Air Manila, Inc. vs. Court of Industrial Relations

A final and executory labor judgment, once sustained by the Supreme Court, may not be set aside or further modified by the NLRC through a total reopening of the approved computation; any further proceedings are limited to the matters expressly left open by the final judgment. In ordering execution, the Court applied the policy of fixing backwages at a reasonable net amount, deducting one-third of the total award as earnings elsewhere without further hearing to avoid protracted delay.

Air Manila, Inc. was an employer whose pilots were represented by the Air Manila Line Pilots Association (AMILPA). Their dispute arose from an unfair labor practice case, Case No. 5295-ULP, originally decided by the Court of Industrial Relations (CIR), the labor tribunal later replaced in function by the National Labor Relations Commission (NLRC). The CIR decision left computation of the monetary award to its Examining Division, and the present controversy concerns the execution of that final award after the CIR and the Supreme Court had acted on the computation.

Air Manila, Inc. and its individual officers were the employer and management parties in a labor dispute with the Air Manila Line Pilots Association (AMILPA), the union representing its pilots. In Case No. 5295-ULP, the Court of Industrial Relations (CIR) rendered a decision dated August 25, 1971 finding Air Manila, Inc., et al. guilty of unfair labor practice as charged. The CIR ordered the reinstatement of the union members to their former positions with backwages from November 1, 1968 for those who were furloughed and from November 2, 1968 for those who went on strike, until actual reinstatement, without loss of seniority and other rights and privileges under their Collective Bargaining Agreement. The computation of the award was left to the Examining Division of the CIR.

On November 27, 1972, the Chief of the CIR Examining Division submitted a report computing the backwages and other monetary benefits due to AMILPA members. Associate Judge Alberto S. Veloso approved the report in toto by order dated March 6, 1973. The approved computation included by-pass pay of P1,395,119.78 for members by-passed due to appointments of Captain Diosdado Deang and Victor Bernardo; P3,322,464.00 for members by-passed in the hiring and training of 707 captains; and P484,800.00 for members by-passed in the hiring of Electra captains, for a total by-pass pay of P5,202,383.78. It also included guaranteed backwages of P2,891,000.00 for 24 unreinstated pilots from November 1, 1968 to November 30, 1972 and P530,824.00 for 13 reinstated pilots from November 1, 1968 to date of reinstatement; overtime pay of P1,147,700.72 for hours below 1,000 and P803,063.28 for hours in excess of 1,000 from November 1, 1968 to November 30, 1972; night differential pay of P289,104.90 for pilots and P132,491.45 for co-pilots from November 1, 1968 to November 30, 1972; and unpaid vacation leave pay of P223,952.00. The total amount was P6,018,135.63.

The approved report and computation became the subject of subsequent pleadings and orders. On June 16, 1973, the CIR granted AMILPA’s prayer for a writ of execution to enforce the August 25, 1971 decision and the March 6, 1973 order, initially for P8,000,000.00, while reserving possible deductions for payments already made and earnings elsewhere. On November 16, 1973, the CIR dismissed Air Manila’s petition for relief but set for hearing the motion to deduct earnings elsewhere and other payments. On July 23, 1974, Associate Judge Alberto S. Veloso, concurred in by Acting Associate Judge Guillermo C. Medina, modified the March 6, June 16, and November 16, 1973 orders to allow Air Manila to prove earnings elsewhere, payments already made, and alleged errors by the CIR Auditing Examiner, and directed the Hearing Examiner to schedule hearings. Acting Associate Judge Alberto L. Dalmacion, concurred in by Acting Associate Judge Pedro F. Perez, issued a separate opinion voting for modification and also for allowance of Air Manila’s motion for reconsideration.

On October 10, 1974, the CIR en banc issued a per curiam resolution denying Air Manila’s motion for clarification and maintaining a limited modification of the questioned orders. The CIR explained that four votes favored a limited modification and reception of evidence only on alleged earnings elsewhere, alleged payments effected, and alleged errors in the computation of by-pass pay for 707 Jet Captains and for the hiring of Electra Flight Pilots, while only two votes favored a total allowance of Air Manila’s motion for reconsideration. Air Manila filed a petition for review on December 23, 1974, but the Supreme Court denied it for lack of merit by resolution dated February 24, 1975, and denied reconsideration on June 6, 1975. Entry of judgment was made on June 22, 1975.

