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Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation registered in the Philippines engaged in the business of manufacturing wool and yarn carpets and rugs. 4 Respondents were its regular and permanent employees, but were affected by petitioner's retrenchment and voluntary retirement programs.
On March 15, 2004, Tagyamon, 5 Luna, 6 Badayos, 7 Dela Cruz, 8 and Comandao 9 received a uniformly worded Memorandum of dismissal. As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004, together with fifteen (15) other employees on the ground of lack of market/slump in demand. PCMC, however, claimed that they availed of the company's voluntary retirement program and, in fact, voluntarily executed their respective Deeds of Release, Waiver, and Quitclaim.
Respondent employees also insisted that their acceptance of separation pay and signing of quitclaim is not a bar to the pursuit of illegal dismissal case. PCMC, for its part, defended its decision to terminate the services of respondents being a necessary management prerogative.
The LA found no flaw in respondents' 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. NLRC sustained the decision of LA and emphasized the application of the principle of laches for respondents' inaction for an unreasonable period.
In reversing the earlier decisions of the LA and the NLRC, 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.
1. Whether principle of laches apply in this case?
2. Whether waivers, releases and quitclaims can bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal
1. No. 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. . . . Courts exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. 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." 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 33 of the Civil Code. Respondents' complaint filed almost 3 years after their alleged illegal dismissal was still well within the prescriptive period.
2. 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." The circumstances show that petitioner's misrepresentation led its employees, specifically respondents herein, to believe that the company was suffering losses which necessitated the implementation of the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and quitclaim.