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Naguiat v NLRC et al | 1997 | Panganiban, J.


1. Sergio F. Naguiat does business under the name

and style of Sergio F. Naguiat Enterprise, Inc. (NEI) and Clark Field Taxi, Inc. (CFTI); they are separate entities but are family-owned by the Naguiats; CFTIs president was Sergio Naguiat while Antolin Naguiat was its vice-president; the two are father and son; NEI was a trading firm; 2. CFTI had a concessionaires contract with the Army Air Force Services (AAFES) for the operation of taxi services within Clark Air Base; 3. The individual respondents here were previously employed by CFTI as taxicab drivers: They were required a daily boundary fee worth 26.50 dollars for those working from 112nn while 27 dollars or those working from 12nn to 12 midnight; all incidental expenses like gas were accounted against them; They earned not less than 15 dollars daily and any excess were required to be deposited to the company which they later withdrew 15 days later; they worked three to four times a week; 4. Due to the phase-out of US military bases in the Philippines, from which Clark Air Base was not spared, the AAFES was dissolved and the taxicab drivers were officially terminated on November 26, 1991; 5. The AAFES Taxi Drivers Association (the union) thru its local president, Eduardo Castillo, held negotiations with CFTI for the separation benefits: 500PHP for every year of service as severance pay was agreed upon; most of the drivers accepted, however, individual respondents here thought otherwise; Those who thought otherwise disaffiliated with the union, thru National Organization of Workingmen (NOWM) a labour organization , filed a complaint against Sergio Naguiat doing business under NEI, AAFES, and the union for payment of separation ay due to termination/phase-out; it was later amended to include several other drivers and Antolin Aguiat as VP and general manager; 6. Respondents contentions: They allege that NEI should be liable since they were regular employees of it, although their individual employment were approved by CFTI; also, they were assigned to NEI after having been hired by CFTI so NEI managed, controlled and supervised their employment;


They are entitled to separation pay based on their latest daily earnings of 15 dollars for working 16 days a month; Petitioners contentions: CFTIs business cessation was due to great financial losses and lost business opportunity resulting from phase out of the Clark Air Base brought about by the Mt. Pinatubo eruption and the expiration of the RP-US military base agreement; Admitted the negotiations between CFTI and the union and the separation pay of 500PHP for every year of service;

8. The labour arbiter increased the amount to 1.2k

for humanitarian consideration (so it is not really a separation pay) and rejected petitioners contention that the business cessation was due to great financial losses and lost business opportunity since at that time, CFTI was profitably earning and the cessation was due to the untimely closure of the Clark Air Base; 9. The individual respondents appealed to the NLRC which modified the labour arbiter and granted separation pay to them; it granted one-half month salary for every year of service; NEI and the father and son (acting as President and VP) were jointly and severally made liable; 10. Petitioners MFR was denied by NLRC, hence case went to the Court and upon filing by petitioners of a surety bond a restraining order to enforce the NLRC decision was issued; Issues: 1. W/N NLRC committed grave abuse of discretion; NOPE 2. W/N NOWM has standing to represent the workers; Petitioners in estoppel 3. W/N the petitioners are liable. Qualified Liability. Held and Ratio:

1. RULE (Judicial Dictum): findings of fact of

administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally, are generally accorded not only great respect but even finality; and are binding to the 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; Here, there is none:

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The 240 (half of which would be the separation pay) dollar base for the separation pay for the drivers were set forth in detail by them thru their schedule and financial arrangement they had with their employer;

(c) Employer includes any person acting in the interest of an employer directly or indirectly. The term shall not include any labour organization or any of its officers or agents except when acting as employer.


Also, petitioners did not bother to refute such allegations; they did not even appeal from the labour arbiter decision of such findings and conclusions; so theyre in estoppel; Court sustained labour arbiter and NLRC in finding that the business cessation was not due to great financial loss but due to phase out of the US military presence thereat; Article 283 of the labour provides that in cases of closures or cessation of operationsnot due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. So NLRC did not commit grave abuse of discretion in granting 120 dollars (half of 240 dollars) for every year to the drivers; Petitioners in estoppel:

Sergio Naguiat was the president of CFTI actively managed the business.
Section 100, (5): (5) To the extent that the stockholders are actively engaged in the management or operation of the business and affairs of a close corporation, the stockholders hall 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 adeqate liability insurance.

