TOPIC: DEFINITION OF TORT UNDER PH LAW humanitarian consideration”(they weren’t granted separation pay, to do so would

be unjust to the employer whose business was brought down by force majeure).
Thus, respondents appealed to the NLRC. In its Resolution, the NLRC modified the
decision of the labor arbiter by granting separation pay to the private respondents.
In discharging the above obligations, Sergio F. Naguiat Enterprises should be joined
NAGUIAT V. NLRC
as indispensable party whose liability is joint and several.
● Petitioners submitted additional issues by way of supplement, the pertinent issue
G.R. No. 116123 being Naguiat Enterprises, Inc. is a separate and distinct juridical entity which
March 13, 1997 cannot be held jointly and severally liable for the obligations of CFTI. And similarly,
Petitioners: SERGIO F. NAGUIAT, doing business under the name and style SERGIO F. Sergio F. Naguiat and Antolin Naguiat were merely officers and stockholders of CFTI
NAGUIAT ENT., INC., & CLARK FIELD TAXI, INC. and, thus, could not be held personally accountable for corporate debts.
Respondents: NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), NATIONAL
ORGANIZATION OF WORKINGMEN and its members, LEONARDO T. GALANG, Et Al. ISSUE: W/N Sergio Naguiat is solidarily liable.
Ponente: PANGANIBAN, J
DOCTRINE: Essentially, "tort" consists in the violation of a right given or the omission of a HELD: YES
duty imposed by law. Simply stated, tort is a breach of a legal duty.
Sergio F. Naguiat, in his capacity as president of CFTI, cannot be exonerated from joint and
FACTS: several liability in the payment of separation pay to individual respondents. The Labor Code
● Petitioner CFTI held a concessionaire’s contract with the Army Air Force Exchange provides that an ‘Employer’ includes any person acting in the interest of an employer,
Services ("AAFES") for the operation of taxi services within Clark Air Base. Sergio F. directly or indirectly. The term shall not include any labor organization or any of its officers or
Naguiat was CFTI’s president, while Antolin T. Naguiat was its vice-president. Like agents except when acting as employer. As a corporation is an artificial person, it must have
Sergio F. Naguiat Enterprises, Incorporated ("Naguiat Enterprises" or “NE”), a an officer who can be presumed to be the employer, being the ‘person acting in the interest
trading firm, it was a family-owned corporation. Respondents were previously of the ‘employer corporation’. The corporation, only in the technical sense, is the employer.
employed by CFTI as taxicab drivers. The responsible officer of an employer corporation can be held personally liable.
● Due to the phase-out of the US military bases in the Philippines, the AAFES was
dissolved, and the services of individual respondents were officially terminated. Sergio F. Naguiat, admittedly, was the president of CFTI who actively managed the business.
Thus, the AAFES Taxi Drivers Association ("drivers’ union") and CFTI held Thus, he falls under the definition of the word ‘employer’. Petitioners conceded that CFTI and
negotiations as regards separation benefits that should be awarded in favor of the NE were close family corporations. According to the Corp Code, stockholders of close family
drivers. The parties agreed that the separated drivers will be given severance pay. corporations shall be personally liable for corporate torts. Essentially, "tort" consists in the
Most of the drivers accepted said amount, but the respondents herein refused to violation of a right given or the omission of a duty imposed by law. Simply stated, tort is a
accept theirs. breach of a legal duty. The Labor Code mandates the employer to grant separation pay to
● The respondents, after disaffiliating themselves from the driver’s union and joining employees in case of closure or cessation of operations of establishment or undertaking not
a new labor organization (National Organization of Workingmen or “NOWM”), filed due to serious business losses or financial reverses, which is the condition obtaining at bar.
a complaint against the petitioners for payment of separation pay due to CFTI failed to comply with this law-imposed duty or obligation. Consequently, its stockholder
termination/phase-out. The respondents alleged that they were regular employees who was actively engaged in the management or operation of the business should be held
of Naguiat Enterprises, although their individual applications for employment were personally liable. In the present case, Sergio Naguiat is held solidarily liable for corporate tort
approved by CFTI. They claimed to have been assigned to Naguiat Enterprises after because he had actively engaged in the management and operation of CFTI, a close
having been hired by CFTI, and that the former managed, controlled, and corporation.
supervised their employment; that they were entitled to separation pay. On the
other hand, petitioners claimed that the cessation of business of CFTI was due to WHEREFORE, the foregoing premises considered, the petition is PARTLY GRANTED. The
"great financial losses and lost business opportunity" resulting from the phase-out assailed February 28, 1994 Resolution of the NLRC is hereby MODIFIED as follows:
of Clark Air Base brought about by the Mt. Pinatubo eruption and the expiration of
the RP-US military bases agreement. (1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat, president and co-
● The labor arbiter, finding the individual complainants to be regular workers of CFTI, owner thereof, are ORDERED to pay, jointly and severally, the individual respondents their
ordered the latter to pay them P1,200.00 for every year of service "for
separation pay computed at US$120.00 for every year of service, or its peso equivalent at the The following facts are derived from the records of the case:
time of payment or satisfaction of the judgment;
Petitioner CFTI held a concessionaire's contract with the Army Air Force
XXX
Exchange Services ("AAFES") for the operation of taxi services within
Clark Air Base. Sergio F. Naguiat was CFTI's president, while Antolin T.
Naguiat was its vice-president. Like Sergio F. Naguiat Enterprises,
Incorporated ("Naguiat Enterprises"), a trading firm, it was a family-owned
G.R. No. 116123 March 13, 1997 corporation.

