MANILA SANITARIUM & HOSPITAL AND/OR H. L. DYER, PETITIONERS, VS. FAUSTO GABUCO AND THE COURT OF INDUSTRIAL RELATIONS, RESPONDENTS.

On December 19, 1956, respondent Fausto Gabuco
instituted with the respondent Court of Industrial Relations, a
complaint for Unfair Labor Practice against the petitioner (Case No.
1143 ULP), alleging—

“1. That the complainant being an
employee of the respondents, together with some of his co-employees
proposed to respondents, through a petition in writing dated August 2,
1956 the return of the privileges they usually enjoyed, i.e., (1)
rental subsidies, (2) child allowance, (3) Educational grant, and (4)
Transportation allowance;

2. That on
August 14, 1956, the complainant in company with his other co-employees
in respondent hospital convoked a meeting and organized a union in
which he was elected President; and

3.
That upon respondents’ learning complainant’s organization of a union,
they dismissed Fausto Gabuco on September 30, 1956, in order to
discourage union membership.”

On December 26, 1956, the herein petitioners filed
their Answer, specifically denying the charges and averred that Fausto
Gabuco was removed because (1) his job was no longer necessary and (2)
he was given the equity separation allowance.

Under date of April 15, 1957, the Hospital
presented a Motion to Dismiss, contending that the CIR did not have
jurisdiction over the case, since the Manila Sanitarium and Hospital
was not established for profit or gain, and that aside from being
operated for charitable purposes, it is also the nature of an
educational institution, for it educates and trains nurses. On June 11,
1957, the following order was issued: “The grounds * * *, having been
found, after due hearing, to be not indubitable, said motion is hereby
denied without prejudice to the issues therein raised being disposed of
in the decision of the merits after all evidence is submitted.” The
parties presented evidence in support of their respective contentions.
After making definite findings that Fausto Gabuco had organized the
Hospital Employees Union on August 14, 1956, and that respondents
therein had learned of it, the trial court, .anent the cause of the
dismissal of Gabuco, held:

“Premises considered, this Court is of the opinion
and so holds, that respondents are guilty of unfair labor practices
within the meaning of Section 4(a), 1 and 4 of the Industrial Peace
Act, by discriminately discharging Fausto Gabueo on September 30, 1956
for union activities. Hence, the respondents are hereby ordered to
reinstate fully and immediately Fausto Gabueo with back wages from
October 1, 1956 until reinstated without prejudice to seniority or
other rights and privileges he enjoyed before his separation.

The respondents shall cease and desist from such unfair labor practice.”

Respondents presented a Motion for Reconsideration,
on the ground that the judgment was contrary to law and jurisprudence
and facts and evidence submitted during the hearing. In same Motion,
respondents informed the court that they would be submitting their
arguments in support of the motion within ten (10) days from July 31,
1958. On August 8, 1958, respondents presented a “Motion for Extension
of Time” to file their memorandum, which was denied on August 11, 1958,
on the ground that the Court en banc has adopted a ‘no extension’
policy. Under date of August 13, 1958, respondents presented their
Memorandum, assailing the decision on various grounds. On August 18,
1958, complainant Gabuco, now respondent, presented a Motion to Dismiss
the Motion for Reconsideration, alleging in support thereof that the
memorandum had been filed one (1) day late. The above motion was
opposed by respondents, claiming substantial compliance with the law.
On August 21, 1958, the Court en banc dismissed the motion for
reconsideration. Judge Tabigne dissented.

The Manila Sanitarium and Hospital brought to this
Court the decision and the resolutions denying its motion for extension
and dismissing its Motion for Reconsideration, on a Writ of Certiorari,
claiming, that the CIR acted without or in excess of its jurisdiction
and/or with grave abuse of discretion, and committed substantial errors
of law in:

1. Taking cognizance
   of the case subject of this petition and finding petitioner Manila
   Sanitarium & Hospital, to ‘be an institution operated for profit
   “or gain;
2. Finding the herein petitioners guilty of unfair labor practices;
3. Ordering the herein petitioners to reinstate immediately Respondent
   Fauato Gabuco with back wages from October I, 1956 until fully
   reinstated; and
4. In not giving’ dim course to petitioners’ Motion for Reconsideration.

The conclusions reached by the respondent court on
the question of jurisdiction has no factual and legal basis. The
grounds upon which the respondent court had predicated said conclusions
on the nature, character and activities of the petitioner, are set
forth in the appealed decision, as follows—

“* * *. This Court cannot subscribe
to the contention al’ respondents because the Manila Sanitarium and
Hospital is being operated not on charity but on practically business
basis by charging medical and hospital fees and does not maintain a
free ward; whereas the Boy Scouts of the Philippines has always been
operating on charity-alms from private us well as government entities,
and the voluntary contributions of private individuals.

In other words, respondent hospital is operated,
just like any other private hospital, for profit and gain. While the
yardstick used in the Boy Scouts of the Philippines vs. Juliana Araos
case for determining whether or not an institution or concern is
operated for profit or gain is the charitable end of the same, the
instant case does not fall under that norm considering that unlike the
Boy Scouts it engages in charging medical and hospital fees without
even as much as maintaining a free ward.”

The evidence of record, mainly documentary,
definitely proves that the Manila Sanitarium and Hospital is a
non-profit, non-industrial establishment. The articles of Incorporation
of the Philippine Union Mission Corporation of the Seventh Day
Adventists, a religious corporation, (Exhs. A-B), to which the hospital
is a subsidiary, provides the following—

“Third:—That the general and
principal purpose and object for which this corporation is formed is to
teach the people of all nations the commandments of God and the
everlasting Gospel of Jesus Christ, and the subsidiary purposes and
objects for which this corporation is formed are: to issue notes, to
grant annuities, to acquire, possess, and hold title to real, personal
and mixed estates, including public or private lands for agricultural
development and other purposes, water rights, mining rights, and forest
rights, either in trust or otherwise, by gift, bequest, device, or
purchase, and to have the power to sell and convey the same by such
instrument or conveyance as may be suitable; to establish and operate
sanitariums, hospitals, clinics, publishing houses, and book and
periodical agencies; * * *.”