Notwithstanding the entry of judgment, Air Manila filed in NLRC Cases Nos. 5295 and 5295-ULP (1)-8-Inj a petition in the guise of an injunction to restrain the Labor Arbiter from further hearing the case and to have the NLRC decide the merits of its motion for reconsideration. On March 30, 1976, the NLRC rendered a decision granting Air Manila’s motion for reconsideration by way of a total reopening of the disputed computations made by the Chief of the Examining Division of the defunct CIR and remanding the case to the Labor Arbiter for further proceedings. On November 26, 1976, AMILPA filed the present Motion to Compel Execution of Final Judgment, praying that the NLRC decision of March 30, 1976 be declared a nullity, that the August 25, 1971 decision and the CIR resolutions as upheld by the Supreme Court be immediately executed and implemented, and that the NLRC be restrained from further proceeding with the case.

• Execution Jurisdiction: Petitioners argued that the motion has no legal basis because applications for execution of judgments are filed not with the appellate court but with the court or body of origin.
• Remedy: Petitioners argued that AMILPA’s remedy is to appeal to the Secretary of Labor.
• NLRC Jurisdiction: Petitioners argued that the NLRC acted legally with jurisdiction when it rendered the questioned 1976 decision.
• Reopening of Computation: In their earlier petition for review, petitioners sought to set aside the CIR resolution and to have the March 6, 1973 and November 16, 1973 orders effectively set aside in toto, or in the alternative to remand the matter to the NLRC to decide en banc whether to reopen and recompute Items A, B, C and E and to break the tie vote of two to two with one abstention.

• Nullity of NLRC Decision: AMILPA prayed that the NLRC decision of March 30, 1976 be declared a nullity and of no force and effect.
• Immediate Execution: AMILPA prayed that the decision of August 25, 1971 and resolutions of the CIR as upheld by the Supreme Court be immediately executed and implemented.
• Restraint: AMILPA prayed that the NLRC be restrained from further proceeding with the case pending resolution of the motion.
• No Final Amount: The NLRC pointed out that as to the amount of backwages there is yet no final amount subject to execution and which would merit the present motion for execution.

• Jurisdiction of NLRC: Whether the NLRC had jurisdiction to set aside or further modify the CIR per curiam resolution of October 10, 1974, as sustained by the Supreme Court, by ordering a total reopening of the approved report and computation of award.
• Validity of NLRC Decision: Whether the NLRC decision of March 30, 1976 is null and void and of no force and effect.
• Execution of Final Judgment: Whether the final CIR decision of August 25, 1971 should be executed, and in what amount, particularly as to backwages, overtime pay, and night differential pay.
• Limited Reopening: Whether further proceedings should be limited to previous payments allegedly effected and alleged errors in the computation of by-pass pay.
• Deduction for Earnings Elsewhere: Whether the Court may fix the deduction for earnings elsewhere without further hearing to avoid protracted delay.

• Jurisdiction of NLRC: No. The NLRC had no jurisdiction to set aside or further modify the CIR per curiam resolution of October 10, 1974 as sustained by the Supreme Court; its March 30, 1976 decision is null and void.
• Validity of NLRC Decision: Null and void. The total reopening exceeded the limited reopening authorized by the final judgment.
• Execution of Final Judgment: Yes. Execution was ordered for Items A, B, C and E in the net amount of P4,012,090.42, after deducting one-third of the total award for earnings elsewhere.
• Limited Reopening: Yes, but limited. The NLRC and Labor Arbiter were directed to hear evidence on previous payments and alleged errors in by-pass pay (Item D) for no less than five consecutive days.
• Deduction for Earnings Elsewhere: Yes. The Court fixed the deduction at one-third of the total award, or P2,006,045.21, leaving a net amount of P4,012,090.42.

