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Snakes and Ladders: Effects of Illegal Termination (Part 1)

Christian Andrew Labitoria Gallardo[1]

Originally an Indian game called Mokshapat or Moksha Patamu, the Snakes and Ladders is a board game used as a part of moral instruction to children. With a roll of a dice, the player advances through each tile with a corresponding action, which may either be good, neutral or bad. Each supposedly good deeds stand on a ladder which will make the player advance to a higher tile, while bad deeds have snakes which, obviously, would make the player retreat to a lower tile. The aim is simple: reach the highest tile ahead of the other players. Ultimately therefore, it is a game of luck, but with some lesson about cause and effects of each action.[2]

True to that game, and in a corporate setting, the company bears fruit from the proper management of employees. On the other side of the coin, maltreatment of employees, such as making up excuses for unilaterally terminating an employee, may entail some dire consequences for the management. In this article, we shall discuss such consequences.

Reinstatement, or in lieu thereof Separation Pay

A core principle in illegal dismissal cases is that an illegally dismissed employee should be treated as if the dismissal did not happen in the first place. This is so because the law assumes that, had he not been treated unfairly, he would have remained with the employer over the period of time that he was separated therein. This applies regardless if the employee found permanent or temporary work outside the employment where he was dismissed.

Thus, Article 279 of the Labor Code states that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges up to the time of his actual reinstatement.[3] Hence, from the judgment of the Labor Arbiter declaring that the employee has been illegally dismissed, he must be welcomed with open arms by the employer in the office, with probably a Creme Brulee cake and a White Spinach pizza on the sides. Okay, maybe there should not be a celebration, but you get what I mean.

Full backwages

Aside from a homecoming celebration, and in relation as well to the concept of equity, full backwages and other benefits, computed from the time it was withheld upon the employee up to the time of his actual reinstatement must be given. This includes allowances given to the employee under the employment contract, company policy or collective bargaining agreement, such as, say, gym allowance, for burning up all those excess calories from eating pies. The backwages and allowances must be given in full without deducting therefrom any earnings derived by employee elsewhere.[4] The employer’s offer to reinstate during the pendency of the labor case shall not forestall the payment of backwages.[5]

It must be noted however that the backwages must be computed on the basis of the wage rate level at the time of the illegal dismissal and not in accordance with the current wage level.[6] In short, it is presumed that the employee did not receive a raise during the time that he was separated from the employer. The allowances however must include the monetary value of the mandatory 13th month pay as well as the service incentive leaves.[7]

The rule however is different for illegally dismissed fixed-term employees. Unlike regular employees, they shall be entitled to backwages, including allowances regularly given, only for the portion corresponding to the unexpired term of the contract.[8] Also, if the employee has reached the optional retirement age of sixty (6) years old, his backwages shoud cover only the time when he was illegally dismissed up to the time when he reached sixty (60) years old.[9] Well, at least said employee could avail of the free weekly cinema passes. However, if the employee has reached the age of sixty five (65) years or beyond, the backwages should be computed until the age of sixty floive (65) instead of sixty (60).[10] Lastly, if the employer has ceased operations, the backwages shall naturally be computed only until the time when the company has stopped operating.[11]

But what if having the employee reinstated is no longer feasible due to the damaged relations between the employer and the employee? Can such a relationship be forced? Can a trust even be forced, especially if it was broken already? By that, I was referring to the mutual trust between the employer and the employee. Stay tuned for the next installation of this article. Meanwhile, please do check our facebook group Business Labor Forum for free legal advice and announcements.

Photo from: by Chris Gorgio

[1]Christian Andrew Labitoria Gallardo is a recent graduate of the Ateneo School of Law with a Juris Doctor degree, and is currently an associate of the Sangalan and Gaerlan, Business Lawyers, a law firm specializing in labor, corporate and business law. You may reach him through a phone call or message (09157042132) or via email ( [2] Sunday Times, available at (last accessed February 21, 2021). [3] Article 279, Labor Code. [4] Bustamante v NLRC, G.R. No. 111651 (1996). [5] Buhain v CA, G.R. No. 143709 (2002). [6][6] PLDT v NLRC, G.R. No. 106947 (1999). [7] Espejo v NLRC, G.R. No. 112678 (1996). [8] Philippine-Singapore Transport Service v NLRC, G.R. No. 95449 (1997). [9] Espejo v NLRC, G.R. No. 112678 (1996). [10] St Michael’s Institute v Santos, G.R. No. 145280 (2001). [11] Chronicle Securities Corp v NLRC, G.R. No. 157907 (2004).


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