Also, CFTI and NEI were close family corporations owned by the Naguiat family:

They did not assail NOWMs juridical personality seasonably since it was already a party-litigant before the labour arbiter; also, the taxi drivers represented by NOWM are themselves already parties in this case; 3. Sergio Naguiat liable but Antolin Naguiat absolved: Court reversed NLRC in finding NEI liable since it did not discuss or give any explanation for holding NEI and its officers jointly and severally liable in discharging CFTIs liability for payment of separation pay;

NEI is not an indirect employer of the taxi drivers much less a labour only contractor: a. Petitioners submitted the drivers applications with CFTI; and b. Social security remittances an payroll of Naguiat Enterprises show that the individual respondents were not its employees; c. Respondents must have been confused on the personalities of Sergio Naguiat as president of CFTI and NEI; they are separate entities; d. Also, in the unions constitution, their definite employer was CFTI; HOWEVER, Sergio Naguiat, as president of CFTI, cannot be exonerated from joint and several liability in the payment of separation pay:
Article 212(c) of the Labor Code:

There was no showing of reasonably adequate liability insurance so what remains is to determine the existence of corporate tort: Tort violation of a right given or the omission of a duty imposed by law; it is a breach of a legal duty; Article 283 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; CFTI failed to do so, so its stockholder actively engaged in the management or operation of the business should be held personally liable; Court finds to application to the rule that a corporate officer cannot be held liable with a corporation in the absence of evidence that he had acted in bad faith or with malice; Sergio Naguiat is held solidarily liable for corporate tort because he had actively engaged in the management and operation of CFTI, a close corporation As regards Antolin Naguiat, althout he carried the title of general manager it had not been shown he acted in such capacity;

No Denial of Due Process: the individual Naguiat says that they were denied due process by not being impleaded as parties to the complaint: in A.C. Ransom case, although the officers of the corporation were not parties to the case, the Court held the corporation president still liable; also, they voluntarily submitted themselves to the jurisdiction of the labour arbiter when they filed a position paper together with CFTI before the arbiter.

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JUDGMENT: CFTI and Sergio Naguiat ordered to pay jointly and severally 120 dollars or its peso equivalent for every year of service to the individual respondents; NEI and Antolin Naguiat absolved.

assessed an valorem tax deficiency on FTCs part worth around 9M pesos; FTC went to the Court of Tax Appeals and it ruled that the Memo was defective, invalid and unenforceable; the CA affirmed the CTA and finally by the Court in CIR v CA; Court held that the Memo fell short of the requirements of a valid administrative issuance;

Vinzons-Chato v Fortune Tobacco Corporation | 2007 | Ynares-Santiagio, J. Facts: 1. Petitioner Liwayway Vinzons-Chato assails the decision of the CA affirming the RTC of Marikina denying her motion to dismiss the complaint filed by respondent Fortune Tobacco Corporation (FTC); FTCs complaint sought to recover damages for the alleged violation of its constitutional rights arising from petitioners issuance of Revenue Memorandum Circular No. 37-93 (Memo) which was declared by the Court invalid in Commissioner of Internal Revenue v CA;

4. April 10, 1997: FTC filed before the RTC of Marikina a complaint for damages against petitioner in her private capacity: FTC says petitioner should be liable under Article 32 of the CC considering that the Memo violated its constitutional right against deprivation of property without due process of law and the right to equal protection of the laws; Petitioner, on her part, motioned to dismiss saying that:

a. FTC had no cause of action since she issued

the memo in the performance of her official function and within the scope of her authority; she merely acted as the Republics agent so latter should be responsible; b. Complaint has no cause of action since there is no allegation of malice or bad faith; Certification against forum shopping was signed by FTCs counsel in violation of the rule that it is the plaintiff or the principal who should sign the same;

2. Petitioner was then the Commission of Internal Revenue while respondent was engaged in the manufacture of cigarettes, among which are Champion, Hope, and More cigarettes; 3. Background of the Memo:

RA 7654 took effect on July 3, 1993; Section 142, (c)(1) of the RA covers locally manufactured cigarettes which are currently classified and taxed at 55% and which an ad valorem tax of 55% provided that the minimum tax shall not be less than Five Pesos per pack; Prior to the enactment of RA 7654, FTCs cigarettes were subjected to 20-45% ad valorem tax; HOWEVER, 2 days before the RAs effectivity, the Memo was issued reclassifying FTCs cigarette brands as locally manufacture cigarettes bearing a foreign brand subject to the 55% ad valorem tax; so, in effect, the cigarettes became subject to the provisions of the RA; FTC requested the recall of the Memo but was denied thru a letter; the same letter


