Sergio F. Naguiat, doing business under the name and style Sergio F. Naguiat Ent., Inc. & Clark Field Taxi, Inc. vs. National Labor Relations Commission (Third Division), National Organization of Workingmen and its Members, Leonardo T. Galang, et. al.
G.R. No. 116123, March 13, 1997
269 SCRA 564
336 Phil. 545
FACTS:
Clark Field Taxi, Inc. (CFTI) held a concessionaire contract within the Clark Air Base. Its President and Vice-President were Sergio F. Naguiat and Antolin Naguiat, respectively. They also owned Sergio F. Naguiat Enterprises, Inc, a trading business. These two corporations are family-owned. The President, Sergio F. Naguiat supervised and determined the employment terms of the drivers of their taxi business while no evidence was offered on the extent of his son, Antolin Naguiat’s participation in the management or operation of the business. They stopped their taxi business due to the expiration of the RP-US military bases agreement which resulted to the phasing out of Clark Air Base. The employees of CFTI who were separated from service because of the closure of Clark Air Base filed an action for the payment of their separation pay.
ISSUE:
Are officers of corporations ipso facto liable jointly and severally with the companies they represent for the settlement of its corporate obligations?
RULING:
No. In case of close corporations, not all are personally liable but only those who were actively engaged in the management or operation of the business. Section 100 paragraph 5 of the Corporation Code states that the stockholders shall be held to strict fiduciary duties to each other and among themselves to the extent that the stockholders are actively engaged in the management or operation of the business and affairs of a close corporation. Said stockholders shall be personally liable for corporate torts unless the corporation had obtained reasonably adequate liability insurance. Therefore, the President who had actively engaged in the management and operation of CFTI is held solidarily liable however, the Vice-President in the absence of evidence on the extent of his participation in the operation of the business cannot be held solidarily liable.
The rule that a corporate officer cannot be held solidarily with a corporation in the absence of evidence that he had acted in bad faith or with malice is not applicable in this case.
NOTES:
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 labor case may reach the Supreme Court, the petitioner/s must clearly show that the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion.
Administrative Law
Long-standing and well-settled in Philippine jurisprudence is the judicial dictum 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 great respect but even finality; and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record.
Evidence; Estoppel
In their amended complaint before the Regional Arbitration Branch in San Fernando, Pampanga, herein private respondents set forth in detail the work schedule and financial arrangement they had with their employer. Therefrom they inferred that their monthly take-home pay amounted to not less than $240.00. Herein petitioners did not bother to refute nor offer any evidence to controvert said allegations. Remaining undisputed, the labor arbiter adopted such facts in his decision. Petitioners did not even appeal from the decision of the labor arbiter nor manifest any error in his findings and conclusions. Thus, petitioners are in estoppel for not having questioned such facts when they had all opportunity to do so. Private respondents, like petitioners, are bound by the factual findings of Respondent Commission.
Business Losses
Petitioners also claim that the closure of their taxi business was due to great financial losses brought about by the eruption of Mt. Pinatubo which made the roads practically impassable to their taxicabs. Likewise well-settled is the rule that business losses or financial reverses, in order to sustain retrenchment of personnel or closure of business and warrant exemption from payment of separation pay, must be proved with clear and satisfactory evidence. The records, however, are devoid of such evidence.
Estoppel
On the question of NOWM’s authority to represent private respondents, we hold petitioners in estoppel for not having seasonably raised this issue before the labor arbiter or the NLRC. NOWM was already a party-litigant as the organization representing the taxi driver-complainants before the labor arbiter. But petitioners who were party-respondents in said complaint did not assail the juridical personality of NOWM and the validity of its representations in behalf of the complaining taxi drivers before the quasi-judicial bodies. Therefore, they are now estopped from raising such question before this Court. In any event, petitioners acknowledged before this Court that the taxi drivers allegedly represented by NOWM, are themselves parties in this case.
Administrative Law
Unfortunately, the NLRC did not discuss or give any explanation for holding Naguiat Enterprises and its officers jointly and severally liable in discharging CFTI’s liability for payment of separation pay. We again remind those concerned that decisions, however concisely written, must distinctly and clearly set forth the facts and law upon which they are based.This rule applies as well to dispositions by quasi-judicial and administrative bodies.
Labor-only contracting and Independent contractors, explained
We find no reason to make a contrary finding. Labor-only contracting exists where: (1) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machinery, and work premises, among others; and (2) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. Independent contractors, meanwhile, are those who exercise independent employment, contracting to do a piece of work according to their own methods without being subject to control of their employer except as to the result of their work.
Corporation Law
Sergio F. Naguiat, admittedly, was the president of CFTI who actively managed the business. Thus, applying the ruling in A. C. Ransom, 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.
Close Family Corporations
Moreover, petitioners also conceded that both CFTI and Naguiat Enterprises were “close family corporations” owned by the Naguiat family. Section 100, paragraph 5, (under Title XII on Close Corporations) of the Corporation Code, states:
“(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. Said stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance.”
Corporate Torts
Our jurisprudence is wanting as to the definite scope of “corporate tort.” Essentially, “tort” consists in the violation of a right given or the omission of a duty imposed by law.[35] Simply stated, tort is a breach of a legal duty.[36] Article 283 of the Labor Code mandates the employer to grant separation pay to employees in case of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, which is the condition obtaining at bar. CFTI failed to comply with this law-imposed duty or obligation. Consequently, its stockholder who was actively engaged in the management or operation of the business should be held personally liable.
Due Process
Furthermore, Sergio and Antolin Naguiat voluntarily submitted themselves to the jurisdiction of the labor arbiter when they, in their individual capacities, filed a position paper together with CFTI, before the arbiter. They cannot now claim to have been denied due process since they availed of the opportunity to present their positions.
Myline Cordial 
Leave a comment