The Supreme Court held that backwages and separation pay for illegally dismissed employees must be computed until the finality of the court’s decision, regardless of who initiated the appeal. This ruling ensures that employees unjustly terminated receive full compensation for the duration of the legal battle, reinforcing the principle that the employer-employee relationship subsists until the final resolution. The decision emphasizes the importance of protecting workers’ rights and welfare, as mandated by the Constitution, and prevents employers from benefiting from delays in litigation.

Who Pays When Justice is Delayed? Examining Backwages in Dismissal Disputes

The case of C.I.C.M. Mission Seminaries vs. Maria Veronica C. Perez revolves around the computation of backwages and separation pay awarded to an illegally dismissed employee. The central question before the Supreme Court was whether these monetary awards should be computed until the finality of the Court’s decision, even when the employee herself appealed the initial ruling. Petitioners argued that the computation should only extend to the date of the Labor Arbiter’s (LA) original decision, contending that the employee’s appeal caused the delay. Respondent, on the other hand, maintained that her right to appeal should not prejudice her entitlement to a full and just compensation.

The Supreme Court addressed the issue of the affidavit of service, which the petitioners failed to append. The Court reiterated the importance of the affidavit of service as essential to due process and the orderly administration of justice. As cited in Ang Biat Huan Sons Industries, Inc. v. Court of Appeals, 547 Phil. 588, 569 (2007):

The rule is, such affidavit is essential to due process and the orderly administration of justice even if it is used merely as proof that service has been made on the other party.

Despite this procedural lapse, the Court proceeded to delve into the merits of the case for the guidance of the bench and bar.

The Court emphasized its role in a Rule 45 petition, stating it is limited to determining whether the Court of Appeals (CA) erred in finding grave abuse of discretion on the part of the National Labor Relations Commission (NLRC). Grave abuse of discretion is defined as a capricious and whimsical exercise of judgment, as highlighted in United Coconut Planters Bank v. Looyuko, 560 Phil. 581, 591-592 (2007).

Grave abuse of discretion, which has been defined as a capricious and whimsical exercise of judgment so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.

The Court firmly established that the computation of backwages and separation pay should extend until the finality of the decision ordering such payments. This principle is rooted in the understanding that the employer-employee relationship subsists until the final resolution of the case. The Court cited several precedents, including Gaco v. NLRC, Surima v. NLRC, and Session Delights Ice Cream and Fast Foods v. CA, to support its position.

As noted in Bani Rural Bank, Inc. v. De Guzman, 721 Phil. 84 (2013), the finality of the decision ordering separation pay effectively terminates the employment relationship and represents the final settlement of rights and obligations between the parties.

The petitioners’ argument that the delay was caused by the employee’s appeal was explicitly rejected. The Court clarified that the critical factor is the subsistence of the employment relationship until the finality of the decision, regardless of who initiated the appeal. This ensures that employees are not penalized for exercising their right to seek a just resolution to their illegal dismissal claims.

To further emphasize its point, the Court invoked Article II, Section 18 of the 1987 Constitution, which mandates the State to protect the rights of workers and promote their welfare. The decision underscores the importance of upholding this constitutional mandate in labor disputes.

The petitioners’ claim that recomputation would violate the doctrine of immutability of judgment was also dismissed. The Court clarified that recomputation is a necessary consequence of the illegal dismissal and does not alter the final decision itself. This principle was previously discussed in Session Delights Ice Cream and Fast Foods v. CA, 625 Phil. 612, 629 (2010).

[N]o 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 in that decision… The illegal dismissal ruling stands; only the computation of the monetary consequences of the dismissal is affected and this is not a violation of the principle of immutability of final judgments.

The court illustrated the difference between a modification of a final judgment and the computation of its monetary consequence. A final judgment cannot be altered or amended. However, when an illegal dismissal is found, the reliefs continue to add on until full satisfaction.

FAQs

What was the key issue in this case?	The key issue was whether backwages and separation pay should be computed until the finality of the court’s decision, even if the employee appealed the initial ruling. The petitioners argued it should only be until the Labor Arbiter’s decision date, but the Court disagreed.
What did the Supreme Court decide?	The Supreme Court ruled that backwages and separation pay should be computed until the finality of the decision, regardless of who appealed. This protects employees’ rights and ensures they receive full compensation for the duration of the legal battle.
Why did the Court rule that way?	The Court reasoned that the employer-employee relationship subsists until the finality of the decision. Therefore, the employee is entitled to all monetary awards until the final resolution, regardless of who initiated the appeal.
Does this ruling violate the immutability of judgment?	No, the Court clarified that recomputation is a necessary consequence of the illegal dismissal. It does not alter the final decision itself but merely adjusts the monetary consequences to reflect the prolonged legal battle.
What if the employee caused the delay?	The Court explicitly rejected the argument that the employee’s appeal should limit the computation of backwages. The focus is on the subsistence of the employment relationship until the finality of the decision.
What constitutional principle supports this ruling?	Article II, Section 18 of the 1987 Constitution mandates the State to protect the rights of workers and promote their welfare. This ruling aligns with that constitutional mandate.
What is grave abuse of discretion?	Grave abuse of discretion is a capricious and whimsical exercise of judgment so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.
What is the significance of the affidavit of service?	The affidavit of service is essential to due process and the orderly administration of justice. It serves as proof that service has been made on the other party in a legal proceeding.

This ruling reinforces the importance of protecting workers’ rights in illegal dismissal cases. By ensuring that backwages and separation pay are computed until the finality of the decision, the Supreme Court safeguards employees from the financial burdens of prolonged litigation and upholds the State’s constitutional mandate to protect labor rights.

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: C.I.C.M. Mission Seminaries vs. Maria Veronica C. Perez, G.R. No. 220506, January 18, 2017