TALISAY-SILAY MILLING CO., INC., PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS AND TALISAY EMPLOYEES & LABORERS ASSOCIATION (TELA), RESPONDENTS.

Talisay-Silay Milling versus Court of Industrial Relations

The Case

This is a petition for certiorari brought by Talisay-Silay Milling Company against the Court of Industrial Relations and the Talisay Employees and Laborers Association, the labor union of its workers. The company asks the Supreme Court to set aside two orders of the industrial court approving a court examiner's computation of back wages owed to strikers who had been unlawfully kept out of work, and directing the company to deposit the sum of 238,430 pesos and 84 centavos. The case matters because it fixes the method of computing back wages where the number of actual working days is known, and because it holds that a surety bond posted to secure a preliminary injunction that should never have been issued answers for legal interest when the injunction is dissolved.

Procedural History

The dispute began in the Court of Industrial Relations, where the company filed an action to declare a strike illegal. The industrial court, through Judge Bautista, declared the strike illegal and ordered the reinstatement of the remaining strikers, without back pay for the period of the strike. That order was affirmed by the Supreme Court. When the company still failed to reinstate the workers, the industrial court issued a writ of execution, and the workers were actually readmitted in late January 1956. The union then moved for back wages, and the industrial court ordered its chief examiner to compute them, later amending the order to cover only the period from November 1953 to January 1956. The company challenged that order before the Supreme Court, which affirmed it. The examiner then submitted his report, which the company objected to, submitting its own lower computation. The industrial court approved the examiner's report and ordered the deposit of the sum, and denied reconsideration. Hence this appeal by certiorari.

Facts

In December 1952, many laborers of the company, members of the union, went on strike. The company sued to have the strike declared illegal. While that case was pending, the parties stipulated in February 1953 that a number of the strikers would be reinstated, and they were. In June 1953, the industrial court declared the strike illegal and ordered the immediate reinstatement of the rest of the strikers, but ruled that they were not entitled to compensation during the illegal strike. That order became final after reconsideration was denied, and the Supreme Court affirmed it on appeal.

The company did not immediately comply. Only in January 1956, after a writ of execution was issued, were most of the workers actually readmitted. The union then moved for back wages from the date of the reinstatement order to the date of actual reinstatement. The industrial court directed its examiner to compute the back wages, and the Supreme Court affirmed that directive.

The examiner submitted a report in April 1960, fixing the total at 238,430 pesos and 84 centavos. The company objected, claiming the report did not follow the Supreme Court's earlier decision, and submitted its own computation, which was lower by 68,204 pesos and 10 centavos. The industrial court approved the examiner's report and ordered the company to deposit the sum within five days. Reconsideration was denied, and the company came to the Supreme Court, which issued a preliminary injunction upon a bond of 30,000 pesos.

Issues

• Whether or not the back wages should be computed using the employee's average pay in a given period prior to the period of the award, as the company contends, rather than the examiner's method based on the average daily wage multiplied by the actual number of working days.
• Whether or not the surety bond posted for the preliminary injunction may be held liable for legal interest on the back wages, and whether the company may be ordered to pay such interest.

Applicable Provisions

Section 14 of Commonwealth Act Number 113 provides:

An appeal shall not stay the execution of the decision, award, or order of the Court of Industrial Relations sought to be reviewed.

This provision means the workers would have been paid but for the injunction, which grounds the award of damages.

Article 2209 of the Civil Code of the Philippines provides:

If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest.

This is the basis for charging legal interest on the back wages withheld.

Ruling

On the first issue, the Court held that its earlier decision did not mandate the average pay method. It merely quoted, with approval, a statement that where there is no fixed wage, or the work is seasonal or part time, the board customarily uses the employee's average pay in a given period prior to the improper discharge. The Court stressed that this passage did not reject the examiner's method but sanctioned it, since the order directing the preparation of the report had itself been affirmed. The examiner ascertained each laborer's average daily wage in 1951 and 1952 from the payrolls, determined the actual number of working days during the back pay period, and multiplied the two. The company's method, dividing total earnings by twenty-four months and multiplying by the number of months in the period, would be proper only if the actual working days were unknown, but the company's own records show them. The Court reasoned that had the workers been reinstated when the order became final, they would have worked those actual working days, so it is fair and just to pay them their average daily wage for that number of days.

On the second issue, the Court held the union's counterclaim well taken as to the bond. The company was never entitled to the injunction, and the method it attacked had already been approved. Since an appeal does not stay execution, the workers would have been paid but for the injunction, and the company retained the money with the opportunity to profit from its use. The Court therefore held the surety liable for legal interest on the sum from the date of the writ until full payment, not exceeding the bond, and ordered the company to pay the costs. The Court declined the union's further prayer for interest against the company itself, because that relief was never sought in the lower court and its jurisdiction was purely appellate.

Doctrine

Where the actual number of working days of the employees during the back pay period is known from the employer's records, back wages are computed by multiplying each worker's average daily wage in a prior base period by the actual number of working days in the period covered. The average pay method is a fallback for cases where there is no fixed wage or the work is seasonal or part time. An appeal does not stay execution of an order of the Court of Industrial Relations, so a preliminary injunction that should not have issued renders the surety bond liable for legal interest under Article 2209 of the Civil Code.

Disposition

The Supreme Court affirmed the orders appealed from, dissolved the preliminary injunction, and held the surety liable on its bond for legal interest on 238,430 pesos and 84 centavos from September 1960 until full payment, not exceeding 30,000 pesos, with costs against the company.

Remember This

Memorize this line: where the actual working days are known, back wages equal the average daily wage times the actual working days worked. Examiners use this case to test the computation of back wages and the liability of a surety bond when a preliminary injunction is wrongly issued.