VICENTE ASPERILLA, ET AL., PLAINTIFFS AND APPELLANTS, VS. MANILA RAILROAD COMPANY, DEFENDANT AND APPELLEE.

On August 7, 1950, plaintiffs filed a complaint before the Municipal
Court of Manila praying, that defendant be ordered to pay them their
respective salary differentials resulting from the standardization of
salaries of defendant’s employees, among whom were plaintiffs, for the
period from February 1 to June 30, 1949 in the total amount of
P7,878.15. The action was based on a memorandum of agreement executed
on November 21, 1948 between defendant and two labor unions
representing its employees and laborers. Paragraph 2 of said agreement
provides: “* * * upon the exhaustion of the amount of P400,000.00, the
employees and laborers affected by the standardized plan will receive
their present salaries provided that any wage differential from date of
exhaustion will be paid when funds for the purpose are available.”

On September 12, 1956, defendant filed a motion to dismiss which
was denied, and thereafter, it filed its answer wherein it reiterated
its prayer for dismissal on the ground, among others, that the clause
“provided that any wage differential from date of exhaustion will be
paid when funds for the purpose are available” was understood by the
parties to mean that the payment of said salary differentials will be
made when the company is no longer losing in its operations, and that,
since the obligation assumed by defendant is subject to a suspensive
condition which had not yet happened, said obligation is not yet due
and demandable; hence, the present action is premature.

On December 26, 1956, the municipal court rendered judgment in favor
of plaintiffs ordering defendant to appropriate the sum of P6,922.81
not later than March 31, 1957 to be paid to plaintiffs, with legal
interest thereon, and to pay the costs. Defendant appealed to the court
of first instance, where the case was tried de novo, and
having defendant succeeded in proving that it only realized profits
during the fiscal year 1956-1957 the court found the action premature
and dismissed the complaint. Hence the present appeal.

The main basis on which the decision of the trial court dismissing
the case is predicated is that the action taken by appellants in the
municipal court in August, 1956 is premature it appearing that
defendant company only realized profits in its operations during the
fiscal year 1956-1957 making in this respect the following comment:

“It was shown that the company had only realized
profits in the fiscal year 1956-57 as shown by Exhibit 1 and
consequently, the claim of the plaintiffs for the payment of their
salary differential n accordance with the memorandum agreement, Exhibit
A, did not take place until the fiscal year 1956-57. Consequently, the
fixing by the lower court of the obligation on the part of the
defendant to appropriate the amount to pay the said salary differential
not later than March 31, 1957 is premature because they filed this case
in the Municipal Court in August, 1956.”

The above finding is undoubtedly based upon the theory, as
entertained by appellee, that the clause “provided that am wage
differential from date of exhaustion will be paid when funds for the
purpose are available” was understood by the parties to mean that the
payment of the salary differentials will be made when the company is no
longer losing in its operations, or when its financial position would
warrant the payment of said salary differentials, and since it was here
shown that appellee realized profits only in the fiscal year 1956-1957,
the instant action is premature.

We submit that the foregoing interpretation runs counter to the
opinion expressed by this Court in a similar case wherein another group
of employees of appellee tried to recover the balance of their salary
differentials under the same memorandum of agreement on which
appellants now base their claim in the present case (Tiglao, et al. vs.
The Manila Railroad Company, 98 Phil., 181; 52 Off., Gaz., [1] 179).
Indeed, in that case, in refusing to pay the salary differentials, the
company did not repudiate the agreement, but merely contended that
pursuant to its terms the salary differentials would only be payable
when “funds for the purpose are available,” which, as counsel contends,
was not then the case because the company was then losing in its
business. In fact, the company presented as evidence some summary
statements of its accounting department showing that it has sustained
losses during the fiscal year ending June 30, 1953 and during the month
of July next following.

In dismissing this contention as untenable, this Court made the
following comment: “Those statements, however, do not necessarily prove
that, in a multimillion peso business such as that of the defendant,
funds for the payment of a debt of P7,275.00 due the plaintiffs could
not have been raised or made available because of the losses suffered
in one year and one month. The memorandum of agreement does not
stipulate that the salary differentials shall be paid only from surplus
profits. In fact the agreement provides that the standardized
salaries—with the resulting salary differentials, naturally—are ‘to be
carried in all the subsequent budgets of the company.’ And we think it
may be admitted that in a going concern the availability of funds for a
particular purpose is a matter that does not necessarily depend upon
the cash position of the company but rather upon the judgment of its
board of directors in the choice of projects, measures or expenditures
that should be given preference or priority, or in the choice between
alternatives. So if defendant was able to raise or appropriate funds to
meet other obligations notwithstanding the fact that it was losing, we
think it could have done likewise with respect to its debt to the
plaintiffs, an obligation which is deserving of preferential’ attention
because it is owed to the poor.”

The same observation may be made with regard to the claim of herein
appellants which only amounts to the relatively small sum of P6,922.81
which appellee, with the exercise of a more sympathetic judgment, could
have appropriated out of its funds even if it had to pay some other
peremptory obligations for, as this Court well observed, this is a
claim which deserves preferential consideration because it is owed to
the poor. We find, therefore, incorrect the finding of the trial court
that this action is premature on the mere ground that appellee has
realized profits in its operation only in the fiscal year 1956-1957.

Wherefore, the decision appealed from is reversed. Instead, judgment
is hereby rendered ordering appellee to pay appellant the sum of
P6,922.81, with legal interest thereon from the date of the filing of
the complaint, without pronouncement as to costs.

Paras, C. J., Bengzon, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia, Barrera, and Gutierrez David, JJ., concur.
Padilla, J., took no part.