G.R. No. 82499 - Capitol Medical Center, Inc. vs. Court of Appeals

Capitol Medical Center, Inc. (CMCI)—a hospital corporation—organized and operated Capitol Medical Center College (CMCC) beside its hospital in Quezon City.
The college offered courses including a four-year nursing program, a two-year midwifery program, and a two-year medical secretarial program, with 900 students enrolled at the start of the first semester of the 1987‑88 school year.

Mid‑1987: The college faculty, led by the Dean of Nursing, demanded vacation and sick leave privileges similar to those enjoyed by hospital personnel.
Despite dialogues between the faculty and the school administration headed by Dr. Thelma Navarrete-Clemente, no agreement was reached.
At the CMCI Board meeting on September 15, 1987, concerns were raised that the faculty’s discontent could incite mass demonstrations by the student body, owing to the moral influence of the faculty.

To prevent possible disorder and to protect the hospital’s image and patient safety, the Board resolved to authorize the college’s closure if the antagonism became uncontrollable.
The resolution, recorded in the minutes, stated that the CMCC could be closed at the end of the first semester if faculty‑student antagonism escalated into mass action.

As the dispute intensified over the following 30 days, the faculty unilaterally “postponed” the scheduled final examinations from October 14‑19, 1987, and joined the students in noisy demonstrations outside the hospital.
On October 17, 1987, in response to these disruptive events and the potential risk to patients, the CMCI Board held an emergency special meeting and unanimously resolved to close the college effective at the end of the first semester.
Announcements were posted on the premises informing students that the college would cease operations and listing alternative schools for transfer.
Subsequently, on October 20 and October 29, 1987, Dr. Clemente formally notified the Department of Education, Culture and Sports (DECS) about the immediate and complete closure of the school, emphasizing reasons such as mismanagement, declining quality of education, and operational costs.
The Department of Labor and Employment (DOLE) was also informed regarding the termination of the services of the faculty and support personnel, done in compliance with the Labor Code.

On December 2, 1987, 15 students and parents, on behalf of the 900 affected students, filed a class suit (Civil Case No. 52429) against CMCC and Dr. Clemente seeking a writ of preliminary mandatory injunction directing the college to reopen so that students might continue their studies.
The Regional Trial Court (RTC) of Quezon City granted the writ on December 14, 1987, fixing a bond and ordering the school to resume operations.
Petitioners filed a motion for reconsideration which was denied by the RTC.
The petition was then elevated to the Court of Appeals via petition for certiorari with a preliminary injunction (CA‑G.R. SP No. 13626).

The Court of Appeals upheld the RTC order by reasoning that the initial student enrollment had created a binding contract obligating the school to operate until the students completed their courses.
A motion for reconsideration was filed by the petitioners on February 26, 1988 and denied on March 8, 1988.

The petition for review was ultimately filed challenging the order requiring the school to reopen.

Whether the enrollment of students in the college created a binding contractual obligation compelling the school to remain open for the entire course of study.
Whether the “binding contract” theory, as derived from enrollment practices and the Manual of Regulations for Private Schools, obligates the school to continue operating despite mass disruptions.

Whether the trial court abused its discretion by issuing a writ of preliminary mandatory injunction to force the reopening of the school.
Whether the court’s order to restore conditions preceding the disruptive status quo (i.e., to reopen the school) rather than merely preserving the status quo, was proper under the circumstances.

Whether the shutdown caused by mass actions and strikes, initiated by both teachers and students, nullified any legal obligation of the school to reopen.
Whether the school’s decision to close under uncontrollable circumstances was a proper exercise of its administrative discretion.