CORPUZ, GRACE P. ATTY.

OLIVER REYES

Legal Research and Computer AY 2015-2016

TOPIC: REINSTATEMENT OF ILLEGALLY DISMISSED

EMPLOYEE

INTRODUCTION

One of the basic constitutional rights given to an employee is the

security of tenure. It means that an employer shall not terminate

the services of an employee except for just or authorized causes. If

an employer violated such rule, then the employee is said to be

illegally dismissed and entitled to the reliefs granted by the law.

Under the Labor Code1, it provides for the just causes in

terminating the services of an employee, to wit: serious

misconduct; willful disobedience of employer’s lawful orders

connected with work; gross and habitual neglect of duty; fraud or

breach of trust; commission of a crime or offense against the

employer, employer’s family, or representative; and other

analogous causes. While for authorized causes, the law allows the

employer to terminate the services of its employee because by

reason of: installation of labor-saving devices; redundancy;

retrenchment to prevent losses; closure or cessation of business;

and if the disease of the employee is not curable within six months

1
Articles 297 to 299, Labor Code of the Philippines
and his continued employment of is prejudicial to his health or to

the health of his co-employees.

RELIEFS GIVEN TO AN ILLEGALLY DISMISSED EMPLOYEE

There are various reliefs and remedies given by the law to an

illegally dismissed employee. An employee who is unjustly

dismissed from work shall be entitled to reinstatement without

loss of seniority rights and other privileges and to his full

backwages inclusive of allowances, and to his other benefits or

their monetary equivalent computed from the time his

compensation was withheld from him up to the time of his actual

reinstatement.2 In addition to this, the employee may also

recover moral and exemplary damages and attorney’s fees

against the erring employer. 3

REINSTATEMENT IN GENERAL

Reinstatement restores the employee who was unjustly

dismissed to the position from which he was removed, that is, to

his status quo ante dismissal. 4 Furthermore, it is a remedy that

most effectively restores the right of an employment before he was

unjustly deprived of his job. In giving an illegally dismissed

2
Article 294, Labor Code of the Philippines
3
Alcantara Reviewer
4
Page 883, Volume II, Labor Code with Comments and Cases by Azucena, Jr.
employee the right to reinstatement, the law recognizes the fact

that continued employment gives to a worker, especially to a lowly

or menial laborer, an assurance of continuity in his source of

income which a grant of separation pay could not provide.5 In one

instance, the order for the reinstatement of the striking employees

was held proper since the employer was guilty of unfair labor

practice. Reinstatement of the strikers, who have not found

substantially equivalent employment elsewhere, therefore follows

as a matter of right, notwithstanding that the employer has hired

others to take the place of the strikers for the purpose of continuing

the operation of the plant or the business of the industry.6

REINSTATEMENT TO FORMER POSITION

When an employee is reinstated, he gets back to his work or

position without loss of seniority rights. It only means that the

employee should be treated in matters involving seniority and

continuity of employment as though he or she had not been

dismissed from work.7 However, there are cases wherein the

employee may not be reinstated to his former position. First,

when such position no longer exists at the time of reinstatement.

The employee then will be given a substantially equivalent

position in the same establishment, without loss of seniority

5
Quijano vs. mercury Drug Corporation, GR No. 126561, July 8, 1998
6
National Federation of Labor Union vs. Ople, GR No. 68661, July 22, 1986
7
http://kittelsoncarpo.com/labor-employment/termination-of-employment/
rights. Second, the establishment where the employee is to be

reinstated has closed or ceased operations or where his former

position no longer exists at the time of reinstatement for reasons

not attributable to the fault of the employer. The employee shall

be entitled to separation pay equivalent at least one month

salary or to one month salary for every year of service,

whichever is higher, a fraction of at least six months being

considered as one whole year. 8

PAYMENT OF BACKWAGES AS PART OF REINSTATEMENT

As stated earlier, an employee who was illegally dismissed is

entitled to twin reliefs of reinstatement without loss of seniority

rights and the payment of full backwage. Backwages is a form of

relief that is given to an illegally dismissed employee to

compensate him for the lost income he could have earned during

the period of such dismissal. It includes all the amounts he could

have earned starting from the date of dismissal up to the time of

reinstatement.9 9
It is computed from the time of the illegal

dismissal up to the time of actual reinstatement.10 However, there

are various circumstances wherein reinstatement without

payment of backwages may be justified, since the two reliefs are

distinct and separate from the other. First is the fact that the

8
Section 4, Rule I, Book 6, Omnibus Rules Implementing the Labor Code
9
http://kittelsoncarpo.com/labor-employment/termination-of-employment/
10
St. Joseph Academy of Valenzuela Faculty Association vs. St. Joseph Academy of Valenzuela, GR No.
182957, June 13, 2013
dismissal of the employee would be too harsh a penalty. Second

