Solidbank v. Court of Appeals
REITERATIONFacts
The Antecedents: Danilo H. Lazaro (Lazaro) was employed by Solidbank Corporation (Solidbank) on December 21, 1992, and rose to the position of Vice President. In August 1995, an audit of the Imus branch, under Lazaro's region, uncovered irregularities involving loan releases, allegedly defrauding the bank of P43 million. Lazaro resigned on February 15, 1996, citing delicadeza, though he was not criminally charged. The bank president, Vistan, did not accept his resignation, cleared him of liability, and assigned him to a special project to help resolve the Imus case. Subsequently, Lazaro's Christmas bonus was reversed, his service car was recalled, and his payroll was not credited. On January 7, 1997, Lazaro was verbally dismissed, retroactive to November 30, 1996, based on the recommendation of SVP Jazmines, citing that his continued presence might be used to accuse the bank of abetting a senior officer implicated in a public inquiry. Procedural History: Lazaro filed a complaint for illegal dismissal, non-payment of wages and bonus, reinstatement, backwages, moral and exemplary damages, and attorney's fees. The Labor Arbiter (LA) dismissed the illegal dismissal complaint but awarded Lazaro separation pay, compensatory benefit, 1996 Christmas bonus, and moral and exemplary damages, totaling P1,818,879.12. Both parties appealed to the National Labor Relations Commission (NLRC), which affirmed the LA's decision with modification by deleting the award of moral and exemplary damages. Both parties moved for reconsideration, which were denied. Lazaro appealed to the Court of Appeals (CA), which ruled that Lazaro was illegally dismissed and modified the LA's decision, awarding him separation pay, backwages, compensatory benefit, 1996 Christmas bonus, unpaid salary for December 1996, moral and exemplary damages, and attorney's fees, totaling P2,920,830.08. The CA later issued an Amended Decision and a Resolution, correcting and modifying the monetary awards. Solidbank and Lazaro filed petitions for review with the Supreme Court. The Petition: Both Solidbank and Lazaro filed petitions for review before the Supreme Court, assailing the decisions of the CA. Solidbank argued that the CA erred in not denying Lazaro's second motion for reconsideration and in awarding damages and attorney's fees. Lazaro argued that his gross monthly pay should be higher and that his separation pay should include other benefits.
Issue(s)
Whether the appellate court erred in not denying the "second" Motion for Reconsideration/Clarification filed by Lazaro. Whether the appellate court erred in computing Lazaro's gross monthly pay, separation pay, and backwages. Whether the CA rightly awarded damages and attorney's fees to respondent.
Ruling
The Supreme Court modified the decisions of the Court of Appeals. It ruled that the CA did not err in allowing Lazaro's second motion for reconsideration as the Amended Decision constituted a new decision. The Court affirmed that separation pay and backwages must be computed based on the gross monthly salary, including allowances and benefits, but only up to the date of the employer's cessation of operations. The Court found insufficient evidence to increase Lazaro's gross monthly pay beyond P53,962.64. The award of moral and exemplary damages and attorney's fees was deleted for lack of basis. The Court ordered Solidbank to pay Lazaro separation pay, backwages, 1996 Christmas bonus, and compensatory benefit, with specific computed amounts.
Ratio Decidendi
On the allowance of the "second" Motion for Reconsideration/Clarification: The Court ruled that the appellate court did not err in allowing Lazaro's "second" motion for reconsideration. It clarified that an Amended Decision supersedes the original decision, thereby creating a new decision for which a subsequent motion for reconsideration is permissible under the Rules of Court. This is distinct from a supplemental decision, which merely adds to the original ruling. The Court cited Planters Development Bank v. Sps. Lopez to support this distinction, emphasizing that an amended judgment is an entirely new decision. On the computation of Lazaro's gross monthly pay, separation pay, and backwages: The Court reiterated the principle that illegally dismissed employees are entitled to separation pay and backwages computed based on their gross monthly pay, which includes all allowances and benefits or their monetary equivalent. However, such amounts must be duly proven by evidence. In this case, the Court found the records bereft of sufficient evidence to support Lazaro's claim for a higher gross monthly pay beyond the P53,962.64, which remained uncontested by both parties. Therefore, this amount was retained as the basis for computation. The Court held that separation pay must be computed only up to the time the employer ceased operations, as reinstatement would be impossible beyond that point. It noted that Solidbank ceased operations in 2000, and Lazaro was covered by the Solidbank-Metrobank Merger-Integration Agreement. The Court disagreed with the CA's reasoning that Lazaro was not covered by the agreement, stating that as an illegally dismissed employee, he was considered employed until the merger. The separation pay was computed based on his employment from December 21, 1992, to July 31, 2000 (7.64 years), multiplied by his gross monthly pay increased by 150%. The Court clarified that backwages are computed from the time of dismissal until the finality of the decision ordering separation pay. However, considering Solidbank's cessation of operations on July 31, 2000, backwages were computed only up to that date. The Court reasoned that computing backwages beyond the cessation of business would be unjust and confiscatory. Lazaro's backwages were computed from his illegal dismissal on November 30, 1996, up to July 31, 2000 (91.67 months), multiplied by his gross monthly pay. On the award of damages and attorney's fees: The Court deleted the award of moral and exemplary damages and attorney's fees. It explained that dismissal, even if illegal, does not automatically warrant moral damages unless bad faith is proven. Bad faith requires a dishonest purpose, moral obliquity, or conscious doing of wrong, not merely bad judgment or negligence. Similarly, attorney's fees are awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate due to the employer's unjustified acts. The Court found no evidence of bad faith on the part of Solidbank or any factual basis for these awards.
Main Doctrine
Separation pay and backwages for illegally dismissed employees must be computed based on their gross monthly salary, inclusive of all allowances and benefits, subject to evidentiary proof. However, such computation for separation pay and backwages should only extend up to the date of the employer's cessation of operations. Damages and attorney's fees are only awarded if the dismissal was in bad faith and the employee was compelled to litigate due to the employer's unjustified acts.