G.R. Nos. L-18444-45, November 28, 1964
Manila Railroad Company, petitioner, vs. Union de Maquinistas, Fogoneros y Motormen; Union de Empleados de Trenes; Station Employees Union; MRR Yard Crew Union; Kapisanang Liberal sa Daang Bakal (KALIDAKAL) and Court of Industrial Relations, respondents.

FACTS

The Manila Railroad Company’s Board of Directors passed Resolution No. 437, effective January 1, 1951, imposing graduated salary reductions (5%, 10%, 15%, 20%) as a temporary economy measure, with a condition that “the reduction of salaries be returned immediately as the finances of the Company improve, beginning from the lower bracket up.” The reductions were gradually lifted and salaries fully restored by July 1, 1954. The respondent unions later filed a claim in the Court of Industrial Relations (CIR) for a refund of the deducted amounts, which the company opposed, arguing the resolution only meant restoration of salary rates, not a refund, and that the CIR lacked jurisdiction over the claim.

ISSUE

1) Whether Resolution No. 437 obligated the company to refund the deducted salary amounts, not merely restore the salary rates. 2) Whether the CIR had jurisdiction to treat the refund claim as an incident in the pending certified cases.

RULING

The Supreme Court affirmed the CIR’s order. 1) On the merits, the Court held the resolution’s language was ambiguous. Interpreting it in light of contemporaneous circumstances, particularly the company’s prior refund of other withheld allowances and the finding that the company’s General Manager had pledged a refund during campaigns to secure employee agreement, the Court resolved the doubt in favor of the laborers under Article 1702 of the Civil Code. The obligation was to refund the deducted sums. 2) On jurisdiction, the Court found the refund claim was among the union’s unsettled demands that contributed to the strike leading to the presidential certification of the cases to the CIR; thus, it was properly treated as an incident within the CIR’s jurisdiction.