• Jurisdiction of NLRC: The final disposition of the case had been decided by the defunct CIR on August 25, 1971 and upheld by the Supreme Court in its May 8, 1972 resolution dismissing the petition to review. The CIR’s October 10, 1974 per curiam resolution allowed only a limited recomputation or reopening of the approved award as to earnings elsewhere, payments made, and correctness of the by-pass pay computation. The Supreme Court denied Air Manila’s petition for review and motion for reconsideration, and entry of judgment was made on June 22, 1975. The NLRC’s March 30, 1976 decision, which granted a total reopening, was therefore beyond its jurisdiction and null and void. The Court also noted that final disposition had been unreasonably delayed by repeated objections bordering on contempt of court and abuse of judicial processes.
• Validity of NLRC Decision: Because the NLRC had no jurisdiction to set aside or further modify the per curiam CIR resolution as sustained by the Supreme Court, its March 30, 1976 decision ordering a total reopening was null and void and of no force and effect. The total reopening was contrary to the limited reopening authorized as to three items.
• Execution of Final Judgment: The remaining bulk of the award consisted of Items A, B, C and E, representing backwages, overtime pay, and night differential pay in the total sum of P6,018,135.63. The only approved deduction was earnings elsewhere. In line with precedents and equity, the Court fixed the deduction without further hearing at one-third of the total award, or P2,006,045.21, leaving a net amount of P4,012,090.42. Execution was ordered to issue forthwith for this net amount, to avoid further protracted delays and allow AMILPA members to enjoy the fruits of their victory.
• Limited Reopening: The two remaining items—previous payments allegedly made and alleged errors in the computation of by-pass pay (Item D, total P5,202,383.78)—should have been clarified long ago but were delayed by the void NLRC 1976 decision, which restrained the Labor Arbiter and granted a total reopening. The NLRC and its commissioned Labor Arbiter were ordered to schedule hearings immediately for reception of evidence on these two items for no less than five consecutive days and as continuously and expeditiously thereafter as necessary. They were then to set forth deductions and revisions of computation found in order, state the final amount due on Item D under the August 25, 1971 CIR decision, issue the corresponding writ of execution, and report to the Supreme Court within thirty days from notice.
• Deduction for Earnings Elsewhere: The main cause of delays in executing backwage awards is the determination of earnings elsewhere during wrongful lay-offs or dismissals, which can take as long as the original trial and appeal. To avoid such delays, the Court adopted the principle of fixing backwages at a reasonable level without qualification and deduction, relieving employees from proving earnings and employers from submitting counter-proofs, and obviating the twin evils of idleness on the part of employees and attrition and undue delay on the part of employers. Feati University Faculty Club (PAFLU) vs. Feati University adopted the policy of pegging backwages to their total equivalent of three years without deduction or qualification, followed in Luzon Stevedoring Corporation and B. H. Tenefrancia vs. CIR, et al. and Insular Life Assurance Co., Ltd. Employees Association-NATU, et al. vs. Insular Life Assurance Co., Ltd., et al.; Cristobal vs. Melchor, et al. granted five years of back salaries without qualification or deduction. The total award of P6,018,135.63 represented four years of backwages from November 1, 1968 to November 30, 1972, or approximately P1.5 million per year; three years under the Feati standard would amount to P4.5 million. Under the special circumstances and equity, the Court fixed the earnings-elsewhere deduction at one-third of the total award, or P2,006,045.21, leaving P4,012,090.42 net backwages. Equity as the complement of legal jurisdiction seeks to reach and do complete justice where courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent so to do; equity regards the spirit and not the letter, the intent and not the form, the substance rather than the circumstance.

