G.R. No. 211228, November 12, 2014
UNIVERSITY OF PANGASINAN, INC., CESAR DUQUE/JUAN LLAMAS AMOR/DOMINADOR REYES, Petitioners, v. FLORENTINO FERNANDEZ AND HEIRS OF NILDA FERNANDEZ, Respondents.
D E C I S I O N
This case arose from a complaint for illegal dismissal filed by [Florentino and Nilda] on May 18, 2000 against [UPl], its President Cesar Duque, Executive Vice-President Juan Llamas Amor and Director for Student Affairs Dominador Reyes x x x.
In a Decision dated November 6, 2000, [Labor Arbiter Rolando D. Gambito (LA Gambito)] ruled that [Florentino and Nilda] were illegally dismissed by [the petitioners]. The dispositive portion of the Decision reads:"ACCORDINGLY, judgment is hereby rendered as follows:
1. Declaring that [the petitioners] are not liable for unfair labor practice;
2. Declaring that [Florentino and Nilda] were dismissed from their positions as college instructors without just and valid cause;
3. Ordering [UPl] and/or its president Cesar T. Duque, and vice-president, Juan Llamas Amor to pay [Florentino and Nilda] backwages, allowances and other benefits computed from the date of their dismissal on May 9, 2000 up to November 6, 2000, date of promulgation of decision;
4. Ordering that instead of reinstatement of [Florentino and Nilda] to their former positions, [the petitioners] should pay them separation pay equivalent to one (1) month salary for every year of service, a fraction of at least six (6) months shall be considered as one (1) whole year;
5. Ordering the [petitioners] to pay [Florentino and Nilda] attorney's fees in the amount of P20,000[.00];
6. Denying [Florentino and Nilda's] claim for moral and exemplary damages and all other claims for want of merit.SO ORDERED."
COMPUTATION OF AWARD: (1) BACKWAGES (May 9-November 6, 2000); a) [Florentino] P10,706.95 (mo. rate) x 5 mos. & 21 days = P63,754.82 b) [Nilda] P11,282.28 (mo. rate) x 5 mos. & 21 days = P67.180.83 TOTAL BACKWAGES P 130,935.65 (2) Separation Pay: [Florentino] P10,706.95x 26 years P278,380.70 [Nilda] P11,282.28x29 years P327,186.12 TOTAL P605,566.82 ATTORNEY'S FEES: P 20,000.00 TOTAL AWARD: BACKWAGES P130,935.65 SEPARATION PAY P605,566.82 ATTORNEY'S FEES P 20,000.00 P756,502.47
[The petitioners] interposed an appeal to the NLRC, which affirmed [LA Gambito's] Decision in a Resolution dated June 29, 2001 xxx[.]
X X X X
[The petitioners] filed a Motion for Reconsideration which was granted by the NLRC in a Resolution dated February 21, 2002, the dispositive portion of which reads:"WHEREFORE, finding compelling reasons to reverse Our previous ruling, the Motion for Reconsideration is hereby GRANTED, the Resolution dated June 29, 2001 is hereby SET ASIDE and the decision of [LA Gambito] REVERSED. The complaint is herebyAggrieved, [Florentino and Nilda] filed a Petition for Certiorari with [the CA] to annul the NLRC's Resolution dated February 21, 2002. On September 13, 2004, [the CA] rendered a Decision granting the petition. The dispositive portion thereof reads:
DISMISSED with costs against [Florentino and Nilda].
SO ORDERED.""WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed resolution dated February 21, 2002 of x x x NLRC (First Division) in NLRC NCR Case No. SUB-RAB 01-07-05-0092-00; NLRC NCR CA No. 027116-2001 is hereby REVERSED and SET ASIDE. The decision of [LA Gambito] dated November 6, 2000 is hereby REINSTATED.
[UPI] appealed [the CA's] Decision to the Supreme Court but which was denied by the Supreme Court in a Resolution dated February 21, 2005 on the ground that [UPI] failed to properly verify its petition in accordance with Section 1, Rule 45 in relation to Section 4, Rule 7, and A.M. No. 00-2-10-SC. [UPI's] motion for reconsideration was likewise denied with finality by the Supreme Court in a Resolution dated June 6, 2005.
As a consequence, an Entry of Judgment was issued by the Supreme Court declaring its Resolution dated February 21, 2005 final and executory as of July 11, 2005.
Subsequently, [Florentino and Nilda] moved for a re-computation of their award to include their backwages and other benefits from the date of the decision of [LA Gambito] up to the finality of the decision on July 11, 2005. They likewise moved for the issuance of a writ of execution. During the pre-execution conference, [UPI] questioned the re-computation of [Florentino and Nilda's] backwages and awards. In view of a stand-off, [LA Flores] required both parties to submit their respective computations and justifications.
