1.

The Supervisory Technical Staff employees refers to those

personnel who are required to have specific technical training or
experience in Engineering, Medicine, Nursing, Accounting,
TEACHING or other science and/or GOVERNMENT
LICENSE. (emphasis ours)

2. Apparently, appellants-teachers belong to the grouping of

Supervisory/Technical employees as they are personnel required to
have the specific prerequisite mentioned. More particularly they fall
under the category of STS 1 employees as they perform more
complex to highly complex professional work which involves
research, analysis, problem solving and others and which require
greater exercise of independent judgement;

3. However, since the implementation of the Policy Manual 1989,

the teachers’ salaries have been based on the category of Skilled,
Semi-skilled, Unskilled employees (SSU) commonly referred to as
the rank and file employee. In other words, while the teachers are
STS 1 employees, they were paid as mere rank and file employees.
In view of the discrimination against the teachers, they are now
receiving a monthly salary of P14,455.00 as of 2007.1

4. Employees in the other departments who are also categorized as

STS 1 are receiving salaries way beyond that of the teacher which is
proven by their salary slips.2 Apparently, the appellant-teachers
were grossly underpaid in the amount of P9,000.00 a month.

5. On June 10, 1991, respondent PMC and the respondent Catholic

Vicar Apostolic of the Mountain Province (now Diocese of Baguio
Schools), entered into a Deed of Donation whereby “for ONE PESO
(1), Philippine Currency, and in consideration of the DONEE’S
administering and catering to the educational needs of the
inhabitants of Philex Minesite, the DONOR hereby donates the
following described properties to the DONEE. The properties
described herein are the school structure of the Philex Mines
Elementary School.”3

6. After the execution of the Deed of Donation, respondent PMC

caused the incorporation of Philex Mines Elementary School into
Philex Mines Elementary School Inc., by registering it with the
Securities and Exchange Commission on December 2, 1991.4

1
Please see SALARY SLIPS of the teachers attached as ANNEXES “C to C-35” of complainants’ POSITION
PAPER
2
See ANNEXES “D,E,E-1,E-2, and E-3” of complainants’ POSITION PAPER
3
Deed of Donation marked as ANNEX “F” of the COMPLAINT
4
Sec. Reg 21902 and By-Laws of the Philex Mines Elementary School Inc., as ANNEXES “AA” and “AA-1” of
Complainants’ POSITION PAPER

Page 1 of 14
7. Thereafter, without the knowledge and consent of the
employees-teachers, the respondents caused the change of the
name of the employer before the Social Security and Philippine
Health Insurance Corporation by making it appear that the new
employer is the newly created entity – Philex Mines Elementary
School Inc.5

8. The change caused confusion as to who is the real employer of

the appellants-teachers. Consequently, the teachers were deprived
of the benefits being enjoyed by their counter-part employees in the
other department particularly as follows:

a. Medical assistance and yearly bonuses of the complainants-

teachers were under computed to the sum of P7,000.00 yearly
from 1991 up to the present.

b. There was no job deliberation to determine the salary

distinction of the newly hired employees and the old
employees;

c. No service Credit for work, practices and meeting performed

after school hours as provided by the company policies;

d. Complainants were discriminated for their bonuses are given

only after the employees in the other departments were given

e. Expenses for the renewal of their license are no longer

shouldered by the company;

f. Complainants were not given emergency leave whenever their

emergency leave falls on a summer vacation;

g. No more ONE-MONTH pay bonus before retirement

whenever the date of their retirement falls on a summer
vacation;

h. Board passers were not given P50.00 increase in their salary

as provided in the company policy;

i. The computation of the salary increase should be based on

their category as STS 1 employee and should be based on the
increase of the salary of the rank and file employees.

9. Hence, the teachers filed the instant case with the Regional
Arbitration Branch, Cordillera Administrative Region, Baguio City.

