In cases of illegal dismissal, the Supreme Court has clarified that even a final judgment can be subject to recomputation of monetary awards to fully compensate the illegally dismissed employee. The recomputation, particularly involving back wages and separation pay, extends from the time of dismissal until the final resolution of the case, ensuring complete indemnification for the period the employee was unjustly deprived of employment. This principle ensures that illegally dismissed employees are made whole, accounting for the time elapsed during litigation.

When Does an Illegal Dismissal Decision Truly End? Examining the Recomputation of Awards

The case of Metroguards Security Agency Corporation v. Alberto N. Hilongo revolves around the recomputation of monetary awards in an illegal dismissal case. Alberto Hilongo was initially declared illegally dismissed by the Labor Arbiter, a decision later reversed by the National Labor Relations Commission (NLRC). However, the Court of Appeals (CA) reversed the NLRC’s decision and reinstated the Labor Arbiter’s ruling. The core legal question arises from Hilongo’s motion for clarification, seeking additional awards computed from the initial Labor Arbiter’s decision until the CA’s denial of the petitioner’s motion for reconsideration. This case clarifies how the finality of an illegal dismissal ruling affects the computation of monetary awards, specifically back wages and separation pay.

The Supreme Court’s analysis hinges on the principle that the consequences of illegal dismissal continue until full satisfaction, as stipulated in Article 279 of the Labor Code. This provision is intrinsically linked to any decision declaring a dismissal illegal. The court emphasized that recomputation does not alter the final judgment but rather ensures that the monetary consequences accurately reflect the period during which the employee was illegally deprived of their livelihood. The finality of a decision declaring illegal dismissal triggers a right to recomputation to account for the elapsed time. The key is that the illegal dismissal ruling stands, and only the computation of the monetary consequences of this dismissal is affected. This principle was firmly established in prior cases such as Session Delights Ice Cream and Fast Foods v. Court of Appeals and Gonzales v. Solid Cement Corporation.

Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (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. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation 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.

The petitioners argued that a final decision becomes immutable and unalterable. However, the Court clarified that recomputation is not an alteration but an inherent part of the judgment’s execution, aligning with the Labor Code’s intent to fully compensate the illegally dismissed employee. The logic here is that the employee’s loss continues until the final resolution, and the compensation must reflect that ongoing deprivation. This is not a modification of the original judgment, which declared the dismissal illegal, but an adjustment to the financial remedies to reflect the total harm suffered.

Furthermore, the petitioners incorrectly asserted that the NLRC’s decision reversing the Labor Arbiter effectively ended the employment relationship. The Supreme Court highlighted that the CA had already reversed the NLRC decision, reinstating the Labor Arbiter’s finding of illegal dismissal. Therefore, the finality of the CA’s decision, affirming the Labor Arbiter, dictates the cessation of the employment relationship and the period for which back wages and separation pay must be computed. The Court pointed out the CA Decision dated September 7, 2012 became final and executory on April 26, 2013. This date is critical because it marks the definitive end of the employment relationship for purposes of calculating the final monetary award.

While the Supreme Court affirmed the CA’s order for recomputation, it corrected the CA’s determination of the finality date. The CA had incorrectly used June 11, 2013, as the finality date, leading to an erroneous computation. The Supreme Court clarified that the correct date was April 26, 2013, the date the CA decision became final and executory. Consequently, the recomputation of back wages and separation pay must cover the period from May 1, 2010, until April 26, 2013. Additionally, the legal interest of 12% per annum applies from April 26, 2013, to June 30, 2013, and thereafter, a 6% per annum interest rate applies, in accordance with Bangko Sentral ng Pilipinas Monetary Board’s Circular No. 799.

This ruling reinforces the principle of providing complete relief to illegally dismissed employees. The recomputation of monetary awards ensures that employees are fully compensated for the entire period they were unjustly separated from their employment. The clarification on the finality date and the corresponding interest rates further refines the process, aligning it with both legal precedent and prevailing regulations.

FAQs

What was the key issue in this case?	The primary issue was whether the monetary awards due to an illegally dismissed employee should be recomputed after the decision finding the dismissal illegal becomes final. This involves determining the period for which back wages and separation pay should be calculated.
Why did the Court order a recomputation of the monetary awards?	The Court ordered a recomputation to ensure that the illegally dismissed employee was fully compensated for the entire period they were unjustly deprived of employment. This is based on Article 279 of the Labor Code, which aims to make the employee whole.
What is the significance of Article 279 of the Labor Code in this case?	Article 279 mandates that illegally dismissed employees are entitled to reinstatement with full back wages. Since reinstatement was not feasible, separation pay was awarded, and Article 279 was used as the basis to compute the back wages from the time of dismissal until the finality of the decision.
When did the employment relationship officially end in this case?	The employment relationship officially ended on April 26, 2013, the date when the Court of Appeals’ decision affirming the Labor Arbiter’s ruling became final and executory. This date is crucial for calculating the final monetary award.
How are back wages and separation pay calculated in illegal dismissal cases?	Back wages are calculated from the date of illegal dismissal until the finality of the decision, while separation pay is typically one month’s salary for every year of service. The recomputation ensures that these amounts reflect the total period of unemployment due to the illegal dismissal.
What interest rates apply to monetary awards in illegal dismissal cases?	A 12% per annum legal interest applies from the finality of the decision until June 30, 2013. Starting July 1, 2013, the interest rate is adjusted to 6% per annum, in accordance with Bangko Sentral ng Pilipinas Monetary Board’s Circular No. 799.
Does the recomputation of awards alter the final judgment?	No, the recomputation does not alter the final judgment declaring the dismissal illegal. It merely adjusts the monetary consequences to accurately reflect the period during which the employee was illegally deprived of their livelihood.
What was the error made by the Court of Appeals in this case?	The Court of Appeals incorrectly identified June 11, 2013, as the date the Labor Arbiter’s decision became final. The Supreme Court corrected this to April 26, 2013, which affected the calculation of additional back wages and separation pay.

In conclusion, the Supreme Court’s decision in Metroguards Security Agency Corporation v. Alberto N. Hilongo clarifies and reinforces the right of illegally dismissed employees to full compensation, extending until the final resolution of their case. The ruling ensures that the recomputation of monetary awards accurately reflects the financial losses incurred during the period of illegal dismissal, thus upholding the principles of labor justice and social protection.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Metroguards Security Agency Corporation v. Alberto N. Hilongo, G.R. No. 215630, March 09, 2015