SERGIO F. NAGUIAT, doing business under the name and style Individual respondents were previously employed by CFTI as taxicab
SERGIO F. NAGUIAT ENT., INC., & CLARK FIELD TAXI, drivers. During their employment, they were required to pay a daily
INC., petitioners,  "boundary fee" in the amount of US$26.50 for those working from 1:00
vs. a.m. to 12:00 noon, and US$27.00 for those working from 12:00 noon to
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), 12:00 midnight. All incidental expenses for the maintenance of the
NATIONAL ORGANIZATION OF WORKINGMEN and its members, vehicles they were driving were accounted against them, including
LEONARDO T. GALANG, et al., respondents. gasoline expenses.

PANGANIBAN, J.: The drivers worked at least three to four times a week, depending on the
availability of taxicabs. They earned not less than US$15.00 daily.
Are private respondent-employees of petitioner Clark Field Taxi, Inc.,
who were separated from service due the closure of Clark Air Base, In excess of that amount, however, they were required to make cash
entitled to separation pay and, if so, in what amount? Are officers of deposits to the company, which they could later withdraw every fifteen
corporations ipso facto liable jointly and severally with the companies days.
they represent for the payment of separation pay?
Due to the phase-out of the US military bases in the Philippines, from
These questions are answered by the Court in resolving this petition which Clark Air Base was not spared, the AAFES was dissolved, and the
for certiorari under Rule 65 of the Rules of Court assailing the services of individual respondents were officially terminated on
Resolutions of the National Labor Relations Commission (Third November 26, 1991.
Division)   promulgated on February 28, 1994,  and May 31, 1994.  The
1 2 3

February 28, 1994 Resolution affirmed with modifications the decision of 4

The AAFES Taxi Drivers Association ("drivers' union"), through its local
Labor Arbiter Ariel C. Santos in NLRC Case No. RAB-III-12-2477-91. The
president, Eduardo Castillo, and CFTI held negotiations as regards
second Resolution denied the motion for reconsideration of herein
separation benefits that should be awarded in favor of the drivers. They
petitioners.
arrived at an agreement that the separated drivers will be given P500.00
for every year of service as severance pay. Most of the drivers accepted
The NLRC modified the decision of the labor arbiter by granting said amount in December 1991 and January 1992. However, individual
separation pay to herein individual respondents in the increased amount respondents herein refused to accept theirs.
of US$120.00 for every year of service or its peso equivalent, and holding
Sergio F. Naguiat Enterprises, Inc., Sergio F. Naguiat and Antolin T.
Instead, after disaffiliating themselves from the drivers' union, individual
Naguiat, jointly and severally liable with Clark Field Taxi, Inc. ("CFTI").
respondents, through the National Organization of Workingmen
("NOWM"), a labor organization which they subsequently joined, filed a
The Facts complaint against "Sergio F. Naguiat doing business under the name and
5
style Sergio F. Naguiat Enterprises, Inc., Army-Air Force Exchange but to impose a monetary obligation to an employer
Services (AAFES) with Mark Hooper as Area Service Manager, Pacific whose profitable business was abruptly shot (sic) down
Region, and AAFES Taxi Drivers Association with Eduardo Castillo as by force majeure would be unfair and unjust to say the
President," for payment of separation pay due to termination/phase-out. least.7

Said complaint was later amended  to include additional taxi drivers who
6

were similarly situated as complainants, and CFTI with Antolin T. Naguiat and thus, simply awarded an amount for "humanitarian
as vice president and general manager, as party respondent. consideration."

