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NAGUIAT v NLRC therefore liable with CFTI)

-They also alleged that CFTI closed business due to great financial losses and lost business
opportunity (roads impassable due to Mt. Pinatubo eruption; lost business due to phase out of
US bases), hence they should be entitled to half month salary for every year of service
G.R. No: 116123
rendered as separation pay (or $120 every month, based on the $240 which is the minimum
Petitioner/s: Sergio Naguiat, doing business under Naguiat Enterprises; Clark Field Taxi
monthly earnings as taxi driver of CFTI)
Respondent/s: National Labor Relations Commission (NLRC), National Organization of
Workigmen and its members; Leonardo Galang 5. Labor Arbiter: ordered payment of P1,200 ($120 x5) for every year of service for
Ponente: J. Panganiban humanitarian consideration. Galang appealed to the NLRC.
Action: Petition for certiorari
Date: March 13, 1997 6. NLRC: ruled 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.

7. Their MR being denied, hence this petition by Naguiat.


1. Clark Field Taxi Inc., a family-owned corporation (by the family of Sergio Naguiat; they also
own another company, Naguiat Enterprises), held a concessionaires contract with the Army ISSUE 1
Air Force Exchange Services (AAFES) for the operation of taxi services within Clark Air Base.
-Leonardo Galang were among those hired as taxicab drivers. WON private respondent-employees (Galang, who were separated from service due to
-They worked at least 3-4 times a week, and are required to pay boundary fee of US$26.50 (if the closure of Clark Air Base, entitled to separation pay -- YES
woking from 1AM to 12NN) or US$27 (if working from 12NN to 12MN).
-They earned US$15.00 daily. The excess of that amouont is deposited to the company,
which they can withdraw every 15 days. 1. Naguiat failed to show that NLRC acted without or in excess of its jurisdiction or with grave
abuse of discretion. It is well-settled in Philippine jurisprudence that the finding of facts of
2. Due to the phase out of the US military bases in the Philippines, AAFES was dissolved and
administrative agencies are binding upon this Court unless there is a showing of grave abuse
the services of the taxicab drivers were terminated.
of discretion.
3. AAFES Taxi Drivers Association (union) held a negotiation with CFTI for their separation
2. Naguiat also failed to prove with clear and satisfactory evidence CFTIs business losses or
benefits. It was agreed that they will receive P500 for every year of service as severance pay.
financial reverses so as to sustain retrenchment or closure of business and warrant exemption
Galang, however, refused to accept the said amount.
of separation pay. Further, Naguiat is also estopped from questioning the amount of $240 as
4. Galang disaffiliated themselves from the union and instead joined the National basis for the computation of separation pay as he did not appeal nor manifest error in the
Organization of Workingmen. They filed a complaint against Naguiat Enterprises, AAFES, and findings and conclusions of the labor arbiter.
the union, for payment of separation pay due to termination/phase out.
3. NLRC is correct in holding that the respondent-employees were entitled to separation pay
-They alleged that they were regular employees of the Naguiat Enterprises, although it was
in the amount of $120.00 (one half of $240.00 monthly pay) or its peso equivalent for every
CFTI who approved and supervised their employment (Naguiat as their indirect employer,
year of service.
duties to each other and among themselves. Said stockholders shall be personally liable for
corporate torts unless the corporation has obtained reasonably adequate liability insurance."
5. However, Antolin Naguiat, as the VP of CFTI, cannot be held liable. Although he was the
WON officers of corporations are ipso facto liable jointly and severally with the companies general manager, it was not shown that he acted in such capacity. There was no evidence on
they represent for the payment of separation pay -- YES the extent of his participation in the management or operation of the business.


1. NAGUIAT ENTERPRISES NOT SOLIDARILY LIABLE. The findings of the labor arbiter, Petition partly granted. CFTI and Sergio Naguiat, as president and co-owner thereof, are
which is binding in this court, is that the respondents were regular employees of CFTI who jointly and severally liable to pay the respondents the separation pay computed at US$120 for
received wages on a boundary or commission basis. There is no evidence to show that every year of service. Sergio Naguiat Enterprises and Antolin Naguiat are absolved from
Naguiat Enterprises is an indirect employer nor a labor-only contractor of the drivers. liability on the other hand.
-They submitted documents such as drivers applications for employment with CFTI
-SSS remittances and payroll of Naguiat Enterprises show that none of them were its NOTES

2. The drivers claims only signify their confusion on the personalities of Sergio Naguiat as an
individual who was president of CFTI, and Sergio Naguiat Enterprises, as a separate
corporate entity with a separate business. The truth of the matter is, Sergio Naguiat, in
supervising the taxi drivers and determining their employment terms, was rather carrying out
his responsibilities as president of CFTI. Naguiat Enterprises as a separate corporation does
not appear to be involved at all (although Sergio Naguiat is also a stockholder and the director
of said firm).

3. BUT, CFTI PRESIDENT SOLIDARILY LIABLE. 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.

4.Moreover, there is a corporate tort in this case. Tort is a breach of a legal duty: the
violation of a right given or the omission of a duty imposed by law. In this case, because CFTI
failed to comply with the law-immposed 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