Consolidated Distillers of the Far East, Inc. v. Zaragoza
REITERATIONFacts
The Antecedents: Respondent Rogel N. Zaragoza (Rogel) filed a case for illegal dismissal against petitioner Consolidated Distillers of the Far East, Inc. (Condis). The Court, in G.R. No. 196038, affirmed the findings of illegal dismissal and ordered Rogel's reinstatement and payment of backwages. Procedural History: After the finality of the Court's Resolution in G.R. No. 196038, Rogel moved for the issuance of an alias writ of execution. Condis opposed, arguing that its execution of an Asset Purchase Agreement with Emperador Distillers, Inc. (EDI) was a supervening event making reinstatement impossible. The Labor Arbiter (LA) ruled in favor of Rogel, ordering Condis to pay backwages/reinstatement salaries and allowances from December 3, 2007, to August 3, 2013. The National Labor Relations Commission (NLRC) reversed the LA, declaring the LA's Resolution void, ruling that reinstatement was impossible due to the Asset Purchase Agreement but backwages should only be computed until the finality of the Court's Resolution in G.R. No. 196038 (March 30, 2012). The Court of Appeals (CA) affirmed the NLRC with modification, ordering backwages computed until the finality of the CA decision and separation pay computed from the date of employment until the finality of the CA decision. The Petition: Condis filed a Petition for Review on Certiorari assailing the CA Decision and Resolution, arguing that the CA erred in ruling that new issues were raised in the partial motion for reconsideration, in applying the doctrine in Bani Rural Bank vs. De Guzman instead of Olympia Housing Inc., and in reckoning the period of backwages and separation pay until the finality of the CA decision, which Condis claims would be confiscatory. Condis also argued that the CA erred in not resolving the issue regarding allowances based on evidence presented during execution proceedings.
Issue(s)
Whether the Court of Appeals committed reversible error in ruling that Petitioner did not raise new issues in its Partial Motion for Reconsideration. Whether the Court of Appeals committed reversible error in applying the doctrines laid down in Bani Rural Bank vs. De Guzman and Olympia Housing Inc. v. Lapastora to this instant case. Whether the factual findings of the Court of Appeals are binding to the Supreme Court, and if the question of whether or not there exists a supervening event, which prohibited Respondent's reinstatement is already settled, thus the Honorable Court of Appeals committed reversible error in reckoning the period of back wages and separation pay until finality of the decision of this case and not until the time the supervening event and legal impossibility to reinstate arose in this case. Whether in awarding backwages and separation pay beyond the occurrence of the supervening event, the Court of Appeals committed reversible error by not considering that these would be confiscatory, and would result in unjust enrichment. Whether the Court of Appeals committed reversible error in not resolving the issue regarding the award of Zaragoza's allowances, which were based on evidence which were only presented during execution proceedings.
Ruling
The Petition for Review is partly granted. The Decision of the Court of Appeals dated March 17, 2016 and Resolution dated January 10, 2017 are affirmed with modifications. Consolidated Distillers of the Far East, Inc. is ordered to pay Rogel N. Zaragoza backwages from the date he was illegally dismissed until the finality of the Supreme Court's decision, and separation pay computed from his first day of employment until the finality of the Supreme Court's decision, at the rate of one (1) month salary for every year of service. The sum previously received by Rogel N. Zaragoza must be deducted. Petitioner is also ordered to pay legal interest of six percent (6%) per annum from the finality of the Supreme Court's decision until full satisfaction. The Labor Arbiter is ordered to make another recomputation.
Ratio Decidendi
On the issue of new issues raised in the Partial Motion for Reconsideration: The Court found that Condis' arguments regarding the application of Bani and Olympia Housing, and the reckoning of backwages and separation pay, were not new issues but rather elaborations or re-arguments of issues already passed upon by the CA. Therefore, the CA did not err in ruling that no new issues were raised. On the application of Bani Rural Bank, Inc. v. De Guzman and Olympia Housing, Inc. v. Lapastora: The Court found that Bani was correctly applied by the CA, as it directly addressed the computation of backwages when separation pay is ordered due to a supervening event. Conversely, Olympia Housing was not applicable because Condis failed to prove a complete closure of business with compliance to statutory requirements, which was a key factor in the Olympia Housing ruling. The Court clarified that for Olympia Housing to apply, the employer must prove full compliance with statutory requirements for business closure prior to the finality of the award. Condis' mere execution of an Asset Purchase Agreement and termination of a Service Agreement did not equate to a business closure. On the computation of backwages and separation pay: The Court disagreed with Condis' argument that backwages and separation pay should only be computed until 2007 or the occurrence of the supervening event. The Court reiterated the ruling in Bani Rural Bank, Inc. v. De Guzman, which held that when separation pay is ordered in lieu of reinstatement due to a supervening event, backwages are computed from the time of dismissal until the finality of the decision ordering separation pay. This is because the employment relationship is terminated only upon the finality of the decision ordering separation pay, which represents the final settlement of the parties' rights and obligations. Condis failed to prove that it had closed its business in 2007 and complied with all statutory requirements for closure, thus Olympia Housing, Inc. v. Lapastora was not applicable. The Court affirmed the CA's computation of backwages and separation pay until the finality of the CA decision. On the confiscatory nature of the award: The Court implicitly rejected the argument that the award was confiscatory by affirming the computation of backwages and separation pay until the finality of the decision, consistent with established jurisprudence. The principle of stare decisis and the ruling in Bani supported the computation period, and the Court found no basis to deviate from it. The Court also noted that Condis did not question the propriety of the award of separation pay in lieu of reinstatement. On the inclusion of allowances: The Court ruled that allowances and other benefits not included in the LA's Decision that had become final and executory on March 30, 2012, could not be added during execution proceedings. The LA's original computation of backwages included basic pay, 13th-month pay, and monetized vacation and sick leaves. The subsequent addition of hotel/lodging allowance, meal allowance, and monthly incentive by the LA during execution proceedings violated the rule on immutability of judgments. Therefore, the CA erred in affirming the LA's computation that included these additional amounts.
Main Doctrine
When separation pay is ordered in lieu of reinstatement due to a supervening event, backwages are computed from the time of dismissal until the finality of the decision ordering separation pay. Allowances and other benefits not included in the final and executory decision awarding backwages cannot be added during execution proceedings.