In their complaint, herein private respondents alleged that they were Herein individual private respondents appealed to the NLRC. In its
regular employees of Naguiat Enterprises, although their individual Resolution, the NLRC modified the decision of the labor arbiter by
applications for employment were approved by CFTI. They claimed to granting separation pay to the private respondents. The concluding
have been assigned to Naguiat Enterprises after having been hired by paragraphs of the NLRC Resolution read:
CFTI, and that the former thence managed, controlled and supervised
their employment. They averred further that they were entitled to The contention of complainant is partly correct. One-half
separation pay based on their latest daily earnings of US$15.00 for month salary should be US$120.00 but this amount can
working sixteen (16) days a month. not be paid to the complainant in U.S. Dollar which is not
the legal tender in the Philippines. Paras, in commenting
In their position paper submitted to the labor arbiter, herein petitioners on Art. 1249 of the New Civil Code, defines legal tender
claimed that the cessation of business of CFTI on November 26, 1991, as "that which a debtor may compel a creditor to accept in
was due to "great financial losses and lost business opportunity" resulting payment of the debt. The complainants who are the
from the phase-out of Clark Air Base brought about by the Mt. Pinatubo creditors in this instance can be compelled to accept the
eruption and the expiration of the RP-US military bases agreement. They Philippine peso which is the legal tender, in which case,
admitted that CFTI had agreed with the drivers' union, through its the table of conversion (exchange rate) at the time of
President Eduardo Castillo who claimed to have had blanket authority to payment or satisfaction of the judgment should be used.
negotiate with CFTI in behalf of union members, to grant its taxi driver- However, since the choice is left to the debtor,
employees separation pay equivalent to P500.00 for every year of (respondents) they may choose to pay in US dollar."
service. (Phoenix Assurance Co. vs. Macondray & Co. Inc., L-
25048, May 13, 1975)
The labor arbiter, finding the individual complainants to be regular
workers of CFTI, ordered the latter to pay them P1,200.00 for every year In discharging the above obligations, Sergio F. Naguiat
of service "for humanitarian consideration," setting aside the earlier Enterprises, which is headed by Sergio F. Naguiat and
agreement between CFTI and the drivers' union of P500.00 for every Antolin Naguiat, father and son at the same time the
year of service. The labor arbiter rejected the allegation of CFTI that it President and Vice-President and General Manager,
was forced to close business due to "great financial losses and lost respectively, should be joined as indispensable party
business opportunity" since, at the time it ceased operations, CFTI was whose liability is joint and several. (Sec. 7, Rule 3, Rules
profitably earning and the cessation of its business was due to the of Court) 8

untimely closure of Clark Air Base. In not awarding separation pay in

accordance with the Labor Code, the labor arbiter explained: As mentioned earlier, the motion for reconsideration of herein petitioners
was denied by the NLRC. Hence, this petition with prayer for issuance of
To allow respondents exemption from its (sic) obligation a temporary restraining order. Upon posting by the petitioners of a surety
to pay separation pay would be inhuman to complainants
bond, a temporary restraining order  was issued by this Court enjoining
9
As to the third issue, petitioners incessantly insist that Sergio F. Naguiat
execution of the assailed Resolutions. Enterprises, Inc. is a separate and distinct juridical entity which cannot be
held jointly and severally liable for the obligations of CFTI. And similarly,
Issues Sergio F. Naguiat and Antolin Naguiat were merely officers and
stockholders of CFTI and, thus, could not be held personally accountable
The petitioners raise the following issues before this Court for resolution: for corporate debts.

I. Whether or not public respondent NLRC (3rd Div.) Lastly, Sergio and Antolin Naguiat assail the Resolution of NLRC holding
committed grave abuse of discretion amounting to lack of them solidarily liable despite not having been impleaded as parties to the
jurisdiction in issuing the appealed resolution; complaint.