As such religious corporation, the Seventh Day
Adventists expressly declared that it is not for personal profit or
gain to any individual, but that all its property and effects must be
used and expended in carrying into effect the aims and objects of its
existence. The Commissioner of Internal Revenue, as early as March 11,
1956, and August 15, 1958, had declared that “upon investigation
conducted by a representative of this office, it was ascertained that
the Manila Sanitarium & Hospital where they (Pharmacists) are
employed, is a religious and charitable institution not conducted for
private gain” (Annex O, of Petition; Appendix C). The Operating Policy
of the Seventh Day Adventists, (Article, II), states that the object of
the Hospital is “to advance through medical missionary work, the cause
and Kingdom of Jesus Christ * * * it being understood that no dividends
or profits shall ever be declared to any constituency, boards or to any
of its working force” (Annex A-l of the petition). W. J. Hackett,
Minister and President of the Philippine Union Mission Corporation of
the Seventh-Day Adventists, Potenciano Romulo, Secretary of the same
religious denomination and Dr. Rey Jutry, Chief Medical Staff and
member of the Board of Management of the Manila Sanitarium and
Hospital, testified in unison that the hospital was not operated for
private gain or profit. Their testimony had not been contradicted by
respondent Fausto Gabuco.

With respect to its management, the respondent
Court commented that this medical institution is operated in the
fashion of an ordinary private hospital, imposing medical and hospital
fees. This must be conceded; or it is one way of obtaining maximum
efficiency in its service. The mere charging of medical and hospital
fees for those who can afford to pay, did not make the institution
established for profit or gain. It had to meet expenses for operation
and maintenance, in order to carry its lofty purposes to serve
suffering humanity ( U.S.T. Hospital Employees vs. Santo Tomas
Hospital, G. R. No. L-6988, May 24, 1954; San Beda vs. CIR &
N.L.U., 510 Off. Gaz. 5836; No. L-7649, Oct. 29, 1955; Quezon
Institute, et al. vs. Velasco and Quezon Institute,, et al. vs.
Paraiso, L-7742 & L-7743; Univ. of San Agustin vs. CIR, et al. No.
L-12222, May 28, 1958). The petitioner-hospital is not only established
and run for religious purposes, but it is also educational in the sense
that it trains and educate nurses and charitable and benevolent because
it offers free medical assistance to indigents. The fact that in the
hospital, there is no separate place distinctly marked with the words
“Free Ward”, does not necessarily prove that the hospital was not
giving free medical assistance or not admitting charity patients
therein. Dr. Jutry testified that there was no such thing as “pay ward”
and “free ward” in said hospital, as it was an institution organized on
a non-profit basis, to help people as much as possible medically; that
the hospital charged medical fees to patients who could afford to pay;
partial medical fees to some; and free to many; so that the more fees
it collected, the more free services it could render; that indigent
patients who were admitted as charity cases, occupied the same ward
with paying patients; their treatment, facilities and accommodations
were the same. The hospital for the years 1952 to 1958 (7 years), had
appropriated and actually spent around P890,855.68 for free service
(Appendix B).

Respondent Court declared that petitioner hospital
was a business concern because there is nothing in the evidence which
showed that it incurred losses in its operation. The criterion advanced
by the respondent court in determining whether or not an establishment
is organized for profit or gain, is fallacious. The mere fact that an
industrial or commercial enterprise had incur losses, does not follow
as a consequence that it is not for profit or for gain, although it is
established for such purpose; much in the same way that if a charitable
institution gains on its operations, that it has become a business
enterprise established for profit or gain. It has not been shown that
the petitioner-hospital, a non-stock corporation, ever declared
dividends to its members or that its property, effects or profit was
used for personal or individual gain, and not for the purpose of
carrying out the objectives of the hospital itself.

In the case of Boy Scouts of the Philippine vs. Araos, L-10091, Jan. 29, 1958, we have held:

“On the basis of the foregoing considerations,
there is every reason to believe that our labor legislation from
Commonwealth Act No. 103, creating’ the Court of Industrial Relations,
down through the Eight Hour Labor Law, to the Industrial Peace Act, was
intended by the Legislature to apply only to industrial employment and
to govern the relations between employers engaged in industry and
occupation for purposes of profit arid gain, and their industrial
employees, but not to organizations and entities which are organized,
operated, and maintained not for profit or gain, but for elevated and
lofty purposes, such as, charity social service, education and
instruction, hospital and medical service, the encouragement and
promotion of character, patriotism and kindred virtues in the youth of
the nation, etc.” (See also Univ. of San Agustin vs. CIR, et al.,
supra.)

It appearing that the petitioner Manila Sanitarium
and Hospital is a purely charitable and educational institution, not
established or operated for profit or gain, the same is not governed by
the said Act, and the respondent Court has acted without jurisdiction
and committed grave abuse of discretion and substantial error of law
when it took cognizance of the case, subject of the petition.

Because of the conclusions reached, consideration of the other issues involved herein is deemed unnecessary.

The decision sought to be reviewed is reversed,
without pronouncement as to costs, reserving to the respondent herein
Fausto Gabuco, the right to file the appropriate action, in the proper
Court.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, Dizon, Regala and Makalintal, JJ., concur.