Villena vs. Batangas II Electric Cooperative, Inc.

"Other benefits" awarded in a final and executory judgment for illegal dismissal includes allowances attached to the position from which the employee was removed, but does not include retirement pay, which requires a separate cause of action and application under a company retirement plan.

Concepcion Villena was hired by Batangas II Electric Cooperative, Inc. (BATELEC II) as a bookkeeper in 1978 and eventually promoted to Finance Manager in 1985. In 1994, she was demoted to Auditor, leading to a series of labor disputes over her constructive dismissal and the computation of her monetary awards, including salary differentials and benefits. BATELEC II issued a retirement plan (Policy No. 03-003) in 2003 while the execution of the illegal dismissal awards was pending.

Concepcion A. Villena was hired by Batangas II Electric Cooperative, Inc. (BATELEC II) as a bookkeeper in 1978 and promoted to Finance Manager in 1985. In 1994, she was demoted to Auditor, prompting her to file a complaint for constructive dismissal before the Labor Arbiter. The Labor Arbiter dismissed the complaint, but the National Labor Relations Commission (NLRC) reversed the ruling on January 31, 2000, declaring her illegally dismissed and ordering her reinstatement and payment of salary differentials. The NLRC resolution was silent on allowances and attorney's fees, leading Villena to elevate the matter to the Court of Appeals (CA).

In a decision dated August 31, 2001, the CA modified the NLRC ruling, declaring Villena entitled to the difference between the salary of the Finance Manager and that of the Auditor, plus allowances and any other benefits pertaining to the position of Finance Manager, and attorney's fees. The case was remanded to the NLRC for computation. During the computation phase, the Labor Arbiter excluded claims for bonus, representation allowance, transportation benefits, and attorney's fees, and denied her claim for separation pay in lieu of reinstatement. Villena received the partial amount but appealed the exclusion of other benefits and separation pay.

Meanwhile, on September 20, 2003, BATELEC II issued Policy No. 03-003, providing for retirement benefits to regular employees. On March 22, 2007, the NLRC granted Villena's appeal, ordering separation pay in lieu of reinstatement, salary differentials, other benefits, and attorney's fees. This resolution attained finality. When Villena moved for execution, the Executive Labor Arbiter issued an Order on November 24, 2009, computing her total award to include salary differentials, various leaves, separation pay, allowances for representation, transportation, and cellular phone usage, and retirement pay, amounting to ₱6,294,290.99.

BATELEC II appealed to the NLRC, which excluded the representation, transportation, and cellular phone allowances, and retirement pay. The NLRC later modified its ruling, deleting separation pay and awarding retirement pay instead. Villena filed a petition for certiorari before the CA. The CA reversed the NLRC, finding that the earlier final and executory judgments could not be modified to substitute retirement pay for separation pay. However, the CA affirmed the exclusion of the allowances, reasoning that Villena did not perform the duties of a Finance Manager because she was not a certified public accountant. Villena then filed the present petition.

• Inclusion of Retirement Pay: Petitioner argued that retirement pay should be included in the "other benefits" awarded in the final and executory decisions, claiming it could be contemporaneously claimed during the execution phase.
• Inclusion of Allowances: Petitioner maintained that representation, transportation, and cellular phone usage allowances form part of the "other benefits pertaining to the position of Finance Manager" and should be included in the computation of monetary awards.

• Exclusion of Allowances: Respondent argued that Villena was not entitled to representation, transportation, and cellular phone usage allowances because she did not perform the duties of a Finance Manager, not being a certified public accountant which is a required qualification for such position.
• Exclusion of Retirement Pay: Respondent contended that retirement pay was not part of the final and executory judgments and that Policy No. 03-003 was issued after the CA decision attained finality.

• Retirement Pay: Whether retirement pay should be included in the computation of "other benefits" awarded in the final and executory decisions for illegal dismissal.
• Allowances: Whether representation, transportation, and cellular phone usage allowances should be included in the computation of "other benefits pertaining to the position of Finance Manager."

• Retirement Pay: No. Retirement pay cannot be included in the execution of the final and executory judgments because the illegal dismissal complaint did not contain a specific cause of action for retirement pay, and the company retirement plan was issued after the judgments became final.
• Allowances: Yes. Representation, transportation, and cellular phone usage allowances form part of the "other benefits pertaining to the position of Finance Manager" and must be included in the computation, as the final and executory CA decision had already awarded such benefits and could no longer be modified.

• Retirement Pay: The "other benefits" mentioned in the final and executory August 31, 2001 CA Decision and March 22, 2007 NLRC Resolution cannot be construed to include retirement pay because they adjudged awards relative to Villena’s illegal dismissal complaint, which lacked a specific cause of action for retirement pay. To claim retirement pay, the complaint should have contained substantial allegations showing that she applied for it and that her application met the requirements under the company’s retirement plan, which was issued in 2003, after the 2001 CA Decision became final. Since retirement pay was not an issue in the illegal dismissal case, it cannot be claimed contemporaneously during the execution phase.
• Allowances: Representation, transportation, and cellular phone usage allowances are given to the Finance Manager as part of their benefits, unlike retirement pay which requires a subsequent application. Consequently, these allowances ought to be included in the "other benefits pertaining to the position of Finance Manager" awarded in the final and executory CA Decision. With the award of "other benefits" having lapsed into finality, it became immutable and unalterable, meaning they may no longer be modified even to correct perceived errors. Thus, the CA erred in considering and varying the previous CA ruling on Villena's entitlement to these allowances.

• Immutability of Final Judgments — A judgment that has become final and executory is immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law. The Court applied this doctrine to uphold the inclusion of allowances in the execution of the August 31, 2001 CA Decision, as the award of "other benefits pertaining to the position of Finance Manager" had already lapsed into finality and could not be modified by the CA.
• Retirement Pay as a Separate Cause of Action — Retirement pay cannot be contemporaneously claimed during the execution phase of an illegal dismissal case if it was not included as a specific cause of action in the original complaint. The Court held that to claim retirement pay, the complaint must contain substantial allegations showing that the employee applied for it and met the requirements under the company's retirement plan.

• "The 'other benefits' mentioned in these rulings cannot be construed to include retirement pay for the primary reason that they adjudged awards relative to Villena’s illegal dismissal complaint, which remains barren of a specific cause of action for retirement pay." — This passage articulates the ratio decidendi for excluding retirement pay from the execution of the final and executory judgments, emphasizing the necessity of a specific cause of action.
• "With the award of the 'other benefits pertaining to the position of Finance Manager' made by the CA in its August 31, 2001 Decision lapsing into finality, the same had already become immutable and unalterable; this means that they may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law." — This defines the controlling doctrine of immutability of final judgments as applied to the inclusion of allowances in the monetary award.

• Santos vs. Servier Philippines, Inc., 593 Phil. 133 (2008) — Cited for the principle that retirement pay and separation pay are not mutually exclusive unless there is a specific prohibition in the CBA or retirement plan.
• Abalos vs. Philiex Mining Corporation, 441 Phil 386 (2002) — Cited for the doctrine that final and executory judgments are immutable and unalterable.

Maria Lourdes P.A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Lucas P. Bersamin, Jose Portugal Perez.