G.R. No. L-63779 October 27, 1983
ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION and/or NGO CHING, petitioners, vs. HON. MANUEL M. LAZARO, Presidential Assistant for Legal Affairs; MINISTER OF LABOR AND EMPLOYMENT; NATIONAL LABOR RELATIONS COMMISSION; LOLITO C. FULLEROS, Executive Labor Arbiter, and JAIME SAMBAJON, respondents.

FACTS

Jaime Sambajon was employed by Associated Anglo-American Tobacco Corporation. In February 1974, the company filed an application with the Department of Labor to dismiss him due to an alleged illegal shortage in his accounts. Sambajon countered by filing a complaint for reinstatement, backwages, and overtime pay. The Labor Arbiter, in a 1975 decision, ordered his reinstatement with full backwages from March 1974. The National Labor Relations Commission dismissed the company’s appeal on a technicality. The case eventually reached the Office of the President, which in December 1982 affirmed the Labor Arbiter’s reinstatement order, nullifying a contrary order by an Acting Secretary of Labor.
Following the finality of the reinstatement order, the Executive Labor Arbiter issued a writ of execution for Sambajon’s backwages, which were computed without any temporal limitation, amounting to over P106,000 as of March 1983. The company posted a bond to stay execution and elevated the case to the Supreme Court via certiorari. It did not contest the reinstatement order itself but specifically assailed the award of full backwages, praying that it be limited to a period of three years.

ISSUE

Whether the backwages awarded to an illegally dismissed employee ordered reinstated should be limited to three years.

RULING

Yes, the backwages are limited to three years. The Supreme Court modified the decision under review, holding that in the interest of pragmatic and expeditious justice, the backwages due to Jaime Sambajon should be equivalent to only three years’ pay, in addition to his reinstatement. The Court applied a settled rule and followed the recommendation of the Solicitor General, citing precedents such as Insular Life Assurance Co., Ltd. Employees Association vs. Insular Life Assurance Co., Ltd. This three-year limitation is a judicially established policy designed to balance the employee’s right to full compensation for illegal dismissal with equitable considerations for the employer, preventing the imposition of an indefinite and potentially ruinous financial burden that could result from protracted litigation. The ruling aims to achieve a fair and reasonable resolution without unduly punishing the employer, thereby serving the broader interests of justice in labor disputes.