Bliss Development Corporation v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondents Teresita Lejano and Rodolfo Angeles were employed by petitioner Bliss Development Corporation (BDC). BDC terminated their employment on February 6, 1987, on grounds of loss of trust and confidence. Private respondents filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC). Procedural History: The Labor Arbiter issued a Decision on August 16, 1987, ordering BDC to reinstate the private respondents without loss of seniority rights and with full backwages from February 6, 1987, to actual reinstatement. BDC appealed the decision, but its appeal was dismissed by the NLRC for failure to post the required bond. A petition for certiorari with the Supreme Court was also dismissed. Private respondents filed a motion for execution, and the Labor Arbiter issued a Writ of Execution on October 29, 1991, ordering payment of monetary benefits amounting to P1,174,814.28. Subsequently, private respondents filed a Final Motion for Execution claiming additional entitlements for salaries, allowances, and separation benefits in lieu of reinstatement due to BDC's dissolution. The Labor Arbiter granted this motion, ordering additional payments. The NLRC, however, set aside the Labor Arbiter's order and dismissed the final motion for execution, ruling that backwages should be confined to basic salary, regular allowance, and thirteenth-month pay, not exceeding three years. The Petition: Petitioner BDC filed a petition for certiorari, assailing the NLRC's decision for allegedly gravely abusing its discretion in not ordering private respondents to refund excess payments despite a finding of such excess.
Issue(s)
Whether the NLRC gravely abused its discretion in not ordering private respondents to refund excess payments and regarding the award of separation pay. Whether the award of backwages should be limited to three (3) years. Whether attorney's fees were validly awarded.
Ruling
The petition is meritorious. The Supreme Court affirmed the NLRC's decision with modifications: (1) the backwages awarded should be limited to three (3) years only, without qualification or deduction, and any excess shall be refunded to the petitioner; and (2) the petitioner is ordered to pay separation pay to private respondents in lieu of reinstatement due to the corporation's dissolution.
Ratio Decidendi
On the refund of excess payments and separation pay: The Court found that the NLRC failed to rectify the writ of execution despite its own pronouncements that the computation of backwages was in patent departure from applicable jurisprudence. The NLRC should have modified or recomputed the award to conform to its ruling. While the issue of reinstatement became moot due to the petitioner's dissolution, the award of separation pay was deemed proper. However, the Court noted that the amounts for separation pay had already been covered in the total amount previously received by the private respondents. The Court modified the NLRC's decision to explicitly state that any excess backwages should be refunded and ordered the payment of specific amounts for separation pay, clarifying that these amounts were in lieu of reinstatement. On the limitation of backwages to three (3) years: The Court reiterated the "Mercury Drug Rule," which limits the award of backwages to three years without qualification or deduction. The amendatory provision of R.A. No. 6715, allowing full backwages, took effect after the private respondents were terminated and has no retroactive effect. The Court emphasized that even if a decision awarding backwages in excess of three years has become final and executory, it should still be interpreted and implemented in accordance with the three-year rule, as any award exceeding this limit is considered null and void as to the excess. This policy applies even to final decisions, and a departure therefrom constitutes a grave abuse of discretion. The Court cited Arms Taxi v. NLRC, Sealand Service, Inc. v. NLRC, and Mansalay Catholic High School v. National Labor Relations Commission to support this ruling. On the award of attorney's fees: The Court found no justification for the award of attorney's fees because the Labor Arbiter's original decision, which formed the basis for the writs of execution, did not include such an award. While private respondents claimed they successfully appealed for attorney's fees, the record lacked evidence to support this. The Court reiterated the principle that a writ of execution must conform to the judgment it seeks to enforce; if it exceeds the judgment, it has no validity pro tanto. The NLRC has the authority to review the correctness of execution and consider supervening events. The NLRC correctly noted that the computation of monetary benefits included attorney's fees, which were not awarded in the Labor Arbiter's decision dated August 16, 1989.
Main Doctrine
The award of backwages for illegally dismissed employees is limited to three (3) years without qualification or deduction, even if the decision awarding backwages in excess of three years has become final and executory. Any award exceeding this limit is considered null and void as to the excess. Attorney's fees cannot be awarded if not explicitly stated in the Labor Arbiter's decision.