THE INSULAR LIFE ASSURANCE COMPANY, LTD., AND FGU INSURANCE GROUP, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, HON. ANTONIO TRIA TIRONA, LABOR ARBITER OF THE EXECUTION…

This is a petition to review and set aside the resolution of the
National Labor Relations Commission (NLRC), promulgated
on April 9, 1986, denying
the petitioners’ motion for reconsideration, which it treated as an appeal from
the order of Labor Arbiter Antonio Tria Tirona dated January
17, 1986.  The order is,
likewise, the subject of this present application for relief.

This controversy is an
offshoot of a labor dispute between petitioner Companies
and respondent Unions which began way back in 1958 and has been brought to this
Court twice for review.

The facts are culled from
our previous decisions and the records of the case.

The petitioners were the
respondents, together with the defunct Court of Industrial Relations (CIR) in
SC-G.R. No. L-25291, entitled The Insular Life Assurance Co., Ltd., Employees Association-NATU,
v. The Insular Life
Assurance Co., Ltd. (37 SCRA 244) seeking to review and reverse the decision of the CIR
dismissing the respondent Union’s complaint for unfair
labor practice.

As a result of a bargaining deadlock, respondent Unions declared a strike on May 21, 1958.  On
the strength of a writ of preliminary injunction, petitioner
Companies “notified the petitioners-strikers to report back to work on June 2,
1958 or else be
replaced.” The respondent Unions called off their strike and returned to
work.  However, a certain number of workers were refused readmission on the ground of criminal
charges pending against them before the fiscal’s
office.  However, non-strikers similarly
facing criminal indictments were readily readmitted.  Thus, a complaint for unfair labor practice
against petitioner Companies was filed on July 29, 1958.  The
complaint specifically charged the petitioners with — (1) interfering with the
exercise of the workers’ right to concerted activity; and (2) discriminating
against Union members as regards
readmission to work after the strike on the basis of union membership and
degree of participation in the strike.

After trial on the merits, the Court of
Industrial Relations, through presiding Judge Arsenio
Martinez, rendered a decision,
dated August
17, 1965, dismissing the complaint of
respondent Unions for lack of merit. 
The Unions seasonably filed their motion for reconsideration which was,
however, denied by the October 20,
1965 resolution of the CIR sitting en banc.  Hence, the petition for review filed before
us by respondent Unions docketed as G.
R. No. 25291 (37 SCRA 244).

On January 30, 1971,
this Court rendered a decision
setting aside the challenged CIR decision, adjudging the petitioners guilty of
unfair labor practice, and ordering the reinstatement with backwages
of the Unions’ members found to have
been discriminatorily dismissed by them.

On April 21, 1971,
the petitioner Companies, through a motion
for reconsideration, petitioned this Court for a re-examination of the January 30, 1971 decision.  In the main, the respondents questioned the
review made by this Court of the determination of facts reached by the Court of
Industrial Relations and the consequent revision of the said findings of
fact.  The arguments of then respondent
Companies centered on their objection that the Court erred in finding them
guilty of unfair labor practice.

In a resolution
dated March 10, 1977 (76 SCRA 50), this Court found no sufficient or compelling
reasons to depart from the judgment embodied in the decision of January 30,
1971, save for the pronouncement on backwages which
we fixed at “the total equivalent of three (3) years without qualification
or deduction, as applicable to and fully justified in the case at bar.”
The petitioners’ motion for reconsideration was denied.

Thereafter, petitioner Companies filed on March 16, 1977 a
“Motion for Clarification” of a portion of the March 10, 1977
resolution, asking whether or not the payment of the three (3) years backwages shall be at the pay rates as of June 2, 1958, (the date of the act of discrimination or
discharge of the Union members) or the current pay rates for positions similar
or comparable to those previously held by them.

In line with our ruling in Davao
Free Workers Front v. Court of Industrial Relations (67 SCRA 418) we
held, in a resolution dated May 5, 1977, that “the computation of the said
backwages is at the rate that the petitioners
entitled thereto were actually receiving and being paid at the time of
dismissal and strike x x x
without deduction and qualification x x x“, i.e., June 2, 1958.  We declared the resolution final and
immediately executory.

Pursuant to the court’s resolution of May 5, 1977, the petitioners paid in full the
total amount of three (3) years backwages awarded to
the dismissed employees except four of them, namely:  Florencio Ibarra, Pacifico Ner, Blas
Ventura and Jose Castillon, who had reached the
retirement age while the case was pending
before us.

