G.R. No. L-29068 - East Asiatic Co., Ltd. vs. Court of Industrial Relations

Case Summary (G.R. No. L-29068)

Factual Background: Unfair Labor Practice Case and Final Judgment

Respondent Dizon filed Case No. 1796-ULP with the Court of Industrial Relations, charging the employer and its officials with unfair labor practice. After the corresponding proceedings, the Court of Industrial Relations rendered a decision ordering petitioners to cease and desist and to reinstate Dizon immediately to her former position, with back wages from September 1, 1958 until actually reinstated, and with all rights and privileges acquired, including seniority and other terms and conditions existing at the time of her lay-off.

The Supreme Court affirmed the decision in G. R. No. L-17037 on April 30, 1966, sustaining the order of reinstatement with back pay. The affirmance made the labor judgment final and executory, and the record shows that execution issues subsequently emerged regarding (a) the implementation of reinstatement and (b) the computation of back wages, including whether earnings elsewhere should reduce the back wages.

Post-Affirmance Developments and the Execution-Related Issue

Before the Supreme Court could return the records for execution, petitioner company filed a manifestation dated June 14, 1966, showing willingness to reinstate Dizon to her former position with the same salary she had been receiving at dismissal. Dizon filed a counter-manifestation agreeing to reinstatement, but insisting that her monthly salary should include the salary at dismissal plus yearly general wage increases from 1958 to 1965. Petitioners replied, reiterating that the judgment required reinstatement on the basis of what Dizon received at lay-off.

On June 30, 1966, the Supreme Court issued a resolution noting the reply and directing that matters could be taken up in the lower court in connection with implementation. Meanwhile, Dizon filed on June 8, 1966 a motion to compute the back wages due under the judgment. Petitioners opposed the motion. The Court of Industrial Relations then issued an order directing the examining division to proceed to the employer’s records and compute back wages according to the final decision.

In compliance, the examining division submitted a report dated March 2, 1967. The examiner computed back wages from September 28, 1958 to February 28, 1967 at P30,090.00, while also reporting that Dizon’s earnings from other employers during the same period totaled P42,881.44. The report concluded that if the P42,881.44 outside earnings were allowed as deductions, Dizon would receive no back wages. A hearing on the report followed.

The CIR Order Dated May 12, 1967: Approval of P30,090.00 and Disallowance of Deductions

Judge Emiliano C. Tabigne issued an order on May 12, 1967 approving the computed back wages of P30,090.00 but disallowing the P42,881.44 claimed as outside earnings. The court ruled that the P30,090.00 computation was correct. It refused the deduction because petitioners allegedly failed to adduce competent evidence to support their claim of Dizon’s outside earnings. The court found that the examiner had exceeded authority by computing outside earnings using affidavits attached to the parties’ manifestations, without sufficient evidentiary support. It also held that the affidavits attached were not identified by witnesses and therefore were merely “pieces of paper” without evidentiary value. The court further opined that claims for wages earned outside the country were not wages that could properly be considered to offset backwages.

In the same order, the Court of Industrial Relations directed the examining division to compute additional back wages from March 1, 1967 until actual reinstatement. It also denied Dizon’s claim for fringe benefits and related items because she allegedly failed to present evidence in support of the motion to compute.

Proceedings on Motion for Reconsideration and the Divided En Banc Resolution

Petitioners filed a motion for reconsideration. The Court of Industrial Relations en banc resolved it with a divided vote. In a resolution dated June 27, 1967, Associate Judge Emiliano C. Tabigne, with Presiding Judge Arsenio I. Martinez concurring, denied the motion. Associate Judge Amando C. Bugayong wrote a concurring and dissenting opinion, which was concurred in (in the result) by Associate Judges Ansberto P. Paredes and Joaquin M. Salvador, and voted to modify the order by holding that Dizon was no longer entitled to reinstatement or to back wages from the time she left the Philippines for the United States.

The dissent’s view relied on factual developments said to be undisputed: Dizon went to the United States during the pendency of the case; while the matter was on appeal before the Supreme Court, she was formally asked to report for work; she returned briefly to the country; she was then told to report to her employer for work but she did not do so; and she went again to the United States. The dissent treated Dizon’s refusal to report and continued stay in the United States as a waiver of her right to reinstatement and limited back wages accordingly, reasoning that while she was in the United States, she could not have worked in the Philippines and thus back wages should cease when she left for America.

The Supreme Court’s Review: Misapprehension of Evidence and Procedure in Backwages Computation

On review, the Court held that neither of the two competing views in the Court of Industrial Relations was entirely correct. It first rejected the minority’s basis for disallowing deductions on the ground that petitioners’ affidavits were mere copies, unauthenticated, hearsay, or inconclusive. The Supreme Court considered that approach overtechnical and inconsistent with the governing statutory scheme for unfair labor practice adjudication and execution incidents.

