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612 SCRA 10 – Labor Law – Labor Relations – NIRC Remedies – Computation of Backwages/Separation

Pay

Adonis Flora filed an illegal dismissal case against Session Delights and Fast Foods (Session Delights). In
February 2001, the labor arbiter, Monroe Tabingan, ruled in favor of Flora and ordered Session Delights
to pay Flora the following: P26k backwages, P2k 13th month pay, P4.4k separation pay, P5k damages,
and P3.7k attorney’s fees – a total of about P41k.

Instead of paying Flora, Session Delights appealed the decision of the arbiter. The National Labor
Relations Commission (NLRC) affirmed the decision of the arbiter. Unsatisfied, Session Delights appealed
to the Court of Appeals (CA). The CA affirmed the decision of the NLRC but deleted the award of 13th
month pay as well as the award of P5k in damages. The CA then ordered the labor arbiter to make a
recomputation.

The arbiter made the recomputation and so Session Delights was ordered to pay Flora the amount of
P253k. Session Delights again appealed, but this time it only appealed the recomputation as it avers that
the amount in the original decision of the Labor Arbiter should be controlling, in short, the period that
lapsed during the time of appeal should not be included in computing the backwages.

The CA ruled that other than the inclusion again of the 13th month pay and the P5k damages, the
computation made by the Labor Arbiter is correct.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: Yes. As a rule, backwages is computed from the time of the illegal dismissal up to the time of
actual reinstatement. If reinstatement is no longer possible, it is computed until the finality of the
decision. In this case, the decision became final when Session Delights no longer appealed the CA
decision affirming the finding of illegal dismissal against Session Delights or on July 29, 2003. Hence, the
original computation made by the labor arbiter in its February 2001 decision must be recomputed to
include the period until July 29, 2003. The fact that Session Delight’s liability increased from P41k to
P253k (less the erroneous inclusions) is but an unavoidable consequence of Session Delight’s appeal
since it lost on appeal.
But does this violate the principle of immutability of judgment considering the fact that the original
decision of the labor arbiter already provided for a computation?

No. In these types of cases, there are two parts of the decision issued by the arbiter. The first part is the
finding of illegal dismissal against the employer. The second part is the computation of whatever is due
to the employee who was illegally dismissed. The decision of the arbiter is immediately final and
executory subject to a timely appeal by the losing party. As a rule, if a decision is affirmed on appeal, the
dispositive portion of the original decision controls (subject of course to modifications made by the
appellate court). In this case, the finding of illegal dismissal stays, but the computation must be done
again pursuant to the rule that the end period must be until the finality of the decision. This does not
violate the principle of immutability of judgment.