II. Whether or not Messrs. Teofilo Rafols and Romeo N. Individual respondents filed a comment separate from that of NOWM. In
Lopez could validly represent herein private respondents; sum, both aver that petitioners had the opportunity but failed to refute, the
and, taxi drivers' claim of having an average monthly earning of $240.00; that
individual respondents became members of NOWM after disaffiliating
themselves from the AAFES Taxi Drivers Association which, through the
III. Whether or not the resolution issued by public
manipulations of its President Eduardo Castillo, unconscionably
respondent is contrary to law.  10

compromised their separation pay; and that Naguiat Enterprises, being

their indirect employer, is solidarily liable under the law for violation of the
Petitioners also submit two additional issues by way of a supplement   to
11
Labor Code, in this case, for nonpayment of their separation pay.
their petition, to wit: that Petitioners Sergio F. Naguiat and Antolin
Naguiat were denied due process; and that petitioners were not furnished
The Solicitor General unqualifiedly supports the allegations of private
copies of private respondents' appeal to the NLRC. As to the procedural
respondents. In addition, he submits that the separate personalities of
lapse of insufficient copies of the appeal, the proper forum before which
respondent corporations and their officers should be disregarded and
petitioners should have raised it is the NLRC. They, however, failed to
considered one and the same as these were used to perpetrate injustice
question this in their motion for reconsideration. As a consequence, they
to their employees.
are deemed to have waived the same and voluntarily submitted
themselves to the jurisdiction of the appellate body.
The Court's Ruling
Anent the first issue raised in their original petition, petitioners contend
that NLRC committed grave abuse of discretion amounting to lack or As will be discussed below, the petition is partially meritorious.
excess of jurisdiction in unilaterally increasing the amount of severance
pay granted by the labor arbiter. They claim that this was not supported First Issue: Amount of Separation Pay
by substantial evidence since it was based simply on the self-serving
allegation of respondents that their monthly take-home pay was not lower Firmly, we reiterate the rule that in a petition for certiorari filed pursuant to
than $240.00. 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
On the second issue, petitioners aver that NOWM cannot make legal NLRC acted without or in excess of jurisdiction or with grave abuse of
representations in behalf of individual respondents who should, instead, discretion. 12

be bound by the decision of the union (AAFES Taxi Drivers Association)

of which they were members. 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 With respect to the amount of separation pay that should be granted,
confined to specific matters, are generally accorded not only great Article 283 of the Labor Code provides:
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 . . . In case of retrenchment to prevent losses and in
they were arrived at arbitrarily or in disregard of the evidence on record. 
13
cases of closures or cessation of operations of
establishment or undertaking not due to serious business
Nevertheless, this Court carefully perused the records of the instant case losses or financial reverses, the separation pay shall be
if only to determine whether public respondent committed grave abuse of equivalent to one (1) month pay or at least one-half (1/2)
discretion, amounting to lack of jurisdiction, in granting the clamor of month pay for every year of service, whichever is higher.
private respondents that their separation pay should be based on the A fraction of at least six (6) months shall be considered
amount of $240.00, allegedly their minimum monthly earnings as taxi one (1) whole year.
drivers of petitioners.
Considering the above, we find that NLRC did not commit grave abuse of
In their amended complaint before the Regional Arbitration Branch in San discretion in ruling that individual respondents were entitled to separation
Fernando, Pampanga, herein private respondents set forth in detail the pay   in the amount $120.00 (one-half of $240.00 monthly pay) or its
15

work schedule and financial arrangement they had with their employer. peso equivalent for every year of service.
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 Second Issue: NOWM's Personality to
any evidence to controvert said allegations. Remaining undisputed, the Represent Individual Respondents-Employees
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 On the question of NOWM's authority to represent private respondents,
findings and conclusions. Thus, petitioners are in estoppel for not having we hold petitioners in estoppel for not having seasonably raised this
questioned such facts when they had all opportunity to do so. Private issue before the labor arbiter or the NLRC. NOWM was already a party-
respondents, like petitioners, are bound by the factual findings of litigant as the organization representing the taxi driver-complainants
Respondent Commission. before the labor arbiter. But petitioners who were party-respondents in
said complaint did not assail the juridical personality of NOWM and the
Petitioners also claim that the closure of their taxi business was due to validity of its representations in behalf of the complaining taxi drivers
great financial losses brought about by the eruption of Mt. Pinatubo which before the quasi-judicial bodies. Therefore, they are now estopped from
made the roads practically impassable to their taxicabs. Likewise well- raising such question before this Court. In any event, petitioners
settled is the rule that business losses or financial reverses, in order to acknowledged before this Court that the taxi drivers allegedly
sustain retrenchment of personnel or closure of business and warrant represented by NOWM, are themselves parties in this case.  16

exemption from payment of separation pay, must be proved with clear

and satisfactory evidence.   The records, however, are devoid of such
14
Third Issue: Liability of Petitioner-
evidence. Corporations and Their Respective Officers

