Law School Noob: [CASE DIGEST] Naguiat v. NLRC (G.R. No. 116123)

Tuesday, November 2, 2021

[CASE DIGEST] Naguiat v. NLRC (G.R. No. 116123)

March 13, 1997

FACTS:

Clark Field Taxi Inc. (CFTI) was a corporation owned by Sergio Naguiat and his family, who also owned Naguiat Enterprises. Clark Taxi held a concessionaire’s contract with the Army Air Force Exchange Services (AAFES) for the operation of taxi services within Clark Air Base. Leonardo Galang, et.al. were among those hired as taxicab drivers.

AAFES was dissolved due to the phase-out of the US military bases in the Philippines. Consequently, the services of the taxicab drivers were terminated.

The company union, AAFES Taxi Drivers Association, held a negotiation with CFTI for their separation benefits. It was agreed that they will receive P500 for every year of service as severance pay. Galang et.al., however, refused to accept the said amount.

Galang, et.al, disaffiliated themselves from the union and instead joined the National Organization of Workingmen. They filed a complaint against Naguiat Enterprises, AAFES, and the Union, for payment of separation pay due to termination/phase out.

They alleged that they were regular employees of the Naguiat Enterprises, although it was CFTI who approved and supervised their employment.

The Labor Arbiter ordered the payment of P1,200 ($120 x5) for every year of service for humanitarian consideration.

Upon appeal, the NLRC held that the drivers were entitled to the separation pay in the amount of $120 for every year of service, and that Sergio Naguiat and Antolin Naguiat, father and son and President and VP of Naguiat Enterprises, should be held jointly and severally liable with CFTI for the payment of separation pay.

Hence, the instant petition.

ISSUE:

Whether officers of corporations are ipso facto liable jointly and severally with the companies they represent for the payment of separation pay. – YES.

HELD:

CFTI and its president and co-owner, Sergio Naguiat, are jointly and severally liable to pay the respondents the separation pay computed at US$120 for every year of service.

Sergio Naguiat, in his capacity as president of CFTI, cannot be exonerated from joint and several liability in the payment of separation pay to individual respondents. He falls within the meaning of an “employer” as contemplated by the Labor Code, who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees.

Further, because CFTI failed to comply with the law-imposed duty to grant separation pay to employees in case of closure of establishment, the stockholder who was actively engaged in the management or operation of the business should be held personally liable.

Purusant to Corporation Code, Title XII (Close Corporations), Section 100, par. 5. To the extent that the stockholders are actively engage(d) in the management or operation of the business and affairs of a close corporation, the stockholders shall be held to strict fiduciary duties to each other and among themselves.

Antolin Naguiat, as the VP of CFTI, cannot be held liable. Although he was the general manager, it was not shown that he acted in such capacity. There was no evidence on the extent of his participation in the management or operation of the business.Said stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance."

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