G.R. No. L-12222 - University of San Agustin vs. Court of Industrial Relations

Case Summary (G.R. No. L-12222)

Factual Background

The record showed that the University of San Agustin was organized and operated exclusively for religious and educational purposes, not for profit, gain, or the division of dividends among stockholders. The Philippine Association of College and University Professors was described as a non-stock association composed of professors and teachers in different colleges and universities. After its organization, the University allegedly acted in ways hostile to the association, and the affected professors and teachers therefore filed the complaint for unfair labor practice that initiated the proceeding before the Court of Industrial Relations.

Upon being required to answer, the University denied the charge of unfair labor practice. At the same time, it disputed both the jurisdiction over the parties and the jurisdiction over the subject-matter, asserting three related grounds: first, that professors and teachers were not “industrial” laborers or employees, and that the association was not a legitimate labor organization under the laws creating the Court of Industrial Relations; second, that the University was not an institution established for the purpose of gain or division of profits, and therefore was not an “industrial enterprise” and its teaching staff were not engaged in “industrial employment”; and third, as a consequence, that the controversy was not an “industrial dispute” and the industrial court therefore had no jurisdiction at all. In support of its position, the University invoked U.S.T. Hospital Employees Association vs. Sto Tomas University Hospital, 95 Phil. 40, and San Beda College vs. Court of Industrial Relations and National Labor Union, 97 Phil., 787 (citing an Official Gazette publication date).

Procedural History Before the Court of Industrial Relations

The industrial court conducted trial before a hearing examiner. The trial proceeded notwithstanding the University’s assertion during the proceedings that the court could not proceed without the prior preliminary investigation required by law. The case was nonetheless tried, and it was thereafter submitted to the court for decision.

On January 2, 1957, Judge Jose. S. Bautista issued an order holding that the court could not hold the trial without the requisite preliminary investigation. Despite that, he ruled that the court had jurisdiction over the controversy, expressing the view that industrial employment was not a basic criterion in determining jurisdiction in an unfair labor practice charge. He accordingly ordered that the case be referred to the Prosecution Division to conduct the preliminary investigation required by law.

The court en banc affirmed the order, with Judge Lanting not taking part and Judge Martinez concurring in the result. The University then filed the present petition for review.

The Principal Issue on Review

The decision framed a single, anchored question: since the University was not an institution established for profit or gain, nor an industrial enterprise, but was established exclusively for educational purposes, could the relationship between the University and its professors be characterized as an employer-employee relationship that falls within the Magna Carta provisions on unfair labor practice? Stated differently, the issue asked whether the unfair labor practice statutory scheme applied to the relation between the petitioner and members of the respondent association.

The Court treated the issue as not new, and it directly relied on an earlier ruling involving a close factual and legal parallel.

Controlling Doctrine from Boy Scouts of the Philippines v. Araos

The Court noted that the issue had been addressed in Boy Scouts of the Philippines vs. Juliana V. Araos, 102 Phil. 1080, promulgated on January 29, 1958. In that case, the Court ruled negatively on whether a charitable institution organized not for profit but for elevated purposes—such as charity, social service, education and instruction, hospital and medical service, and related virtues—was included within the statutory definitions of “employer” and “employee” in Republic Act No. 875 (the statute governing the Court of Industrial Relations’ unfair labor practice jurisdiction).

The Court in Boy Scouts reasoned that the labor legislation, from the statute creating the Court of Industrial Relations (Commonwealth Act No. 103) through later enactments including the Eight Hour Labor Law and the Industrial Peace Act, was intended to apply to industrial employment and to govern relations between employers engaged in industry for purposes of profit and gain and their industrial employees, but not to entities organized and maintained not for profit but for lofty and charitable purposes. On that basis, it held that Republic Act No. 875, particularly its unfair labor practice and labor dispute provisions, did not apply to the Boy Scouts case, and thus the Court of Industrial Relations had no jurisdiction.

The Court’s Reasoning in the Present Case

Applying the analogy between the two disputes, the Court held that it could not sustain the industrial court’s assumption of jurisdiction. It reasoned that the University of San Agustin, like the charitable and non-profit entities in Boy Scouts, was established exclusively for educational and religious purposes and was not an institution fou

Case Syllabus (G.R. No. L-12222)

The petition sought review of an order of the Court of Industrial Relations dated January 2, 1957 and its resolution dated March 5, 1957, which held that the court had jurisdiction and ordered referral of the matter to the Prosecution Division for the preliminary investigation required by law.
The controversy began as a complaint for unfair labor practice filed by the Philippine Association of College and University Professors against the University of San Agustin.
The University of San Agustin denied the unfair labor practice charge and disputed both jurisdiction over the parties and jurisdiction over the subject-matter.
Trial proceeded before a hearing examiner while the legal questions raised by the University remained unresolved.
During the trial, the University raised an additional legal point that the court could not proceed without a prior preliminary investigation required by law.
Despite the raised point, the trial continued and the case was submitted to the Court of Industrial Relations for decision.
The Court issued the January 2, 1957 order stating that while it could not conduct the trial without the requisite preliminary investigation, it nonetheless had jurisdiction over the controversy.
The Court’s jurisdictional view rested on its opinion that industrial employment was not a controlling criterion for determining jurisdiction in an unfair labor practice charge.
The en banc Court affirmed the order, with Judge Lanting taking no part and Judge Martinez concurring in the result, prompting the present petition for review.

Parties and Relationship Claimed

The petitioner was the University of San Agustin, an educational institution managed by a religious non-stock corporation organized and existing under Philippine laws.
The University was organized not for profit or gain and not for the division of dividends among stockholders, but solely for religious and educational purposes.
The respondent association was the Philippine Association of College and University Professors, a non-stock association of professors and teachers across different colleges and universities.
The association alleged that since its organization, the University adopted a hostile attitude that included discrimination, harassment, and intimidation of its members.
The association and affected members filed the unfair labor practice complaint that initiated the industrial court proceedings.
The central relationship issue was whether the University’s relation with its teaching staff constituted an employer-employee relation within the jurisdiction of the Court of Industrial Relations.

Key Factual Allegations

The association alleged that the University discriminated against, harassed, and intimidated members of the organization.
The complaint was framed as an unfair labor practice, thereby invoking the industrial court’s authority under labor legislation on unfair labor practice.
The University did not admit the unfair labor practice charge and instead contested the industrial court’s authority at the outset.
The University also raised a procedural jurisdictional objection during the trial, insisting on the absence of the legally required preliminary investigation before further proceedings.

Jurisdictional Grounds Raised

The University argued that the complainants, being college and/or university professors, were not “industrial” laborers or employees.
The University further argued that because the complainants were engaged in the teaching profession, the association was not and could not be a legitimate labor organization within the meaning of laws creating the Court of Industrial Relations and defining its powers.
The University asserted that it was not an institution established for purposes of gain or division of profits, and therefore it was not an “industrial” enterprise.
The University relied on earlier jurisprudence to support the proposition that non-profit institutions fall outside “industrial enterprise” concepts for purposes of industrial court jurisdiction.
The University maintained that, as a necessary consequence, the controversy was not an “industrial dispute”, and thus the Court of Industrial Relations lacked jurisdiction not only over the parties but also over the subject-matter.