Facts:
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. Respondents were its regular and
permanent employees, but were affected by petitioner's retrenchment and
voluntary retirement programs.
On March 15, 2004, Tagyamon, Luna, Badayos,
Dela Cruz, and Comandao received a uniformly worded
Memorandum of dismissal, to wit:
This is to inform you that in view of a slump
in the market demand for our products due to the un-competitiveness of our
price, the company is constrained to reduce the number of its workforce. The
long-term effects of September 11 and the war in the Middle East have greatly
affected the viability of our business and we are left with no recourse but to
reorganize and downsize our organizational structure.
We wish to inform you that we are implementing
a retrenchment program in accordance with Article 283 of the Labor Code of the
Philippines, as amended, and its implementing rules and regulations.
In this connection, we regret to advise you
that you are one of those affected by the said exercise, and your employment
shall be terminated effective at the close of working hours on April 15, 2004.
Accordingly, you shall be paid your separation
pay as mandated by law. You will no longer be required to report for work
during the 30-day notice period in order to give you more time to look for
alternative employment. However, you will be paid the salary corresponding to
the said period. We shall process your clearance and other documents and you
may claim the payables due you on March 31, 2004.
Thank you for your services and good luck to
your future endeavors.
Claiming that they were aggrieved by PCMC's decision to terminate
their employment, respondents filed separate complaints for illegal dismissal
against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and
Mr. David Lim.
PCMC, for its part, defended its decision to terminate the
services of respondents being a necessary management prerogative. It pointed
out that as an employer, it had no obligation to keep in its employ more
workers than are necessary for the operation of his business. Thus, there was
an authorized cause for dismissal.
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. With the
foregoing findings, the CA ordered that respondents be reinstated with full
backwages less the amounts they received as separation pay. In case of
impossibility of reinstatement, the CA ordered PCMC to pay respondents
backwages and in lieu of reinstatement, separation pay equal to one month pay
or 1⁄2 month pay for every year of service whichever is higher, plus moral
damages.
Ruling:
Laches
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. It has been repeatedly held by the Court that:
x x x
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. In Zabat Jr. v. Court of Appeals x x x, this
Court was more emphatic in upholding the rules of procedure. We said therein:
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."
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.
Laches cannot, therefore, be invoked yet. To be sure, laches may be applied
only upon the most convincing evidence of deliberate inaction, for the rights
of laborers are protected under the social justice provisions of the Constitution
and under the Civil Code.
Stare Decisis
The main issue sought to be determined in
this case is the validity of respondents' dismissal from employment.
Petitioners contend that they either voluntarily retired from the service or
terminated from employment based on an authorized cause. The LA and the NLRC
are one in saying that the dismissal was legal. The CA, however, no longer
discussed the validity of the ground of termination. Rather, it applied the Court's
decision in the Philcea case where the same ground was thoroughly discussed. In
other words, the appellate court applied the doctrine of stare decisis and
reached the same conclusion as the earlier case.
Under the doctrine of stare decisis, when a
court has laid down a principle of law as applicable to a certain state of
facts, it will adhere to that principle and apply it to all future cases in
which the facts are substantially the same, even though the parties may be
different.[36] Where the facts are essentially different, however, stare
decisis does not apply, for a perfectly sound principle as applied to one set
of facts might be entirely inappropriate when a factual variant is introduced.
The question, therefore, is whether the
factual circumstances of this present case are substantially the same as the
Philcea case.
We answer in the affirmative.
This case and the Philcea case involve the
same period which is March to April 2004; the issuance of Memorandum to
employees informing them of the implementation of the cost reduction program;
the implementation of the voluntary retirement program and retrenchment
program, except that this case involves different employees; the execution of
deeds of release, waiver, and quitclaim, and the acceptance of separation pay
by the affected employees.
The illegality of the basis of the
implementation of both voluntary retirement and retrenchment programs of
petitioners had been thoroughly ruled upon by the Court in the Philcea case. It
discussed the requisites of both retrenchment and redundancy as authorized
causes of termination and that petitioners failed to substantiate them. In
ascertaining the bases of the termination of employees, it took into
consideration petitioners' claim of business losses; the purchase of machinery
and equipment after the termination, the declaration of cash dividends to
stockholders, the hiring of 100 new employees after the retrenchment, and the
authorization of full blast overtime work for six hours daily. These, said the
Court, are inconsistent with petitioners' claim that there was a slump in the
demand for its products which compelled them to implement the termination
programs. In arriving at its conclusions, the Court took note of petitioners'
net sales, gross and net profits, as well as net income. The Court, thus,
reached the conclusion that the retrenchment effected by PCMC is invalid due to
a substantive defect. We quote hereunder the Court's pronouncement in the
Philcea case, to wit:
Respondents
failed to adduce clear and convincing evidence to prove the confluence of the
essential requisites for a valid retrenchment of its employees. We believe that
respondents acted in bad faith in terminating the employment of the members of
petitioner Union.
In contrast, in this case, the retrenchment
effected by respondent Corporation is invalid due to a substantive defect,
non-compliance with the substantial requirements to effect a valid
retrenchment; it necessarily follows that the termination of the employment of
petitioner Union's members on such ground is, likewise, illegal. As such, they
(petitioner Union's members) are entitled to reinstatement with full backwages.
We find no reason to depart from the above
conclusions which are based on the Court's examination of the evidence presented
by the parties therein. As the respondents here were similarly situated as the
union members in the Philcea case, and considering that the questioned
dismissal from the service was based on the same grounds under the same
circumstances, there is no need to relitigate the issues presented herein. In
short, we adopt the Court's earlier findings that there was no valid ground to
terminate the employees.
Indeed, in Abaria v. National Labor Relations
Commission, although the Court was confronted with the same issue of the
legality of a strike that has already been determined in a previous case, the
Court refused to apply the doctrine of stare decisis insofar as the award of
backwages was concerned because of the clear erroneous application of the law.
We held therein that the Court abandons or overrules precedents whenever it
realizes that it erred in the prior decision. The Court's pronouncement in that
case is instructive:
The
doctrine though is not cast in stone for upon a showing that circumstances
attendant in a particular case override the great benefits derived by our
judicial system from the doctrine of stare decisis, the Court is justified in
setting it aside. For the Court, as the highest court of the land, may be
guided but is not controlled by precedent. Thus, the Court, especially with a
new membership, is not obliged to follow blindly a particular decision that it
determines, after re-examination, to call for a rectification.
The Abaria case, however, is not applicable
in this case. There is no reason to abandon the Court's ruling in the Philcea
case.
WHEREFORE, premises considered, the petition
is hereby DENIED. The Court of Appeals Decision dated July 7, 2009 and
Resolution dated February 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.
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