5. The RTC denied petitioners motion to dismiss saying that to rule on her allegations would be to prematurely decide the case without allowing the parties to present evidence; also, the defect of the certification against forum shopping was cured by the authorization by the FTCs secretary of its counsel to sign the certification; 6. The case was then elevated to CA on certiorari; the CA denied the certiorari since under Article 32 of the CC, liability may arise even if the defendant acted without malice or bad faith; it said that Section 38, Book I of the Administrative Code is the general law on the civil liability of public officers while Article 32 of the Civil Code is the special law that governs the instant case;

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So, bad faith or malice need not be alleged in the complaint for damages; It also sustained RTCs ruling on the certification against forum shopping;

Section 38. Liability of Superior Officers. (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence. Xxx Section 39. Liability of Subordinate Officers. No subordinate officer or employee shall be civilly liable for acts done by him in good faith in the performance of his duties. However, he shall be liable for wilful or negligent acts done by him which are contrary to law, morals, public policy and good customs even if he acts under orders or instructions of his superior.


Case then elevated to the Court: Petitioner says that Section 38, Book I of the AC should be applied since it is the special law while Article 32 of the CC is the general law; so if a complaint does not allege any bad faith or malice, the same is dismissible for failure to state a cause of action; as for the certification, she insists in the defect; FTC, of course, mirrored the opposite; it says Article 32 is a special provision and it is enough that there was a violation of constitutional rights and no need to allege bad faith or malice;

In Cojuangco, Jr. v CA a public officer who directly or indirectly violates the constitutional rights of another, may be validly sued for damages under Article 32 of the CC even if his acts were not so tainted with malice or bad faith.

Issues: 1. W/N a public officer can be validly sued in his/her private capacity for acts done in connection with the discharge of the functions of his/her office; 2. Which between Article 32 of the CC and Section 38, Book I of the AC should govern the case? 3. Should the complaint be dismissed on the failure to comply with rule on certification against forum shopping? Held and Ratio: Court then says that in our jurisdiction, a public officer may be validly sued in his/her private capacity for acts done in performance of official functions, where such public officer: 1. 2. acted with malice, bad faith or negligence; or violated a constitutional right of the plaintiff;


Article 32 of the CC governs the instant case:

1. GENERAL RULE: a public officer may not be

held liable for damages which a person may suffer arising from the just performance of his official duties and within the scope of his assigned tasks; doing so would virtually be a charge against the Republic, which is not amenable to judgment for monetary claims without its consent;

Article 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: Xxx (6) The right against deprivation of property without due process of law; Xxx (8) The right to the equal protection of the laws; Xxx

EXCEPTION: a public officer is not immune from damages in his/her personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official functions;


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i. General statute one which embraces a class of subjects or places and does not omit any subject or place naturally belonging to such class; ii. Special Statute one which relates to particular persons or things of a class or to a particular portion or section of the state only; Both should be harmonized; but in case of conflict, the special law should prevail since it evinces the legislative intent more clearly; Special law becomes an exception to the general law even if latter is passed later unless the former is repealed expressly or by necessary implication;

3. No, CA and RTC sustained in re cured certification against non-forum shopping; also the merits of the case justified the liberal application of the rules. JUDGMENT: RTC JUDGMENT AFFIRMED. RTC judge directed to continue with the proceedings of the civil case.

However, in a case that the special

statute refers to a subject in general, which the general statue in treats in particular, the specific/special provision of the latter governs; SO, in this case, Article 32 has the special provision where a violation of constitutional rights is enough to constitute a cause of action;

In the Code Commission, Dean Bocobo

explained the rationale of Article 32 which needs not the element of bad faith; he said that the object of the Article is to put an end to official abuse by the plea of good faith; in the US, this remedy is in the nature of a tort; Tort: Article 32 was patterned after the tort in American law; it is a wrong; an act or omission of an act by one, without right, whereby another receives some injury, directly or indirectly, in person, property or reputation; Civil liability in tort is determined by the conduct and not by the mental state of the tortfeasor and there are cases that motive is immaterial; Otherwise, it is the mental state or motive that would determine if the act is wrongful; presence of good motive or absence of evil motive does not render lawful an act which is otherwise an invasion of anothers legal right; liability is not precluded by the fact that the defendant acted without evil intent;

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