McLeod v NLRC (2007)
additional moral damages, exemplary damages,
Carpio
Topic: Past Practices
I. FACTS:
Feb 2, 1995 – John McLeod filed a complaint for
retirement benefits, vacation and sick leave benefits,
non-payment of unused airline tickets, holiday pay,
underpayment of salary and 13th month pay, moral
and exemplary damages, attorney’s fees plus interest
against Filipinas Synthetic Corporation (Filsyn), Far
Eastern Textile Mills, Inc. (FETMI), Sta. Rosa Textiles,
Inc. (SRTI), Patricio Lim and Eric Hu.
John alleged that he was an expert in textile
manufacturing processes from 1956 to 1993 and
worked with Universal Textiles Inc (UTEX) and Peggy
Mills Inc., making P60,000 a month, along with other
benefits listed above
[Note: Sta Rosa Textiles eventually acquired Peggy
Mills Inc. in 1992]
Filsyn et al. counters that:
1. Sta. Rosa Textiles non-operational
2. John resigned his post with Sta. Rosa Textiles
on Nov. 1992
3. Filsyn and Far Eastern Textiles have no EE-
ER with John
4. And no cause of action with any of the
defendants.
With the attempts at a compromise failing, John filed
the complaint with the Labor Arbiter.
Labor Arbiter ruled in favor of John, finding all
respondents jointly and solidarily liable for the money
claims amounting to P5,528,996.55; as well as Unused
Airline Tickets for 3 years amounting to $7,350.00
NLRC reversed and ordered Peggy Mills to pay
John 22.5 days for every year of service for his
twelve (12) years of service from 1980 to 1992
based on a salary rate of P50,495.00 a month. MR
also denied.
CA affirmed NLRC with modifications for
and attorney’s fees.
II. ISSUES:
Relevant to the discussion: W/N McLeod was entitled
to any of the employee benefits in his money claim?
NO
III. RATIONALE:
a. McLeod only an employee of PMI (not by any of the
defendants) as acting VP and GM from June 20, 1980
to December 31, 1992
b. PMI not renamed SRTI, SRTI merely acquired PMI’s
rights, title, and interest through a Dation in Payment
as payment for its obligations due to SRTI worth Php
210M.
c. The Dation in Payment between PMI and SRTI did
not expressly or impliedly agree to any of PMI’s debts.
2.e PMI shall warrant that it will hold SRTC or
its assigns, free and harmless from any
liability for claims of PMI’s creditors,
laborers, and workers and for physical injury
or injury to property arising from PMI’s custody,
possession, care, repairs, maintenance, use or
operation of the Assets except ordinary wear
and tear;”
d. Not entitled to vacation leave and sick leave as
well as holiday pay
Article 82, Title I, Book Three of the Labor Code, on
Working Conditions and Rest Periods, provides:
“Coverage.—The provisions of this title shall apply to
employees in all establishments and undertakings
whether for profit or not, but not to government
employees, managerial employees, field personnel,
members of the family of the employer who are
dependent on him for support, domestic helpers,
persons in the personal service of another, and
workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
As used herein, “managerial employees” refer to those
whose primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof, and to other officers
or members of the managerial staff.”

e. No Underpayment of 13th month for Dec. 1993

After the termination of the employer-employee

relationship between McLeod and PMI, SRTI hired
McLeod as consultant and not as employee. Since
McLeod was no longer an employee, he was not
entitled to the 13th month pay.

f. PMI has no company policy granting its officers

and employees expenses for trips abroad.

To be considered a “regular practice,” the giving of the

benefits should have been done over a long period,
and must be shown to have been consistent and
deliberate.

In this case, no proof provided the PMI ever promised

McLeod that it continues to provide the airline tickets
as a benefit, nor any proof that PMI and McLeod had
expressly agreed upon the giving of that benefit.
g. No Retirement Plan
Since PMI has no retirement plan, Sec. 5, Rule II was
applied, specifically 5.2.a

(a) Fifteen (15) days salary of the employee

based on his latest salary rate.

With McLeod having worked with PMI for 12 years,

from 1980 to 1992, he is entitled to a retirement pay
equivalent to 1/2 month salary for every year of service
based on his latest salary rate of P50,495 a month.

IV. DISPOSITIVE:

WHEREFORE, we DENY the petition and AFFIRM the

Decision of the Court of Appeals in CA-G.R. SP No.
55130, with the following MODIFICATIONS: (a) the
retirement pay of John F. McLeod should be computed
at 1/2 month salary for every year of service for 12
years based on his salary rate of P50,495 a month; (b)
Patricio L. Lim is absolved from personal liability; and
(c) the awards for moral and exemplary damages and
attorney’s fees are deleted. No pronouncement as to
costs.