In University of Santo Tomas Faculty Union v. University of Santo Tomas, the Supreme Court addressed the crucial issue of prescription in labor disputes, specifically those arising from collective bargaining agreements (CBAs). The Court ruled that the faculty union’s claims against the university for alleged unpaid benefits had prescribed because the union failed to file its complaint within the prescribed periods for unfair labor practices or money claims, as stipulated in the Labor Code. This decision underscores the importance of adhering to statutory timelines when pursuing labor-related claims and clarifies the jurisdictional boundaries between labor arbiters and voluntary arbitrators in CBA disputes.

Unraveling the Threads: A University’s CBA, a Union’s Claim, and a Race Against Time

The University of Santo Tomas Faculty Union (USTFU) filed a complaint against the University of Santo Tomas (UST), alleging unfair labor practice due to the university’s failure to remit the full amounts to the hospitalization and medical benefits fund as mandated by their Collective Bargaining Agreement (CBA). USTFU contended that UST did not properly “slide in” or carry over the allocated funds from year to year, resulting in a significant deficiency. UST, however, argued that the amounts were not meant to be cumulative and that USTFU’s claims had already prescribed. This dispute raised fundamental questions about the interpretation of CBA provisions, the jurisdiction of labor tribunals, and the timely pursuit of labor claims.

The Labor Arbiter (LA) initially ruled in favor of USTFU, ordering UST to remit P18,000,000 to the fund. The National Labor Relations Commission (NLRC) later increased this amount to P80,000,000. However, the Court of Appeals (CA) set aside these decisions, finding that the case fell under the jurisdiction of a voluntary arbitrator, not the LA or NLRC. The Supreme Court affirmed the CA’s ruling on jurisdiction but addressed the substantive issues to provide clarity and prevent further delays. At the heart of the matter was the question of whether UST had indeed violated the CBA and, if so, whether USTFU’s claims were still actionable given the time that had elapsed since the alleged violations.

The Supreme Court delved into the jurisdictional issue, emphasizing that disputes arising from the interpretation or implementation of CBAs fall under the original and exclusive jurisdiction of voluntary arbitrators, as stipulated in Article 261 of the Labor Code. This jurisdiction extends to violations of the CBA, except for “gross violations,” defined as a “flagrant and/or malicious refusal to comply with the economic provisions” of the agreement. The Court determined that UST’s actions did not amount to a gross violation, as the disagreement stemmed from differing interpretations of the CBA rather than a deliberate and malicious refusal to comply.

Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. – The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

Building on this principle, the Court highlighted the importance of the grievance machinery outlined in the CBA. Article X of the 1996-2001 CBA between UST and USTFU specifically outlines the grievance process, which includes steps for resolving misunderstandings or disputes regarding the CBA. Despite this clear process, USTFU bypassed certain steps and directly filed a complaint with the LA, further supporting the argument that the matter should have been resolved through voluntary arbitration. USTFU’s attempt to bypass the grievance process outlined in the CBA further solidified the Supreme Court’s view that the case was not properly brought before the Labor Arbiter.

Moreover, the Supreme Court addressed the critical issue of prescription. Article 290 of the Labor Code dictates that unfair labor practices must be filed within one year from accrual; otherwise, they are barred. Article 291 establishes a three-year prescriptive period for money claims arising from employer-employee relations. The Court found that USTFU’s claims, whether characterized as unfair labor practice or money claims, had prescribed. USTFU failed to file its complaint within the one-year or three-year periods following the alleged breaches by UST, rendering the claims time-barred.

The Court emphasized that USTFU’s cause of action accrued when UST allegedly failed to comply with the economic provisions of the 1996-2001 CBA. Upon such failure, USTFU could have brought an action against UST. It was an error to state that USTFU’s cause of action accrued only upon UST’s categorical denial of its claims on 2 March 2007. Prescription of an action is counted from the time the action may be brought, according to Calma and Ontanillas v. Montuya, 120 Phil. 896, 900 (1964).

