G.R. No. 146667 ; January 23, 2007
John F. McLeod, Petitioner, vs. National Labor Relations Commission (First Division), Filipinas Synthetic Fiber Corporation (Filsyn), Far Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., (Peggy Mills, Inc.), Patricio L. Lim, and Eric Hu, Respondents.

FACTS

Petitioner John F. McLeod, a textile expert, was hired in 1980 as Vice-President and Plant Manager of Peggy Mills, Inc. He alleged that upon his retirement in 1993, he was denied various monetary benefits, including retirement pay, vacation and sick leave benefits, unpaid airline tickets, holiday pay, and a portion of his 13th month pay. He filed a complaint against Peggy Mills and several other corporate entities and individuals, including Patricio Lim and Eric Hu, claiming they were his employers either jointly or as successors-in-interest.
The respondents, principally Peggy Mills, countered that McLeod was not entitled to retirement benefits as the company had no retirement plan and he had only worked for 12 years. They also claimed his claims for other benefits were unfounded or had been offset by damages allegedly caused by his negligence during a union strike. They further argued that the other corporate respondents were separate entities and that Sta. Rosa Textiles merely acquired the assets, not the liabilities, of Peggy Mills.

ISSUE

The primary issue was whether McLeod was entitled to his claimed monetary benefits and, if so, against which respondents he could rightfully enforce such claims.

RULING

The Supreme Court denied McLeod’s petition, affirming with modifications the Court of Appeals’ decision. The Court held that McLeod was entitled to retirement pay under Article 287 of the Labor Code, as amended, which mandates retirement benefits for employees who have reached the age of 60 and served at least five years. Since Peggy Mills had no retirement plan, the statutory provision applied. His retirement pay was computed at one-half month salary for every year of service, based on his proven salary rate of P50,495 per month for his 12 years of service with Peggy Mills.
However, the Court absolved Patricio Lim from personal liability, finding no evidence that he acted in bad faith or that the corporate veil of Peggy Mills should be pierced. The Court also ruled that the other corporate respondents, Filsyn, Far Eastern Textile Mills, and Sta. Rosa Textiles, were not liable as McLeod failed to substantiate his claim that they were his employers or that they were mere alter egos of Peggy Mills. The claim of successor liability against Sta. Rosa Textiles failed because it only purchased the assets of Peggy Mills, not its liabilities. The awards for moral and exemplary damages and attorney’s fees were deleted for lack of basis.