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

FACTS: 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 attorneys 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
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 Delights
liability increased from P41k to P253k (less the erroneous inclusions) is but an
unavoidable consequence of Session Delights 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.