The labor arbiter, as affirmed by NLRC, correctly found that petitioners The resolution of this issue involves another factual finding that Naguiat
stopped their taxi business within Clark Air Base because of the phase- Enterprises actually managed, supervised and controlled employment
out of U.S. military presence thereat. It was not due to any great financial terms of the taxi drivers, making it their indirect employer. As adverted to
loss because petitioners' taxi business was earning profitably at the time earlier, factual findings of quasi-judicial bodies are binding upon the court
of its closure. in the absence of a showing of grave abuse of discretion.
Unfortunately, the NLRC did not discuss or give any explanation for the taxicabs which became the principal investment and asset of the
holding Naguiat Enterprises and its officers jointly and severally liable in company.
discharging CFTI's liability for payment of separation pay. We again
remind those concerned that decisions, however concisely written, must Private respondents failed to substantiate their claim that Naguiat
distinctly and clearly set forth the facts and law upon which they are Enterprises managed, supervised and controlled their employment. It
based.   This rule applies as well to dispositions by quasi-judicial and
17
appears that they were confused on the personalities of Sergio F.
administrative bodies. Naguiat as an individual who was the president of CFTI, and Sergio F.
Naguiat Enterprises, Inc., as a separate corporate entity with a separate
Naguiat Enterprise Not Liable business. They presumed that Sergio F. Naguiat, who was at the same
time a stockholder and director   of Sergio F. Naguiat Enterprises, Inc.,
27

In impleading Naguiat Enterprises as solidarily liable for the obligations of was managing and controlling the taxi business on behalf of the latter. A
CFTI, respondents rely on Articles 106,  107   and 109   of the Labor
18 19 20 closer scrutiny and analysis of the records, however, evince the truth of
Code. the matter: that Sergio F. Naguiat, in supervising the taxi drivers and
determining their employment terms, was rather carrying out his
Based on factual submissions of the parties, the labor arbiter, however, responsibilities as president of CFTI. Hence, Naguiat Enterprises as a
found that individual respondents were regular employees of CFTI who separate corporation does not appear to be involved at all in the taxi
received wages on a boundary or commission basis. business.

We find no reason to make a contrary finding. Labor-only contracting To illustrate further, we refer to the testimony of a driver-claimant on
exists where: (1) the person supplying workers to an employer does not cross examination.
have substantial capital or investment in the form of tools, equipment,
machinery, and work premises, among others; and (2) the workers Atty. Suarez
recruited and placed by such person are performing activities which are
directly related to the principal business of the employer.   Independent
21
Is it not true that you applied not with
contractors, meanwhile, are those who exercise independent Sergio F. Naguiat but with Clark Field
employment, contracting to do a piece of work according to their own Taxi?
methods without being subject to control of their employer except as to
the result of their Work. 
22
Witness

From the evidence proffered by both parties, there is no substantial basis I applied for (sic) Sergio F. Naguiat.
to hold that Naguiat Enterprises is an indirect employer of individual
respondents much less a labor only contractor. On the contrary, Atty. Suarez
petitioners submitted documents such as the drivers' applications for
employment with CFTI,   and social security remittances   and
23 24

Sergio F. Naguiat as an individual or the

payroll   of Naguiat Enterprises showing that none of the individual
25

corporation?
respondents were its employees. Moreover, in the contract   between 26

CFTI and AAFES, the former, as concessionaire, agreed to purchase

from AAFES for a certain amount within a specified period a fleet of Witness
vehicles to be "ke(pt) on the road" by CFTI, pursuant to their
concessionaire's contract. This indicates that CFTI became the owner of Sergio F. Naguiat na tao.
Atty. Suarez Yes, sir.

