Metroguards Security Agency Corporation v. Hilongo

The recomputation of monetary consequences (backwages and separation pay) of an illegal dismissal ruling upon execution does not constitute an alteration or amendment of the final decision being implemented, as it is a necessary consequence that flows from Article 279 of the Labor Code and established jurisprudence; the illegal dismissal ruling stands, and only the computation of its monetary consequences is affected, which is not a violation of the principle of immutability of final judgments.

Metroguards Security Agency Corporation (formerly known as Beeguards Corporation) and its officer Milagros T. Chan were the employer-respondents in an illegal dismissal case filed by Alberto N. Hilongo before the National Labor Relations Commission. Hilongo had been employed since October 25, 2001, earning a daily salary of P382. The dispute arose after the Labor Arbiter found that Hilongo was illegally dismissed and ordered payment of backwages and separation pay in lieu of reinstatement, triggering a protracted appellate process over both the liability finding and the proper computation of monetary awards through execution.

Alberto N. Hilongo was employed by Metroguards Security Agency Corporation (then known as Beeguards Corporation) beginning October 25, 2001, earning a daily salary of P382. On September 5, 2009, Hilongo was dismissed from employment. He thereafter filed a complaint for illegal dismissal before the National Labor Relations Commission, docketed as NLRC NCR-10-14411-09, against Beeguards Corporation and its officer Milagros T. Chan.

On April 30, 2010, Labor Arbiter Antonio R. Macam found that Hilongo was illegally dismissed and ordered the payment of backwages, separation pay in lieu of reinstatement, and 10% attorney's fees, totaling P170,520.31. The backwages were computed from September 5, 2009 to April 30, 2010, while separation pay was computed for seven years of service from October 25, 2001 to April 30, 2010. On appeal, the NLRC reversed the Labor Arbiter in its Decision dated September 30, 2010, but the CA, in CA-G.R. SP No. 117891, reversed the NLRC and reinstated the Labor Arbiter's ruling in its Decision dated September 7, 2012. Petitioners' motion for reconsideration was denied by the CA on March 26, 2013, and they did not appeal further to the Supreme Court. The CA decision became final and executory on April 26, 2013.

After the entry of judgment, Hilongo sought clarification that the monetary award should be recomputed to include the period from May 1, 2010 to the date of finality, as the Labor Arbiter's original computation covered only up to April 30, 2010. The CA, in its Resolution dated June 11, 2013, granted the entry of judgment and held that recomputation was a necessary consequence of the illegal dismissal ruling. The case was remanded to the Labor Arbiter, but in an Order dated October 29, 2013, the Labor Arbiter directed the issuance of a writ of execution while ruling that the original award of P170,520.31 prevailed, declining to recompute. Hilongo's subsequent petition before the NLRC was dismissed on November 29, 2013, with his motion for reconsideration denied on January 16, 2014. Hilongo then filed a petition for certiorari before the CA, which granted the petition on July 22, 2014, ordering the Labor Arbiter to recompute the monetary awards including additional backwages and separation pay from May 1, 2010 to June 11, 2013, with 12% interest from June 11, 2013 to June 30, 2013 and 6% interest from July 1, 2013 until full satisfaction. Petitioners elevated the matter to the Supreme Court.

• Immutability of Final Judgments: Petitioners contended that a decision that has acquired finality becomes immutable and unalterable, and that the recomputation of monetary awards upon execution constitutes an impermissible alteration of the final decision.
• NLRC Decision as Endpoint for Computation: Petitioners argued that the NLRC's final decision reversing the Labor Arbiter was in fact the final decision that effectively declared the employment relationship between Hilongo and petitioners as ended, and that the computation of separation pay and backwages should cease on that date.

• Insufficiency of Original Award: Respondent Hilongo maintained that the original award of P170,520.31 was insufficient because the Labor Arbiter's computation covered only up to the date of the April 30, 2010 decision, and that additional monetary awards should be computed from May 1, 2010 up to the date of finality of the decision.
• Necessity of Recomputation: Respondent argued that recomputation of the monetary awards is a necessary consequence flowing from the nature of the illegality of dismissal, as the reliefs continue to accrue until full satisfaction under Article 279 of the Labor Code.

• Recomputation of Monetary Awards: Whether the CA erred in ordering the recomputation of Hilongo's monetary awards upon execution of the Labor Arbiter's decision that had acquired finality.

• Recomputation of Monetary Awards: No. The recomputation of the monetary consequences of illegal dismissal upon execution does not constitute an alteration or amendment of the final decision, as it is a necessary consequence flowing from Article 279 of the Labor Code and established jurisprudence. The CA's order of recomputation was proper, but its date of finality was corrected from June 11, 2013 to April 26, 2013.