5
SSS statements of Accounts and Loan Payments Details and Borrower Information; Philhealth Employer
Quarterly Remittance Report, Claim Form No. 1 and Member Data Records, showing the name of the
employer attached as ANNEXES “BB to HH” of complainants’ POSITION PAPER

2|Page
 However, respondent DIOCESE never filed a single
pleading in the instant case. It was only respondent PMC who
filed their answer and respective pleadings;

10. Unfortunately, the Labor Arbiter decided that no

employer-employee relationship exists between complainants and
the respondent PMC, and Dismissed the case for want of
jurisdiction. It also dismissed the case against respondent Baguio-
Benguet Diocesan School for lack of bases. Despite the fact that
respondent Diocese never even filed their answer or any pleadings
whatsoever;

ISSUES

WHETHER OR NOT the Labor Arbiter gravely abused its

discretion in finding no employer-employee relationship
between complainant-teachers and Respondent Philex
Mining Corporation?

ARGUMENTS/DISCUSSIONS

11. The Labor Arbiter gravely abused its discretion in finding no

employer-employee relationship between the teachers and the
respondent Philex Mining Corporation;

12. In his decision, the rationale of the Labor Arbiter stated that:

xxx
it is undeniable that respondent PMC established the PMES in
1960 as part of their social obligation in putting up a mining site
in the Province of Benguet and in order to meet the educational
needs of its employees’ dependents which paved the way towards
the hiring of the first 22 complainant-teacher before June 10, 1991.
It is safely inferred therefore as evidenced by the copies of
identification cards and the personnel action forms (see record
pages no. 88 to 124) issued to complainant-teachers that
employment relationship existed then between respondent PMC
and the said complainant-teachers because of the fact that the
selection and engagement of employees, payment of wages, power
to discipline and the power of control are lodged with the
respondent PMC.

However, the execution of the Deed of Donation ceding to

respondent BBDS all the properties of the PMES as well as the
management of its operations is the operative act which divested
respondent PMC ownership of the school and control over its

3|Page
 operations that eventually altered the employment relationship
between respondent PMC and the first 22 complainants-teachers.
xxx

13. Apparently, the Labor Arbiter gravely abused his discretion in

appreciating the evidence - the deed of donation, against the
teachers.

If it can be shown that administrative bodies grossly

missappreciated evidence of such nature so as to compel a
conclusion to the contrary, their findings of facts must necessarily
be reversed. Factual findings of administrative agencies do not have
infallibility and must be set aside when they fail the test of
arbitrariness.6

14. The Decision banked on the validity of the Deed of Donation as

the operative act that terminated the employer-employee
relationship between the teachers and respondent PMC. Admittedly
and without being repetitious, the teachers were employees of the
respondent PMC before the execution of the Donation. In fact, they
were enjoying various benefits provided for by the company.

15. Unfortunately, after the said donation, they were no longer

provided the same, to wit:

a. Their privilege to be categorized as STS 1 Employees and to

enjoy the benefits pertinent thereto pursuant to the Blue Book
Manual and instead they were categorized as rank and file
employees thereby underpaying them in the amount of Php
7,000.00 monthly since 1991 up to the present. Respondent
company should pay the complainants the said salary
differentials;

b. The medial assistance and yearly bonuses of the complainants

were undercomputed to the sum of Php 7,000.00 yearly from
1991 up to the present. Respondent PMC should pay the said
undercomputation;

c. There was no job deliberation to determine salary distinction

of the newly hired employees and the old employees;

d. No service credit for work-practices and meeting performed

after school hours as provided by the company policies;

e. Complainants were discriminated for their bonuses are given

only after the employees and the other departments were give;

6
Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 117038, September 25, 1997,
SCRA 445

4|Page
 f. Renewal of their licenses are no longer shouldered by the
company;

g. Complainants were not given emergency leave whenever their

emergency leave falls on a summer vacation;

h. No more ONE MONTH pay bonus before retirement

whenever the date of their retirement falls on a summer
vacation;

i. Board passers were not given Php 50.00 increase in their

salary as provided for in the company policy;

j. The computation of the salary increase should be based on

their category as STS I employee and should not be based on
the increase of the salary of the rank and file employees;

k. Therefore, respondent’s claim that no diminution of benefits

transpired after the donation is completely false and far from
the truth;

