Doctrine of Piercing the

398 SUPREME COURT REPORTS ANNOTATED

Sarona vs. National Labor Relations Commission

VOL. 663, JANUARY 18, 2012 399

Sarona vs. National Labor Relations Commission

PETITION for review on certiorari of a decision of the

400 SUPREME COURT REPORTS ANNOTATED

Sarona vs. National Labor Relations Commission

Commission, Royale Security Agency (formerly Sceptre

“WHEREFORE, in view of the foregoing, the instant petition

On June 20, 2003, the petitioner, who was hired by

VOL. 663, JANUARY 18, 2012 401

After several weeks of being in floating status, Royale’s

petitioner at Highlight Metal Craft, Inc. (Highlight Metal)

402 SUPREME COURT REPORTS ANNOTATED

request for a certificate of employment, a claim which, to

petitioner’s abandonment is negated by his filing of a

“In short, respondent wanted to impress before us that

VOL. 663, JANUARY 18, 2012 403

“The immediate filing of a complaint for [i]llegal

The respondents were ordered to pay the petitioner

reinstatement, the respondents were ordered to pay the

“To support its prayer of piercing the veil of corporate entity of

404 SUPREME COURT REPORTS ANNOTATED

the estate of Roso T. Sabalones. In short, the estate of the late

contrary, the name of Roso T. Sabalones does not appear in the

The respondents appealed LA Gutierrez’s May 11, 2005

VOL. 663, JANUARY 18, 2012 405

“WHEREFORE, premises considered, the Decision of the

1. Backwages - [P]15,600.00

The NLRC partially affirmed LA Gutierrez’s May 11,

“On the other hand, while complainant is entitled to backwages,

406 SUPREME COURT REPORTS ANNOTATED

The petitioner, on the other hand, did not appeal LA

these issues. Effectively, the petitioner had already waived

“On the other hand, in complainant’s Reply to Respondent’s

Consequently, the petitioner elevated the NLRC’s

VOL. 663, JANUARY 18, 2012 407

“In Cuyco v. Cuyco, which We find application in the instant

authority to review matters not assigned as errors in an

Nonetheless, the CA ruled against the petitioner and

“In the instant case, We find no evidence to show that Royale

408 SUPREME COURT REPORTS ANNOTATED

Royale on October 1, 2003, alleged that in order to circumvent

dissolution of Sceptre before the SEC before forming a new

VOL. 663, JANUARY 18, 2012 409

By way of this Petition, the petitioner would like this

410 SUPREME COURT REPORTS ANNOTATED

the property used by Sceptre as its principal place of