On August 22, 2006, [LA Flores] issued an Order ruling as follows:"Before Us is an Omnibus Motion filed by [UPI] through its legal counsel alleging among other things the adoption of the final decision of [LA Gambito] dated November 6, 2000.
"xxx Please take note that x x x the decision rendered by the [CA] reinstating the decision of [LA Gambito] xxx was declared final and executory by no less than the Supreme Court of the Philippines by its issuance of a final entry of Judgment dated July 11, 2005.
Hence, there is a need to update and upgrade the computation of money claims and separation pay which has amounted now to P2,165,467.02 as finally completed by our Labor Arbitration Associate Galo Regino L. Esperanza hereto attached as Annex "A".
The pending motion to Dismiss is hereby set aside for lack of merit.
The substitution of [the] heirs of [Nilda] is hereby granted.
On the same date (August 22, 2006), [LA Flores] issued a writ of execution.
[UPI] filed a Motion for Reconsideration of the above Order but it was denied by [LA Flores] in an Order dated September 12, 2006 on the ground that no motion for reconsideration of any order or decision is allowed under Section 19, Rule V of the NLRC Rules of Procedure.
In another Order likewise dated September 12, 2006, [LA Flores] denied [UPI's] Motion to Quash Writ of Execution and directed the sheriff to proceed with the due execution of the writ.
[The petitioners] interposed an appeal to the NLRC questioning [LA Flores'] Orders dated August 22, 2006 and September 12, 2006 basically alleging that [Florentino and Nilda] are only entitled to the amount of P756,502.47 awarded by [LA Gambito] in the Decision dated November 6, 2000, and not the recomputed amount of P2,165,467.02.
In the assailed Decision dated July 21, 2008, the NLRC granted the appeal, x x x
x x x x
[Florentino and Nilda] filed a Motion for Reconsideration but it was denied by the NLRC in a Resolution dated November 11, 2008 x x x[.]
x x x x9 (Citations omitted and italics in the original)
WHEREFORE, premises considered, the Petition for Certiorari is GRANTED. The Decision dated July 21, 2008 and Resolution dated November 11, 2008 of the [NLRC] are REVERSED and SET ASIDE and [LA Flores'] Order dated August 22, 2006 is REINSTATED.
[The petitioners] are ORDERED to PAY [the respondents] the following:
1) backwages computed from May 9, 2000 (the date when [Florentino and Nilda] were illegally dismissed from employment) up to July 11, 2005 (the date of the finality of the Supreme Court's Resolution per Entry of Judgment);
2) separation pay computed from [Florentino and Nilda's] respective first day[s] of employment with [UPI] up to July 11, 2005 at the rate of one month pay per year of service;
3) attorney's fees in the amount of P20,000.00; and
4) legal interest of twelve percent (12%) per annum of the total monetary awards computed from July 11, 2005 until their full satisfaction.
The [LA] is hereby ORDERED to make another re-computation according to the above directives.
We are mindful of the principle of immutability of judgment [and] that the fallo embodies the court's decisive action on the issue/s posed, and is thus the part of the decision that must be enforced during execution. However, said doctrine finds no application in the case at bench.
It must be stressed that in illegal dismissal cases, the re-computation of backwages and similar benefits is merely an inevitable consequence of the delay in paying the awards stated in the [LA's] decision. The instant controversy is not novel and was settled and adequately explained by the Supreme Court in the case of Session Delights Ice Cream and Fast Foods vs. [CA], viz:x x x x
In concrete terms, the question is whether a re-computation in the course of execution of the [LA's] original computation of the awards made, pegged as of the time the decision was rendered and confirmed with modification by a final CA decision, is legally proper. The question is posed, given that the petitioner did not immediately pay the awards stated in the original [LA's] decision; it delayed payment because it continued with the litigation until final judgment at the CA level.
A source of misunderstanding in implementing the final decision in this case proceeds from the way the original [LA] framed his decision. The decision consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney's fees, and legal interests.The second part is the computation of the awards made. On its face, the computation the [LA] made shows that it was time-bound as can be seen from the figures used in the computation. This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be re-computed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the [LA's] decision that the CA had affirmed. The public and private respondents, on the other hand, posit that a re-computation is necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in lieu reinstatement.That the [LA's] decision, at the same time that it found that an illegal dismissal had taken place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the then NLRC Rules of Procedure which requires that a computation be made. This Section in part states:[T]he [LA] of origin, in cases involving monetary awards and at all events, as far as practicable, shall embody in any such decision or order the detailed and full amount awarded.Clearly implied from this original computation is its currency up to the finality of the [LA's] decision. As we noted above, this implication is apparent from the terms of the computation itself, and no question would have arisen had the parties terminated the case and implemented the decision at that point.x x x x
We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the [LA's] original decision in accordance with its basic component parts as we discussed above. To reiterate, the first part contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or monetary consequences of the illegal dismissal, computed as of the time of the [LA's] original decision.
