G.R. No. L-76768 September 12, 1988
CARLOS KENG SENG, petitioner, vs. LORENZO DE LA CRUZ, ELVIRA SEVERO, ALICE UBERAS, CRISTINA BULADRAN, ELVIRA CATALUNA, DANNY ORTEGA, JOSE ESCALARES, EVELYN SEVERO, ROBERTO CALAMBA, respondents.

FACTS

Petitioner Carlos Keng Seng, a moviehouse operator in Bacolod City, informed his nine employees in July 1980 of a temporary closure due to the city government’s strict tax imposition. The private respondents subsequently executed individual releases of claims before a labor conciliator, stating they had voluntarily resigned and received their 13th month pay, living allowance, and other benefits. Petitioner then filed a report of termination citing voluntary resignation. However, on September 2, 1980, the employees filed a complaint for illegal dismissal. They alleged that their resignations were part of a scheme by cinema operators to protest the taxes, and that petitioner promised to reinstate them once the business reopened. Petitioner denied making any such promise, contending the resignations and settlement were voluntary and final.

ISSUE

The core issue is whether the private respondents were illegally dismissed, entitling them to reinstatement and backwages, despite having executed quitclaims and received separation benefits.

RULING

The Supreme Court affirmed the finding of illegal dismissal but modified the award of backwages. The legal logic hinges on the validity of the quitclaims and the existence of a promise of reinstatement. While the employees signed releases and accepted benefits, the labor authorities found credible their assertion that this was done based on petitioner’s promise to rehire them upon resumption of operations. Following established jurisprudence, such as People’s Bank and Trust Company vs. People’s Bank and Trust Company Employees Union, the acceptance of separation pay does not automatically bar employees from contesting the legality of their dismissal, especially when the quitclaim was executed under circumstances casting doubt on its voluntariness. The Court upheld the factual finding that a promise of reinstatement existed, rendering the subsequent termination not truly voluntary. Therefore, reinstatement was proper since the moviehouse had resumed operation. However, the Court, agreeing with the Solicitor General, eliminated the award of three years’ backwages. The rationale was that granting full backwages despite the employees having received separation benefits would constitute unjust enrichment at the employer’s expense. The decision balanced the remedy for illegal dismissal with the principle against double recovery.