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…

Insular Life Assurance versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by the Insular Life Assurance Company and the FGU Insurance Group against the National Labor Relations Commission, Labor Arbiter Antonio Tria Tirona, and the respondent unions. The petitioners ask the Supreme Court to set aside the Commission's resolution denying their motion for reconsideration and the Labor Arbiter's order computing the money judgment in a decades-old labor dispute. The case matters because it is a master class in two things every labor lawyer must know: the finality of judgments and the strict limits of execution, and the rule that a motion for reconsideration filed one day late is treated as an appeal that has already lost its way.

Procedural History

The dispute began in 1958 with a strike and an unfair labor practice complaint. The Court of Industrial Relations dismissed the complaint in 1965, but the Supreme Court reversed in 1971, finding the companies guilty of unfair labor practice and ordering reinstatement with backwages. On reconsideration, the Court fixed backwages at the equivalent of three years without qualification or deduction, and clarified that the rate was the pay actually received at the time of dismissal. When the companies refused to reinstate four union members who had reached retirement age, the unions sued for contempt. The Commission found the companies guilty of contempt in 1978, and the Supreme Court affirmed that resolution in 1985, except for the contempt finding. The private respondents then moved for computation of the judgment. The Labor Arbiter issued an order in January 1986 computing benefits at over two million pesos. The petitioners filed a motion for reconsideration one day beyond the ten-day period. The Commission treated the motion as an appeal and dismissed it as filed late. Hence this petition for certiorari.

Facts

In 1958, after a bargaining deadlock, the unions struck. The companies obtained an injunction and told the strikers to return by June 2, 1958 or be replaced. The unions called off the strike, but some workers were refused readmission because of pending criminal charges, while non-strikers facing similar charges were readmitted. A complaint for unfair labor practice followed.

The Supreme Court eventually found the companies guilty and ordered reinstatement with backwages. On reconsideration, the Court limited backwages to three years without qualification or deduction, computed at the rate actually received at the time of dismissal. Four union members, Florencio Ibarra, Pacifico Ner, Blas Ventura, and Jose Castillon, had reached retirement age while the case was pending. The companies refused to reinstate them, and the unions sued for contempt.

After the judgment became final, the private respondents moved for computation. The Labor Arbiter's order awarded backwages, salary differentials, fringe benefits, and retirement pay in the aggregate amount of two million three hundred forty-eight thousand three hundred thirty-four pesos and thirteen centavos. The petitioners' motion for reconsideration was filed one day late, and the Commission dismissed it.

Issues

• Whether or not the Commission erred in treating the petitioners' motion for reconsideration as an appeal under Article 223 of the Labor Code.
• Whether or not the Labor Arbiter erred in computing the backwages of the four retirees for eight years instead of limiting them to three years without deduction or qualification.
• Whether or not the Labor Arbiter erred in awarding salary differentials, fringe benefits, and retirement benefits beyond what the judgment decreed.
• Whether or not the retirement benefits should be computed up to the employees' sixtieth birthday rather than up to the date of the judgment's promulgation.

Applicable Provisions

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.

This fixes the ten-day period within which a motion for reconsideration must be filed, since it is treated as an appeal for purposes of timeliness.

Section 14 of Rule 1, Book VI of the Implementing Rules 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.

This makes years of service the measure of retirement benefits, which the Court ties to the employee's compulsory retirement date under the company plan.

Ruling

On the first issue, the Court found no error in the Commission's treatment of the motion for reconsideration as an appeal. A motion for reconsideration must be filed within the period to appeal, and when filed beyond that period, it forecloses the right to appeal. The petitioners' motion was one day late. Nevertheless, the Court did not dismiss outright, because substantial justice required a review on the merits.

On the second issue, the Court held that the Labor Arbiter gravely erred in computing backwages for eight years. The law of the case was fixed in the earlier decision: backwages are limited to three years without qualification or deduction, at the rate of pay at the time of dismissal. The Court applied the Mercury Drug doctrine, which fixes backwages at three years, subject to deduction for mitigating circumstances and increase for aggravating circumstances. Since the companies were absolved of contempt, no aggravating circumstance justified an increase.

On the third issue, the Court held that the three-year backwages already include leave benefits and allowances, so these cannot be paid again. Salary differentials cannot be awarded, because that would grant backwages at current pay rates, which the Court never allowed. Execution must conform to the dispositive part of the decision, and an order of execution that varies the tenor of the judgment is a nullity.

On the fourth issue, the Court held that retirement benefits are computed from date of hiring to the employee's sixtieth birthday, the compulsory retirement date under the company plan. The tardy reinstatement did not postpone that date; only the application and payment of benefits were delayed. Those who left before acquiring the necessary credits are not entitled, and those who never reported back are entitled only if they reached sixty before the finality of the reinstatement order.

Doctrine

A motion for reconsideration of a Labor Arbiter's order must be filed within ten days from receipt, and if filed late, it is treated as an appeal that has lost its timeliness. Execution must conform strictly to the dispositive part of the judgment, and an order that varies or exceeds its terms is void. Backwages are fixed at three years without qualification or deduction, at the rate of pay at the time of dismissal, and this award already includes leave benefits and allowances. Retirement benefits are computed from date of hiring to the employee's compulsory retirement date under the company plan, which is the sixtieth birthday.

Disposition

The petition was granted. The Commission's resolutions and the Labor Arbiter's order were set aside insofar as they ordered payment of backwages and salary differentials beyond the three-year limit fixed by the judgment.

Remember This

Memorize this line: execution must conform to the dispositive part of the decision, and an order that varies its tenor is a nullity. Examiners use this case to test the ten-day period for motions for reconsideration before the Labor Arbiter and the three-year rule on backwages under the Mercury Drug doctrine.