MINUTE RESOLUTION DISPOSING THE PRIOR CASE IS NOT BINDING ON CLAIMANTS NOT PARTY TO THE SAID PREVIOUS CASE

Minute resolution that denies or dismisses a petition for failure to comply with formal and substantive requirements, the challenged decision, together with its findings of fact and legal conclusions, are deemed sustained.

As to its effect on other cases it constitutes res judicata. However, if other parties or another subject matter (even with the same parties and issues) is involved, the minute resolution is not binding precedent.

Thus, the Supreme Court held in the August 16, 2017 case as follows:

Read-Rite Philippines, Inc. vs. Francisco, et al.
G.R. No. 195457, August 16, 2017

Facts:

In the Compensation and Benefits Manual of Read-Rite’s predecessor company, among the benefits that an employee is entitled to are Voluntary Separation Benefit and Involuntary Separation Benefit.

Voluntary Separation Benefit provides that upon separation from employment after rendering at least twenty (20) continuous years of service, an employee shall be entitled to a lump sum benefit equal to his full retirement benefit with salary and service calculated as of the date of voluntary separation with the tabular rate provided.

While the Involuntary Separation Benefit states that an employee terminated involuntarily for reasons beyond his control (except for just cause), including but not limited to retrenchment or redundancy, shall be entitled to receive the applicable minimum benefit prescribed by law.

Similarly, in the Retirement Plan subsequently adopted by Read-Rite, Sections 3 of Article VII (Retirement Benefits) thereof provide for the voluntary separation benefit which states that upon separation from employment after having rendered ten (10) years of Continuous Service, a Member will receive a lump sum benefit equal his full accrued Normal Retirement Benefit multiplied by the appropriate factor as shown in its table.

While Section 4 of the same Article VII provides for involuntary separation benefit which states that a Member terminated involuntarily for reasons beyond his control (except for just cause), including but not limited to retrenchment or redundancy, shall be entitled to receive the applicable minimum benefit prescribed by law on involuntary separation or the benefit computed in accordance with Article VII Section 3 of this Plan, whichever is greater. Such benefit will be in lieu of and is in full satisfaction of all termination and retirement benefits which the Employee may be entitled to under the labor laws of the Republic of the Philippines and benefits under this Plan.

In April 1999, Read-Rite began implementing a retrenchment program due to serious business losses. About 200 employees were terminated and they were each given involuntary separation benefits equivalent to one-month pay per year of service. From this first batch of retrenched employees, however, there were eight employees -who had rendered at least ten years of service -that apparently received additional voluntary separation benefits.

Eventually, Read-Rite embarked on another round of retrenchment beginning the last quarter of 1999. Most of the 49 respondents in this case were part of this second batch of retrenched employees. All of the Francisco, et al. received involuntary separation benefits equivalent to one-month pay per year of service.

Accordingly, they each executed a Release, Waiver and Quitclaim (quitclaim), which stated, among others, that they had each received from Read-Rite the full payment of all compensation, benefits, and privileges due them and they will not undertake any action against the company to demand further compensation.

Eventually, Read-Rite sent notices to government agencies indicating that it had ceased its manufacturing operations effective June 18, 2003.

Meanwhile, Francisco, et al. filed complaints against Read-Rite involving two cases which were consolidated. Francisco, et al. sought the payment of additional voluntary separation benefits, legal interest thereon, and attorney’s fees. They argued that Read-Rite discriminated against them by not granting the aforesaid benefits, the award of which had since become a company policy.

LA Ruling:

The Labor Arbiter dismissed the Francisco, et al.’ complaints, ruling that voluntary separation benefits are separate and distinct from involuntary separation benefits.

The LA held that additional voluntary separation benefits were given once to a few retrenched employees in April 1999 did not convert such grant into a company practice. The isolated payment was no longer given to involuntarily separated employees in subsequent rounds of retrenchment as Read-Rite explained that the same was only paid by mistake.

Francisco, et al. appealed to the NLRC.

NLRC Ruling:

The National Labor Relations Commission (NLRC) affirmed the LA judgment.

The NLRC ruled that Francisco, et al. were not entitled to additional voluntary separation benefits as the same pertained to employees who have rendered at least ten years of service and who resigned voluntarily.

Moreover, involuntarily separated employees cannot avail themselves of both involuntary separation benefits and voluntary separation benefits, unless the same was so expressly provided by Read-Rite’s Compensation and Benefits Manual. The NLRC further upheld the Labor Arbiter’s position that an isolated payment of additional separation benefits to eight retrenched employees in April 1999 did not ripen into a company policy.

The NLRC also bound Francisco, et al. to their quitclaims absent any proof that the same were executed with vitiated consent. Francisco, et al. sought a reconsideration of the NLRC Resolution, manifesting that in similar labor cases involving other employees of Read-Rite, the Court of Appeals and the Supreme Court allegedly upheld said employees’ entitlement to additional voluntary separation benefits.

Francisco, et al. alleged that in a Decision dated October 7, 2005 in CA-G.R. SP No. 73795, entitled Read-Rite (Phils.), Inc. vs. National Labor Relations Commission and Teresa Ayore, the Court of Appeals affirmed the judgment of the NLRC that ruled in favor of another batch of Read-Rite employees in their pursuit of the same additional voluntary separation benefits sought by herein Francisco, et al.. Read-Rite did not appeal the appellate court’s decision, thus making the same final and executory.

In like manner, Francisco, et al. argued that the Court of Appeals rendered a Decision dated January 26, 2006 in CA-G.R. SP No. 82463, entitled Zamora v. Read-Rite Philippines, Inc. and National Labor Relations Commission, which affirmed the NLRC ruling that awarded additional voluntary separation benefits to yet another set of retrenched Read-Rite employees. Read-Rite elevated the said decision to the Supreme Court, but the petition was denied outright in a minute Resolution dated November 12, 2007 in G.R. No. 179022. The resolution became final and executory on March 28, 2008.

