G.R. No.

171664 March 6, 2013

BANKARD, INC., Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO
BUENCONSEJO,BANKARD EMPLOYEES UNION-AWATU, Respondents.
D E C I S I O N
MENDOZA, J .:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review,
reverse and set aside the October 20, 2005 Decision
1
and the February 21, 2006
Resolution
2
of the Court of Appeals {CA), in CA-G.R. SP No. 68303, which affirmed the
May 31, 2001 Resolution
3
and the September 24, 2001 Order
4
of the National Labor
Relations Commission (NLRC) in Certified Cases No. 000-185-00 and 000-191-00.
The Facts
On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before
the National Conciliation and Mediation Board (NCMB) its first Notice of Strike (NOS),
docketed as NS-06-225-00,
5
alleging commission of unfair labor practices by petitioner
Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2) outsourcing/contracting-out
jobs; 3) manpower rationalizing program; and 4) discrimination.
On July 3, 2000, the initial conference was held where the Union clarified the issues cited
in the NOS. On July 5, 2000, the Union held its strike vote balloting where the members
voted in favor of a strike. On July 10, 2000, Bankard asked the Office of the Secretary of
Labor to assume jurisdiction over the labor dispute or to certify the same to the NLRC for
compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor
Secretary) of the Department of Labor and Employment (DOLE) issued the order
certifying the labor dispute to the NLRC.
6

On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the
Union filed its second NOS, docketed as NS-07-265-00,
7
alleging bargaining in bad faith
on the part of Bankard. Bankard then again asked the Office of the Secretary of Labor to
assume jurisdiction, which was granted. Thus, the Order, dated August 9, 2000, certifying
the labor dispute to the NLRC, was issued.
8

The Union, despite the two certification orders issued by the Labor Secretary enjoining
them from conducting a strike or lockout and from committing any act that would
exacerbate the situation, went on strike on August 11, 2000.
9

During the conciliatory conferences, the parties failed to amicably settle their dispute.
Consequently, they were asked to submit their respective position papers. Both agreed to
the following issues:
1. Whether job contractualization or outsourcing or contracting-out is an unfair
labor practice on the part of the management.
2. Whether there was bad faith on the part of the management when it bargained
with the Union.
10

As regards the first issue, it was Bankards position that job contractualization or
outsourcing or contracting-out of jobs was a legitimate exercise of management
prerogative and did not constitute unfair labor practice. It had to implement new policies
and programs, one of which was the Manpower Rationalization Program (MRP) in
December 1999, to further enhance its efficiency and be more competitive in the credit
card industry. The MRP was an invitation to the employees to tender their voluntary
resignation, with entitlement to separation pay equivalent to at least two (2) months salary
for every year of service. Those eligible under the companys retirement plan would still
receive additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment
Division availed of the MRP. Thus, Bankard contracted an independent agency to handle
its call center needs.
11

As to the second issue, Bankard denied that there was bad faith on its part in bargaining
with the Union. It came up with counter-offers to the Unions proposals, but the latters
demands were far beyond what management could give. Nonetheless, Bankard continued
to negotiate in good faith until the Memorandum of Agreement (MOA) re-negotiating the
provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was entered into
between Bankard and the Union. The CBA was overwhelmingly ratified by the Union
members. For said reason, Bankard contended that the issue of bad faith in bargaining had
become moot and academic.
12

On the other hand, the Union alleged that contractualization started in Bankard in 1995 in
the Records Communications Management Division, particularly in the mailing unit,
which was composed of two (2) employees and fourteen (14) messengers. They were hired
as contractual workers to perform the functions of the regular employees who had earlier
resigned and availed of the MRP.
13
According to the Union, there were other departments
in Bankard utilizing messengers to perform work load considered for regular employees,
like the Marketing Department, Voice Authorizational Department, Computer Services
Department, and Records Retention Department. The Union contended that the number of
regular employees had been reduced substantially through the management scheme of
freeze-hiring policy on positions vacated by regular employees on the basis of cost-cutting
measures and the introduction of a more drastic formula of streamlining its regular
employees through the MRP.
14

