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[ GR No. L-7900, Jan 12, 1956 ]



98 Phil. 181

[ G.R. No. L-7900, January 12, 1956 ]




This action was commenced in the Municipal Court of Manila, in October,  195by 35 retired  employees of the defendant  Manila  Railroad  Co. to recover sum  of P7.275, the  aggregate balance of salary differentials still due the under a memorandum  of  agreement signed by the defendant  and.the unions representing  its employees and  laborers. After an unfavorable judgment int hat court, the defendant appealed to the Court of First Instance of Manila,having again lost  in that court  it brought the case here on appeal, raisin questions of law.The memorandum of agreement above  mentioned, which was signed in October, 1948, and constitutes the basis of plaintiffs'  claim, contains  thfollowing stipulations:
"1. That  the  Manila  Railroad  Company  hereby  reiterates its approval of tho standardized salaries provided for by the Standardization Committee effective as  of July  1, 1948, to be carried in all subsequent budget of the Company,  payment  to be made in  accordance with  Item 2;  and immediate payment of said salaries will commence with the available funds of P400,000, already, appropriated for this purpose;
"2. That we hereby  further  agree  that  upon  the exhaustion of the amount of  P400,000, the employees and laborers affected by the standardized plan will  receive their present salaries provided that any wage differential  from of exhaustion paid when funds for the  purpose  are available."
It is agreed  that plaintiffs, who retired with gratuity in January, 1951, were entitled to collect the salary differentials, or increase in pay, resulting from the standardization of their salaries; that for salary differentials corresponding to the period from July 1, 1948, to January 31, 1949, they have already received a total of P9,906.05, but that there is still due them  the total sum of P7,275, which has remained unpaid  because of the exhaustion of the  P400,000 appropriated for the purpose.In refusing to pay  the balance still due the plaintiffs,defendant does  not repudiate the above  agreement, but contends in substance that pursuant to its terms payment of salary differentials after the exhaustion of the P400.000 already appropriated is, subject to the condition that "funds for the purpose are available" and that no such funds are available because defendant is losing in its business.The defendant has, indeed, presented in evidence" two summary statements of its accounting department, showing that it has  sustained  losses  in its operations during the fiscal year ending June 30, 1953,  and during the month of July next following. These 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 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 subsequent budgets of the company." And  we think it may be admitted that in a going concern the availability of funds fora 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 like wise with respect to its debt  to  the plaintiffs, an obligation which is  deserving of preferential attention because it is owed to the poor.Viewed in this light, that is, that the time to redeem defendant's promise to pay salary differentials, after the exhaustion of what had already been appropriated for that purpose, really depended upon the judgment  of its board of  directors it not appearing that defendant was bankrupt the obligation to pay  the said salary  differentials may be considered as one  with a term whose duration has been left to the will  of the  debtor,  so  that  pursuant to article 1128 of the old Civil Code (Art. 1197 of the new),the duration of the term may be fixed by the courts.There is something to  defendant's contention that in previous  cases this Court has  held that the duration of the term should be fixed  in a separate action for that express purpose.  But we think the lower court has given good reasons for not adhering to technicalities in its desire to  do  substantial justice.  It says;
"(1)  The facts  in the instant case are not disputed, the parties having submitted  the case for decision to be based on an agreed stipulation  of facts;"(2) The fixing  of a period for the payment of the obligation has been amply discussed by the parties in their pleadings so that this Court  may render judgment on that subject matter under the alternative  prayer  of the plaintiffs 'for such further  relief as  this Honorable  Court may deem just and  equitable';"(3) To  dismiss  the present  case and require the plaintiffs to file another action for fixing the period of defendant's obligation, would entail multiplicity of suits;"(4) In  this case there  are  thirty-five plaintiffs who were  low salaried employees  of the defendant Manila Railroad  Company  and the said plaintiffs have not been paid their salary  differentials for the period  of, from February 1 to June 30, 1948; and"(5) To  dismiss  the present case and order the plaintiffs to file another suit would open the door for dilatory tactics leading to a protracted litigation and in effect deny the benefits of social justice."
We may  add  that defendant does  not claim that if  a separate action were instituted to fix the  duration of  the term of its obligation,  it could present better  proofs than those  already adduced in the present case.  Such separate action would, therefore, be  a mere formality and would serve  no purpose other than to  delay.We, however, agree that the lower court should not have made  the  interest adjudged run from October 21, 1948,  the day the action was commenced in the municipal court, but only from default of payment of the principal within  the period of one year fixed by the  court.Wherefore, with the only  modification  as to  the date the adjudged interest  is to commence  to run, the judgment  below  is affirmed, with costs against the defendant and appellant.

รกs, C. J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., JJ., concur.