Professional Documents
Culture Documents
FACTS: Petitioner CFTI Held A Concessionaire's Contract With The
FACTS: Petitioner CFTI Held A Concessionaire's Contract With The
NAGUIAT, doing regards separation benefits that should be awarded in favor of the
business under the name and style SERGIO F. NAGUIAT ENT., INC., drivers. They arrived at an agreement that the separated drivers will
& CLARK FIELD TAXI, INC., petitioners, vs. NATIONAL LABOR be given P500.00 for every year of service as severance pay. Most of
RELATIONS COMMISSION (THIRD DIVISION), NATIONAL the drivers accepted said amount in December 1991 and January
ORGANIZATION OF WORKINGMEN and its members, LEONARDO T. 1992. However, individual respondents herein refused to accept
GALANG, et al., respondents. theirs.
FACTS: Petitioner CFTI held a concessionaire's contract with the Instead, after disaffiliating themselves from the drivers' union,
Army Air Force Exchange Services ("AAFES") for the operation of taxi individual respondents, through the National Organization of
services within Clark Air Base. Sergio F. Naguiat was CFTI's Workingmen ("NOWM"), a labor organization which they
president, while Antolin T. Naguiat was its vice-president. Like Sergio subsequently joined, filed a complaint[5] against "Sergio F. Naguiat
F. Naguiat Enterprises, Incorporated ("Naguiat Enterprises"), a doing business under the name and style Sergio F. Naguiat
trading firm, it was a family-owned corporation. Enterprises, Inc., Army-Air Force Exchange Services (AAFES) with
Mark Hooper as Area Service Manager, Pacific Region, and AAFES
Individual respondents were previously employed by CFTI as taxicab Taxi Drivers Association with Eduardo Castillo as President," for
drivers. During their employment, they were required to pay a daily payment of separation pay due to termination/phase-out. Said
"boundary fee" in the amount of US$26.50 for those working from complaint was later amended[6] to include additional taxi drivers
1:00 a.m. to 12:00 noon, and US$27.00 for those working from who were similarly situated as complainants, and CFTI with Antolin
12:00 noon to 12:00 midnight. All incidental expenses for the T. Naguiat as vice president and general manager, as party
maintenance of the vehicles they were driving were accounted respondent.
against them, including gasoline expenses.
In their complaint, herein private respondents alleged that they were
The drivers worked at least three to four times a week, depending regular employees of Naguiat Enterprises, although their individual
on the availability of taxicabs. They earned not less than US$15.00 applications for employment were approved by CFTI. They claimed
daily. In excess of that amount, however, they were required to to have been assigned to Naguiat Enterprises after having been
make cash deposits to the company, which they could later withdraw hired by CFTI, and that the former thence managed, controlled and
every fifteen days. supervised their employment. They averred further that they were
entitled to separation pay based on their latest daily earnings of
Due to the phase-out of the US military bases in the Philippines,
US$15.00 for working sixteen (16) days a month.
from which Clark Air Base was not spared, the AAFES was dissolved,
and the services of individual respondents were officially terminated In their position paper submitted to the labor arbiter, herein
on November 26, 1991. petitioners claimed that the cessation of business of CFTI on
November 26, 1991, was due to "great financial losses and lost
The AAFES Taxi Drivers Association ("drivers' union"), through its
business opportunity" resulting from the phase-out of Clark Air Base
local president, Eduardo Castillo, and CFTI held negotiations as
brought about by the Mt. Pinatubo eruption and the expiration of the of the debt. The complainants who are the creditors in this instance
RP-US military bases agreement. They admitted that CFTI had can be compelled to accept the Philippine peso which is the legal
agreed with the drivers' union, through its President Eduardo Castillo tender, in which case, the table of conversion (exchange rate) at the
who claimed to have had blanket authority to negotiate with CFTI in time of payment or satisfaction of the judgment should be used.
behalf of union members, to grant its taxi driver-employees However, since the choice is left to the debtor, (respondents) they
separation pay equivalent to P500.00 for every year of service. may choose to pay in US dollar.' (Phoenix Assurance Co. vs.