In examining the substance of USTFU’s claims, the Supreme Court also addressed the interpretation of the CBA provisions. USTFU argued that UST’s contributions to the fund should have been cumulative, with each year’s allocation carried over to the next. However, the Court disagreed, noting that the 1996-2001 CBA and the 1999 Memorandum of Agreement did not explicitly provide for such a carry-over. It was only in the 2001-2006 CBA that an express carry-over provision was included, indicating that the parties did not initially intend for the contributions to be cumulative.

The Court provided a detailed table consolidating USTFU’s claims, UST’s remittances, and UST’s alleged balances to illustrate the discrepancies and the timeline of events. While the Court acknowledged Article 1702 of the Civil Code, which mandates that labor legislation and contracts be construed in favor of the laborer’s safety and decent living, it also emphasized that when CBA provisions are clear and unambiguous, their literal meaning should govern. This balancing act between protecting labor rights and adhering to contractual terms guided the Court’s analysis.

Ultimately, the Supreme Court denied USTFU’s petition, declaring that the claims had prescribed and that there was no carry-over provision for the Hospitalization and Medical Benefits Fund in the 1996-2001 CBA and the 1999 Memorandum of Agreement. The carry-over provision for the Hospitalization and Medical Benefits Fund is found only in the 2001-2006 and 2006-2011 Collective Bargaining Agreements, stated the Supreme Court. This ruling underscores the importance of prompt action in pursuing labor claims and the necessity of clear and unambiguous language in CBAs to avoid disputes over interpretation. While labor laws are often construed in favor of employees, clear contractual provisions will be upheld.

FAQs

What was the central issue in this case?	The primary issue was whether the University of Santo Tomas Faculty Union’s (USTFU) claims against the University of Santo Tomas (UST) for unpaid benefits had prescribed due to the lapse of time. Additionally, the court addressed the jurisdiction of labor tribunals in disputes arising from collective bargaining agreements (CBAs).
What is the significance of prescription in labor cases?	Prescription refers to the time limit within which a legal action must be initiated. In labor cases, failing to file a complaint within the prescribed period can result in the loss of the right to pursue the claim, regardless of its merit.
What are the prescriptive periods for labor claims under the Labor Code?	Article 290 of the Labor Code provides a one-year prescriptive period for unfair labor practices, while Article 291 establishes a three-year period for money claims arising from employer-employee relations.
When did the Supreme Court say USTFU’s cause of action accrued?	The Supreme Court stated that USTFU’s cause of action accrued when UST allegedly failed to comply with the economic provisions of the 1996-2001 CBA. This occurred each time UST failed to remit the correct amount to the fund, not just when UST denied the claims.
What is the role of voluntary arbitration in CBA disputes?	Voluntary arbitration is a process where disputes arising from the interpretation or implementation of CBAs are resolved by a neutral arbitrator. The voluntary arbitrator has original and exclusive jurisdiction over these disputes, except for gross violations of the CBA.
What constitutes a gross violation of a CBA?	According to Article 261 of the Labor Code, a gross violation of a CBA is defined as a “flagrant and/or malicious refusal to comply with the economic provisions” of the agreement.
Did the Supreme Court find that UST committed unfair labor practice?	No, the Supreme Court did not find that UST committed unfair labor practice. The Court determined that the dispute stemmed from differing interpretations of the CBA, not a deliberate and malicious refusal to comply with its economic provisions.
What is the meaning of Article 1702 of the Civil Code in labor disputes?	Article 1702 of the Civil Code states that labor legislation and contracts should be construed in favor of the safety and decent living of the laborer. However, this principle is balanced against the need to uphold clear and unambiguous contractual terms.
What was the key factor in the Supreme Court’s decision regarding the interpretation of the CBA?	The key factor was the absence of a clear and explicit “carry-over” provision in the 1996-2001 CBA and the 1999 Memorandum of Agreement. The Court emphasized that when CBA provisions are clear and unambiguous, their literal meaning should govern.

The University of Santo Tomas Faculty Union v. University of Santo Tomas case serves as a significant reminder of the importance of adhering to prescriptive periods and clearly defining terms in collective bargaining agreements. While labor laws generally favor employees, the enforcement of these rights requires timely action and unambiguous contractual language. Understanding these principles is essential for both employers and employees in navigating labor disputes and ensuring fair and equitable outcomes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: University of Santo Tomas Faculty Union, G.R. No. 203957, July 30, 2014