COMPUTATION OF SEPARATION PAY AND BACKWAGES WHERE REINSTATEMENT IS DISPUTED IS UP TO THE DATE OF FINALITY OF THE DECISION

C.I.C.M. Mission Seminaries School of Theology, Inc., Fr. Romeo Nimez, CICM vs. Maria Veronica C. Perez
G.R. No. 220506, January 18, 2017

Facts:

This controversy is an offshoot of an illegal dismissal case filed by Veronica Perez (Perez) against CICM, et al.

The NLRC affirmed the ruling of the LA. Aggrieved, CICM, et al. filed a petition for certiorari with the CA. Meanwhile, the LA issued an undated writ of execution addressed to the Sheriff, who, in turn, implemented it by garnishing upon CICM’s bank deposit with BPI Family Savings Bank.

CICM moved for the urgent quashal of the said writ and for the garnishment to be lifted. The LA issued an order lifting the notice of garnishment made on CICM’s bank accounts. Nonetheless, the LA still ordered the issuance of a writ of execution to enforce the balance of the judgment award.

LA Ruling:

The LA recognized Perez’s right to receive from CICM, et al. backwages and separation pay in lieu of reinstatement. Thus, it ordered CICM, et al. to pay Perez the aggregate amount of P286,670.58. The LA decision was affirmed by the NLRC, by the CA and by the Supreme Court in G.R. No. 200490.

The decision became final and executory on October 4, 2012. Consequently, Perez moved for the issuance of a writ of execution. CICM, et al. opposed and moved for the issuance of a certificate of satisfaction of judgment, alleging that their obligation had been satisfied by the release of the cash bond in the amount of P272,337.05 to Perez.

In its July 10, 2014 Order, the LA ruled that the cash bond posted by CICM, et al. was insufficient to satisfy their obligation. Thus, it ordered the issuance of a writ of execution

Undaunted, CICM, et al. elevated an appeal before the NLRC.

NLRC Ruling:

The NLRC affirmed the ruling of the LA. Aggrieved, CICM, et al. filed a petition for certiorari with the CA.

Meanwhile, the LA issued an undated writ of execution addressed to the Sheriff, who, in turn, implemented it by garnishing upon CICM’s bank deposit with BPI Family Savings Bank. CICM moved for the urgent quashal of the said writ and for the garnishment to be lifted

On January 14, 2015, the LA issued an order lifting the notice of garnishment made on CICM’s bank accounts. Nonetheless, on April 13, 2015, the LA still ordered the issuance of a writ of execution to enforce the balance of the judgment award.

CA Ruling:

On May 27, 2015, the CA dismissed the petition filed by CICM, et al.. CICM, et al. moved for reconsideration which the CA denied in its Resolution.

Issue/s:

Whether or not computation of backwages and separation pay should be until the Decision of the Labor Arbiter only where reinstatement was not ordered despite appeals made by said employee which [delayed] the final resolution of the issue on reinstatement.

Whether or not failure to append the Affidavit of Service is fatal to the petition.

Whether or not recomputation violates the principle of immutability of judgment.

SC Ruling:

The SC did not find merit in the petition.

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. The utter disregard of this requirement as held in a catena of cases cannot be justified by harking to substantial justice and the policy of liberal construction of the Rules. Indeed, technical rules of procedure are not meant to frustrate the ends of justice. Rather, they serve to effect the proper and orderly disposition of cases and, thus, effectively prevent the clogging of court dockets.

Thus, in Ferrer vs. Villanueva, the Court held that petitioner’s failure to append the proof of service to his petition for certiorari was a fatal defect.

In Gaco vs. NLRC, it was ruled that with respect to the payment of backwages and separation pay in lieu of reinstatement of an illegally dismissed employee, the period shall be reckoned from the time compensation was withheld up to the finality of this Court’s decision. This was reiterated in Surima v. NLRC and Session Delights Ice Cream and Fast Foods vs. CA.

The reason for this was explained in Bani Rural Bank, Inc. vs. De Guzman. When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay.

The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other. Hence, backwages no longer accumulate upon the finality of the decision ordering the payment of separation pay because the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment.

One cannot, therefore, attribute patent error on the part of the CA when it merely affirmed the NLRC’s conclusion, which was clearly based on jurisprudence. Plainly, it does not matter if the delay caused by an appeal was brought about by the employer or by the employee. The rule is, if the LA’s decision, which granted separation pay in lieu of reinstatement, is appealed by any party, the employer-employee relationship subsists and until such time when decision becomes final and executory, the employee is entitled to all the monetary awards awarded by the LA.

In this case, Perez remained an employee of CICM, et al. pending her partial appeal. Her employment was only severed when the Supreme Court, in G.R. No. 200490, affirmed with finality the rulings of the CA and the labor tribunals declaring her right to separation pay instead of actual reinstatement. Accordingly, she is entitled to have her backwages and separation pay computed until October 4, 2012, the date when the judgment of the SC became final and executory, as certified by the Clerk of Court, per the Entry of Judgment.

Read more on backwages and separation pay in Guide to Valid Dismissal of Employees (pp. 345, 356, 363)

The Court disagrees with CICM, et al.’ assertion that a recomputation would violate the doctrine of immutability of judgment. It has been settled 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.