G.R. No. 195457 August 16, 2017
READ-RITE PHILIPPINES, INC., Petitioner, vs. GINA G. FRANCISCO, ET AL., Respondents.

FACTS

Petitioner Read-Rite Philippines, Inc., a manufacturer of magnetic heads, implemented a retrenchment program in 1999 due to serious business losses. Its Compensation and Benefits Manual and subsequent Retirement Plan provided distinct benefits: a Voluntary Separation Benefit for employees with at least ten years of service who separate voluntarily, and an Involuntary Separation Benefit for those terminated for reasons like retrenchment, entitling them to the “applicable minimum benefit prescribed by law” or the voluntary benefit calculation, whichever is greater. During the first wave of retrenchment in April 1999, eight employees with over ten years of service were mistakenly given both involuntary separation pay and an additional voluntary separation benefit. In a subsequent round later that year, the respondent employees, who were also retrenched, received only the standard involuntary separation pay equivalent to one month’s salary per year of service. Each respondent executed a Release, Waiver, and Quitclaim acknowledging full payment.
The respondents later filed complaints, claiming entitlement to the additional voluntary separation benefits, arguing that the prior grant to the eight employees established a company practice of granting such benefits to all retrenched employees with ten years of service. The Labor Arbiter and the NLRC dismissed the complaints, ruling that voluntary and involuntary separation benefits are distinct, the single prior grant was a mistake and did not create a binding practice, and the quitclaims were validly executed.

ISSUE

Whether the respondent employees, who were involuntarily separated due to retrenchment, are entitled to claim the additional Voluntary Separation Benefit provided in the company’s Retirement Plan.

RULING

No. The Supreme Court denied the petition and affirmed the Court of Appeals’ decision which had reversed the NLRC and granted the respondents’ claim. The Court’s legal logic centered on the interpretation of the company’s own Retirement Plan. Section 4 of Article VII explicitly states that an employee terminated involuntarily, including for retrenchment, is 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.” Section 3 details the computation for the Voluntary Separation Benefit. The Court held that the plain language of Section 4 creates a clear entitlement for involuntarily separated employees to receive the higher of two amounts: the statutory separation pay or the amount computed under the voluntary separation formula. Since the respondents had rendered at least ten years of service, the benefit calculated under the voluntary separation formula (a percentage of their full retirement benefit) was demonstrably greater than the one-month-per-year statutory pay they initially received. The company’s argument that the voluntary benefit was exclusive to those who resigned was contradicted by the Plan’s own text, which expressly applied that calculation as a comparative benchmark for involuntary separations. The prior grant to the eight employees was not merely a mistaken act of generosity but was, in fact, compliance with the Plan’s terms. The quitclaims were invalidated as they waived a benefit expressly granted by the Plan, and acceptance of a lesser amount does not constitute a waiver of the correct, higher benefit mandated by company policy.