Because of the petitioner Companies’ refusal to reinstate the
aforementioned union members and their alleged sham reinstatement of others,
the Unions sued the Companies for contempt before respondent NLRC.  After hearing the parties, the respondent
NLRC issued a resolution, dated
July 28, 1978 finding petitioner Companies guilty of contempt and ordered them
through their respective presidents, to pay a fine of Five Thousand Pesos (P5,000.00)
each.  A petition for certiorari
was filed with us, docketed as G. R. No. L-49071, questioning the aforesaid
resolution of the NLRC.

Petitioner Companies alleged that the respondent Commission erred
in ordering the petitioners to pay the four (4) Union members an amount equal
to their daily salaries beginning May 16, 1977, until they are actually
reinstated, in utter disregard of the fact that they had been retired upon
reaching the age of sixty (60) years in 1963, 1970, 1974 and 1977, respectively.  Likewise, they alleged that the Commission
erred in arbitrarily ordering the petitioners to pay all reinstated employees
differential salaries “by way of salary rate adjustments” on the
basis of “the actual pay rates of the respondent companies’ other employees
with comparable seniority” because this is an unwarranted deviation from
the final judgment of this Court in G.R. No. L-25291, dated March 10, 1977.  Finally, they assailed the order of contempt as well as the fine
imposed on them.

On April 17, 1985, this Court rendered a decision affirming the
assailed resolution of the respondent NLRC, save, however, the pronouncement
finding petitioner Companies guilty of contempt (135 SCRA 697).

After the aforementioned decision became final, the private respondents
filed with the execution arm of the respondent NLRC a “Motion for
Computation of Judgment”, dated June
21, 1985.

In his Order dated July 24, 1985, the respondent Labor Arbiter
directed the Chief, Research and Information Division, NLRC, to designate the
Socio-Economic Analyst “to compute the award in accordance with the
decision” of this Court.

On September 3, 1985, Analysts Remedios
B. Paz and Angelita B. Pancito
of the Research and Information Division of the NLRC submitted their
“Report of Examiner” indicating that the sums of money due to the
thirty-four (34) members of the private respondents amounted to P1,415,437.56, representing their backwages,
computed for a period of three (3) years, salary differentials, fringe benefits
and retirement pay.

On January 17, 1986,
the respondent Labor Arbiter of the Execution Arm issued the disputed order
which computed the benefits under the decision of this Court in the aggregate amount
of P2,348,334.13.

On January 28, 1986,
the petitioners filed their motion for reconsideration of the order now subject
of this present review.

On January 29, 1986,
private respondents filed their motion to dismiss, alleging that the
petitioners’ motion for reconsideration was filed beyond the ten-day period
provided in Article 223 of the Labor Code for appeal.

Thus, treating the petitioners’ motion for reconsideration as an appeal, the respondent
Commission issued its disputed resolution dismissing the petitioners’ motion
filed on January 28, 1986 on the ground that the order appealed from had
already become final, a day before, on January 27, 1986, ten (10) calendar days
after the receipt by the petitioners of the order dated January 17, 1986.

Alleging grave abuse of discretion and/or abuse of discretion,
the petitioners instituted the present petition for certiorari.

The petitioners submit
the following assignment of errors:

“1.  The respondent Commission erred in treating
petitioners’ Motion for Reconsideration of its resolution dated April 7, 1986 as an appeal under Article 223 of the Labor Code;

“2.  The respondent Labor Arbiter erred in:

“a.   Computing the backwages
of the four (4) retirees, Florencio Ibarra, Pacifico Ner, Blas
Ventura and Jose Castillon for eight (8) years from
May 16, 1977 to May 13, 1985, instead of limiting said backwages
to three (3) years without deduction or qualification;

“b.   Computing the retirement benefits of the four
retirees from the dates of their respective employment up to May 13, 1985;

“c.   Computing the
fringe benefits of the nine strikers who reported back to work in May, 1977 and
continued working in the total sum of P189,176.74;

“d.   Computing the
vacation leave and service award differentials of some members of the
respondent Unions;

“e.   Awarding salary and fringe benefit
differentials and retirement benefits up to May, 1985 to the strikers who reported back to work in May, 1977 but had stopped soon
thereafter;

“f.    Awarding retirement benefits to Mariano Subong, Domingo Boco and Narciso Dano who had not reported back to work at any time.”
(pp. 179-180, Rollo)

Article 223 of the Labor
Code provides:

“Decisions, awards or orders of the Labor Arbiter or
compulsory arbitrators are final and executory unless
appealed to the Commission by
any or both parties within ten (10) days from receipt of such awards, orders or
decisions.  x x x.”

