FEATI UNIVERSITY, PETITIONER, VS. HON. JOSE S. BAUTISTA, PRESIDING JUDGE OF THE COURT OF INDUSTRIAL RELATIONS, AND FEATI UNIVERSITY FACULTY CLUB-PAFLU, RESPONDENTS.[G.R. No. L-2…

Feati University versus Bautista

The Case

This is a special civil action for certiorari and prohibition with a writ of preliminary injunction, brought by Feati University against the Presiding Judge of the Court of Industrial Relations and the Feati University Faculty Club, a registered labor union affiliated with the Philippine Association of Free Labor Unions. The University asks the Supreme Court to annul several orders issued by the industrial court in three related proceedings arising from a faculty strike, and to restrain that court from proceeding further. The case matters because it settles, for the first time in this form, whether a proprietary educational institution operated for profit and its professors and instructors fall within the coverage of the Industrial Peace Act, and whether the President may certify their dispute to the Court of Industrial Relations.

Procedural History

The dispute began before the Court of Industrial Relations, where the Faculty Club filed a petition for certification election, and where the President of the Philippines certified the labor dispute arising from the strike. The University moved to dismiss on the ground of lack of jurisdiction, but the Presiding Judge denied the motion and issued a return-to-work order, later warning the replacement teachers not to disturb that order. The University sought reconsideration before the industrial court sitting en banc, and while those motions were still pending, it came directly to the Supreme Court by petition for certiorari and prohibition, docketed as one case. The Supreme Court issued a writ of preliminary injunction restraining the Presiding Judge from further proceeding in the three industrial court cases, upon a bond later reduced to 50,000 pesos. After the injunction was issued, the industrial court en banc resolved the pending motions for reconsideration, and the University challenged those resolutions in two separate petitions for certiorari filed by way of appeal, docketed as two further cases. The Supreme Court ordered that the three cases be considered together and decided them on the merits.

Facts

On January 14, 1963, the President of the Faculty Club wrote to the President of Feati University informing her that the faculty had organized into a registered labor union. The Faculty Club was composed of professors and instructors of the University. On January 22, 1963, the Faculty Club sent twenty-six demands concerning the employment of its members and asked for an answer within ten days. The University asked for at least thirty days to study the demands, and its counsel demanded proof of the union's majority status and its designation as bargaining representative.

On February 1, 1963, the Faculty Club rejected the request for extension and filed a notice of strike with the Bureau of Labor, alleging the University's refusal to bargain collectively. Conciliation conferences failed. On February 18, 1963, the faculty members declared a strike and established picket lines on the University premises, disrupting classes. Further efforts by labor officials to settle the dispute failed. On March 21, 1963, the President of the Philippines certified the dispute to the Court of Industrial Relations under Section 10 of Republic Act Number 875.

The industrial court set the certified case for hearing, and the parties agreed that the strikers would return to work under a status quo arrangement. The University then moved to dismiss, arguing that the Industrial Peace Act did not apply to it as an educational institution, nor to the faculty members as independent contractors, and that the presidential certification violated Section 10. The Presiding Judge denied the motion, declared the Act applicable, ordered the strikers reinstated under their last terms and conditions, and enjoined the University from dismissing employees without the court's authority. The University had already hired replacements, and the court later warned those replacements not to disturb the effectivity of the return-to-work order. Meanwhile, the Faculty Club withdrew its certification election petition, which the court allowed, and the Acting Chief Prosecutor of the industrial court filed an indirect contempt complaint against University officials, on which the Presiding Judge ordered their arrest and fixed bail at 500 pesos each.

Issues

• Whether or not the Court of Industrial Relations acquired jurisdiction over the certified labor dispute and the related cases, considering that the University is an educational institution and the faculty members are claimed to be independent contractors.
• Whether or not Republic Act Number 875 applies to a proprietary educational institution operated for profit and to its professors and instructors as employer and employees.
• Whether or not the presidential certification of the dispute under Section 10 of the Industrial Peace Act was valid.
• Whether or not the orders of the industrial court, including the return-to-work order and the contempt orders, were issued with or without jurisdiction or with grave abuse of discretion.

Applicable Provisions

Section 10 of Republic Act Number 875, the Industrial Peace Act, provides:

Where the President of the Philippines finds that in any industry or enterprise or in any locality or region of the Philippines there exists a labor dispute causing or likely to cause a strike or lockout, he may certify such labor dispute to the Court of Industrial Relations for compulsory arbitration.

This provision is the source of the industrial court's jurisdiction over the certified dispute, and the University attacks the certification as beyond its terms.

Section 2 of the same Act defines the terms used in it, and the decision turns on whether the University and its faculty fall within those definitions of employer and employee.

Employer includes any person, partnership, association, corporation, or other entity that employs or seeks to employ workers.

The Court uses this definition to test whether a profit-making educational institution is an employer within the Act's coverage.

Ruling

On the first issue, the Court held that the Court of Industrial Relations validly acquired jurisdiction. The pivotal claim of the University was that the Act does not apply to it because it is an educational institution, and does not apply to the faculty because they are independent contractors. The Court rejected both claims.

On the second issue, the Court reviewed its earlier rulings excluding certain institutions from the Act, and explained that the principal reason for those rulings was that those entities were not organized, maintained, and operated for profit and did not declare dividends to stockholders. Feati University, by contrast, is a proprietary educational institution operated for profit. The Court therefore held that the Industrial Peace Act applies to it as an employer and to its professors and instructors as employees affiliated with a duly registered labor union.

On the third issue, the Court upheld the presidential certification, holding that the industrial court acquired jurisdiction over the certified dispute by virtue of that certification, and that the certification was not violative of Section 10.

On the fourth issue, the Court held that the questioned orders were issued within the court's jurisdiction. Having acquired jurisdiction over the certified dispute, the industrial court could issue the return-to-work order and the related orders in the certified case, the certification election case, and the contempt case.

Doctrine

A proprietary educational institution operated for profit, which declares dividends to stockholders, is an employer within the coverage of the Industrial Peace Act, and its professors and instructors are employees who may organize into a registered labor union for collective bargaining purposes. The exclusion of educational institutions from the Act rests on their being non-profit entities that do not declare dividends, not on the nature of education itself. Once the President certifies a labor dispute to the Court of Industrial Relations under Section 10, that court acquires jurisdiction over the dispute and may issue the orders necessary to resolve it.

Disposition

The Supreme Court upheld the jurisdiction of the Court of Industrial Relations and the validity of the presidential certification, and dismissed the University's petitions, thereby sustaining the questioned orders.

Remember This

The single line to memorize is this: a profit-making educational institution is an employer under the Industrial Peace Act, and its faculty may unionize. Examiners use this case to test the profit and dividend test for coverage of the Industrial Peace Act and the effect of a presidential certification on the jurisdiction of the industrial court.