Title
Manila Sanitarium and Hospital vs. Gabuco
Case
G.R. No. L-14311
Decision Date
Jan 31, 1963
A hospital dismissed an employee for union activities; the Supreme Court ruled it a non-profit entity, exempt from labor laws, reversing the unfair labor practice decision.

Case Digest (G.R. No. L-16904)

Facts:

  • Background of the Case
    • The case involves petitioners Manila Sanitarium & Hospital and/or H. L. Dyer versus respondent Fausto Gabuco and the Court of Industrial Relations.
    • On December 19, 1956, Fausto Gabuco filed a complaint for an unfair labor practice before the Court of Industrial Relations (Case No. 1143 ULP).
  • Allegations and Events Leading to the Dispute
    • The complaint alleged that:
      • Gabuco, an employee, along with his co-employees, petitioned for the reinstatement of certain privileges (rental subsidies, child allowance, educational grant, and transportation allowance).
      • On August 14, 1956, Gabuco, together with other co-employees, convened a meeting and organized a union, in which he was elected President.
      • The hospital, upon learning about the union formation, dismissed Gabuco on September 30, 1956, purportedly to discourage union membership.
    • In response, the hospital filed an answer on December 26, 1956, denying the charges and contending that:
      • Gabuco’s position was no longer necessary.
      • He had received an equity separation allowance.
  • Pre-Trial and Trial Proceedings
    • The Manila Sanitarium and Hospital filed a Motion to Dismiss on April 15, 1957, arguing that:
      • The Court of Industrial Relations (CIR) lacked jurisdiction because the hospital was not established for profit or gain, being operated for charitable purposes and also functioning as an educational institution for training nurses.
    • On June 11, 1957, the Court denied the motion to dismiss—without prejudice—allowing the case to proceed on the merits.
    • Evidence was presented by both parties:
      • The trial court made findings regarding the formation of the union on August 14, 1956, and noted that the hospital learned of these activities.
      • Based on these findings, the trial court held that the dismissal of Gabuco constituted an unfair labor practice under Section 4(a), 1 and 4 of the Industrial Peace Act.
      • The trial court ordered the hospital to reinstate Gabuco immediately with back wages from October 1, 1956, and to cease further unfair labor practices.
  • Post-Trial Motions and Subsequent Proceedings
    • The hospital-responses included:
      • Filing a Motion for Reconsideration on the trial court’s ruling, arguing that the judgment was contrary to law, jurisprudence, and the evidence presented.
      • Requesting an extension of time to file their memorandum, which was denied by the Court en banc due to a strict “no extension” policy.
      • Eventually, filing a memorandum arguing that the trial court’s decision was factually and legally erroneous.
    • Additional motions:
      • On August 18, 1958, respondent Gabuco filed a Motion to Dismiss the Motion for Reconsideration on the ground of tardiness (filed one day late), which the hospital opposed.
      • The Court en banc dismissed the Motion for Reconsideration on August 21, 1958, with a dissenting opinion by Judge Tabigne.
  • Evidence on the Nature and Character of the Hospital
    • Documentary evidence and testimony established that:
      • The hospital is a subsidiary of the Philippine Union Mission Corporation of the Seventh Day Adventists, a religious corporation.
      • Its articles of incorporation clearly state its purpose as teaching the gospel and providing services such as establishing sanitariums, hospitals, and training facilities.
    • Testimonies by officials of the religious corporation unanimously affirmed that:
      • The hospital was operated to advance medical missionary work and was not intended for personal or individual profit or gain.
    • Financial and operational evidence:
      • The hospital charged fees for services primarily to meet operating expenses and to fund free medical services.
      • Over the period from 1952 to 1958, significant funds (nearly P890,855.68) were appropriated and spent on free medical services.
      • Despite the imposition of fees (with no distinctive “free ward”), the institution maintained a charitable and educational character.
    • Jurisprudential context:
      • The respondent court’s conclusion that the hospital was for profit was contrasted with prior cases like Boy Scouts of the Philippines vs. Araos, where the criterion of charitable purpose was key in determining the application of labor laws.
      • The mere charging of fees, without evidence of profit appropriation for private gain, did not conclusively render the hospital a profit-making enterprise.
  • The Crux of the Dispute
    • The petitioners argued that since the hospital was a non-stock, non-profit, charitable, and educational institution, it should not fall under the jurisdiction of the Industrial Peace Act—designed to govern industrial employment in profit-oriented establishments.
    • They contended that the lower court’s findings regarding the hospital's profit nature were erroneous, leading to decisions that exceeded the court’s jurisdiction and amounted to grave abuse of discretion.

Issues:

  • Jurisdiction of the Court of Industrial Relations
    • Whether the CIR had jurisdiction over the case given that Manila Sanitarium and Hospital was alleged to be a non-profit, charitable, and educational institution rather than an establishment operated for profit or gain.
  • Characterization of the Hospital’s Operations
    • Whether the imposition of medical and hospital fees, despite being a common practice for maintaining operational efficiency, automatically renders the institution as a profit-making enterprise.
  • Unfair Labor Practice and Dismissal of Fausto Gabuco
    • Whether Gabuco’s dismissal, following his participation in union organization, constituted an unfair labor practice within the meaning of the Industrial Peace Act.
  • Timeliness and Procedural Issues
    • The impact of procedural non-compliance (i.e., the one-day tardiness in filing the memorandum) on the final decisions regarding motions for reconsideration and extension.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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