In a case of illegal dismissal, the Supreme Court has clarified that backwages and separation pay should be computed from the time of dismissal until the finality of the decision, regardless of who initiated the appeal. This ruling ensures that employees unjustly terminated are fully compensated for the entire period they were unable to work due to the illegal dismissal, reinforcing the state’s commitment to protecting workers’ rights.

CICM Mission Seminaries vs. Maria Veronica C. Perez: Who Bears the Cost of Delay in Illegal Dismissal Cases?

This case originated from an illegal dismissal claim filed by Maria Veronica C. Perez against C.I.C.M. Mission Seminaries. The Labor Arbiter (LA) initially ruled in favor of Perez, awarding her backwages and separation pay. This decision was subsequently affirmed by the National Labor Relations Commission (NLRC), the Court of Appeals (CA), and finally, the Supreme Court. However, a dispute arose regarding the period for which backwages and separation pay should be computed, specifically whether it should extend to the finality of the Supreme Court’s decision, even though Perez herself had appealed the initial LA ruling.

The petitioners argued that the computation should only be up to the date of the LA’s initial decision, contending that the delay in the case’s resolution was due to Perez’s appeal, where reinstatement was refused. They relied on the principle that the party causing the delay should bear the responsibility for the increase in monetary awards. The Supreme Court, however, disagreed, emphasizing established jurisprudence that backwages and separation pay should be computed until the finality of the decision ordering separation pay, regardless of who appealed the case.

The Court’s decision hinged on the principle that the employer-employee relationship is only severed upon the finality of the decision ordering separation pay. Before this point, the employee remains technically employed and entitled to the corresponding monetary benefits. The Supreme Court cited several precedents, including Gaco v. NLRC and Surima v. NLRC, which consistently held that backwages and separation pay are computed until the finality of the decision. The Court underscored that if the LA’s decision, which granted separation pay in lieu of reinstatement, is appealed by any party, the employer-employee relationship subsists until such time when the decision becomes final and executory, the employee is entitled to all the monetary awards awarded by the LA.

The Supreme Court addressed the argument that recomputing the award would violate the doctrine of immutability of judgment. It clarified that recomputation is a necessary consequence of the illegal dismissal and does not alter the final decision. The Court stated that:

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 in that decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction thereof. The recomputation of the awards stemming from an illegal dismissal case does not constitute an alteration or amendment of the final decision being implemented. 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.

This reaffirms that the core ruling of illegal dismissal remains intact; the adjustment of monetary consequences is merely an implementation of the original judgment. The Court also emphasized the constitutional mandate to protect the rights and welfare of workers, noting that favoring the employer’s position would undermine this protection. The Court stated that to favor the petitioners’ position is nothing short of a derogation of the State’s policy to protect the rights of workers and their welfare under Article II, Section 8 of the 1987 Constitution.

The ruling effectively clarifies that employers bear the responsibility for the financial consequences of illegal dismissals until the final resolution of the case. This encourages employers to ensure their employment practices are compliant with labor laws, mitigating the risk of costly litigation and back pay obligations. The decision reinforces the importance of due process in employment termination and underscores the financial implications of non-compliance.

The Supreme Court firmly rejected the petitioners’ argument that it was not their fault why the amounts due ballooned. The court underscored that the predicament stemmed from their initial act of illegally dismissing the respondent. By illegally dismissing respondent, they took the risk and must suffer the consequences. This firm stance highlights the importance of employers adhering to labor laws and respecting employee rights to avoid the financial repercussions of wrongful termination.

FAQs

What was the key issue in this case?	The main issue was whether backwages and separation pay in an illegal dismissal case should be computed until the finality of the Supreme Court’s decision, even if the employee appealed the initial ruling.
What did the Supreme Court rule?	The Supreme Court ruled that backwages and separation pay should be computed until the finality of the decision, regardless of who appealed the case. The employer-employee relationship is only severed when the decision becomes final and executory.
Why did the Court rule this way?	The Court based its decision on established jurisprudence and the principle that the employer-employee relationship continues until the finality of the decision. Additionally, the court emphasized the constitutional mandate to protect workers’ rights.
Does this ruling violate the doctrine of immutability of judgment?	No, the Court clarified that recomputing the award is a necessary consequence of the illegal dismissal and does not alter the final decision. The illegal dismissal ruling stands; only the computation of the monetary consequences is affected.
What happens if the employee appeals the LA’s decision?	If the employee appeals, the employer-employee relationship continues, and the employee is entitled to backwages and separation pay until the final decision. The employer is responsible for the financial consequences until the final resolution.
Who bears the responsibility for the increase in monetary awards due to delays?	Regardless of who causes the delay, the employer is responsible for the monetary awards until the final decision. This is due to the continuing employer-employee relationship.
What is the practical implication for employers?	Employers must ensure their employment practices comply with labor laws to avoid costly litigation and back pay obligations. Due process in employment termination is crucial to mitigate the risk of wrongful termination.
What is the effect of illegal dismissal on the computation of monetary awards?	The reliefs continue to add on until full satisfaction, meaning the monetary awards, such as backwages and separation pay, will be computed from the time of dismissal until the final resolution of the case.

This decision serves as a clear reminder to employers of their obligations under Philippine labor law. It reinforces the principle that illegally dismissed employees are entitled to full compensation for the duration of their unemployment caused by the illegal act. The ruling underscores the importance of employers adhering to labor standards and respecting employee rights to avoid the financial and legal repercussions of wrongful termination.

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. Perez, G.R. No. 220506, January 18, 2017