Reinstatement vs Abandonment: Computing Backwages in Illegal Dismissal Cases

When a worker wins an illegal dismissal case, the usual remedy is reinstatement plus full backwages. But what happens if the employer orders the worker back and the worker does not immediately comply? Can the employer treat that as abandonment, terminate the worker again, and stop the backwages from running? In Buenviaje v. Court of Appeals (G.R. No. 147806, November 12, 2002), the Supreme Court answered no, and in doing so laid down important rules on how backwages are computed and what truly constitutes abandonment.

The Facts of the Case

The petitioners were promo girls hired by Cottonway Marketing Corporation. In October 1994, the company terminated them, claiming business losses. The workers filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC).

The Labor Arbiter initially ruled the retrenchment valid but ordered separation pay. On appeal, the NLRC reversed this and ordered the workers' reinstatement without loss of seniority rights, plus full backwages computed from the time their salaries were withheld up to their actual reinstatement.

Cottonway challenged the NLRC decision before the Supreme Court, but the petition was dismissed, and the NLRC decision became final and executory.

The Employer's Reinstatement Letters

Three months after the NLRC decision, Cottonway sent the workers individual letters ordering them to report for work within five days, warning that failure would be deemed abandonment. The workers' counsel replied that they were not in a position to comply because the case was still pending, but offered to discuss satisfaction of the decision.

Cottonway then sent termination letters, claiming the workers lost their employment for failing to report. The company argued that this was a "supervening event" that validly terminated the workers, so backwages should stop at the date of the termination letters.

The Issue

The central issue was whether the workers' backwages should be limited to the period before the employer's termination letters, or computed until actual reinstatement or finality of the decision.

The Ruling

The Supreme Court ruled in favor of the workers. The NLRC decision had become final and executory, and a final judgment is immutable—it cannot be altered or modified by any court or tribunal. The writ of execution must conform strictly to the judgment.

The Court also rejected the employer's abandonment theory. For abandonment to justify dismissal, the employer must prove two elements: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship.

Neither element was proven. The workers had a reasonable explanation for not immediately reporting—their counsel stated the case was still pending and offered to discuss compliance. They never abandoned their suit; they continued filing pleadings to enforce the NLRC decision. The Court noted that workers who are litigating illegal dismissal must earn a living elsewhere, and such employment does not prove abandonment.

The Court further observed that the employer gave only five days to report, no opportunity to explain, and sent termination letters almost immediately. This appeared to be a scheme to remove the workers for good, not a sincere offer of reinstatement.

The Rule on Backwages Under R.A. 6715

The Court reiterated that under Republic Act No. 6715, illegally dismissed employees are entitled to full backwages, inclusive of allowances and other benefits, computed from the time their compensation was withheld up to their actual reinstatement. If reinstatement is no longer possible, backwages run until the finality of the decision.

Significantly, under R.A. 6715, backwages are "full"—they are not reduced by earnings the employee derived elsewhere during the period of illegal dismissal. As the Court explained in Bustamante v. NLRC, the employee must still earn a living while litigating, and full backwages are part of the price the employer pays for illegally dismissing the worker.

Practical Takeaways

• Abandonment requires proof of intent. An employer cannot simply claim abandonment when a worker fails to report immediately after a reinstatement order. There must be both unjustified absence and a clear intention to sever the employment relationship.
• A final NLRC decision is immutable. Once a reinstatement and backwages award becomes final, the Labor Arbiter's duty to execute it is ministerial. The employer cannot use alleged supervening events to reduce the award.
• Full backwages are truly full. Under R.A. 6715, backwages are not reduced by earnings from other employment during the illegal dismissal period.
• Reinstatement orders must be reasonable. Employers should give workers reasonable time to comply and an opportunity to explain before treating non-compliance as abandonment.
• Workers may seek other income. Finding other work while a dismissal case is pending does not amount to abandonment of the original employment.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.