G.R. No. L-17038 and L-17057. July 31, 1964.
Consolidated Labor Association of the Philippines, petitioner, vs. Marsman and Co., Inc. and the Court of Industrial Relations, respondents. (and the consolidated case).

FACTS

Marsman & Co., Inc. was charged with unfair labor practice before the Court of Industrial Relations (CIR) by members of the Marsman & Company Employees and Laborers Association (MARCELA). The union, after being certified as the bargaining agent, submitted economic proposals to the company. Negotiations failed, leading to a strike notice and, ultimately, a strike on June 4, 1954, accompanied by picketing. The Department of Labor mediated, and on July 30, 1954, an agreement was reached wherein the company, through its vice-president, offered to have all strikers return to work, after which demands would be discussed. The strikers returned.
The company reinstated many strikers but refused readmission to 69 specific union members. Company officials informed them they would not be reinstated unless they ceased active union membership and claimed sufficient manpower. This refusal prompted the resumption of the strike. The CIR found the company guilty of unfair labor practice for this refusal and ordered the reinstatement of 60 of the 69 complainants but denied them back wages. Both parties appealed: the union sought backpay, and the company contested the unfair labor practice finding.

ISSUE

The primary issues were: (1) Whether the company committed unfair labor practice by refusing reinstatement to the complainants; and (2) Whether the reinstated employees are entitled to back wages.

RULING

The Supreme Court affirmed the CIR decision. The legal logic centers on the characterization of the strike and the employer’s concomitant obligations. Initially, the strike was an economic strike concerning bargaining demands. During such a strike, an employer may hire permanent replacements to continue operations and is not obligated to displace them when strikers seek reinstatement.
However, the strike’s character changed when the company offered reinstatement to all strikers and then refused it specifically to active union members because of their union activities. This refusal, aimed at discouraging union membership, constituted an unfair labor practice, converting the strike into an unfair labor practice strike. Substantial evidence supported the CIR’s factual findings on the offer, acceptance, and discriminatory motive. The company’s defense that some strikers committed illegal acts was valid only against those individuals convicted of crimes like coercion and malicious mischief during the strike period. The CIR correctly reinstated only those not personally guilty of such unauthorized illegal acts.
Regarding back wages, the Court upheld their denial. For the period of the economic strike, no unfair labor practice existed, so no back pay was due. Even after the unfair labor practice finding, the grant of back wages is discretionary. The CIR did not abuse its discretion in denying them, considering the violent climate of the strike and picket, which necessitated constant police patrols, even if the reinstated individuals did not personally commit violent acts. The minatory atmosphere justified the discretionary denial of back wages.