The Court emphasized that Section 20 of Commonwealth Act 103 authorizes the Court of Industrial Relations, in hearings and investigations, to act according to justice and equity and substantial merits, without being bound by technical rules of legal evidence, and to inform its mind as it deems just and equitable. It likewise highlighted Section 5(b) of the Industrial Peace Act, which provides that rules of evidence in courts of law or equity are not controlling in unfair labor proceedings; the spirit and intention is speedily and objectively to ascertain facts without technicalities. It further stressed that Section 5(c) and Section 5(d) reflect broad remedial authority and the policy of prompt disposition of unfair labor practice disputes, including incidents such as computation of back wages.

The Court characterized backwages computation as a “part and parcel” of the unfair labor case proceedings. It reasoned that the same flexible, non-technical method mandated for unfair labor disputes should govern the determination of how much is due under the final judgment. It further held that the trial court should not have treated issues of “rights and privileges” as if the worker bore the entire evidentiary burden, because such matters were often within the employer’s peculiar knowledge through books and records. Conversely, it also held that the discharged employee should disclose, with least delay, any circumstances of gainful employment during the lay-off to enable proper deductions.

The Implied Rule on Deductions of Earnings Elsewhere: Uniform Jurisprudence and Guidelines

Turning to the deductions claimed by petitioners, the Court stated that an employer is entitled to deduct from amounts ordered as back wages whatever the employee earned elsewhere during the period covered, because the law does not favor enrichment and “double compensation” is abhorrent. The decision treated this qualification as implied in judgments ordering reinstatement unless expressly excluded for justified reasons.

The Court referenced a “long line” of decisions holding that whatever a dismissed laborer actually earned during the period of illegal dismissal should be deducted. It then quoted the guidelines restated in Itogon-Suyoc Mines, Inc. vs. Sangilo-Itogon Workers’ Union. The guidelines included first deducting total earnings obtained from other employment from dismissal to reinstatement (or to the time judgment becomes final if the laborer decides not to return), and second taking into account whether, with due diligence, the dismissed respondents might have obtained suitable remunerative employment, to prevent idleness and windfalls.

The Court added that both parties should not engage in “hide-and-seek” in presenting deductions, because the discovery and fact-finding process exists precisely to reach fair and equitable results. It considered that the Court of Industrial Relations should have used its power to actively elicit relevant facts and not require one side to bear the entire evidentiary load while denying the other side practical means of verification.

Waiver of Reinstatement: Departure for Employment vs. Refusal After Offer or Order

The Court held that limiting back wages merely because Dizon left for the United States was not sound “law” under the circumstances. It explained that as long as reinstatement had not been carried out, an illegally dismissed worker could seek employment anywhere, including abroad, and departure to search for employment did not constitute waiver of reinstatement. Waiver would arise only if the worker unjustifiably or unreasonably refused to report for work after reinstatement had been ordered or the employer had offered reinstatement pursuant to the judgment.

Accordingly, the Court treated the “bare fact” of actual employment elsewhere as not affecting the right to reinstatement; it affects only the computation of back wages under the deduction guidelines. It further stated that only when the worker refuses to return or imposes uncalled-for conditions after an opportunity to work becomes available would her right to reinstatement cease. Back wages would still be due up to the time of such refusal.

Treatment of Lower Cou

Case Syllabus (G.R. No. L-29068)

Parties and Procedural Posture

The petitioners EAST ASIATIC COMPANY, LTD. and its named corporate officers sought certiorari from the Court of Industrial Relations orders arising from execution in an unfair labor practice case.
The respondents were the Court of Industrial Relations, the East Asiatic Co. Employees Union (PTUC), and Soledad A. Dizon, the employee awarded reinstatement and backwages.
The dispute originated from Case No. 1796-ULP where the Court of Industrial Relations found petitioners guilty of unfair labor practices and ordered reinstatement with back wages.
The unfair labor practice judgment of February 10, 1960 was affirmed on appeal by the Supreme Court on April 30, 1966 in G. R. No. L-17037.
Before the case records were returned for execution, petitioners and Dizon filed successive manifestations on reinstatement terms and the computation of backwages.
The Court of Industrial Relations issued a May 12, 1967 order approving computed backwages but disallowing alleged outside earnings claimed as deductions.
The Court of Industrial Relations en banc resolved petitioners’ motion for reconsideration on June 27, 1967 with a divided vote of three to two, leading to a modification limiting backwages to the period until Dizon left for the United States.
The Supreme Court reviewed whether the execution-phase rulings and en banc modification were consistent with law, jurisprudence, and the Industrial Peace framework.