With regard to the second issue, the Union averred that Bankards proposals were way
below their demands, showing that the management had no intention of reaching an
agreement. It was a scheme calculated to force the Union to declare a bargaining
deadlock.
15

On May 31, 2001, the NLRC issued its Resolution
16
declaring that the management
committed acts considered as unfair labor practice (ULP) under Article 248(c) of the Labor
Code. It ruled that:
The act of management of reducing its number of employees thru application of the
Manpower Rationalization Program and subsequently contracting the same to other
contractual employees defeats the purpose or reason for streamlining the employees. The
ultimate effect is to reduce the number of union members and increasing the number of
contractual employees who could never be members of the union for lack of qualification.
Consequently, the union was effectively restrained in their movements as a union on their
rights to self-organization. Management had successfully limited and prevented the growth
of the Union and the acts are clear violation of the provisions of the Labor Code and could
be considered as Unfair Labor Practice in the light of the provisions of Article 248
paragraph (c) of the Labor Code.
17

The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was
rendered moot and academic by virtue of the finalization and signing of the CBA between
the management and the Union.
18

Unsatisfied, both parties filed their respective motions for partial
reconsideration.1wphi1 Bankard assailed the NLRC's finding of acts of ULP on its part. The
Union, on the other hand, assailed the NLRC ruling on the issue of bad faith bargaining.
On September 24, 2001, the NLRC issued the Order
19
denying both parties' motions for
lack of merit.
On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA
arguing that the NLRC gravely abused its discretion amounting to lack or excess of
jurisdiction when:
1. It issued the Resolution, dated May 31, 2001, particularly in finding that
Bankard committed acts of unfair labor practice; and,
2. It issued the Order dated September 24, 2001 denying Bankard's partial motion
for reconsideration.
20

The Union filed two (2) comments, dated January 22, 2002, through its NCR Director,
Cornelio Santiago, and another, dated February 6, 2002, through its President, Paulo
Buenconsejo, both praying for the dismissal of the petition and insisting that Bankard's
resort to contractualization or outsourcing of contracts constituted ULP. It further alleged
that Bankard committed ULP when it conducted CBA negotiations in bad faith with the
Union.
Ruling of the Court of Appeals
The CA dismissed the petition, finding that the NLRC ruling was supported by substantial
evidence.
The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of
jobs did not per se constitute ULP, especially when made in good faith and for valid
purposes. Despite Bankard's claim of good faith in resorting to job contractualization for
purposes of cost-efficient operations and its non-interference with the employees' right to
self-organization, the CA agreed with the NLRC that Bankard's acts impaired the
employees right to self-organization and should be struck down as illegal and invalid
pursuant to Article 248(c)
21
of the Labor Code. The CA thus, ruled in this wise:
We cannot agree more with public respondent. Incontrovertible is the fact that petitioner's
acts, particularly its promotion of the program enticing employees to tender their voluntary
resignation in exchange for financial packages, resulted to a union dramatically reduced in
numbers. Coupled with the management's policy of "freeze-hiring" of regular employees
and contracting out jobs to contractual workers, petitioner was able to limit and prevent the
growth of the Union, an act that clearly constituted unfair labor practice.
22

In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September
24, 2001 Order of the NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for
being a mere repetition of the grounds previously raised. Hence, the present petition
bringing up this lone issue:
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD,
INC. COMMITTED ACTS OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED
THE PETITION FOR CERTIORARI AND DENIED THE MOTION FOR
RECONSIDERATION FILED BY PETITIONER.
23

Ruling of the Court
The Court finds merit in the petition.
Well-settled is the rule that "factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only
respect but even finality by the courts when supported by substantial
evidence."
24
Furthermore, the factual findings of the NLRC, when affirmed by the CA, are
generally conclusive on this Court.
25
When the petitioner, however, persuasively alleges
that there is insufficient or insubstantial evidence on record to support the factual findings
of the tribunal or court a quo, then the Court, exceptionally, may review factual issues
raised in a petition under Rule 45 in the exercise of its discretionary appellate jurisdiction.
26