Macondray & Co. Inc., L-25048, May 13, 1975)
The labor arbiter, finding the individual complainants to be regular
workers of CFTI, ordered the latter to pay them P1,200.00 for every In discharging the above obligations, Sergio F. Naguiat Enterprises,
year of service "for humanitarian consideration," setting aside the which is headed by Sergio F. Naguiat and Antolin Naguiat, father and
earlier agreement between CFTI and the drivers' union of P500.00 son at the same time the President and Vice-President and General
for every year of service. The labor arbiter rejected the allegation of Manager, respectively, should be joined as indispensable party
CFTI that it was forced to close business due to "great financial whose liability is joint and several. (Sec. 7, Rule 3, Rules of
losses and lost business opportunity" since, at the time it ceased Court)"[8]
operations, CFTI was profitably earning and the cessation of its
business was due to the untimely closure of Clark Air Base. As mentioned earlier, the motion for reconsideration of herein
petitioners was denied by the NLRC. Hence, this petition with prayer
In not awarding separation pay in accordance with the Labor Code, for issuance of a temporary restraining order. Upon posting by the
the labor-arbiter explained: "To allow respondents exemption from petitioners of a surety bond, a temporary restraining order[9] was
its (sic) obligation to pay separation pay would be inhuman to issued by this Court enjoining execution of the assailed Resolutions.
complainants but to impose a monetary obligation to an employer
whose profitable business was abruptly shot (sic) down by force Issues:
majeure would be unfair and unjust to say the least."and thus,
"I. Whether or not public respondent NLRC (3rd Div.) committed
simply awarded an amount for "humanitarian consideration."
grave abuse of discretion amounting to lack of jurisdiction in issuing
Herein individual private respondents appealed to the NLRC. In its the appealed resolution;
Resolution, the NLRC modified the decision of the labor arbiter by
II. Whether or not Messrs. Teofilo Rafols and Romeo N. Lopez could
granting separation pay to the private respondents. The concluding
validly represent herein private respondents; and,
paragraphs of the NLRC Resolution read: "The contention of
complainant is partly correct. One-half month salary should be III. Whether or not the resolution issued by public respondent is
US$120.00 but this amount can not be paid to the complainant in contrary to law."[10]
U.S. Dollar which is not the legal tender in the Philippines. Paras, in
commenting on Art. 1249 of the New Civil Code, defines legal tender The Court's Ruling
as 'that which a debtor may compel a creditor to accept in payment
First Issue: Amount of Separation Pay Private respondents, like petitioners, are bound by the factual
findings of Respondent Commission.
Firmly, we reiterate the rule that in a petition for certiorari filed
pursuant to Rule 65 of the Rules of Court, which is the only way a Petitioners also claim that the closure of their taxi business was due
labor case may reach the Supreme Court, the petitioner/s must to great financial losses brought about by the eruption of Mt.
clearly show that the NLRC acted without or in excess of jurisdiction Pinatubo which made the roads practically impassable to their
or with grave abuse of discretion.[12] taxicabs. Likewise well-settled is the rule that business losses or
financial reverses, in order to sustain retrenchment of personnel or
Long-standing and well-settled in Philippine jurisprudence is the closure of business and warrant exemption from payment of
judicial dictum that findings of fact of administrative agencies and separation pay, must be proved with clear and satisfactory evidence.
quasi-judicial bodies, which have acquired expertise because their [14] The records, however, are devoid of such evidence.
jurisdiction is confined to specific matters, are generally accorded
not only great respect but even finality; and are binding upon this The labor arbiter; as affirmed by NLRC, correctly found that
Court unless there is a showing of grave abuse of discretion, or petitioners stopped their taxi business within Clark Air Base because
where it is clearly shown that they were arrived at arbitrarily or in of the phase-out of U.S. military presence thereat. It was not due to
disregard of the evidence on record. Nevertheless, this Court any great financial loss because petitioners' taxi business was
carefully perused the records of the instant case if only to determine earning profitably at the time of its closure.
