Bani Rural Bank v. De Guzman
REITERATIONFacts
The Antecedents: Respondents Teresa de Guzman and Edgar C. Tan, employees of petitioners Bani Rural Bank, Inc. and ENOC Theatre I and II, filed a complaint for illegal dismissal. The Labor Arbiter initially dismissed the complaint, but the National Labor Relations Commission (NLRC) reversed this, finding illegal dismissal and ordering reinstatement with backwages from dismissal until actual reinstatement, less earnings elsewhere. Procedural History: The NLRC's March 17, 1995 resolution became final and executory. A first computation of backwages by Labor Arbiter Gambito fixed the period until August 25, 1995, based on an alleged manifestation by respondents that they no longer wanted reinstatement. Respondents appealed this computation. The NLRC, in a July 31, 1998 decision, modified its earlier resolution, clarifying 'earnings elsewhere' and awarding separation pay in lieu of reinstatement due to strained relations. This decision became final and executory on January 29, 1999. A second computation by Labor Arbiter Gambito again limited backwages to August 25, 1995. The NLRC reversed this, ordering backwages computed until January 29, 1999. The Court of Appeals (CA) affirmed the NLRC's ruling, finding no grave abuse of discretion. The Petition: Petitioners assailed the CA's decision, arguing that the NLRC committed grave abuse of discretion in modifying a final and executory resolution and in denying their motion for reconsideration. They contended that the CA erred in finding no grave abuse of discretion and in overlooking facts regarding the respondents' alleged waiver of reinstatement.
Issue(s)
Whether the NLRC committed grave abuse of discretion in modifying its final and executory resolution of March 17, 1995, by awarding separation pay in lieu of reinstatement due to strained relations; and whether the principle of immutability of judgment was correctly applied. Whether the Court of Appeals erred in affirming the NLRC's decision regarding the computation of backwages and separation pay, and the application of legal interest.
Ruling
The petition is denied. The decision of the Court of Appeals is affirmed with modification.
Ratio Decidendi
On the issue of grave abuse of discretion and the modification of the NLRC's final resolution: The Court held that the NLRC did not commit grave abuse of discretion. The existence of strained relations between the parties, which became manifest during the execution proceedings, constituted a supervening event that justified the modification of the March 17, 1995 resolution. The NLRC's July 31, 1998 decision, which awarded separation pay in lieu of reinstatement, was a valid exercise of its authority to address such supervening circumstances. The principle of immutability of judgment is not absolute and admits exceptions for supervening events that were not in existence or known at the time of the original judgment. On the computation of backwages and separation pay: The Court clarified that when separation pay is awarded in lieu of reinstatement due to strained relations, backwages are computed from the time of illegal dismissal until the finality of the decision ordering separation pay. In this case, the finality of the NLRC's July 31, 1998 decision on January 29, 1999, became the reckoning point for the computation of backwages. Separation pay is computed from the start of employment up to the same finality date. The Court also ruled that legal interest of six percent (6%) per annum should be applied to the total monetary awards from January 29, 1999, until full satisfaction, as this is a monetary judgment.
Main Doctrine
In cases of illegal dismissal where reinstatement is no longer viable due to strained relations, backwages are computed from the time of illegal dismissal until the finality of the decision ordering separation pay, and separation pay is computed from the start of employment up to the finality of the decision. Legal interest accrues from the finality of the judgment.