is when the employer was in good faith terminating the

employee.11 In one case decided by the Supreme Court, it ruled

that the reinstatement of respondent employee is proper, but

without the award of backwages, considering the good faith of the

employer in dismissing the respondent.12 In another case, the

Court is convinced that the guilt of the petitioner employee was

substantially established. Nevertheless, it agreed with respondent

Minister's order of reinstating petitioner employee without

backwages instead of dismissal which may be too drastic. Denial of

backwages would sufficiently penalize her for her infractions. Since

the bank officials acted in good faith, they should be exempt from

the burden of paying her backwages.13

FORMS OF REINSTATEMENT

There are two forms of reinstatement. One is the actual or

physical reinstatement, wherein the employee shall be physically

admitted back to work. As held in one case, the Court upheld the

general principle that an employee is entitled to reinstatement and

to receive backwages where there is a finding of illegal

dismissal. Loss of trust and confidence not being a just cause for

respondents dismissal since they are not confidential employees,

11
Pepsi-Cola Products Phils., Inc. vs. Molon, G.R. No. 175002, February 18, 2013
12
Manila Electric Co. vs. NLRC, G.R. No. 78763, July 12,1989
13
Cruz vs. Minister of Labor and Employment, G.R. No. L-56591 January 17, 1983
they are entitled to reinstatement, backwages, inclusive of

allowances, and to their other benefits or their monetary

equivalent computed from the time their compensation was

withheld from them up to the time of their actual reinstatement.14

The other form is payroll reinstatement. There is payroll

reinstatement when the employer, instead of physically reinstating

the employee to his former or substantially equivalent position,

chooses to reinstate the employee in the payroll only by paying him

wages and other benefits without however allowing or requiring him

to actually report for work.15 But we must also take note that actual

reinstatement is the general rule, and the payroll reinstatement is

only an exception. It must rest on special circumstances that

render actual reinstatement impracticable or otherwise not

conducive to attaining the purposes of the law.16 There are only

two instances for the application of payroll reinstatement. First, in

cases of preventive suspension pending termination or disciplinary

proceeding. As explained under Omnibus Rules, it provides that no

preventive suspension shall last longer than thirty (30) days. The

employer shall thereafter reinstate the worker in his former or in a

substantially equivalent position or the employer may extend the

period of suspension provided that during the period of extension,

he pays the wages and other benefits due to the worker.17

14
PAGCOR vs. Angara, G.R. NO. 142937 November 15, 2005
15
http://www.laborlaw.usc-law.org/2009/08/03/payroll-reinstatement/
16
Manila Diamond Hotel Employees Union v. CA, et al., G.R. No. 140518, December 16, 2004
17
Section 9, Department Order No. 9, Series of 1997
Second, in cases of pending appeal to the NLRC. The Labor

Code18 provides that the decision of the Labor Arbiter reinstating a

dismissed or separated employee, insofar as the reinstatement

aspect is concerned, shall immediately be executory, even pending

appeal. The employee shall either be admitted back to work under

the same terms and conditions prevailing prior to his dismissal or

separation or, at the option of the employer, merely reinstated in

the payroll. The rationale given by the Court on this is based on

practical considerations. The employer may insist that the

dismissal of the employee was for a just and valid cause and the

latter’s presence within its premises is intolerable by any standard;

or such presence would be inimical to its interest or would in fact

be unacceptable because it sanctions the payment of salaries to

one not rendering service, it may still be the lesser evil compared

to the intolerable presence in the workplace of an unwarranted

employee.19 Furthermore, even if the employer’s appeal turns the

tide in its favor, the reinstated employee through payroll has no

duty to return or reimburse the salary he received during the period

that the lower court or tribunal’s governing decision was for the

employee’s illegal dismissal. 20

In the same way that in case of

reversal on the award of reinstatement on appeal, the employee

need not reimburse the salary he received during payroll

18
Section 229, Book V, Labor Code of the Philippines
19
Maranao Hotel vs. NLRC, GR No. 110027, November 16, 1994
20
Wenphil Corp., vs. Abing, GR No. 207983, April 7, 2014
reinstatement based on the Refund Doctrine. Under the said

doctrine, if the decision of the labor arbiter is later reversed on

appeal upon the finding that the ground for dismissal is valid, then

the employer has the right to require the dismissed employee on

payroll reinstatement to refund the salaries he received while the

case was pending appeal, or it can be deducted from the accrued

benefits that the dismissed employee was entitled to receive from

his employer under existing laws, collective bargaining agreement

provisions, and company practices. However, if the employee was

reinstated to work during the pendency of appeal, then the

employee is entitled to the compensation received for actual

services rendered without need of refund.21

REINSTATEMENT IMMEDIATELY EXECUTORY

Decisions, awards, or orders of the Labor Arbiters are final and

executor unless appealed to the Commission by any or both

parties within ten calendar days from receipt of such decisions,

awards or orders.22 Thus, if the decision of the Labor Arbiter is

reinstatement of the illegally dismissed employee, then the

employer should reinstate him even if the said decision is appealed

to the NLRC. In authorizing execution pending appeal of the

reinstatement aspect of a decision of the Labor Arbiter reinstating a

dismissed or separated employee, the law itself has laid down a

21
Genuino vs. NLRC, G.R. Nos. 142732-33, December 4, 2007
22
Art. 229, Labor Code of the Philippines
compassionate policy which, once more, vivifies and enhances the

