We have often heard of decisions of the High Court ordering the reinstatement of dismissed employees and the payment of their backwages from the time of their dismissal up to actual reinstatement.  The basis for such rulings is usually Article 279 of the Labor Code of the Philippines, as amended.


The Supreme Court, however, had elucidated on the statutory intent on the matter and nature of the twin remedies of reinstatement and payment of backwages in the case of De Guzman vs. National Labor Relations Commission, et al. (371 Phil 192), viz:


“The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of back wages corresponding to the period from his illegal dismissal up to actual reinstatement. The rationale therefor is clearly obvious. Reinstatement restores the employee to the position from which he was removed, i.e., to his status quo ante dismissal, while the grant of backwages allows the same employee to recover from the employer that which he lost by way of wages because of his dismissal. These twin remedies of reinstatement and payment of back wages make whole the dismissed employee, who can then look forward to continued employment. These two remedies give meaning and substance to the constitutional right of labor to security of tenure.

However, the two remedies are distinct and separate. Though the grant of reinstatement commonly carries with it an award of back wages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. Reinstatement is a restoration to a state from which one has been removed or separated. On the other hand, the payment of backwages is a form of relief that restores the income that was lost by reason of the unlawful dismissal. The award of one is not a condition precedent to an award of another. Backwages may be ordered without ordering reinstatement; conversely, reinstatement may be ordered without payment of back wages.

Thus, in a number of cases, the Court, despite its order of reinstatement or award of separation pay in lieu of reinstatement deemed it appropriate not to award back wages as penalty for the misconduct or infractions committed by the employee.”(371 Phil 192, 273-275).


In the recent case of Holcim Philippines Inc. vs. Renante J. Obra (G.R. No. 220998, 08 August 2016), the Supreme Court ruled that a dismissed employee may be reinstated without backwages if the following parameters are present: a) the fact that the dismissal of the employee would be too harsh a penalty; and b)  that the employer was in good faith in terminating the employee.  When the guilt of the employee is substantially established but his dismissal may be too drastic, he may be reinstated without backwages.  Denial of backwages would sufficiently penalize the employee for his infraction.  Furthermore, the good faith of the employer, when clear under the circumstances, may preclude or diminish recovery of backwages.  Only an employee discriminately dismissed is entitled to backpay. (Pepsi-Cola Products Phils. Inc. vs. Molon, 704 Phil. 120, 144-145).

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