This case involves determination of whether or not Bankard committed acts considered as
ULP. The underlying concept of ULP is found in Article 247 of the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. --
Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the workers right
to self-organization and to the observance of a CBA. It refers to "acts that violate the
workers right to organize."
27
Without that element, the acts, even if unfair, are not
ULP.
28
Thus, an employer may only be held liable for unfair labor practice if it can be
shown that his acts affect in whatever manner the right of his employees to self-organize.
29

In this case, the Union claims that Bankard, in implementing its MRP which eventually
reduced the number of employees, clearly violated Article 248(c) of the Labor Code which
states that:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to
commit any of the following unfair labor practice:
x x x x
(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to self-
organization;
x x x x
Because of said reduction, Bankard subsequently contracted out the jobs held by former
employees to other contractual employees. The Union specifically alleges that there were
other departments in Bankard, Inc. which utilized messengers to perform work load
considered for regular employees like the Marketing Department, Voice Authorizational
Department, Computer Services Department, and Records Retention Department.
30
As a
result, the number of union members was reduced, and the number of contractual
employees, who were never eligible for union membership for lack of qualification,
increased.
The general principle is that the one who makes an allegation has the burden of proving
it.1avvphi1 While there are exceptions to this general rule, in ULP cases, the alleging party has the
burden of proving the ULP;
31
and in order to show that the employer committed ULP under
the Labor Code, substantial evidence is required to support the claim.
32
Such principle
finds justification in the fact that ULP is punishable with both civil and/or criminal
sanctions.
33

Aside from the bare allegations of the Union, nothing in the records strongly proves that
Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce
union membership. Contrary to the findings and conclusions of both the NLRC and the
CA, there was no proof that the program was meant to encourage the employees to
disassociate themselves from the Union or to restrain them from joining any union or
organization. There was no showing that it was intentionally implemented to stunt the
growth of the Union or that Bankard discriminated, or in any way singled out the union
members who had availed of the retirement package under the MRP. True, the program
might have affected the number of union membership because of the employees voluntary
resignation and availment of the package, but it does not necessarily follow that Bankard
indeed purposely sought such result. It must be recalled that the MRP was implemented as
a valid cost-cutting measure, well within the ambit of the so-called management
prerogatives. Bankard contracted an independent agency to meet business exigencies. In
the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or
that it was aimed at interfering with its employees right to self-organize, it cannot be said
to have committed an act of unfair labor practice.
34

"Substantial evidence is more than a mere scintilla of evidence. It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even if
other minds equally reasonable might conceivably opine otherwise."
35
Unfortunately, the
Union, which had the burden of adducing substantial evidence to support its allegations of
ULP, failed to discharge such burden.
36

The employers right to conduct the affairs of its business, according to its own discretion
and judgment, is well-recognized.
37
Management has a wide latitude to conduct its own
affairs in accordance with the necessities of its business.
38
As the Court once said:
The Court has always respected a company's exercise of its prerogative to devise means to
improve its operations. Thus, we have held that management is free to regulate, according
to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, supervision and transfer of employees, working methods, time, place and
manner of work.
This is so because the law on unfair labor practices is not intended to deprive employers of
their fundamental right to prescribe and enforce such rules as they honestly believe to be
necessary to the proper, productive and profitable operation of their business.
39

Contracting out of services is an exercise of business judgment or management
prerogative. Absent any proof that management acted in a malicious or arbitrary manner,
the Court will not interfere with the exercise of judgment by an employer.
40
Furthermore,
bear in mind that ULP is punishable with both civil and/or criminal sanctions.
41
As such,
the party so alleging must necessarily prove it by substantial evidence. The Union, as
earlier noted, failed to do this. Bankard merely validly exercised its management
prerogative. Not shown to have acted maliciously or arbitrarily, no act of ULP can be
imputed against it.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-
G.R. SP No. 68303, dated October 20, 2005, and its Resolution, dated February 21, 2006,
are REVERSED and SET ASIDE. Petitioner Bankard, Inc. is hereby declared as not
having committed any act constituting Unfair Labor Practice under Article 248 of the
Labor Code.
SO ORDERED.