provisions of the 1987 Constitution on labor and the working-

man.23 Furthermore, the Court reiterates the principle that

reinstatement pending appeal necessitates that it must be

immediately self-executory without need for a writ of execution

during the pendency of the appeal, if the law is to serve its noble

purpose, and any attempt on the part of the employer to evade or

delay its execution should not be allowed.24 Accordingly, the policy

of the law mainly rests on the social justice and human rights

embodied in our Constitution.25 It favors the restoration of the

status quo for the meantime while the issues involved in the case is

pending and finally resolved. However, if there is refusal on the

part of the employer to reinstate an illegally dismissed employee,

the latter then can collect for the payment of his salaries from the

time the former failed to reinstate him.

WHEN REINSTATEMENT NOT FEASIBLE

First, reinstatement may not be ordered when there is changed of

circumstances. Examples are in cases of recession, retrenchment

or attainment of the employee’s retirement age. Where an

employer suffered business recession such that its commercial or

financial circumstances have changed, forcing it to close one

23
Aris Phil. Inc. vs. NLRC, G.R. No. 90501, August 5, 1991
24
Pfizer, Inc. vs. Velasco, GR No. 177467, March 9, 2011
25
Article XIII, Section 3, Philippine Constitution
outlet, the NLRC, assuming that the employer was guilty of unfair

labor practice, cannot compel the employer to reinstate the

employee if such reinstatement may exceed the employee’s needs

under the altered conditions.26 Also, reinstatement of an illegally

dismissed employee will not be insisted upon an employer who,

while the illegal dismissal complaint was pending, had resort to

retrenchment due to losses adequately proven. Instead of being

reinstated, the illegally dismissed employee should be paid full

backwages from the time of his dismissal up to the time his

retrenchment would have taken effect. He should also be paid

separation pay due to retrenchment.27 Likewise, an illegally

dismissed employee who is approaching or has reached the

retirement age shall not be ordered reinstated. Instead, he shall be

entitled not only to separation pay and full backwages, but also, to

his retirement benefits pursuant to any collective bargaining

agreement in the workplace.28

Second instance when reinstatement is no longer feasible is due to

strained relations. In the doctrine of strained relations, the

employer is allowed to pay the illegally dismissed employee of its

backwages and separation pay since their employment relationship

has become so strained to preclude a harmonious working

relationship between them. However, the doctrine of strained

26
Pizza Inn vs. NLRC, GR No. 74531, June 28, 1988
27
Mitsubishi Motors vs. Chrysler Phil. Labor Union, GR No. 148738, June 29, 2004
28
Bongar vs. NLRC, GR No. 107234, August 24, 1998
relations is not without limitations. In order for it to apply, the

requisites must be strictly complied, to wit: (1) the employee

concerned occupies a position where he enjoys the trust and

confidence of his employer; and (2) if reinstated, an atmosphere of

antipathy and antagonism may be generated as to adversely affect

the efficiency and productivity of the employee concerned.29 If

reinstatement would only exacerbate the tension and strained

relations between the parties, or where the relationship between

the employer and the employee has been unduly strained by

reason of their irreconcilable differences, particularly where the

illegally dismissed employee held a managerial or key position in

the company, it would be more prudent to order payment of

separation pay instead of reinstatement.30 In one case, the court

ruled that the antagonism between the employer and the employee

brought about by the filing of complaint by the employee, plus the

facts that a new employee had been hired to take over the place of

the dismissed employee, and there is no equivalent position

available to the latter, militate against the propriety of reinstating

the said dismissed employee.31

SEPARATION PAY IN LIEU OF REINSTATEMENT

29
Globe-Mackay Cable and Radio Corp. vs. NLRC, GR No. 82511, March 3, 1992
30
Quijano v. Mercury Drug Corp., GR No. 126561. July 8, 1998
31
Asiaworld Publishing House, Inc. vs. Ople, GR No. 56398, July 23, 1987
There are cases as mentioned earlier wherein the reinstatement

either actual or through payroll can no longer be granted to an

illegally dismissed employee. The law then confers to him the

award of separation pay in lieu of reinstatement. It presupposes

from an illegal dismissal in case the reinstatement could not be

carried out. Some of the other instances are: when reinstatement

cannot be effected in view of the long passage of time or because

of the realities of the situation; when it would be inimical to the

employer’s interest; when it will not serve the best interest of the

parties involved; when the company will be prejudiced by the

reinstatement; or when reinstatement will not serve its prudent

purpose. Moreover, the law allows payment of separation pay in

lieu of reinstatement as a substitute for the continued employment

of the illegally dismissed employee. Thus, the order of

reinstatement of an illegally dismissed employee is not absolute.