Saint Louis Faculty Club v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: The Saint Louis University (University) applied for and was granted a permit to increase tuition fees by 15% for the school years 1976-77 and 1977-78. The application was partly justified by the need to cover the 13th month pay. For the school year 1976-77, the incremental proceeds amounted to P1,161,700.00, of which 70.20% was allocated to 'Employee Compensation and Benefits,' including 13th-month pay for 1975 and 1976, salary increases, retirement fund contributions, scholarships, and increased SSS, Medicare, and EC contributions. For the school year 1977-78, the incremental proceeds were P1,443,870.00, with P998,400.00 allocated to salary increases and P80,300.00 to 13th month pay. Procedural History: A Labor Arbiter ruled that the University had substantially complied with Presidential Decree No. 451 (P.D. 451), opining that 'emoluments and/or benefits' included not only salary increases but also other benefits like bonuses and allowances. The National Labor Relations Commission (NLRC) affirmed this decision. The Petition: The Saint Louis Faculty Club petitioned for a review of the NLRC resolution, questioning whether the 13th month pay should be charged to the 60% incremental proceeds from tuition fee increases under P.D. 451.
Issue(s)
Whether the 13th month pay, mandated by law, should be charged to the 60% incremental proceeds from tuition fee increases pursuant to P.D. 451. Whether the University substantially complied with P.D. 451 in its distribution of the incremental proceeds.
Ruling
The petition is granted. The questioned resolution of the NLRC is set aside. The private respondent is ordered to pay the petitioner the sum of P499,100.00 as salary increases from the 60% incremental proceeds for the school years 1976-77 and 1977-78, plus attorney's fees of P25,000.00 and costs.
Ratio Decidendi
On the issue of charging 13th month pay to incremental proceeds: The Court held that the 13th month pay, being a benefit mandated by law (Presidential Decree No. 851), should not be charged against the 60% incremental proceeds from tuition fee increases under P.D. 451. This is in line with the Court's ruling in University of the East vs. University of the East Faculty Association. The Court clarified that allowances and benefits mandated by law or secured by collective bargaining agreements should be charged against the return to investments, as mentioned in the second purpose of Section 3(a) of P.D. 451. Therefore, the University's allocation of funds for 13th month pay from the incremental proceeds was improper. The Court noted the "passing strange" fact that the NLRC seemed unaware of this prior ruling. On substantial compliance with P.D. 451: The Court found that the University did not substantially comply with P.D. 451 because it misapplied the funds. Section 3(a) of P.D. 451 mandates that 60% of the incremental proceeds be allocated for salary increases of faculty and employees, with the balance for institutional development, student assistance, extension services, and return on investment. By charging the legally mandated 13th month pay to the 60% portion intended for salary increases, the University effectively reduced the amount available for actual salary increases and improperly used funds designated for other purposes. The separate opinion of Justice Aquino further detailed how the University's distribution deviated from the prescribed percentages and purposes outlined in P.D. 451 and its implementing rules.
Main Doctrine
The 13th month pay, being a mandatory benefit mandated by law, should not be charged against the 60% incremental proceeds from tuition fee increases under P.D. 451, but rather against the return to investment.