16. Respondent Philex Mining Corporation is hiding behind the

covers of the DEED OF DONATION and even went further to
stipulate provisions to feign control;

Piercing the veil of corporate fiction

17. While a corporation may exist for any lawful purpose, the law will
regard it as an association of persons or, in case of two corporations,
merge them into one, when its corporate legal entity is used as a
cloak for fraud or illegality. This is the doctrine of piercing the veil
of corporate fiction. The doctrine applies when such corporate
fiction is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, or when it is made as a shield to confuse the
legitimate issues, or where a corporation is the mere alter ego or
business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make
it merely an instrumentality, agency, conduit or adjunct of another
corporation.

18. Basic is the rule in corporation law that a corporation is a

juridical entity which is vested with a legal personality separate and
distinct from those acting for and its behalf and, in general, from the
people comprising it. Following this principle, obligations incurred
by the corporation, acting through its directors, officers and
employees, are its sole liabilities. A director, officer or employee of
a corporation is generally not held personally liable for obligations

5|Page
 incurred by the corporation.7 Nevertheless, this legal fiction maybe
disregarded if it is used as a means to perpetrate fraud or an illegal
act, or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, or to confuse legitimate issues.8

19.It cannot be more luminous than daylight, that the scheme of

respondent Philex Mining Corporation in entering into the said
donation and hiding under the guise of another entity, was merely
undermine and subvert labor rights which the employees are
entitled to by no less than the Constitution. Considering the fact that
the petitioners were already discriminated from the time of the
informal complaint filed with the DOLE;

20. In one case decided by the Supreme Court, it stated that “The
question as to whether an employer-employee relationship exists
in a certain situation continues to bedevil the courts. Some
businessmen try to avoid the bringing about of an
employer-employee relationship in their enterprises
because that judicial relation spawns obligations
connected with workmen’s compensation, social
security, medicare, minimum wage, termination pay,
and unionism. In light of this observation, it behooves
this Court to be ever vigilant checking the unscrupulous
efforts of some of our entrepreneurs, primarily aimed at
maximizing their return on investments at the expense of
the lowly workingman.”9

21.Again, the decision of the labor arbiter and the NLRC in finding no
employer-employee relationship between Philex Mining
Corporation and the complainants-petitioners is purely erroneous
for lack of factual and legal basis considering the resounding pieces
of evidence presented by the latter as to be further discussed
hereunder;

The Four-fold test of employer-employee relationship

22. Respondents linger to aver that using the four-fold test will
reveal that the petitioners are not the employees of the respondent
Philex Mining Corporation. On this account, petitioners vigorously
disagree and deem it proper to reiterate and argue the following:

On the selection and engagement of the employees

7
Garcia v. Social Security Commission Legal and Collection, G.R. No. 170735, December 17, 2007, 540
SCRA 456, 473-474
8
Aratea V. Suico, G.R. No. 170284, March 16, 2007, 518 SCRA 501, 507 citing Prudential Bank v. Alvair,
502 Phil. 595 (2005)
9
Aurora Land Projects Corp. v National Labor Relations Commission and Honorio Dagui G.R. No. 114733
January 2, 1997

6|Page
23. Firstly, it must be remembered that several of the petitioners-
teachers were already employees of Philex Mining Corporation,
there is then no question as to the selection and engagement of the
said employees;

24. Secondly, petitioners – teachers hired after the donation are still
employees of Philex Mining Corporation, and not the Diocese. We
reiterate what was stipulated in the DEED OF DONATION
paragraph 3.6 which clearly states that:

3) Company Prerogatives – the Company reserves the right to the

following:

xxx

3.6 To be consulted on the hiring of replacement and/or additional

employees as well as on dismissal/separation/retirement.
xxx

Without doubt, the reservation of the Company itself to be

consulted from the hiring, dismissal, separation, and retirement of
its employees should be more than sufficient to establish the
element of Selection and Engagement of Employees.