The petitioners assail the application of the aforequoted
provision of the Labor Code to its motion for reconsideration which the
respondent Commission treated as an appeal. 
We find no error in the Commission’s doing so.

For purposes of
determining its timeliness, a motion for reconsideration may properly be
treated as an appeal.  As a step to allow an inferior court to correct itself before review by a higher court, a motion for reconsideration must
necessarily be filed within the period to appeal.  When filed beyond such period, the motion for
reconsideration ipso facto forecloses the right to appeal
(Camacho v. Court of Appeals, 76 SCRA 531). 
Thus, in the case at bar, a motion for reconsideration and an appeal
from a decision, award or order of the Labor Arbiter must be filed within ten
(10) days from receipt of such decision, award or order, pursuant to the Labor
Code.  The petitioners’ motion for reconsideration
was filed a day late.

The circumstances of the case, however, do not warrant the
outright dismissal of the petitioner’s motion for reconsideration as was its fate before the respondent
NLRC (American Home Insurance Co. v. Court of Appeals, 109 SCRA 180).  The merits of the case require the present
review on grounds of substantial justice.

The first issue raised by the petitioners against the respondent
Labor Arbiter’s order, dated January 17, 1986, is the alleged incompatibility
of the Labor Arbiter’s computation of backwages of
the retirees Florencio Ibarra, Pacifico
Ner, Blas Ventura and Jose Castillon with this Court’s decision in G.R. No. L-9071,
expressly limiting the amount of backwages to an
equivalent of three (3) years pay without qualification or deduction.

The respondents, however, point out that the dispositive
portion of said decision merely provides an affirmation of the respondent
Commission’s Resolution dated July 28, 1978 without mention of the three-year
limitation on backwages as follows:

“WHEREFORE, respondents Insular Life Assurance Co., Ltd. and
FGU Insurance Group x x x
are also hereby ordered to pay:

“(a)  Union members Florencio
Ibarra, Pacifico Ner, Blas Ventura, and Jose Castillon,
an amount equal to their daily salaries beginning May 16, 1977 until they are
actually reinstated; (p. 65, Rollo)

xxx                                                                   xxx                                                                   xxx

The respondents argue that the court’s
statement on the three-year limitation on backwages
was merely an obiter over which the dispositive must
prevail.

Attention must be drawn
to the issues to which G. R. No. L-49071 addresses itself.  The case arose from petitioner Companies’
initial refusal to reinstate Union members Florencio
Ibarra, Pacifico Ner, Blas Ventura and Jose Castillon
who have already reached retirement age.  The
petitioners allege that the respondent Commission erred in ordering them to pay
the four Union members their backwages “in utter
disregard of the fact that the latter had been retired upon reaching the age of
sixty (60) years in 1963, 1970, 1974 and 1977, respectively.” Stated otherwise,
it is alleged that the Commission erred in awarding backwages
to respondents who are not, in the first place, entitled to reinstatement.  The respondent Unions aver:  “In effect, what petitioners would have
respondent Commission do is to materially alter the Honorable Supreme Court’s
longstanding, final judgment by excluding from the benefit of its reinstatement
order the four (4) mentioned union members whom petitioners claim had already been retired.  This of course, respondent Commission is not
authorized to do.”

The amount of backwages to which the
respondent employees are entitled was settled by this Court in G. R. No. L-25291.  In our
resolution dated March 10, 1977,
we held:

“x x x
[W]e are also constrained to reassess the ruling in our decision of January 30,
1971 to the effect that the strikers must receive backwages
from the date of the act of discrimination, that is, from the date of their
discharge or their offer to return to work up to the date of their actual
reinstatement, deducting therefrom whatever they have
earned pending readmission.

“x x x
Considering all the circumstances at bar, x x x, the Court considers the fixing and limitation of the backwages award to their total equivalent from three years without
qualification and deduction as applicable to and justified in the case at
bar.”

Nevertheless, respondent Commission, in its resolution dated July 28, 1978, awarded daily salaries
from May 16, 1977 until April 17, 1985, or a period of
eight (8) years.  The respondent Commission gravely erred in
doing so.