Francisco, et al. also argued that they had been discriminated upon by Read-Rite in their enjoyment of the additional voluntary separation benefits. Their quitclaims should not be used against them as the same were standard requirements imposed on resigning or separated employees. That they filed their complaints is proof that they did not voluntarily execute their quitclaims.

The NLRC denied the motion for reconsideration. Thus, Francisco, et al. elevated the case to the CA via Petition for Certiorari.

CA Ruling:

The CA granted the petition.

The CA held that the case involved the same facts and the same employer, i.e., Read-Rite, as that of the Ayore and Zamora cases. The complainant employees therein sought additional voluntary separation benefits previously granted by Read-Rite to the above-mentioned eight employees who were retrenched in April 1999, arguing that the denial of the benefits constituted undue discrimination.

The arguments put forward by the parties in Ayore and Zamora were found to be the same as the contentions of the herein Francisco, et al.. Given the said similarities, the Court of Appeals held that the rulings in Ayore and Zamora must be applied in a similar manner.

However, the CA agreed with Read-Rite that the grant of voluntary separation benefits to eight employees in April 1999 did not tum it into a company practice as it was given only once. Still, the failure of Read-Rite to grant the same to Francisco, et al. constituted discrimination. The appellate court further rejected Read-Rite’s claim that the grant of voluntary separation benefits to the eight retrenched employees in April 1999 was merely made by mistake. As for the quitclaims, the same cannot bar Francisco, et al. from demanding benefits to which they are legally entitled to.

Read-Rite moved for reconsideration but the same was denied by the CA. Hence, the petition before the SC.

Issue/s:

Whether or not the single or isolated incident granting the benefit amounted to company practice

Whether or not retrenched employees are entitled to voluntary separation benefits as provided in the company policy

Whether or not the disposition on the prior case by the Supreme Court via a Minute Resolution is applicable to employees who were not parties in said case.

SC Ruling:

The SC found the petition meritorious.

The SC held that Francisco, et al. are only entitled to involuntary separation pay given that they were retrenched employees.

Given the diametrical nature of an involuntary and a voluntary separation from service, one necessarily excludes the other. An employee’s termination from service cannot be voluntary and involuntary at the same time.

As Francisco, et al.’ termination was involuntary in nature, i.e., by virtue of a retrenchment program undertaken by Read-Rite, they are only entitled to receive involuntary separation benefits under the express provisions of the company’s Compensation and Benefits Manual and the Retirement Plan.

The SC was more inclined to believe that the payment of additional voluntary separation benefits, on top of involuntary separation benefits, to eight retrenched employees of Read-Rite in April 1999 was indeed a mistake since the same was not in accordance with the company’s Compensation and Benefits Manual and its Retirement Plan. In any event according to SC, whether said payment was a mistake or otherwise, Francisco, et al. cannot use the same to bolster their own claim of entitlement to additional voluntary separation benefits.

The labor tribunals and the Court of Appeals were one in declaring that the single, isolated payment of additional voluntary separation benefits to the eight retrenched employees of Read-Rite in April 1999 did not convert the same into a voluntary company practice that cannot be unilaterally withdrawn by the company.

The Court had since declared in National Sugar Refineries Corporation vs. National Labor Relations Commission that to be considered as a company practice, the grant of benefits should have been practiced over a long period of time, and must be shown to have been consistent and deliberate.

As to the final ruling in Zamora, the same is a minute resolution of the Supreme Court that affirmed the judgment of the Court of Appeals. In Alonso vs. Cebu Country Club, Inc., the SC declared that a minute resolution may amount to a final action on a case, but the same cannot bind non-parties to the action.

Further, in Philippine Health Care Providers, Inc. vs. Commissioner of Internal Revenue, the SC expounded on the consequence of issuing a minute resolution that although contained in a minute resolution, the dismissal of the petition was a disposition of the merits of the case. When the SC dismissed the petition, it effectively affirmed the CA ruling being questioned. As a result, the SC ruling in that case has already become final.

When a minute resolution denies or dismisses a petition for failure to comply with formal and substantive requirements, the challenged decision, together with its findings of fact and legal conclusions, are deemed sustained. As to its effect on other cases, the SC held that with respect to the same subject matter and the same issues concerning the same parties, it constitutes res judicata. However, if other parties or another subject matter (even with the same parties and issues) is involved, the minute resolution is not binding precedent.

As Francisco, et al. were not parties in the Zamora case, they cannot rely on the minute resolution therein to obtain a dismissal of the instant petition.

The award of involuntary separation benefits in favor of Francisco, et al. should be in accordance with the provisions of not only the Compensation Benefits Manual but also the Read-Rite Retirement Plan. The latter provides for involuntary separation benefit that is equivalent to the applicable minimum benefit prescribed by law on involuntary separation or the benefit computed in accordance with Section 3, Article VII of the Retirement Plan, whichever is greater.

Therefore, the amount of involuntary separation benefits that were awarded to Francisco, et al. must be in accordance with the above-mentioned provision. Francisco, et al. already received involuntary separation benefits of one month pay per year of service. This award is clearly more than that prescribed in Article 283 (now Article 298) of the Labor Code, as amended, which only grants separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher, in cases of retrenchment.

Verily, Francisco, et al. were paid involuntary separation benefits which exceeded what they were entitled to under the law or the Compensation Benefits Manual and the Retirement Plan.

Labor Code 2018 Edition (Renumbered and updated)