RESPONDENT Antonina Q. Agabin was hired by petitioner Angono Medics Hospital Inc. (AMHI) on Sept. 1, 2002 as staff midwife. On June 23, 2007, Agabin requested permission to go on leave without pay from June 29, 2007 to Sept. 15, 2007 as she needed to work as an affiliate in Mariveles, Bataan as part of her school requirement which was approved by her chief nurse.

On Sept. 15, 2007, she reported back to work. On Sept. 19, 2007, Andres Villamayor, the former president of AMHI, berated her for coming to work and told her to go home and take a vacation. The next day, her chief nurse informed her that as per Villamayor’s instruction, Agabin should not report for work anymore. Thus, she filed a complaint for illegal dismissal and money claims. The Executive Labor Arbiter (Arbiter) found that Agabin was illegally dismissed and ordered AMHI among others, to pay Agabin backwages from Sept. 19, 2007, the date of her dismissal until the finality of the decision in her favor and separation pay from Sept. 2, 2002, the date of her employment, until the finality of the decision.

The Court of Appeals (CA) affirmed the decision of the Arbiter ruling that Agabin is entitled to full backwages and separation pay in lieu of reinstatement.

Is the computation of the award of separation pay and backwages justified?

Ruling: Yes.

When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is reinstated, any compensation and benefits thereafter received stem from the employee’s continued employment. In this instance, backwages are computed only up until the reinstatement of the employee since after the reinstatement, the employee begins to receive compensation from his resumed employment.

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 since the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment (Session Delights Ice Cream and Fast Foods v. Court of Appeals, 624Phil. 612 (2010).

The second scenario squarely applies in the case at bar since the order of separation pay was decreed in lieu of reinstatement. Hence, the employer-employee relationship of AMHI and Agabin will only be completely terminated upon the finality of the decision which ordered the payment of separation pay and backwages.

It follows that the computation of Agabin’s backwages must be from the time of her illegal dismissal from employment on Sept. 19, 2007 until the finality of the decision ordering the payment thereof. As for her separation pay, it should be computed at one month pay for every year of service reckoned from Sept. 2, 2002 (as found by the Arbiter) until the finality of the decision in her favor. The ruling of the CA in its assailed April 27, 2012 Decision and June 27, 2012 Resolution which reinstated the Dec. 19, 2008 Decision of the Arbiter is thus correct (Angono Medics Hospital Inc. vs. Antonina Q. Agabin, G.R. 202542, Dec. 9, 2020).