25. It must also be pointed out and noted that the alleged
engagement and selection of employees by the respondent Diocese
were only done after the instant issue of determining the employer
was brought about by the filing of the informal complaint with the
DOLE;

26. Furthermore, as pointed out in the complainant’s position

paper, teachers who were hired after 1991 were still appointed and
approved by the respondent company by DA V.S. MASINDO and
ELSA I. PRANGA, Human Resources Manager of respondent
company and were acting for and in behalf of the President or Vice
President of Philex Mining Corporation;10

27. Besides, if we are to construe the stipulations in the Deed of

Donation, we must do so with utmost regard to labor and to the best
interest of the laborers;

Article 1306 of the New Civil Code slows contracting parties to

establish stipulations, clauses, terms, and conditions which they
may deem convenient provided they do not contravene the law,
morals, good customs, public order or public policy;

10
Please see Annexes A to A-14, and B to B-11 of complainants’ position paper

7|Page
 In the case at bar, the contract adopted by the respondents was
unreasonable and oppressive. It was intended to benefit only the
contracting parties at the expense of the workingman.

Clearly, the donation resulted in the underpayment of

petitioner’s benefits which eventually caused and initiated the
dispute;

28. Hence, the safer and proper way to construe the contract is to
deem the respondent Philex Mining Corporation as the employer of
the petitioners-teachers.
On the payment of Wages

29. It is undisputed that the respondent Philex Mining Corporation

was the entity paying the wages of the teachers, before, during, and
after the execution of the Deed of Donation;

30. A careful examination of the records would should show that the
employer paying the teachers’ wages, namely the pay slips, SSS
memberships, and Certificates of Withholding Tax, clearly referring
to Philex Mining Corporation as the payor-employer of the
petitioners;

It is beyond cavil and an undeniable fact that the payment wages

came from the Philex Mining Corporation and not the Diocese;

However, respondents argue that the payments were only due to

the financial commitment under the Deed of Donation. The
petitioners are not persuaded.

The stipulation in the Deed of Donation states among others

that:

xxx

2) Financial Commitment – the company, as in the case of the

Saint Louis School shall grant continuing donation on the
following funding requirements for as long as the company’s
financial viability will permit;

2.2) Funding the salaries, allowances and all other cash and non-
cash benefits of teachers and administrative personnel and all
other expenses for the normal operation of the Elementary
School subject to deductions from income of the school derived
from educational service contracting that may be agreed with the
DECS in accordance with future contract that maybe entered into
the Vicariate with the Fund for Assistance for Private Education
under the Executive Order No. 156, S. 1968.

8|Page
 xxx

Respondents take shelter on the aforesaid stipulation, however,

they should be reminded that the definition of wages under the labor
code is stated as follows:

Article 97(6) of the Labor Code defines wages as “xxx the

remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be
done, or for services rendered or to be rendered. (emphasis ours)

If indeed there was a change of employer, then the payslips

themselves could have indicated therein that it was the Diocese and not
the Philex Mining Corporation, unfortunately, considerable years have
lapsed after the said donation without a change on the pay slips
records.

With regard to the SSS and other social benefits, the

pieces of evidence clearly show that the records’ change of
employer was made only after the year 2009 which is
already nine (9) years from the execution of the donation.
(emphasis ours)

In other words, the respondent corporation, in contemplation of

the possible labor complaint exerted efforts to change the employer to
the diocese with the illusion of deceiving the courts. In fact, petitioners
were lead to believe that herein respondent Philex Mining Corporation
was their employer for the past years before the institution of the
complaint.

The complaint was filed when the teachers-petitioners realized

that they were being discriminated from the other departments of
Philex Mining Corporation resulting to underpayment of wages and
other benefits in contrast to the employees of other departments of the
said corporation.

The principle of non-diminution of benefits states that: “any

benefit and supplement being enjoyed by employees cannot be
reduced, diminished, discontinued or eliminated by the employer.”11

This principle is founded on the Constitutional mandate to

“protect the rights of workers and promote their welfare,” and “to
afford labor full protection.” Said mandate in turn is the basis of Article
4 of the Labor Code which states that “all doubts in the implementation
11
Arco Metal Products v. Salvador Uy, G.R. No. 170734, May 14, 2008

9|Page
and interpretation of this Code, including its implementing rules and
regulations shall be rendered in favor of labor.”

