​Tomas Claudio Memorial College vs. CA, February 16, 2004

Facts:
Pedro Natividad, an employee of TCMC was arrested by the police authorities without warrant, for violation of RA No. 6425. A memo was served to him informing that his employment was already terminated. While the investigation was ongoing, Natividad was barred from entering the school premises. In June 1997, he filed a complaint with the NLRC for an illegal dismissal on the ground that there was no factual basis for his dismissal and he was deprived of his right to due process.

Issue:
What are the consequences of an illegal dismissal.

​Held:
In Santos v. NLRC, 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 backwages corresponding to the period from his illegal dismissal up to actual reinstatement. The statutory intent on this matter is clearly discernible. Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. These twin remedies-reinstatement and payment of backwages – make the dismissed employee whole who can then look forward to continued employment. Thus do these two remedies give meaning and substance to the constitutional right of labor to security of tenure. The two forms of relief are distinct and separate, one from the other. Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other…
 
The payment of backwages is generally granted on the ground of equity. It is a form of relief that restores the income that was lost by reason of the unlawful dismissal; the grant thereof is intended to restore the earnings that would have accrued to the dismissed employee during the period of dismissal until it is determined that the termination of employment is for a just cause.