Philippine Carpet MFG vs Taguamon

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 petitioners
retrenchment
and
voluntary
retirement
programs. The alleged reason of PCMC for such
action was because of less demand in the market of
their products due to the un-competitiveness of their
price On March 15, 2004, Tagyamon, Luna,
Badayos, Dela Cruz, and Comanda received a
uniformly worded Memorandum of dismissal
stating that they are going to be retrenched because
of the slump in market demand. 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 companys voluntary
retirement program and, in fact, voluntarily
executed their respective Deeds of Release, Waiver,
and Quitclaim. Thus, they filed a complaint for
illegal dismissal against PCMC, Mr. Patricio Lim
and Mr. David Lim.
Respondents contend that PCMC did not, in
fact, suffer losses shown by its acts prior to and
subsequent to their termination. They also insisted
that their acceptance of separation pay and signing
of quitclaim is not a bar to the pursuit of illegal
dismissal case. PCMC on the other hand, contend
that retrenchment was a necessary management
prerogative. Petitioners PCMC also stressed that
respondents belatedly filed their complaint as they
allowed almost three years to pass making the
principle of Laches applicable. Considering that

respondents accepted their separation pay and

voluntarily executed deeds of release, waiver and
quitclaim, PCMC invoked the principle of estoppel
on the part of respondents to question their
separation from the service. Finally, as to Marcos,
Ilao and Nemis, PCMC emphasized that they were
not dismissed from employment, but in fact they
voluntarily retired from employment to take
advantage of the companys program
Issue:
WON deeds of release and quitclaim can bar
employees from demanding benefits to which they
are legally entitled or from contesting the legality of
their dismissal.
Ruling:
No. As the ground for termination of employment
was illegal, the quitclaims are deemed illegal
because 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. The
circumstances
show
that
petitioners
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. The amounts already received by
respondents as consideration for signing the releases
and quitclaims, however, should be deducted from
their respective monetary awards.