G.R. No. 155609 January 17, 2005
ST. JOSEPHS COLLEGE, Petitioner,
vs.
ST. JOSEPHS COLLEGE WORKERS ASSOCIATION (SAMAHAN), Respondent.
D E C I S I O N
PANGANIBAN, J .:
The law allows an increase in school tuition fees on the condition that 70 percent of the
increase shall go to the payment of personnel benefits. Plainly unsupported by the law or
jurisprudence is petitioners contention that the payment of such benefits should be based
not only on the rate of tuition fee increases, but also on other factors like the decrease in
the number of enrollees; the number of those exempt from paying the fees, like scholars;
the number of dropouts who, as such, do not pay the whole fees; and the bad debts
incurred by the school. The financial dilemma of petitioner may deserve sympathy and
support, but its remedy lies not in the judiciary but in the lawmaking body.
The Case
Before us is a Petition for Review
1
under Rule 45 of the Rules of Court, challenging the
June 14, 2002 Decision
2
and the October 9, 2002 Resolution
3
of the Court of Appeals (CA)
in CA-GR SP No. 69268. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the present petition is hereby GIVEN DUE
COURSE, and the writ prayed for, accordingly GRANTED. The DECISION dated
December 27, 2001 and Resolution dated January 31, 2002 issued by the Panel of
Voluntary Arbitrators composed of Aniano G. Bagabaldo, Angel A. Ancheta and Norberto
M. Alensuela in Case No. AGB-AVA-2001-01 are hereby ANNULLED and SET ASIDE.
Consequently, this case is hereby remanded to it (Panel of Voluntary Arbitrators) for re-
computation of the disputed incremental proceeds for School Year 2000-2001 in
accordance with the foregoing discussion with utmost deliberate dispatch.
"No pronouncement as to costs."
4

