University of Pangasinan v. Fernandez
REITERATIONFacts
The Antecedents: Florentino and Nilda Fernandez, faculty members of the University of Pangasinan, Inc. (UPI), filed a complaint for illegal dismissal on May 18, 2000, alleging they were dismissed on May 9, 2000, for dishonesty, abuse of authority, and unbecoming conduct. Labor Arbiter Rolando D. Gambito ruled in their favor on November 6, 2000, declaring their dismissal illegal and ordering UPI to pay backwages, separation pay, and attorney's fees. The NLRC initially affirmed this decision but later reversed it upon UPI's motion for reconsideration, dismissing the complaint. Procedural History: The Court of Appeals (CA) reinstated LA Gambito's decision. UPI's petition to the Supreme Court was denied due to a defective verification. An Entry of Judgment declared the CA's decision final and executory on July 11, 2005. The Fernandezes moved for a re-computation of their awards to include benefits up to the finality of the judgment. Labor Arbiter Luis D. Flores approved an updated computation of P2,165,467.02 on August 22, 2006, and issued a writ of execution. UPI's motion for reconsideration and motion to quash the writ were denied. The NLRC, on appeal, reversed LA Flores' order, limiting the award to the original amount. The CA, however, reversed the NLRC, reinstating LA Flores' order and directing a new computation, including legal interest. UPI's motion for reconsideration was denied by the CA. The Petition: UPI and its former officials filed a petition for review on certiorari, assailing the CA's decision and resolution. They argued that a final and executory decision is immutable and that LA Flores' order could not modify the original decision. They also contended that the re-computation should not extend beyond the retirement ages of the respondents and that the legal interest should be 6%, not 12%.
Issue(s)
Whether the re-computation of backwages and separation pay beyond the date of the Labor Arbiter's original decision, up to the finality of the judgment, violates the principle of immutability of a final and executory judgment. Whether the inclusion of 13th month pay in the re-computation is proper despite not being explicitly stated in the original decision. Whether the period from the NLRC's reversal of the illegal dismissal finding to the CA's reinstatement of the finding should be included in the computation of backwages and benefits. Whether the respondents are entitled to backwages and separation pay beyond their optional retirement ages. Whether the legal interest on the monetary award should be 12% or 6% per annum.
Ruling
The Supreme Court affirmed with modification the decision of the Court of Appeals. It held that the re-computation of backwages and separation pay up to the finality of the judgment does not violate the principle of immutability of judgment. The Court also ruled that the inclusion of 13th month pay is proper by legal mandate. The period from the NLRC's reversal to the CA's reinstatement is not a valid ground to interrupt the computation of backwages. The Court found that the optional retirement age did not limit the computation of awards. Finally, the Court modified the rate of legal interest, applying 12% per annum from July 11, 2005, to June 30, 2013, and 6% per annum from July 1, 2013, until full satisfaction.
Ratio Decidendi
On the immutability of judgment and re-computation of awards: The Court reiterated the principle that a re-computation of backwages and separation pay in illegal dismissal cases is a necessary consequence of the delay in payment and the nature of the reliefs granted under Article 279 of the Labor Code. This re-computation does not alter the final decision on the illegality of dismissal but merely updates the monetary consequences thereof. The Court cited Session Delights Ice Cream and Fast Foods v. CA and Gonzales v. Solid Cement Corporation to support the view that such re-computation is part of the law read into the decision and does not violate the immutability of judgments. The reliefs under Article 279 continue to accrue until full satisfaction, and when separation pay is awarded in lieu of reinstatement, the finality of the decision becomes the reckoning point for computation. On the inclusion of 13th month pay: The Court held that the inclusion of 13th month pay in the computation is proper, even if not explicitly stated in the original decision, as it is a legal mandate under Presidential Decree No. 851 and falls under "other benefits" as provided in Article 279 of the Labor Code. Citing Gonzales, the Court stated that the 13th month pay is a right granted by law and its inclusion is a legal consequence of the finding of illegal dismissal, not an alteration of the final judgment. The computation of awards for backwages and other benefits is a mere legal consequence of the finding of illegal dismissal. On the interruption of the computation period: The Court rejected the petitioners' argument that the period from the NLRC's reversal to the CA's reinstatement should be excluded from the computation of backwages. Citing Gonzales and Reyes v. NLRC, the Court emphasized that there should be no gap or interruption in the reckoning period for backwages and benefits, as this would defeat the purpose of the law. The employer takes the risk of increased liability when it continues to seek recourse against a decision finding illegal dismissal, and there is no insulation from the consequences. On optional retirement age: The Court ruled that the optional retirement age of 60 does not limit the computation of backwages and separation pay. It reasoned that 60 is merely optional, not mandatory, and the evidence did not establish that UPI faculty members retire at 60 or that it was at the employer's option to retire them before 65. The filing of retirement claims by the respondents in 2005, when they were 63, did not constitute an admission that 60 was the mandatory retirement age. Therefore, the computation was correctly allowed to extend beyond 2002. On the rate of legal interest: The Court modified the CA's ruling on the rate of legal interest. Citing Nacar v. Gallery Frames, the Court applied the prevailing rates set by the Bangko Sentral ng Pilipinas Monetary Board. Thus, 12% per annum was imposed on the total monetary award from July 11, 2005 (date of finality) to June 30, 2013, and 6% per annum from July 1, 2013, until full satisfaction of the judgment. This modification was based on the fact that the judgment became final and executory before July 1, 2013, and the new rate applies prospectively.
Main Doctrine
The re-computation of backwages and separation pay in illegal dismissal cases, even after a decision has become final and executory, does not violate the principle of immutability of judgment, as it is a necessary consequence of the delay in payment and the nature of the reliefs granted under Article 279 of the Labor Code. The rate of legal interest on monetary awards is subject to prevailing BSP circulars, with 12% applicable until June 30, 2013, and 6% thereafter.