The law of the case has been established in G. R. No. L-25291.  The backwages to which all reinstated employees are entitled
has been set to the equivalent for a period of three (3) years of the rate of
pay at the time of their dismissal.  This
is in accord with the doctrine laid down by the trail-blazing Mercury Drug
v. Court of Industrial Relations (56 SCRA
694) case which to this day remains the rule in cases of the same or
similar circumstances (Lepanto Consolidated Mining
Co. v. Encarnacion,
136 SCRA 258).  The formula calls for
fixing the award of backwages without qualification
and deduction to three (3) years, subject to deduction where there are
mitigating circumstances in favor of the employer but subject to increase by
way of exemplary damages where there are aggravating circumstances.  With the petitioners having been absolved of
the contempt charges against them, no aggravating circumstances would warrant
an increased award of backwages.

Anent the respondent Arbiter’s award of leave benefits, the
decree on backwages is understood to be inclusive of
such benefits.  The grant of three years backwages without qualification and deduction by the court
necessarily takes into consideration holidays, vacation leaves and service
incentive leaves, paying for all working days regardless of whether or not the
same fall on holidays or employees’ leave days. 
Having already paid these benefits, petitioners can not be burdened to
pay the same again.  With regard to the award of allowances
by respondent Labor Arbiter, we held in Soriano v. National Labor
Relations Commission, et al. (G. R. No.
75510, October 27, 1987) that “the salary base properly used in computing
the separation pay and backwages due to petitioner
should include not just the basic salary but also the regular allowances that
petitioner had been receiving (See Santos v. National Labor Relations
Commission, G. R. No. 76721, September 21, 1987).” Thus, the award of backwages in the case at bar is, likewise, deemed to cover
the allowances claimed by respondents.

As to salary differentials, we have already made clear that the
rate at which the three-year backwages shall be
computed “at the rate that the petitioners are entitled thereto were
actually receiving and being paid at the time of dismissal and strike, x x x, i.e., June 2, 1958.” To award salary differentials
would be to deviate from our ruling in G. R. No. L-25291 aforequoted
and would, in effect, be granting backwages at the
current pay rates for positions similar or comparable to those previously held
by the respondents which we did not, in the first place allow.  It is a
settled rule that upon reinstatement, illegally dismissed employees are
to be paid their backwages without deduction and
qualification as to any wage increases or other benefits
that may have been received by their co-workers who were not dismissed or did
not go on strike (Durabuilt Recapping Plant &
Co., Inc. v. National Labor Relations Commission, G. R. No. 76746, July 27,
1987; Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular
Life Assurance Co., Ltd., 77 SCRA 5, citing Davao Free Workers Front v. Court of Industrial Relations, supra).  We do not depart from such established
policy.

Coming now to the issue of retirement pay, the petitioners
question the award of retirement benefits from the date of their respective
employments up to May 13, 1985 (the date G. R. No.
L-49071 was promulgated) to:  (1) the
four retirees Florencio Ibarra, Pacifico
Ner, Blas Ventura and Jose Castillon; (2) the strikers who reported back to work in May 1977 but stopped working soon
thereafter; and (3) to Mariano Subong, Domingo Boco and Narciso Dano who had
not reported back to work at any time. 
It is argued that retirement benefits to be awarded respondent employees
should span only up to the date when they reached their sixtieth (60th)
birthday in accordance with the companies’ retirement policies.

At the outset, it must be noted that the original decision in G.
R. No. L-25291 provides no more than the grant of backwages
to the petitioners’ dismissed workers. 
No salary differentials, fringe benefits and retirement benefits were
decreed by the court to warrant the respondent Arbiter’s award thereof on
execution.

Fundamental is the rule that execution must conform to that
ordained or decreed in the dispositive part of the
decision (Laingo v. Camilo,
130 SCRA 144).  An order of execution
which varies the tenor of the judgment or exceeds the terms thereof is a
nullity (Gamboa’s Inc. v. Court of Appeals, 72 SCRA
131; see Villoria v. Piccio,
95 Phil. 802).  The Labor Arbiter’s order
is fatally infirm to that extent.

