Naguiat v. NLRC

Naguiat v. NLRC (1997) / Panganiban

Facts

CFTI [Sergio as President; Antolin as VP] held a concessionaire's contract with AAFES for the operation of taxi services in Clark Air Base. Respondents were previously employed by CFTI as taxi drivers. However, AAFES was dissolved as a result of the US military bases phase-out. During the negotiations between AAFES Taxi Drivers Association and CFTI re: separation benefits, it was agreed that separated drivers will be given P500/year of service. Other drivers accepted the amount, but respondents refused to accept it. 

          The respondents, through NOWM, filed a complaint against S. Naguiat (NE), AAFES, and AAFES TDA. They alleged that they were hired by CFTI and then assigned to NE which managed, controlled, and supervised their employment. They averred that they were entitled to separation pay based on their earnings of $15 for working 16 days/month. CFTI's defense that the cessation of business was due to financial losses and lost business opportunity.

     Labor Arbiter ruled in favor of the respondents, ordering CFTI to pay respondents P1,200/year of service for humanitarian consideration. NLRC affirmed LA's decision with modification by granting separation pay $120/year of service, and held that Naguiat Enterprises, S. Naguiat, and A. Naguiat are jointly and severally liable with CFTI. NLRC issued a second resolution denying the MfR of the petitioners.

Issues and Holding

1. Amount of separation pay
   1. Labor Arbiter correctly found that CFTI stopped the taxi business because of the phase-out of the US military bases, and NOT due to great financial loss as the business was earning profitably at the time of closure.
   2. LC 283: separation pay = 1 month pay or at least 1/2 month pay/year of service, whichever is higher
   3. NLRC did not commit GAD in ruling that respondents were entitled to separation pay of $120 (half of $240 monthly pay) per year of service
2. Liability of NE, CFTI and officers
3. NE not liable
   1. LA found that respondents were employees of CFTI as they received salary from said office, etc. (upheld by SC)
   2. S. Naguiat was presumed to be managing and controlling taxi business on behalf of NE; S. Naguiat, in supervising taxi drivers, was carrying out his responsibilities as CFTI
   3. NE is a separate corporation completely (trading business); it is neither respondents' indirect employer nor labor-only contractor
   4. Constitution of CFTI-AAFES TDA provided that members are CFTI employees and that for collective bargaining purposes, the definite employer is CFTI
4. CFTI president solidarily liable [S. Naguiat]
   1. A.C. Ransom Labor Union-CCLU v. NLRC - family-owned corporation filed application for clearance to cease operations. Backwages were computed; however, none of the motions for execution could be implemented for failure to find leviable assets. LA granted union's prayer that officers and agents be personally held liable for payment of backwages. NLRC however said that officers of a corporation are not personally liable for official acts unless they exceeded scope of authority. SC however reversed NLRC and upheld LA, saying that if the policy of the law were otherwise, the employer can have ways for evading payment of backwages.
   2. Employer - any person acting in the interest of an employer, directly or indirectly (LC 212c)
   3. Applying the ruling on A.C. Ransom, S. Naguiat falls within the meaning of "employer" who may be held jointly and severally liable for the obligations of the corporation to the dismissed employees
   4. Both CFTI and NE were close family corporations (Corp. Code Sec. 100, par. 5) [To the extent that the stockholders are actively engaged 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]
   5. cf. MAM Realty Development v. NLRC: director / officer may still be held solidarily liable with a corporation by a specific provision of law
      1. WON there was corporate tort. YES
      2. TORT - violation of a right given or the omission of a duty imposed by law; breach of legal duty
   6. S. Naguiat is solidarily liable for corporate tort because he actively engaged in CFTI's management or operation
5. CFTI VP not personally liable [A. Naguiat]
   1. Was not shown that he acted in the capacity of a GM
   2. No evidence on the extent of his participation in the management, operation of business
6. NOWM's personality to represent respondents
   1. Petitioners held in estoppel for not raising issue before LA or NLRC
7. No denial of due process since the Naguiats availed of the chance to present positions before LA