Key Factual Background

Soledad A. Dizon was continuously employed by East Asiatic Co. Ltd. from February 8, 1951 to August 31, 1958.
Dizon was dismissed on September 1, 1958 by petitioners through named managerial personnel.
Dizon filed Case No. 1796-ULP for unfair labor practice against the company and its officials, seeking reinstatement and backwages.
In the unfair labor practice judgment, Dizon was ordered reinstated immediately to her former position with backwages from September 1, 1958 until actually reinstated, including seniority and other rights and privileges existing at lay-off.
After the Supreme Court’s affirmance on April 30, 1966, petitioners filed a June 14, 1966 manifestation offering reinstatement at the salary she received at dismissal.
Dizon filed a counter-manifestation agreeing to reinstatement but insisting her monthly salary should include the amount at dismissal plus yearly general wage increases given from 1958 to 1965.
Petitioners replied maintaining that reinstatement must follow the decision’s basis on what Dizon received at lay-off.
The Supreme Court’s June 30, 1966 resolution noted the reply and allowed the matter to be taken up by the lower court in implementing the affirmed decision.
Dizon filed a motion to compute backwages on June 8, 1966, prompting petitioners’ opposition and a Court of Industrial Relations order directing computation based on the final decision.
The examining division computed backwages for the period from September 28, 1958 to February 28, 1967 in the amount of P30,090.00.
The examining division also reported alleged outside earnings during the same period totaling P42,881.44, comprised of P6,691.44 earned in the Philippines and P36,190.00 as the peso value of alleged dollar earnings in the United States.
The examiner concluded that if outside earnings were deducted, Dizon would receive no further backwages.
The May 12, 1967 order approved P30,090.00 backwages but denied deduction of the P42,881.44 alleged outside earnings for lack of competent proof.
The en banc majority later modified the effect of backwages by limiting entitlement to the period from dismissal until Dizon’s departure from the Philippines to the United States.
The en banc modification relied on findings that Dizon had been asked to report for work and had returned to the Philippines, failed to report on a specified occasion, and then went again to the United States.

Issues for Resolution

The Supreme Court determined whether backwages should be limited solely until Dizon left the Philippines for the United States, or whether entitlement continued until the actual reinstatement after considering waiver criteria.
The Court addressed whether alleged outside earnings abroad could be deducted from backwages and whether the evidence presented during execution complied with the Industrial Peace evidentiary standards.
The Court examined whether the Court of Industrial Relations and its examining division imposed undue evidentiary technicalities inconsistent with Commonwealth Act No. 103 and the Industrial Peace Act.
The Court also addressed whether the trial and en banc courts erred in rejecting claims for fringe benefits, bonuses, and general wage increases due to failure of proof, given the execution context.
The Court reviewed whether discovery and proof mechanisms, including requests for admission and affidavits, were disregarded or improperly applied during the backwages computation phase.
The Court evaluated the method used by the examining division to compute the peso value of alleged United States dollar earnings using an exchange-rate basis.

Statutory and Doctrinal Framework

The Court emphasized the plenary authority of the Court of Industrial Relations under Section 20 of Commonwealth Act 103 to act according to justice and equity, without being bound by technical rules of legal evidence.
The Court relied on Section 5(b) of the Industrial Peace Act that in unfair labor proceedings the rules of evidence are not controlling and the spirit is to ascertain facts speedily and objectively without regard to technicalities.
The Court highlighted that Section 5(b) authorizes the court to use reasonable means beyond evidence formally presented, including ocular inspection and questioning well-informed persons.
The Court noted Section 5(b) imposes an obligation on the Court or Hearing Examiner to examine and cross-examine witnesses to assist orderly presentation.
The Court invoked Section 5(c) to show the court’s discretionary power includes affirmative actions effectuating the Act’s policies, including reinstatement with or without backpay and protection of accrued rights such as seniority.
The Court underscored the policy of simplicity, speed, and expeditious resolution reflected in Section 5(d), aimed at deciding unfair labor disputes and their incidents without procedural technicalities save for due process.
The Court invoked Ang Tibay vs. CIR, G. R. No. 46496, February 27, 1940, 69 Phil. 635 to reinforce fairness and substantial merits over technicality.
The Court cited Kapisanan Ng Mga Manggagawa sa MRR vs. Hernandez, G. R. No. L-19791, August 14, 1968, 24 SCRA 591 to support the same approach of proceeding strictly according to substantial merits.
The Court treated the determination of backwages as an inevitable incident of unfair labor proceedings, so the same non-technical procedures should govern computation.
The Court relied on the general doctrine that an employer is entitled to deduct from backwages whatever the dismissed employee actually earned elsewhere during the period, to prevent enrichment and avoid double compensation.
The Court quoted and applied the Itogon-Suyoc Mines, Inc. guidelines as restated in this decision regarding deductions of actual earnings and the mitigation principle that account should be taken of due diligenc