• Recomputation of Monetary Awards: The issue is not novel. In Nacar vs. Gallery Frames, the Court held that recomputation of the monetary consequences of illegal dismissal is a necessary consequence that flows from the nature of the illegality of dismissal declared in the decision, and is part of the law — specifically Article 279 of the Labor Code — that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add up until full satisfaction. The recomputation upon execution does not constitute an alteration or amendment of the final decision; the illegal dismissal ruling stands, and only the computation of monetary consequences is affected. This does not violate the principle of immutability of final judgments. Petitioners' contention that the NLRC's decision was the final decision ending the employment relationship was rejected, because the CA had already reversed the NLRC decision with finality and reinstated the Labor Arbiter's ruling. The CA Decision dated September 7, 2012 became final and executory on April 26, 2013, and since the Labor Arbiter's decision ordered separation pay in lieu of reinstatement, the employment relationship effectively ended on that date. The Labor Arbiter's original computation covered only up to April 30, 2010, so the CA properly decreed additional backwages and separation pay. However, the CA erred in concluding that the Labor Arbiter's decision became final on June 11, 2013, contrary to its own finding that it became final on April 26, 2013. Following Nacar, the additional backwages and separation pay should be computed from May 1, 2010 to April 26, 2013, and the 12% legal interest should be reckoned from April 26, 2013 to June 30, 2013, with 6% interest from July 1, 2013 until full satisfaction pursuant to BSP Monetary Board Circular No. 799, series of 2013.

• Immutability of Final Judgments — Exception for Recomputation of Monetary Awards in Illegal Dismissal Cases — A final judgment is generally immutable and unalterable, but the recomputation of the monetary consequences of an illegal dismissal ruling upon execution does not constitute an alteration or amendment of the final decision. The illegal dismissal ruling stands; only the computation of monetary consequences is affected. This is because recomputation is a necessary consequence that flows from the nature of the illegality of dismissal and is part of the law — Article 279 of the Labor Code — that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add up until full satisfaction. This doctrine was reiterated from Nacar vs. Gallery Frames, which in turn reiterated Session Delights Ice Cream and Fast Foods vs. Court of Appeals and Gonzales vs. Solid Cement Corporation.

• Date of Finality as Endpoint for Recomputation — Where the Labor Arbiter's decision orders separation pay in lieu of reinstatement, the finality of that decision on appeal effectively ends the employment relationship. The recomputation of backwages and separation pay should be reckoned from the date of the Labor Arbiter's decision up to the date the decision becomes final and executory, not up to the date of entry of judgment or the date of a resolution granting clarification.

• Legal Interest on Monetary Awards in Labor Cases — Following Nacar vs. Gallery Frames and BSP Monetary Board Circular No. 799, series of 2013, the legal interest on total monetary awards in illegal dismissal cases is 12% per annum computed from the date of finality of the decision up to June 30, 2013, and 6% per annum from July 1, 2013 until full satisfaction.

• "no essential change is made by a recomputation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared by the Labor Arbiter in that decision. A recomputation (or an original computation, if no previous computation has been made) is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision." — This passage, quoted from Nacar vs. Gallery Frames, articulates the ratio decidendi: that recomputation is not an alteration of a final judgment but a necessary legal consequence embedded in the illegal dismissal ruling itself.

• "The recomputation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected, and this is not a violation of the principle of immutability of final judgments." — This formulation reconciles the doctrine of immutability of final judgments with the practical necessity of recomputing monetary awards, and is the canonical statement frequently cited in subsequent labor jurisprudence.

• "By the nature of an illegal dismissal case, the reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code." — This passage defines the continuing nature of reliefs in illegal dismissal cases, establishing that monetary awards are not fixed at the date of the Labor Arbiter's decision but accrue until the decision becomes final.

• Nacar vs. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439 — Controlling precedent. The Court reiterated Nacar's holding that recomputation of monetary consequences of illegal dismissal is a necessary consequence flowing from Article 279 of the Labor Code and does not violate the principle of immutability of final judgments. Nacar also provided the framework for computing legal interest (12% from finality to June 30, 2013; 6% from July 1, 2013 onward).

• Session Delights Ice Cream and Fast Foods vs. Court of Appeals, 625 Phil. 612 (2010) — Followed. An earlier case establishing that recomputation of monetary awards upon execution is a necessary consequence of the illegality of dismissal and does not alter the final decision. The CA quoted this ruling in its June 11, 2013 Resolution, and the Supreme Court relied on it through Nacar.

• Gonzales vs. Solid Cement Corporation, G.R. No. 198423, October 23, 2012, 684 SCRA 344 — Followed. Another earlier case cited alongside Session Delights for the same proposition that recomputation is part of the law read into the decision and does not violate immutability of final judgments.

• Article 279, Labor Code — Cited as the statutory basis for the continuing accrual of reliefs in illegal dismissal cases. The provision is read into the decision, such that backwages and separation pay continue to accumulate until full satisfaction or until the decision becomes final and executory.

• BSP Monetary Board Circular No. 799, Series of 2013 — Applied to determine the rate of legal interest on the monetary awards. The circular, effective July 1, 2013, reduced the rate of interest in the absence of stipulation from 12% to 6% per annum. Accordingly, 12% interest was applied from the date of finality (April 26, 2013) to June 30, 2013, and 6% interest from July 1, 2013 until full satisfaction.

Presbitero J. Velasco, Jr. (Associate Justice, Chairperson), Diosdado M. Peralta (Associate Justice), Bienvenido L. Reyes (Associate Justice), and Francis H. Jardeleza (Associate Justice). No separate concurring opinions were written.