Compensating a wrong act - A Law Each Day (Keeps Trouble Away)

If an employee is illegally dismissed, he is entitled to backwages, and separation pay, if reinstatement is no longer feasible. How much should the backwages and separation pay be? This is answered in this case of Rolando and Vicky, bookkeeper and cashier, respectively, of a rural bank.

Rolando and Vicky received a letter from the president and general manager of the bank requiring them to submit their formal resignation "immediately upon receipt hereof". This letter was triggered by a report of the bank's auditor finding them guilty of negligence in the performance of their duties and responsibilities arising from certain transactions involving the cash counts in the cashier's custody and the late posting in the books of account and proof sheets by the bookkeeper.

Rolando and Vicky questioned this move of the president and declared that they would resign only after vindicating their names before the proper dispenser of justice.

In reply the president insisted that the two were both guilty of negligence and formally informed them that they are dismissed "as of last month".

Answering the notice of dismissal, the two employees tried to point out that the acts attributed to them were not due to their fault. They again requested for a hearing to prove their innocence.

One week later, Rolando brought his case before the labor arbiter by filing a case for illegal dismissal and damages. This resulted in further recriminations between the management and Rolando that ended in some bitter exchanges of words and threats.

In the meantime, Vicky joined Rolando in his complaint. After filing their respective position papers and replies, the labor arbiter found that the subject employees were illegally dismissed and ordered payment of their backwages from date of dismissal, plus damages and attorney's fees. But instead of reinstatement which was no longer feasible due to strained relationship, the labor arbiter ordered payment of their separation pay of one-half month salary for every year of service.

Both parties appealed to the NLRC. The appeal of the bank was filed out of time so it was dismissed. This being so, the finding of illegal dismissal became final. With respect, however, to the award of backwages, the NLRC limited it to one year without qualification and deduction. The separation pay on the other hand was fixed at one-half month pay for every year of service. The NLRC deleted the award of moral damages and attorney's fees. Was the NLRC correct?

On the backwages, the award of a fixed amount of only one year is not proper. The illegal dismissal of Rolando and Vicky was made after RA 6715 was already in force. Under said law, absent any exceptional circumstances, an employee who is unjustly dismissed from work shall be entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time of their illegal dismissal up to the date of the final decision of the court. This backwages shall not be dismissed or reduced by the earning derived by him elsewhere during the period of his illegal dismissal. The underlying reason behind this ruling is that the employee while litigating the legality (illegality) of his dismissal must still earn a living to support himself and his family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee.

With respect to the separation pay, the award of one-half month pay for every year of service cannot be upheld. The prevailing doctrine in this regard is that as an alternative to reinstatement, illegally dismissed employees like Rolando and Vicky are entitled to separation pay equivalent to one month pay for every year of service.

The NLRC is correct in deleting the award of moral damages. The mere allegations of entitlement to moral damages would not suffice to justify the award, absent any concrete proof. In the absence of fraud or bad faith on the part of the employer, an award of moral damages is not proper. The award of attorney's fees is, however, warranted since it has been established that legal services have been rendered by the lawyer of Vicky and Rolando (Rutaquio et.al. vs. NLRC et. al. G.R. No. 97652-53 Oct. 19, 1999).

Atty. Sison's e-mail address is: [email protected]