G.R. No. L-20434 July 30, 1966
PAN AMERICAN WORLD AIRWAYS, INC., petitioner, vs. COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.

FACTS

On August 1, 1960, the respondent Pan American Employees Association staged a strike against the petitioner’s Philippine branch. This labor dispute was certified by the Office of the President to the Court of Industrial Relations (CIR) as Case No. 30-IPA under Section 10 of Republic Act 875, as it affected an industry indispensable to national interest. During the pendency of this case, on February 21, 1961, petitioner filed an urgent petition in the same case, seeking authority to place 80 employees on furlough without pay. This request was based on a strike by its flight engineers in the United States, which curtailed its plane flights worldwide. The CIR granted the petition on the same day “without prejudice to deciding the petition on the merits later on.” Pursuant to this order, petitioner placed the employees on furlough without pay effective February 22, 1961. The employees were recalled to work on February 24, 1961, after the U.S. strike ended, resulting in a two-day furlough on February 22 and 23, 1961. Subsequently, an Acting Prosecutor of the CIR filed an unfair labor practice complaint (Case No. 2744-ULP) on behalf of the respondent union, charging petitioner with illegal lockout under the Industrial Peace Act, alleging failure to give prior notice and bargain collectively. The CIR, in an order dated July 10, 1962, found petitioner not guilty of unfair labor practice and declared the charge of illegal lockout without merit. However, it directed petitioner to pay the affected employees their two days’ wages for the furlough period. Petitioner’s motion for partial reconsideration was denied by the CIR en banc.

ISSUE

May the Court of Industrial Relations order the payment of two days’ back wages to employees who were temporarily laid off, after it has declared the employer not guilty of unfair labor practice and not guilty of locking out its employees?

RULING

No. The Supreme Court reversed the portion of the CIR order directing payment of two days’ wages. The Court held that in an unfair labor practice case prosecuted under Republic Act 875, where the charge is not substantiated and the respondent is absolved, the CIR’s authority is limited to dismissing the complaint. It cannot exercise its general powers of mediation and conciliation to grant remedies such as reinstatement or back wages. The Court reiterated the doctrine from National Labor Union vs. Insular-Yebana Tobacco Corporation and Baguio Gold Mining Company vs. Tabisola that unfair labor practice cases involve violations of public right or policy and are prosecuted like criminal offenses. If the charge fails, the CIR must simply dismiss it. The breach of a contractual obligation by an employer is a separate matter to be redressed like an ordinary contract. The Court also found that the unfair labor practice case (2744-ULP) was not an incident of the certified case (30-IPA) as they involved different employees, issues, and causes of action. Furthermore, the temporary layoff was justified as a legitimate management prerogative due to a bona fide lack of work caused by the strike in the United States. The economic loss from such a temporary work stoppage, absent unfair labor practice, should not be shifted to the employer. Therefore, the Supreme Court affirmed the CIR’s finding that petitioner was not guilty of unfair labor practice but reversed the order for payment of back wages.