Read-Rite Philippines, Inc. vs. Francisco

G.R. No. 195457. August 16, 2017


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

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

All of the respondents received involuntary separation benefits equivalent to one month pay per year of service. They each executed a Release, Waiver and Quitclaim[10] (quitclaim), which stated, among others, that they had each received from Read-Rite the full payment of all compensation due them and they will not undertake any action against the company to demand further compensation.

Meanwhile in February 2002 and February 2003, respondents filed complaints against Read-Rite. Respondents 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 practice.

The Labor Arbiter dismissed the respondents’ complaints, ruling that additional voluntary separation benefits given is an isolated payment and did not ripen into a company policy.  

The NLRC affirmed and ruled that respondents 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.

The CA nullified and set-aside  NLRC’s decision.


WON were arbitrarily discriminated upon when they were not awarded additional voluntary separation benefits which they are entitled under Read-Rite’s Compensation and Benefits Manual.


NO. The Court rules that respondents are only entitled to involuntary separation pay given that they were retrenched employees.

The award of involuntary separation benefits in favor of respondents 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 respondents must be in accordance with the above mentioned provision.

The Supreme Court (SC) had since declared in National Sugar Refineries Corporation v. National Labor Relations Commission, 220 SCRA 452 (1993), 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.

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