On the Power of Dismissal

31.Before discussing this element, it should be made for the record that
the documents utilized and attached by the respondents in their
reply/rejoinder and position papers were all dated from 2009 and
later;

32. On that note, petitioners argue the following:

a. It has always been the respondent Philex Mining Corporation
who granted retirement benefits of the teachers in Philex
Mines Elementary School. As bolstered by the letter of Ms.
EVANGELINE B. SOTELO to ELSA G. PRANGAN.12

b. Respondents argue that the letter of Ms. Helen Soriano is

sufficient to establish the power to discipline and dismiss
employees by the Diocese. However, the letter was dated
March 5, 2013, where the Diocese now caused efforts to show
semblance of the employment relationship due to the ongoing
labor dispute for the determination of the employer of herein
teacher-complainants. Furthermore, the letter was addressed
to the Principal of Philex Mines Elementary School and not
the Diocese.

c. Retirement is the result of a bilateral act of the parties, a

voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age
agrees to sever his or her employment with the former.

In view thereof, the power to discipline and dismiss the

teachers belongs and was never divested from the respondent
Philex Mining Corporation.

On the Power of Control

33. Respondents continue to cloud the truth by forcing that the

element of control is exercised by the respondent Diocese over
herein petitioners, on that account, petitioners hereby adopts and
repleads the foregoing and hastens to add that:

a. The evident bad faith of the respondents in their illusory quest

to feign labor obligations is so pulsating from the fact that all
the pieces of evidence to prove that the respondent Diocese
exercise control over petitioners only came out after the

12
Annex “E” of complainants motion for reconsideration

10 | P a g e
 informal complaint to the Department of Labor and
Employment was filed;

b. In other words, to reiterate, a perusal of the said pieces of

evidence namely:
(1) Policy on Issuance or Release of School Forms and
Certificates (2) Transmutation Tables for Principals and
teachers; (3) Decorations for Advent and Christmas
Seasons; (4) Materials for Catechism on Penance Organized
Student’s Confession; (5) Diocese of Baguio Schools
Common Textbooks; (6) New Load Assignments for
Learning Area Coordination and Principals; (7) Guidelines
in the Assessment and Rating of Learning Outcomes; (8)
Diocese of Baguio-Schools Calendar; (9) Memorandum of
the Diocese dated 16 December 2011, which directed, among
others, Petitioners to renew their professional license in
compliance with RA 7836 where all issued by
respondent Diocesan after the complainant-
teachers informally filed a complaint before the
Department of Labor and Employment, Cordillera
Administrative Region, Baguio City prior to June 2,
2010. The aforementioned pieces of evidence were
issued by the Diocesan to show some semblance of
its control and supervision over the complainant-
teachers in anticipation of the formal complaint
which was subsequently filed. (emphasis ours)

34. Be that as it may, herein petitioners remind the respondents of

the true basis of control under the prevailing facts;

a. That even after the said donation, respondent Philex Mining

Corporation exercised control over the employees-teachers
through its appointed principal- is the one controlling and
supervising the complainants-teachers in performance of
their duties and functions as classroom teachers. Starting with
the principal of the Philex Mines Elementary School, Leandro
Yangot, then Ines B. Fusilero and finally to the present
principal of the PMESI Florence Sison, these high ranking
officers of the school were duly appointed by the respondent
company. The Identification Card issued to Ines B. Fusilero is
very clear on this matter. The company Id of Ines B. Fusilero
showed that the same was issued by the respondent company
and validated by its Validating Officer, ELSA G. PRANGAN –
the company’s Personnel Officer. It could not be said that
respondent company just allowed its name to be used by a
person not in its employ and had its Personnel Officer have it
be validated if the person to whom it was issued is not its
employee.

