G.R. No. L-5679 November 28, 1953
PHILIPPINE EDUCATION CO., INC., petitioner, vs. COURT OF INDUSTRIAL RELATIONS and UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU), respondents.

FACTS

On August 8, 1950, the Union of Philippine Education Employees (NLU) filed a petition in the Court of Industrial Relations (CIR) for arbitration and adjudication of 17 demands. Only three demands are involved in this proceeding: Demand No. 1 for a general 30% salary increase and minimum wages (P5 daily, P150 monthly); Demand No. 6 for two months maternity leave with full pay; and Demand No. 13 for a gratuity of one month’s salary for every year of service for employees dismissed due to old age, sickness, disability, or business slack. The Philippine Education Co., Inc. opposed these demands. The trial judge granted modified versions of the demands: a specific wage increase structure, one month leave before and after confinement with full pay, and a graduated gratuity pay scale based on years of service. The CIR in banc affirmed the decision. The company filed a motion for reconsideration and new trial, asserting that the wage increase lacked legal justification and was based on a false supposition of continued profits. It presented allegations and documents showing a drastic decline in sales, operational losses, and the detrimental impact of import controls, arguing that its financial position had severely deteriorated after the trial concluded, necessitating a reduction, not an increase, in wages and personnel. The Union disputed these financial claims. The company’s motion was denied, leading to this petition.

ISSUE

1. Whether a new trial should be granted based on the company’s allegations of a substantial change in its financial condition after the trial.
2. Whether the Court of Industrial Relations has jurisdiction to grant the disputed demands (general wage increase, maternity leave, and retirement gratuity).

RULING

1. Yes, a new trial is granted. The Supreme Court held that the company’s allegations, if true, would necessitate the closing of the business and laying off all employees unless the CIR’s order was modified. In the interest of all concerned, it was prudent to reopen the case for a thorough investigation to ascertain whether the company could continue operations with the same personnel under the awarded increases and privileges. The Court rejected the Union’s argument that the proper remedy was a motion for modification, stating that motions for reconsideration, new trial, and modification based on changed conditions are substantially the same under the liberal provisions of Commonwealth Act No. 103 , Section 20. The case was remanded for a new trial. However, the Court ruled that should the results of the new hearing be unfavorable to the company, all or any affirmed awards could be made retroactive to the date of the original decision if justified by the circumstances.
2. Yes, the Court of Industrial Relations has jurisdiction to grant the demands, subject to reasonableness and the company’s financial capacity. On Demand No. 1 (wage increase), the CIR’s power to order a general increase, considering factors like the high cost of living and the employer’s financial condition to ensure a fair return on investment, was affirmed under Commonwealth Act No. 103 , Sections 5 and 20, as established in prior jurisprudence. On Demand No. 13 (retirement gratuity), the power to allow such gratuity is conferred by Sections 1, 4, 13, and 20 of Commonwealth Act No. 103 , as pension and retirement plans are embraced in “wages” and conditions of employment. The only limitations are that the award must be reasonable and compatible with the employer’s right to a reasonable profit. On Demand No. 6 (maternity leave), the Court noted that Republic Act No. 679 had since made such leave mandatory. Independently, it held that the CIR’s power to allow maternity leave was implied in its power to regulate labor-capital relations under Commonwealth Act No. 103 . The reasonableness of the awards for Demands No. 1 and 13, in light of the company’s financial position, is a question of fact to be determined in the new trial.