• Finality of Judgment and Limited Reopening — Once a judgment becomes final and executory and is sustained by the Supreme Court, it may not be set aside or further modified by the NLRC; any reopening is limited to matters expressly left open by the final judgment. Applied: the NLRC’s total reopening was void; only limited reopening as to earnings elsewhere, payments, and by-pass pay errors was authorized.
• Jurisdiction of the NLRC over Final CIR Awards — The NLRC has no jurisdiction to set aside or further modify a per curiam CIR resolution that the Supreme Court has sustained. Applied: the March 30, 1976 NLRC decision was declared null and void.
• Reasonable Net Backwages Without Qualification or Deduction — To avoid protracted delay in execution, backwages may be fixed at a reasonable level without qualification or deduction; the Court may fix the earnings-elsewhere deduction without further hearing. The policy relieves employees from proving earnings and employers from counter-proofs, and obviates idleness and attrition or undue delay. Applied: the deduction was fixed at one-third of the total award.
• Equity as Complement of Legal Jurisdiction — Equity reaches complete justice where courts of law, through inflexibility of rules and want of power to adapt judgments to special circumstances, are incompetent so to do; it regards the spirit and not the letter, the intent and not the form, the substance rather than the circumstance. Applied: the Court fixed the deduction without further hearing to avoid delay.
• Limited Reopening of Execution Proceedings — Where final judgment authorizes only limited reopening, further proceedings must be confined to those items. Applied: hearings were limited to previous payments and alleged errors in by-pass pay.

• "After receiving the various comments and pleadings of the parties, the Court holds that the NLRC had no jurisdiction to set aside or further modify the per curiam CIR resolution of October 10, 1974 as sustained by this Court in the very case at bar by ordering a 'total reopening' of the approved report and computation of award (instead of the limited reopening as to three items, supra) and that its 'decision' of March 30, 1976 is therefore null and void and of no force and effect." — This is the ratio decidendi on the NLRC’s lack of jurisdiction and the nullity of its total reopening.
• "It is precisely to avoid such protracted delays in the execution of awards for backwages that in this Court adopted the principle 'fixing the amount of backwages at a reasonable level without qualification and deduction so as to relieve the employees from proving their earnings during their lay-offs and the employer from submitting counter-proofs and thus obviate the twin evils of Idleness on the part of the employees and attrition abd undue delay in satisfying the award on the part of the employer.'" — This states the policy behind fixing reasonable net backwages and the evils the policy seeks to avoid.
• "Equity as the complement of legal jurisdiction seeks to reach and do complete justice where courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent so to do." — This defines the equity principle the Court invoked to fix the earnings-elsewhere deduction without further hearing.
• "In line with the cited precedents and in the interest of justice and equity under the special circumstances obtaining in this case, the Court fixes (without the necessity of further hearing) such deduction in the amount of one-third of the total award or in the sum of P2,006,045.21, leaving a net amount of P4,012,09.42 due and payable by way of net backwages, for which writ of execution shall forthwith issue." — This is the Court’s operative application of the backwage policy, fixing the deduction and ordering execution.

• Feati University Faculty Club (PAFLU) vs. Feati University, L-31503, August 15, 1974, 53 SCRA 395, 418 — Adopted the policy of fixing backwages at a just and reasonable level without qualification or deduction, pegging the amount to three years depending on circumstances; the Court relied on this policy in fixing the deduction.
• Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 711 — Set the precedent of fixing backwages at a reasonable level without qualification or deduction to avoid protracted delay; cited as the origin of the policy.
• NASSCO vs. CIR, L-32724, June 28, 1974 — Applied the Mercury Drug formula for reasonable net backwages without deduction.
• Almira, et al. vs. B. F. Goodrich Phil., Inc., L-347974, July 25, 1974 — Applied the same formula for reasonable net backwages.
• Luzon Stevedoring Corporation and B. H. Tenefrancia vs. CIR, et al., L-34300, November 22, 1974, 61 SCRA 154 — Followed the Feati policy on pegging backwages without deduction or qualification.
• Insular Life Assurance Co., Ltd. Employees Association-NATU, et al. vs. Insular Life Assurance Co., Ltd., et al., L-25291, March 10, 1977, 76 SCRA 50 — Followed the Feati policy on backwages.
• Cristobal vs. Melchor, et al., L-43203, July 29, 1977 — Granted back salaries equivalent to five years without qualification or deduction, illustrating the range of reasonable backwage awards.

Castro, C.J., Fernando, Teehankee, Makasiar, Antonio, Santos, Fernandez, and Guerrero, JJ., concurred. Barredo, J., also concurred but reserved the meaning of a few observations. Muñoz Palma and Concepcion, JJ., were on leave; Aquino, J., took no part.