Commercial Law

Sergio Naguiat vs National Labor Relations Commission

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G.R. No. 116123 – 269 SCRA 564 – Mercantile Law – Business Organization – Corporation Law – Close Corporation – Liability for Tort

Sergio Naguiat was the president of Clark Field Taxi, Inc. (CFTI) which supplied taxi services to Clark Air Base. At the same time, Naguiat was a director of the Sergio F. Naguiat Enterprises, Inc. (SFNEI), their family-owned corporation along with CFTI.

In 1991, CFTI had to close due to “great financial losses and lost business opportunity” resulting from the phase-out of Clark Air Base brought about by the Mt. Pinatubo eruption and the expiration of the RP-US military bases agreement.

CFTI then came up with an agreement with the drivers that the latter be entitled to a separation pay in the amount of P500.00 per every year of service. Most of the drivers accepted this but some drivers did not. The drivers who refused to accept the separation pay offered by CFTI instead sued the latter before the labor arbiter.

The labor arbiter ruled in favor of the taxi drivers. The National Labor Relations Commission affirmed the labor arbiter. It was established that when CFTI closed, it was in profitable standing and was not incurring losses. It ruled that the drivers are entitled to $120.00 (or its peso equivalent) per every year of service subject to exchange rates prevailing that time.

The NLRC likewise ruled that SFNEI as well as CFTI’s president and vice president Sergio Naguiat and Antolin Naguiat should be held jointly and severally liable to pay the drivers. The NLRC ruled that SFNEI actively managed CFTI and its business affairs hence it acted as the employer of the drivers.

ISSUE: Whether or not the ruling of the NLRC is correct.

HELD: It is only partially correct.

  1. NLRC is correct when it ruled that Sergio Naguiat is jointly and severally liable to pay the drivers the award of separation pay in the amount so determined. As president of CFTI, Sergio Naguiat is considered an “employer” of the dismissed employees who is therefore liable for the obligations of the corporation to its dismissed employees. Moreover, CFTI, being a close family corporation, is liable for corporate torts and stockholders thereof shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance (par. 5, Section 100, “Close Corporations”, Corporation Code). Antolin Naguiat is absolved because there was insufficient evidence as against him.
  2. SFNEI  is not liable jointly or severally with CFTI. SFNEI has nothing to do with CFTI. There is no sufficient evidence to prove that it actively managed CFTI especially so when even the drivers testified that their employer is CFTI and that their payroll comes from CFTI. Further, SFNEI was into trading business while CFTI was into taxi services.

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