Who is Sergio F. Naguiat? Atty. Suarez

Witness How about Mr. Antolin Naguiat what is his

role in the taxi services, the operation of
He is the one managing the Sergio F. the Clark Field Taxi, Incorporated?
Naguiat Enterprises and he is the one
whom we believe as our employer Witness

Atty. Suarez He is the vice president.  28

What is exactly the position of Sergio F. And, although the witness insisted that Naguiat Enterprises was his
Naguiat with the Sergio F. Naguiat employer, he could not deny that he received his salary from the office of
Enterprises? CFTI inside the base.  29

Witness Another driver-claimant admitted, upon the prodding of counsel for the
corporations, that Naguiat Enterprises was in the trading business while
He is the owner, sir. CFTI was in taxi services.  30

Atty. Suarez In addition, the Constitution   of CFTI-AAFES Taxi Drivers Association
31

which, admittedly, was the union of individual respondents while still

How about with Clark Field Taxi working at Clark Air Base, states that members thereof are the
Incorporated what is the position of Mr. employees of CFTI and "(f)or collective bargaining purposes, the definite
Naguiat? employer is the Clark Field Taxi Inc."

Witness From the foregoing, the ineludible conclusion is that CFTI was the actual
and direct employer of individual respondents, and that Naguiat
Enterprises was neither their indirect employer nor labor-only contractor.
What I know is that he is a
It was not involved at all in the taxi business.
concessionaire.
CFTI president
x x x           x x x          x x x
solidarily liable
Atty. Suarez
Petitioner-corporations would likewise want to avoid the solidary liability
of their officers. To bolster their position, Sergio F. Naguiat and Antolin T.
But do you also know that Sergio F. Naguiat specifically aver that they were denied due process since they
Naguiat is the President of Clark Field were not parties to the complaint below.   In the broader interest of
32

Taxi, Incorporated? justice, we, however, hold that Sergio F. Naguiat, in his capacity as

Witness
president of CFTI, cannot be exonerated from joint and several liability in The foregoing was culled from Section 2 of RA 602, the
the payment of separation pay to individual respondents. Minimum Wage Law. Since RANSOM is an artificial
person, it must have an officer who can be presumed to
A.C. Ransom Labor Union-CCLU vs. NLRC   is the case in point. A.C.
33 be the employer, being the "person acting in the interest
Ransom Corporation was a family corporation, the stockholders of which of (the) employer" RANSOM. The corporation, only in the
were members of the Hernandez family. In 1973, it filed an application for technical sense, is the employer.
clearance to close or cease operations, which was duly granted by the
Ministry of Labor and Employment, without prejudice to the right of The responsible officer of an employer corporation can be
employees to seek redress of grievance, if any. Backwages of 22 held personally, not to say even criminally, liable for
employees, who engaged in a strike prior to the closure, were nonpayment of back wages. That is the policy of the law. .
subsequently computed at P164,984.00. Up to September 1976, the ..
union filed about ten (10) motions for execution against the corporation,
but none could be implemented, presumably for failure to find leviable (c) If the policy of the law were otherwise, the corporation
assets of said corporation. In its last motion for execution, the union employer can have devious ways for evading payment of
asked that officers and agents of the company be held personally liable back wages. . . .
for payment of the backwages. This was granted by the labor arbiter. In
the corporation's appeal to the NLRC, one of the issues raised was: "Is (d) The record does not clearly identify "the officer or
the judgment against a corporation to reinstate its dismissed employees officers" of RANSOM directly responsible for failure to pay
with backwages, enforceable against its officer and agents, in their the back wages of the 22 strikers. In the absence of
individual, private and personal capacities, who were not parties in the definite Proof in that regard, we believe it should be
case where the judgment was rendered!" The NLRC answered in the presumed that the responsible officer is the President of
negative, on the ground that officers of a corporation are not liable the corporation who can be deemed the chief operation
personally for official acts unless they exceeded the scope of their officer thereof. Thus, in RA 602, criminal responsibility is
authority. with the "Manager or in his default, the person acting as
such." In RANSOM. the President appears to be the
On certiorari, this Court reversed the NLRC and upheld the labor arbiter. Manager. (Emphasis supplied.)
In imposing joint and several liability upon the company president, the
Court, speaking through Mme. Justice Ameurfina Melencio-Herrera, Sergio F. Naguiat, admittedly, was the president of CFTI who actively
ratiocinated this wise: 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,
(b) How can the foregoing (Articles 265 and 273 of the who may be held jointly and severally liable for the obligations of the
Labor Code) provisions be implemented when the corporation to its dismissed employees.
employer is a corporation? The answer is found in Article
212(c) of the Labor Code which provides: Moreover, petitioners also conceded that both CFTI and Naguiat
Enterprises were "close family corporations"  owned by the Naguiat
34