To illustrate these points, had the case involved a pure money claim for a specific sum (e.g., salary for a specific period) or a specific benefit (e.g., 13l month pay for a specific year) made by a former employee, the [LA's] computation would admittedly have continuing currency because the sum is specific and any variation may only be on the interests that may run from the finality of the decision ordering the payment of the specific sum.
In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this case, where the claim is the legality of the termination of the employment relationship). In this type of cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status (in this case, the payment of separation pay and backwages and attorney's fees when illegal dismissal is found). When this type of decision is executed, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties' rights and obligations.
In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that separation pay in lieu of reinstatement and backwages should be paid. How much that separation pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the [LA] of origin as the labor official charged with the implementation of decisions before the NLRC.
As the CA correctly pointed out, the basis for the computation of separation pay and backwages is Article 279 of the Labor Code, as amended, which reads:"xxx An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement."Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a part of the law - specifically, Article 279 of the Labor Code and the established jurisprudence on this provision - that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments.
x x x x
x x x x
That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the [LA's] decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point. The decision also becomes a judgment for money from which another consequence flows - the payment of interest in case of delay. This was what the CA correctly decreed when it provided for the payment of the legal interest of 12% from the finality of the judgment, in accordance with our ruling in Eastern Shipping Lines, Inc. v. [CA].
x x x The strict legalism in limiting the computation of the backwages and other benefits simply because the Decision of the [LA] provided a computation only up to the date of the promulgation of his Decision on November 6, 2000 cannot override or prejudice the substantive rights of an illegally dismissed employee under the law and extant jurisprudence.
Likewise, pursuant to the above ruling of the Supreme Court, the monetary award in favor of [the respondents] should earn legal interest at the rate of 12% from July 11, 2005, the date of the finality of the Decision, as a necessary consequence of [the petitioners'] legal actions in questioning the execution of the [LA's] Decision x x x.
x x x x
With regard to [the respondents'] claims for additional attorney's fees as well as moral and exemplary damages, suffice it to state that the [LA] has already awarded [in their favor] the amount of P20,000.00 as attorney's fees but denied [their] claim for damages in his Decision dated November 6, 2000. Any modification, which effectively increases or decreases the original amount awarded as attorney's fees is not included or contemplated in the discussion above on re-computation of monetary awards. Pursuant to the Session Delights Ice Cream and Fast Foods ruling, the award of attorney's fees involves a specific sum and "would have continuing currency". If at all, the attorney's fees awarded in favor of [the respondents] will earn legal interest pursuant to the rules laid down in Eastern Shipping Lines vs. [CA].
[The respondents'] claim for moral and exemplary damages was correctly denied by the [LA]. While their dismissal may be illegal, there was no showing that [the petitioners] acted in bad faith, x x x.12 (Citations omitted)
A FINAL AND EXECUTORY DECISION IS IMMUTABLE AND CAN NO LONGER BE MODIFIED. THE ORDER OF [LA] FLORES, AS SUSTAINED IN THE ASSAILED RULINGS, CANNOT MODIFY THE FINAL AND EXECUTORY GAMBITO DECISION.
EVEN ASSUMING ARGUENDO THAT THE RE-COMPUTATION OF AWARDS IS VALID, [UPI] IS NOT LIABLE TO PAY BACKWAGES AND SEPARATION PAY FOR THE FULL PERIOD FROM 06 NOVEMBER 2000 UP TO 11 JULY 2005. RESPONDENTS WERE NOT REINSTATED IN THE GAMBITO DECISION.
RESPONDENTS ARE NOT ENTITLED TO BACKWAGES AND SEPARATION PAY BEYOND THEIR RETIREMENT AGES. NEITHER ARE THEY ENTITLED TO LEGAL INTEREST AT 12%.14
Updating the computation of awards to include as well backwages and separation pay corresponding to the period after the rendition of LA Gambito's decision on November 6, 2000 up to its finality on July 11, 2005 is not violative of the principle of immutability of a final and executory judgment.