whether public respondent committed grave abuse of discretion,
amounting to lack of jurisdiction, in granting the clamor of private With respect to the amount of separation pay that should be
respondents that their separation pay should be based on the granted, Article 283 of the Labor Code provides:"x x x In case of
amount of $240.00, allegedly their minimum monthly earnings as retrenchment to prevent losses and in cases of closures or cessation
taxi drivers of petitioners. of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be
In their amended complaint before the Regional Arbitration Branch in equivalent to one (1) month pay or at least one-half () month pay
San Fernando, Pampanga, herein private respondents set forth in for every year of service, whichever is higher. A fraction of at least
detail the work schedule and financial arrangement they had with six (6) months shall be considered one (1 ) whole year."
their employer. Therefrom they inferred that their monthly take-
home pay amounted to not less than $240.00. Herein petitioners did Considering the above, we find that NLRC did not commit grave
not bother to refute nor offer any evidence to controvert said abuse of discretion in ruling that individual respondents were entitled
allegations. Remaining undisputed, the labor arbiter adopted such to separation pay[15] in the amount $120.00 (one-half of $240.00
facts in his decision. Petitioners did not even appeal from the monthly pay) or its peso equivalent for every year of service.
decision of the labor arbiter nor manifest any error in his findings
Second Issue: NOWM's Personality to Represent Individual
and conclusions. Thus, petitioners are in estoppel for not having
Respondents-Employees
questioned such facts when they had all opportunity to do so.
On the question of NOWM's authority to represent private not have substantial capital or investment in the form of tools,
respondents, we hold petitioners in estoppel for not having equipment, machinery, and work premises, among others; and (2)
seasonably raised this issue before the labor arbiter or the NLRC. the workers recruited and placed by such person are performing
NOWM was already a party-litigant as the organization representing activities which are directly related to the principal business of the
the taxi driver-complainants before the labor arbiter. But petitioners employer.[21] Independent contractors, meanwhile, are those who
who were party-respondents in said complaint did not assail the exercise independent employment, contracting to do a piece of work
juridical personality of NOWM and the validity of its representations according to their own methods without being subject to control of
in behalf of the complaining taxi drivers before the quasi-judicial their employer except as to the result of their work.[22]
bodies. Therefore, they are now estopped from raising such question
before this Court. In any event, petitioners acknowledged before this From the evidence proffered by both parties, there is no substantial
Court that the taxi drivers allegedly represented by NOWM, are basis to hold that Naguiat Enterprises is an indirect employer of
themselves parties in this case.[16] individual respondents much less a labor only contractor. On the
contrary, petitioners submitted documents such as the drivers'
Third Issue: Liability of Petitioner-Corporations and Their applications for employment with CFTI,[23] and social security
Respective Officers remittances[24] and payroll[25] of Naguiat Enterprises showing that
none of the individual respondents were its employees.
The resolution of this issue involves another factual finding that
Naguiat Enterprises actually managed, supervised and controlled Moreover, in the contract[26] between CFTI and AAFES, the former,
employment terms of the taxi drivers, making it their indirect as concessionaire, agreed to purchase from AAFES for a certain
employer. As adverted to earlier, factual findings of quasi-judicial amount within a specified period a fleet of vehicles to be "ke(pt) on
bodies are binding upon the court in the absence of a showing of the road" by CFTI, pursuant to their concessionaire's contract. This
grave abuse of discretion. indicates that CFTI became the owner of the taxicabs which became
the principal investment and asset of the company.
Unfortunately, the NLRC did not discuss or give any explanation for
holding Naguiat Enterprises and its officers jointly and severally Private respondents failed to substantiate their claim that Naguiat
liable in discharging CFTI's liability for payment of separation pay. Enterprises managed, supervised and controlled their employment. It
We again remind those concerned that decisions, however concisely appears that they were confused on the personalities of Sergio F.