11 | P a g e
 It has been held that in a business establishment, an
identification card is usually provided not just as a security
measure but to mainly identify the holder thereof as a bona
fide employee of the firm who issues it.13

b. As explained in the petitioner’s Motion for Reconsideration:

in terms of enrolment, it is the respondent Philex Mining
Corporation that has the power to determine the pupils to be
enrolled in the Philex Mines Elementary School. Respondent
Diocesan has no participation whatsoever since the pupils to
be enrolled are selected by the respondent Philex Mining
Corporation evidence by the Philex Mining Corporation
MEMO dated June 04, 2011.

The Donation of structures did not result to the change in

employer

35. It is the respondents’ position that the donation resulted in the

change of employer which is a valid and legal exercise of
management prerogative;

36. A complete, thorough and holistic perusal of the Deed of

Donation clearly fails to show any transfer of employment nor any
provision relative thereto;

37. First, the subject of the donation refers only to physical

properties. The provisions of the said deed is very clear on this
matter stating:
xxx
1. Physical Properties – Subject of the Donation shall consist of
all machineries, equipment, furniture;
xxx
38. For reasons known only to the respondents, this provision was
interpreted as a change of employer. Herein petitioners are not
persuaded. A change of ownership over the physical properties does
not in itself include ownership over the laborers. After all, labor as
much as the laborers themselves are outside the commerce of men.

Hence, the donation cannot be the operative fact to transfer

employment and make the Diocese the employer of the teachers.

39. The quandary where the petitioners now sit is looking at the
sheer hope to be rewarded what is due them for the years they have
served the respondent company. After all teaching is not an easy
profession. In the fullness of God’s time, herein petitioners shall see
light;
13
VIllamaria v. Court of Appeals, G.R. No. 165881, April 19, 2006

12 | P a g e
 In teaching, you cannot see the fruit of a day’s work. It is invisible
and remains so, maybe for twenty years.14

40. To reiterate and with the risk of sounding repetitious, the

teachers were underpaid, their labor undermined, and their rights
violated.

41.To allow respondents to merely transfer the employment by a sheer

donation is an utter violence of the law. It would be a vicious cycle
adopted by employers to avoid obligations arising from the
employer – employee relationship specially in the instant case
where most of the teachers are of retiring ages;

42. After all, if we are to preserve the employment status of the

employees, then all benefits enjoyed by the petitioners should be the
same and corresponding to the benefits of the Philex Mines
Corporation employees as stated under the POLICY MANUAL or
blue book issued by the respondent company and as was enjoyed by
some petitioners before the donation;

43. Besides, the only way to preserve the employment status is to

maintain the employer Philex Mining Corporation, otherwise, the
overpowering influence of capital is used to undermine labor. It
must be remembered that Labor is prior tom and independent of,
capital. Capital is only the fruit of labor, and could never have
existed if labor had not first existed. Labor is the superior of capital,
and deserves much the higher consideration.

44. The case of Sunio is very clear on this matter where the Supreme
Court said that:

It is true that the sale of a business of a going concern does not

ipso facto terminate the employer-employee relations insofar as
the successor-employer is concerned, and that change of
ownership or management of an establishment or company is
not one of the just causes provided by law for termination of
employment.15

45. As far as the respondent Diocese is concerned, they have never,

in any way participated in the instant case. Not a single pleading
to prove that respondent Diocese is the employer of the
teachers was filed by the Vicariate;

14
Jacques Barzun
15
G.R. No. L-57767 January 31, 1984
ALBERTO S. SUNIO and ILOCOS COMMERCIAL CORPORATION, petitioners,
Vs.
NATIONAL LABOR RELATIONS COMMISSION, NEMESIO VALENTON, SANTOS DEL ROSARIO et.al.

13 | P a g e
46. In fact, if indeed there was a transfer of employment, the
respondent Diocese could have filed their answer or own opposition
to the case. Otherwise, this is the very semblance of guilt that the
church acted with the company in undermining the rights of the
laborers to what is due them under the law and fact prevailing.

47. Teaching is leaving a vestige of one self in the development of

another. And surely the student is a bank where you can deposit
your most precious treasures. So to devalue its worth would cause
unfairness and grave injustice to the teacher.

14 | P a g e