Nevertheless, we go on to discuss the matter on retirement
benefits claimed by respondent employees to avoid further litigation between
the parties on the matter which may further delay the full and final
disposition of the case (National Housing Authority v. Court of Appeals, 121
SCRA 777)

Paragraph (a), Section
14, Rule 1, Book VI provides:

“Section 14.  Retirement benefits.  — (a) An employee who is retired pursuant to
a bona fide retirement plan or in accordance with the applicable individual or
collective agreement or established employer policy shall be entitled to all
the retirement benefits provided therein or to termination pay equivalent at
least to one-half month salary for every year of service, whichever is higher,
x x x.”

An employee’s years of service,
therefore, are determinative of the extent of retirement benefits due him.  The respondent retirees, Ibarra, Ner, Ventura
and Castillon capitalize on this provision of law
alleging that because of the petitioners’ failure to reinstate them, upon order
of the court in G. R. No. L-25291 on March
10, 1977, they were unable to be retired, their retirement being possible
only on May 13, 1985.  Thus, computation of their retirement
benefits should include the period during which they were deprived of their
right to retire.

This cannot be
allowed.  The respondent employees are
covered by the petitioner Companies’ retirement plan which prevails as the law in their cases.  The plan grants retirement benefits to
employees upon reaching the age of sixty (60). 
Beyond such age, they cease to be covered by the petitioners’ retirement
policy regardless of whether or not they continue in the companies’
employ.  Consequently, the computation of
benefits accruing under the plan cannot go beyond the stipulated date of
retirement.  Thus, in the case at bar,
respondents would have been retired upon reaching the age of sixty (60), regardless of whether or not they had been
immediately reinstated.  The respondents’
tardy reinstatement could not have delayed the arrival of their compulsory date of
retirement under the policy as to grant them additional benefits beyond such
date.  Only the application and payment
of benefits have been delayed.  Upon
their reinstatement, they could then apply for retirement benefits already due
them in accordance with the Companies’ policies.  As the respondents aver, their employment is
deemed continuous or uninterrupted by their illegal dismissal.  By their own arguments, the respondents’
retirement cannot be deemed to have been postponed by their dismissal and for
purposes of computing retirement benefits, years of service shall be understood
to be the period extending from the employee’s date of hiring to the compulsory
date of retirement which, in this case, is the date of the employee’s sixtieth
(60th) birthday.  This period cannot be extended.  The same rule applies to all other retirable employees.

The petitioners assail the award of retirement benefits to several
employees who had reported back to work in May, 1977 (upon finality of the
order of this Court in G. R. No. L-25291) but had stopped working
thereafter.  We reiterate the applicability
of the aforementioned rule on computation of retirement benefits based on the
employee’s years of service.  All those
who, before their final date of termination have reached the age of sixty (60)
shall be entitled to retirement benefits from date of hiring to the date of
their sixtieth birth anniversary.  Those
who have left the petitioners’ service before acquiring the necessary credits
for retirement are, obviously, not entitled thereto.

As regards those who never reported back to work, they shall be
entitled to retirement benefits if they had reached their sixtieth (60th)
birthday before May 5, 1977
(the date of finality of our decision in G. R. No. L-25291
ordering their reinstatement with backwages).  Otherwise, they cannot be awarded retirement
benefits.

Finally, as to
the service award differentials claimed by some respondent union members, the
company policy shall, likewise prevail, the same being based on the employment
contracts or collective bargaining agreements between the parties.  As the petitioners had explained, pursuant to
their policies on the matter, the service award differential is given at the
end of the year to an employee who has completed years of service divisible by
five (5).  Thus, employees who, at the
time of their separation have completed years of service divisible by five from
the time of their reinstatement in May, 1977 shall be entitled to such
differential.  Others without said years
of service obviously do not qualify to receive this incentive.

WHEREFORE, the petition is hereby GRANTED.  The resolutions of the National Labor
Relations Commission dated April 9,
1986 and July 28, 1978,
insofar as the latter ordered the payment of backwages
and salary differentials to respondents, as well as the challenged order of Labor Arbiter Antonio Tria Tirona are SET ASIDE.

The petitioners are ordered to pay respondents Florencio Ibarra, Pacifico Ner, Blas Ventura and Jose Castillon backwages fixed to the
total equivalent of three (3) years at the rate of pay at the time of their
dismissal without deduction or qualification as to any wage increases or other benefits that may have been
received by their co-workers who were not dismissed or did not go on
strike.  The awards of allowances,
leave benefits, and salary differentials are hereby SET ASIDE.  The award of retirement benefits and service
award differentials shall be made in accordance with the employer-employee
agreements on the matter pursuant to our pronouncements herein.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin, and Cortes, JJ., concur.