December 11, 2013
Ponente: Peralta, J.
FACTS:
·
Philippine Carpet Manufacturing Corporation
(PCMC) is a corporation engaged in the business of manufacturing wool and yarn
carpets and rugs. In March 2004, it issued a memorandum of dismissal to five of
its employees (Tagyamon, Luna, Badayos, Dela Cruz, and Comandao) due to a slump
in the market demand for carpets. Fifteen other employees (including Marcos,
Ilao, and Nemis) claimed that they were also dismissed by PCMC in March 2004
when they were pressured to avail of the company's voluntary retirement
program.
·
In 2007, or three years after their dismissal
from service, the said employees questioned the validity of PCMC's retrenchment
program by filing a complaint for illegal dismissal. Their arguments were: (a)
the facts and circumstances of their situation match the facts and
circumstances in the 2006 case of Philippine
Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas, where the SC
ruled in favor of the employees; (b) PCMC did not, in fact, suffer losses shown
by its acts prior to and subsequent to their termination; and (c) their
acceptance of separation pay and signing of quitclaim is not a bar to the
pursuit of illegal dismissal case.
·
PCMC interposed the defense that: (a) its
decision to terminate the services of its former employees was a necessary
management prerogative; (b) there was an authorized cause for dismissal; (c)
the principle of laches should apply against the complainants because it took
them 3 years before filing a complaint; (d) considering that the complainants
accepted their separation pay and voluntarily executed deeds of release, waiver
and quitclaim, the principle of estoppel should apply, too; and (e) Marcos,
Ilao and Nemis were not dismissed from employment, but voluntarily retired from
employment to take advantage of the company’s program.
·
Labor Arbiter: Complaint dismissed for lack of
merit. The LA found no flaw in the complainants’ termination as they
voluntarily opted to retire and were subsequently re-employed on a contractual
basis then regularized, terminated from employment and were paid separation
benefits. In view of the employees'
belated filing of the complaint, the LA concluded that such action is a mere
afterthought designed primarily for them to collect more money, taking
advantage of the 2006 Supreme Court decision.
·
NLRC: Affirmed the LA's ruling. The NLRC also
emphasized the application of the principle of laches for complainants'
inaction for an unreasonable period.
·
CA: Reversed the NLRC ruling. The CA refused
to apply the principle of laches, because the case was instituted prior to the
expiration of the prescriptive period set by law which is four years. Citing
the Court’s decision in the Philcea case, the CA applied the doctrine of stare
decisis, in view of the similar factual circumstances of the cases. As to Ilao,
Nemis and Marcos, while acknowledging their voluntary resignation, the CA found
the same not a bar to the illegal dismissal case because they did so on the
mistaken belief that PCMC was losing money.
RULING:
Whether
the principle of laches applies in the instant case. – NO.
·
An action for reinstatement by reason of
illegal dismissal is one based on an injury to the complainants’ rights which
should be brought within four years from the time of their dismissal pursuant
to Article 1146 of the Civil Code. In this case, the dismissed employees filed
almost 3 years after their alleged illegal dismissal, which was still well within
the prescriptive period. Laches cannot, therefore, be invoked yet.
·
Laches has been defined as the failure or
neglect for an unreasonable and unexplained length of time to do that which by
exercising due diligence, could or should have been done earlier, thus, giving
rise to a presumption that the party entitled to assert it either has abandoned
or declined to assert it.
·
Laches is a doctrine in equity while
prescription is based on law. Our courts are basically courts of law not courts
of equity. Thus, laches cannot be invoked to resist the enforcement of an
existing legal right. x x x Courts exercising equity jurisdiction are bound by
rules of law and have no arbitrary discretion to disregard them.
·
As for equity which has been aptly described
as a "justice outside legality," this is applied only in the absence
of, and never against, statutory law or, as in this case, judicial rules of
procedure. Aequetas nunguam contravenit legis. The pertinent positive rules
being present here, they should preempt and prevail over all abstract arguments
based only on equity.
·
Thus, where the claim was filed within the
[four-year] statutory period, recovery therefore cannot be barred by laches.
Courts should never apply the doctrine of laches earlier than the expiration of
time limited for the commencement of actions at law.
Whether
the ruling in the Philcea case
applies in the instant case. – YES.
·
In Philcea
v. Hon. Sto Tomas, the company complained against issued a memorandum of
dismissal to 77 of its employees because it was supposedly suffering from
losses. However, after the dismissal of the said employees, the company hired
100 new employees and appropriated P60M tofor the purchase of new equipment. In
this case, the SC held that the company's subsequent actions belied its claim
that it was losing money. The company therefore acted in bad faith when it
dismissed 77 of its employees. The SC ruled that the employees' dismissal was
invalid and were therefore entitled to reinstatement with full backwages.
·
The facts and circumstances in the Philcea case are subtantially identical
to the case at bar. As such, the principle of stare decicis applies. The
dismissed employees here were similarly situated as the dismissed employees in
the Philcea case.
·
PCMC failed to prove that it was suffering
from losses. It failed to adduce clear and convincing evidence to prove the
confluence of the essential requisites for a valid retrenchment of its
employees.In short, the SC adopts its findings in the Philcea case that there
was no valid ground to terminate the employees.
Whether
the signing of waivers, releases, and quitclaims bar employees from demanding
benefits to which they are legally entitled. – NO.
·
As a rule, deeds of release and quitclaim
cannot bar employees from demanding benefits to which they are legally entitled
or from contesting the legality of their dismissal. The acceptance of those
benefits would not amount to estoppel.
·
To excuse the dismissed employees from
complying with the terms of their waivers, they must locate their case within
any of three narrow grounds: (1) the employer used fraud or deceit in obtaining
the waivers; (2) the consideration the employer paid is incredible and
unreasonable; or (3) the terms of the waiver are contrary to law, public order,
public policy, morals, or good customs or prejudicial to a third person with a
right recognized by law.
·
The instant case falls under the first
situation.
·
As the ground for termination of employment
was illegal, the quitclaims are deemed illegal as the employees’ consent had
been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims
and releases by employees pressured into signing by unscrupulous employers
minded to evade legal responsibilities.
·
There is no nexus between intelligence, or
even the position which the employee held in the company when it concerns the
pressure which the employer may exert upon the free will of the employee who is
asked to sign a release and quitclaim. A lowly employee or a sales manager, as
in the present case, who is confronted with the same dilemma of whether [to
sign] a release and quitclaim and accept what the company offers them, or [to
refuse] to sign and walk out without receiving anything, may do succumb to the
same pressure, being very well aware that it is going to take quite a while
before he can recover whatever he is entitled to, because it is only after a
protracted legal battle starting from the labor arbiter level, all the way to
this Court, can he receive anything at all. The Court understands that such a
risk of not receiving anything whatsoever, coupled with the probability of not
immediately getting any gainful employment or means of livelihood in the
meantime, constitutes enough pressure upon anyone who is asked to sign a
release and quitclaim in exchange of some amount of money which may be way
below what he may be entitled to based on company practice and policy or by
law.