[N]o essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a part of the law—specifically, Article 279 of the Labor Code and the established jurisprudence on this provision—that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments.
x x x x
That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the labor arbiter's decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point, x x x.28 (Citation omitted and underscoring ours)
While the dispositive portion of the herein assailed CA decision did not explicitly refer to the 13th month pay, its inclusion in the computation approved by LA Flores is proper.
In computing the backwages and benefits awarded to the respondents, the reckoning period is not interrupted by the NLRC's reversal of LA Gambito's finding of illegal dismissal.
One of the natural consequences of a finding that an employee has been illegally dismissed is the payment of backwages corresponding to the period from his dismissal up to actual reinstatement. The statutory intent of this matter is clearly discernible. The payment of backwages allows the employee to recover from the employer that which he has lost by way of wages as a result of his dismissal. Logically, it must be computed from the date of petitioner's illegal dismissal up to the time of actual reinstatement. There can be no gap or interruption, lest we defeat the very reason of the law in granting the same, x x x.37 (Citation omitted and underscoring ours)
The CA properly imposed a legal interest upon the total monetary award reckoned from the Entry of Judgment on July 11, 2005 until full satisfaction thereof, but the Court modifies the rate indicated in the assailed decision to conform to the doctrine in Nacar.
[T]he Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013, approved the amendment of Section 240 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799,41Series of 2013. effective July 1, 2013, the pertinent portion of which reads:The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum - as reflected in the case of Eastern Shipping Lines and Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 - but will now be six percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively. Consequently, the twelve percent (12%)per annum legal interest shall apply only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable.Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
x x x x
Nonetheless, with regard to those judgments that have become final and executory prior to July 1, 2013, said judgments shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.42 (Some citations omitted and underscoring ours)
(1) backwages, including the 13th month pay, to be computed from May 9, 2000, the date of illegal dismissal from employment, up to July 11, 2005, the date of finality of the Court Resolution in G.R. No. 166103 per Entry of Judgment;
(2) separation pay computed from Florentino Fernandez and Nilda Fernandez's respective first days of employment with the University of Pangasinan, Inc. up to July 11, 2005 at the rate of one month pay per year of service;
(3) attorney's fees in the amount of P20,000.00; and
(4) interest of twelve percent (12%) per annum of the total monetary award, computed from July 11, 2005 to June 30, 2013, and six percent (6%) per annum from July 1,2013 until full satisfaction.
* Acting member per Special Order No. 1866 dated November 4, 2014 vice Associate Justice Diosdado M. Peralta.
1Rollo, pp. 9-43.
2 Penned by Associate Justice Rosalinda Asuncion-Vicente, with Associate Justices Ramon R. Garcia and Rodil V. Zalameda, concurring; id. at 45-59.
3 Id. at 60-62.
4 Id. at 162-170.
5 Id. at 171-172.
6 Id. at 150.
7 Nilda died on May 7, 2006 (id. at 187) and was ordered substituted by her heirs on August 22 2006 (id. at 150).
8 Id. at 173-190.
9 Id. at 46-50.
10 Id. at 173-190.
11 Id. at 58-59.
12 Id. at 52-58.
13 Id. at 192-206.
14 The fourth issue raised by the petitioners relates to the first three, hence, it need not be restated; id at 20.
15 G.R. No. 172149, February 8, 2010, 612 SCRA 10.
16Rollo, pp. 28-31.
17 Id. at 23-24.
18 Id. at 92-100, 101-112.
19 Id. at 32-33.
20 Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term 'one-half (1/2) month salary' shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.
21 325 Phil. 753 (1996).
22 Id. at 759.
23 G.R. No. 189871, August 13, 2013, 703 SCRA 439.
24 Id. at 456; rollo, p. 38.
25Rollo, pp. 223-234.
26 Id. at 231-232.
27 G.R. No. 198423, October 23, 2012, 684 SCRA 344.
28 Supra note 15, at 25-26.
29 Requiring All Employers to Pay Their Employees a 13th Month Pay, effective December 16, 1976.
30 Supra note 27, at 364.
31Rollo, pp. 63-86.
32 Id. at 151.
33 Id. at 58-59.
34Henlin Panay Company v. NLRC, G.R. No. 180718, October 23, 2009, 604 SCRA 362, 372.
35 Supra note 27, at 356-357, citing Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), supra note 15, at 26.
36 598 Phil. 145 (2009).
37 Id. at 161-162.
38 Supra note 27, at 357, citing Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), supra note 15, at 26.
39 Supra note 27, at 360.
40 SEC. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve percent (12%) per annum.
41 Rate of interest in the absence of stipulation.
42 Supra note 23, at 454-457.