Case Summary (G.R. No. 116123)
Key Dates
- Termination of services: November 26, 1991
- Labor Arbiter decision: June 4, 1993
- NLRC Resolutions: February 28 and May 31, 1994
- Supreme Court decision: March 13, 1997
Applicable Law
- 1987 Philippine Constitution
- Labor Code of the Philippines (Art. 106, 107, 109, 283)
- Corporation Code (Sec. 100, Title XII on Close Corporations)
- Rules of Court, Rule 65 (Certiorari)
Factual Background
CFTI contracted with AAFES to operate taxis within Clark Air Base. Drivers paid daily “boundary fees” (US$26.50–27.00) and covered incidental vehicle expenses. They earned at least US$15 per day and deposited excess earnings bi-monthly. With the US military base phase-out, AAFES dissolved and driver services ended. A driver union agreement provided P500 per year of service, which most accepted. A group of drivers, disaffiliating from that union and joining NOWM, filed for separation pay based on alleged monthly earnings of US$240.
Proceedings Below
The Labor Arbiter found the drivers to be regular employees of CFTI, rejected CFTI’s force-majeure defense, and awarded P1,200 per year of service on humanitarian grounds. The NLRC modified the award to separation pay equal to half-month salary (US$120) per year or peso equivalent and held Sergio F. Naguiat Enterprises and its officers jointly and severally liable with CFTI. Petitioners filed a Rule 65 certiorari before the Supreme Court.
Issues Presented
- Whether the NLRC gravely abused discretion in increasing separation pay to US$120 per year of service.
- Whether NOWM validly represented the drivers.
- Whether Sergio F. Naguiat Enterprises, Inc., and its officers are jointly and severally liable for separation pay.
- Whether petitioners’ officers were denied due process by not being impleaded.
Ruling on Separation Pay
- Findings of fact by quasi-judicial bodies are binding absent grave abuse of discretion.
- Petitioners failed to contest the drivers’ earning allegations and are estopped from challenging them.
- No satisfactory proof of serious business losses; closure resulted from Base phase-out.
- Under Labor Code Art. 283, separation pay in closures not due to financial reverses is at least one-half month’s pay per year of service. Award of US$120 per year or peso equivalent is proper.
Authority of NOWM to Represent Drivers
- Petitioners did not challenge NOWM’s standing before the Labor Arbiter or NLRC and are estopped from raising the issue on certiorari.
- NOWM was already a party-litigant representing the drivers below.
Liability of Corporations and Officers
- Sergio F. Naguiat Enterprises was not an indirect employer or labor-only contractor; CFTI was the direct and sole employer of the drivers.
- Article 212(c) of the Labor Code and Sec. 100(5) of the Corporation Code impose personal liability on officers of close corporations actively managing the business.
- By A.C. Ransom precedent, the president of a corporation may be held jointly liable for labor obligations.
- Sergio F. Naguiat, as actively managing president of CFTI, is jointly and severally liable for separation pay.
- Antolin T. Naguia
Case Syllabus (G.R. No. 116123)
Facts
- Clark Field Taxi, Inc. (CFTI) held a concessionaire’s contract with the Army Air Force Exchange Services (AAFES) to operate taxi services within Clark Air Base
- Sergio F. Naguiat served as CFTI’s president; Antolin T. Naguiat was vice-president and general manager
- Individual respondents were taxi drivers paid on a “boundary fee” basis: US$26.50 per day (1 a.m.–12 noon) or US$27.00 per day (12 noon–12 midnight)
- All vehicle maintenance costs and gasoline expenses were deducted from drivers’ earnings
- Drivers worked three to four days weekly, earning at least US$15.00 daily, with excess earnings deposited and withdrawn bi-monthly
- Clark Air Base closed on November 26, 1991, due to the phase-out of U.S. military bases; AAFES was dissolved and drivers’ services terminated
- Drivers’ union (AAFES Taxi Drivers Association) negotiated a P500.00 per year severance pay; most accepted but individual respondents refused
- Individual respondents disaffiliated from the drivers’ union, joined the National Organization of Workingmen (NOWM), and filed a complaint for separation pay
Procedural History
- Complaint filed before Labor Arbiter Ariel C. Santos; amended to add CFTI, Naguiat Enterprises, Antolin T. Naguiat and other parties
- June 4, 1993: Labor Arbiter ordered CFTI to pay P1,200.00 per year of service “for humanitarian consideration,” rejecting P500.00 agreement
- February 28, 1994: NLRC (Third Division) affirmed with modifications, granting separation pay of US$120.00 per year or peso equivalent and joining Naguiat Enterprises and the Naguiats as jointly and severally liable
- May 31, 1994: NLRC denied petitioners’ motion for reconsideration
- Petitioners filed a Rule 65 certiorari petition before the Supreme Court; a temporary restraining order was issued
Issues Presented
- Entitlement of separated drivers to separation pay and correct amount
- Whether corporate officers (the Naguiats) are jointly and severally liable for separation pay
- Authority of NOWM to represent individual respondents instead of the original drivers’ union
- Alleged denial of due process and non-receipt of copies of respondents’ NLRC appeal
Labor Arbiter’s Decision
- Found individual respondents to be regular employees of CFTI, paid on a boundary/commission basis
- Rejected CFTI’s claim of closure due to financial losses and held business ceased because of base shutdown
- Declined to apply Labor Code separation pay formula; awarded P1,200.00 per year as “humanitarian consideration”
NLRC Resolutions
- Calculated sep