(c) "Employer" includes any person acting in the interest family. Section 100, paragraph 5, (under Title XII on Close Corporations)
of an employer, directly or indirectly. The term shall not of the Corporation Code, states:
include any labor organization or any of its officers or
agents except when acting as employer. (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 stockholder actively managing or operating the business and affairs of
other and among themselves. Said stockholders shall the close corporation.
be personally liable for corporate tortsunless the
corporation has obtained reasonably adequate liability In fact, in posting the surety bond required by this Court for the issuance
insurance. (emphasis supplied) of a temporary restraining order enjoining the execution of the assailed
NLRC Resolutions, only Sergio F. Naguiat, in his individual and personal
Nothing in the records show whether CFTI obtained "reasonably capacity, principally bound himself to comply with the obligation
adequate liability insurance;" thus, what remains is to determine thereunder, i.e., "to guarantee the payment to private respondents of any
whether there was corporate tort. damages which they may incur by reason of the issuance of a temporary
restraining order sought, if it should be finally adjudged that said
Our jurisprudence is wanting as to the definite scope of "corporate tort." principals were not entitled thereto. 38

Essentially, "tort" consists in the violation of a right given or the omission

of a duty imposed by law.   Simply stated, tort is a breach of a legal
35
The Court here finds no application to the rule that a corporate officer
duty.   Article 283 of the Labor Code mandates the employer to grant
36
cannot be held solidarily liable with a corporation in the absence of
separation pay to employees in case of closure or cessation of evidence that he had acted in bad faith or with malice.   In the present
39

operations of establishment or undertaking not due to serious business case, Sergio Naguiat is held solidarily liable for corporate tort because he
losses or financial reverses, which is the condition obtaining at bar. CFTI had actively engaged in the management and operation of CFTI, a close
failed to comply with this law-imposed duty or obligation. Consequently, corporation.
its stockholder who was actively engaged in the management or
operation of the business should be held personally liable. Antolin Naguiat not personally liable

Furthermore, in MAM Realty Development vs. NLRC,   the Court

37
Antolin T. Naguiat was the vice president of the CFTI. Although he
recognized that a director or officer may still be held solidarily liable with carried the title of "general manager" as well, it had not been shown that
a corporation by specific provision of law. Thus: he had acted in such capacity. Furthermore, no evidence on the extent of
his participation in the management or operation of the business was
. . . A corporation, being a juridical entity, may act only preferred. In this light, he cannot be held solidarily liable for the
through its directors, officers and employees. Obligations obligations of CFTI and Sergio Naguiat to the private respondents.
incurred by them, acting as such corporate agents, are
not theirs but the direct accountabilities of the corporation Fourth Issue: No Denial of Due Process
they represent. True, solidary liabilities may at times be
incurred but only when exceptional circumstances warrant Lastly, in petitioners' Supplement to their original petition, they assail the
such as, generally, in the following cases: NLRC Resolution holding Sergio F. Naguiat and Antolin T. Naguiat jointly
and severally liable with petitioner-corporations in the payment of
xxx xxx xxx separation pay, averring denial of due process since the individual
Naguiats were not impleaded as parties to the complaint.
4. When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action. We advert to the case of A.C. Ransom once more. The officers of the
(footnotes omitted) corporation were not parties to the case when the judgment in favor of
the employees was rendered. The corporate officers raised this issue
As pointed out earlier, the fifth paragraph of Section 100 of the when the labor arbiter granted the motion of the employees to enforce
Corporation Code specifically imposes personal liability upon the
the judgment against them. In spite of this, the Court held the corporation
president solidarily liable with the corporation.

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
40

the arbiter. They cannot now claim to have been denied due process
since they availed of the opportunity to present their positions.

WHEREFORE, the foregoing premises considered, the petition is

PARTLY GRANTED. The assailed February 28, 1994 Resolution of the
NLRC is hereby MODIFIED as follows:

(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat,

president and co-owner thereof, are ORDERED to pay, jointly and
severally, the individual respondents their separation pay computed at
US$120.00 for every year of service, or its peso equivalent at the time of
payment or satisfaction of the judgment;

(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T.

Naguiat are ABSOLVED from liability in the payment of separation pay to
individual respondents.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.