Payment of backwages in illegal dismissal cases

If an employee is found to be have been illegally dismissed, how much is he suppose to receive as backwages?

This question has for sometime been the subject of controversy due in no small measure to the flip-flopping decisions of the Supreme Court. Fortunately for the workingman, the jurisprudence on the subject has finally become settled.

Under Article 279 of the Labor Code of the Philippines, a regular employee who is found to have been unjustly terminated is entitled not only to reinstatement without loss of seniority rights and other privileges, but also to the payment of his full backwages, including allowances, and other benefits or their monetary equivalent to be computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This provision was amended by Republic Act No. 6715 which took effect on March 21, 1989.

Noteworthy is the fact that despite the effectivity of RA 6715 on March 21, 1989, the true meaning and import of the amendment to Article 279 did not become part of the law of the land until after November 28, 1996 with the promulgation of the decision in the case of Osmalik Bustamante vs. NLRC and Evergreen Farms. This is because on July 5, 1993, in the case of Alex Ferrer vs. NLRC, the Supreme Court interpreted Article 279, as amended by RA 6715, to mean that the full backwages that the illegally dismissed employee should receive should not include the earnings that he might have obtained during the period of his illegal termination. In other words, if the unjustly terminated employee decided to be employed in another company so that he would have money to buy food for his children and send them to school while awaiting the results of his case, the salaries that he earned therefrom would be deducted from the backwages that would be awarded to him. Worse, despite the manifest deviation of this ruling to the spirit and intent of the amendatory law, the same was still adopted and reiterated in the decision in the subsequent case of Pines City Educational Center vs. NLRC which was promulgated on November 10, 1993.

Fortunately, one justice in the person of Justice Teodoro R. Padilla of the division which decided the Pines City Educational Center case realized the anomaly in the interpretation of the amended Article 279 and gave a strong dissenting opinion. It was only then that the Supreme Court was awakened and sought to correct the supreme legal irregularity as soon as the opportunity arose in the Bustamante case.

The significance of Article 279 as amended on how it has dramatically altered the way private companies, from the multinationals to the family-owned, treat their employees, cannot be overemphasized. It has tamed the overbearing attitude of employers to prolong the illegal dismissal cases filed against them by hiring the best lawyers in town that money can buy to employ numerous gut-wrenching dilatory tactics in the expectation that the complaining employee would capitulate and enter into the most lopsided “amicable settlement.” Unless the company’s position is completely justified and aboveboard, utilizing that kind of scheme today against their employees who have filed illegal dismissal cases is considered a financial hara-kiri. Because of this law, companies are first to offer settlement rather than risk emaciating their coffers by payments for backwages. In the final analysis, what the law seeks to promote is a kind of relationship between labor and capital that is dictated by mutual respect rather than animosity and a domineering attitude.

Comments and/or suggestions may be sent to Bragais Law Office, Paz St., San Francisco, Naga City.