written, must distinctly and clearly set forth the facts and law upon Naguiat as an individual who was the president of CFTI, and Sergio
which they are based.[17] This rule applies as well to dispositions by F. Naguiat Enterprises, Inc., as a separate corporate entity with a
quasi-judicial and administrative bodies. separate business. They presumed that Sergio F. Naguiat, who was
at the same time a stockholder and director[27] of Sergio F. Naguiat
Naguiat Enterprises Not Liable Enterprises, Inc., was managing and controlling the taxi business on
behalf of the latter. A closer scrutiny and analysis of the records,
We find no reason to make a contrary finding. Labor-only contracting
however, evince the truth of the matter: that Sergio F. Naguiat, in
exists where: (1) the person supplying workers to an employer does
supervising the-taxi drivers and determining their employment the employer to grant separation pay to employees in case of
terms, was rather carrying out his responsibilities as president of closure or cessation of operations of establishment or undertaking
CFTI. Hence, Naguiat Enterprises as a separate corporation does not not due to serious business losses or financial reverses, which is the
appear to be involved at all in the taxi business. condition obtaining at bar. CFTI failed to comply with this law-
imposed duty or obligation. Consequently, its stockholder who was
CFTI president solidarily liable actively engaged in the management or operation of the business
should be held personally liable.
Petitioner-corporations would likewise want to avoid the solidary
liability of their officers. To bolster their position, Sergio F. Naguiat In fact, in posting the surety bond required by this Court for the
and Antolin T. Naguiat specifically aver that they were denied due issuance of a temporary restraining order enjoining the execution of
process since they were not parties to the complaint below.[32] In the assailed NLRC Resolutions, only Sergio F. Naguiat, in his
the broader interest of justice, we, however, hold that Sergio F. individual and personal capacity, principally bound himself to comply
Naguiat, in his capacity as president of CFTI, cannot be exonerated with the obligation thereunder, i.e., "to guarantee the payment to
from joint and several liability in the payment of separation pay to private respondents of any damages which they may incur by reason
individual respondents. of the issuance of a temporary restraining order sought, if it should
be finally adjudged that said principals were not entitled
Sergio F. Naguiat, admittedly, was the president of CFTI who
thereto."[38]
actively managed the business. Thus, applying the ruling in A. C.
Ransom, he falls within the meaning of an "employer" as The Court here finds no application to the rule that a corporate
contemplated by the Labor Code, who may be held jointly and officer cannot be held solidarily liable with a corporation in the
severally liable for the obligations of the corporation to its dismissed absence of evidence that he had acted in bad faith or with malice.
employees. [39] In the present case, Sergio Naguiat is held solidarily liable for
corporate tort because he had actively engaged in the management
Moreover, petitioners also conceded that both CFTI and Naguiat
and operation of CFTI, a close corporation.
Enterprises were "close family corporations"[34] owned by the
Naguiat family. Antolin Naguiat not personally liable
Nothing in the records show whether CFTI obtained "reasonably Antolin T. Naguiat was the vice president of the CFTI. Although he
adequate liability insurance;" thus, what remains is to determine carried the title of "general manager" as well, it had not been shown
whether there was corporate tort. that he had acted in such capacity. Furthermore, no evidence on the
extent of his participation in the management or operation of the
Our jurisprudence is wanting as to the definite scope of "corporate
business was proffered. In this light, he cannot be held solidarily
tort." Essentially, "tort" consists in the violation of a right given or
liable for the obligations of CFTI and Sergio Naguiat to the private
the omission of a duty imposed by law.[35] Simply stated, tort is a
respondents.
breach of a legal duty.[36] Article 283 of the Labor Code mandates
Fourth Issue: No Denial of Due Process SO ORDERED. Narvasa, C.J., (Chairman), Davide, Jr., Melo, and
Francisco, JJ., concur.
Lastly, in petitioners' Supplement to their original petition, they assail
the NLRC Resolution holding Sergio F. Naguiat and Antolin T.
Naguiat jointly and severally liable with petitioner-corporations in the
payment of separation pay, averring denial of due process since the
individual Naguiats were not impleaded as parties to the complaint.
We advert to the case of A.C. Ransom once more. The officers of the
corporation were not parties to the case when the judgment in favor
of the employees was rendered. The corporate officers raised this
issue when the labor arbiter granted the motion of the employees to
enforce the judgment against them. In spite of this, the Court held
the corporation president solidarily liable with the corporation.