The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The appellate court summarized the facts
5
as follows:
"Petitioner is a non-stock, non-profit Catholic educational institution while respondent is a
legitimate labor organization which is currently the official bargaining representative of all
employees of petitioner except the faculty and consultants of the Graduate School,
managerial employees and those who occupy confidential positions. Respondent has an
existing Collective Bargaining Agreement (CBA) with petitioner for the period from June
1, 1999 to May 31, 2004.
"For the school year 2000-2001, petitioner increased its tuition fees for all its departments.
Thus, in accordance with Article VII, Section 1 of its CBA with respondent, which reads:
"Sec. 1. Tuition Fee Increases. The SCHOOL shall allocate eighty-five percent (85%) of
incremental proceeds from every tuition fee increase solely and expressly for adjustments
in employee salaries and benefits, including those that will be legally mandated during the
lifetime of this CBA.
"[P]etitioner computed the incremental proceeds from the said tuition fees increase using
the following formula:
"Y2 - Y1 = Incremental Proceeds
"Y2 = year 2 tuition fee income
= (Y2 increased tuition fee) x (Y2 number of enrollees)
= total tuition fee collection for SY 2000-2001
"Y1 = year 1 tuition fee income
= (Y1 tuition fee) x (Y1 number of enrollees)
= total tuition fee collection for SY 1999-2000
"Based on petitioners computation, the incremental proceeds from the tuition fees
increase for school year 2000-2001 is P1,560,942.74, eighty-five percent (85%) of which
is equivalent to P1,326,801.33. On January 31, 2001, petitioner provided respondent with
the results of its computation with the request that it be advised on how its members would
like the school to implement the aforesaid increase, whether as part of their basic salary or
as allowances.l^vvphi1. net
"On February 1, 2001, respondent presented to petitioner its computations of the
incremental proceeds which greatly differed from the amount stated by the latter. The
incremental proceeds, as computed by respondent amounted to P4,906,307.58 having been
arrived at using the following formula:
"IP = N (TF2-TF1)
"where:
IP = Incremental Proceeds Per Level
N = Net Number of Students of Present School Year
TF2 = Tuition Fee (Present School Year)
TF1 = Tuition Fee (Previous School Year)
"The Total Incremental Proceeds (TIP) is then computed by adding the
incremental proceeds of all levels in all departments.
"TIP = TIP
"where:
"IP = Incremental Proceeds Per Level
"Consequently, respondent averred that eighty-five percent (85%) of P4,906,307.58, which
is P4,170,360.59 should have been released to its members as provided for in their CBA
effective June 1, 2000.
"Thereafter, petitioner informed respondent that the computation it (respondent) submitted
was erroneous as the tuition fee income for School Year 1999-2000 was understated when
it used as base figure the expected number of enrollees instead of the actual number of
enrollees for said School Year.
"Respondent refused to accept the results of petitioners computation. Petitioner, on the
other hand, likewise rejected respondents computation of the incremental proceeds from
the tuition fees increases. Hence, the parties resorted to voluntary arbitration.
"Petitioner asseverated that in computing the incremental proceeds from the tuition fees
increase, whereby eighty-five percent (85%) of which is to be given to the members of
respondent, the base figure for computing the previous school years income should be the
previous school years number of enrollees and not that of the current year. In other words,
the income for the School Year 1999-2000 should be computed based on the figures for
that year. Thus, if the tuition fee income for the previous year be smaller than the current
year, then there would be incremental proceeds that will be released to the employees.
However, if the tuition fee income for the previous year is higher than the current year,
then despite the tuition fee increase, no incremental proceeds will be distributed or at least
only a minimal amount would only be subject for distribution.
"In refutation, respondent claimed that for the past several school years (1996-1997; 1997-
1998; 1998-1999; 1999-2000), petitioner has been using the formula it used in computing
the incremental proceeds for the year 2000-2001. To use a revised formula, as petitioner
did, a sharp reduction of the incremental proceeds would result. Moreover, respondent
emphasized that if the formula adopted by petitioner is used to compute the incremental
proceeds whereby the decrease in number of students enrolling in the current year is taken
into consideration, the same would run counter to the ruling of the Supreme Court in the
case of Cebu Institute of Technology v. Ople (156 SCRA 633) as it would[,] in effect[,]
charge from the reserved incremental proceeds for the wages and benefits of the
employees the losses sustained by the school in the current year.
"After the parties hereto were heard and their supporting documentary evidence presented,
the Panel of Voluntary Arbitrators, composed of Aniano G. Bagabaldo, Angel A. Ancheta
and Norberto M. Alensuela rendered a Decision dated December 27, 2001, the dispositive
portion of which reads:
WHEREFORE, all foregoing premises considered, this Panel of Voluntary Arbitrators
Rules and Orders:
1. That the formula of computation used in the case of tuition fee increases for
the School Years 1997-1998; 1998-1999; 1999-2000 to be more correct and
realistic formula and the same should be used and applied in computing the 85%
portion of the incremental proceeds of the tuition fee increase collected by the
school for the School Year 2000-2001 which should be allocated for the
employees salaries and benefits under Section 1, Article VIII of the existing
CBA;
2. The respondent school to pay the teachers and other school employees
concerned of their backwages, allowances and other benefits out of the tuition fee
increase for the School Year 2000-2001 retroactively effective on June 1, 2000
based on the above-said formula of computation;
3. The parties to use and apply the same scheme of allocation and distribution
they used before in determining the amount of backwages and allowances, other
benefits that teachers and other qualified employees should receive out of the
incremental proceeds of tuition increase for the School Year 2000-2001;
4. The respondent school to pay the additional amount equivalent to ten percent
(10%) of the employees backwages, allowances, and other benefits for the service
of fees of the Labor Relations Adviser of the Union inclusive for expenses
incurred by the Union in this litigation.
5. The respondent school to strictly effect compliance with the Monetary Awards
within ten (10) days from receipt of this Decision.
SO ORDERED.
"Displeased by the above ruling, petitioner moved for reconsideration thereof which was
denied by AVA Ancheta and AVA Alensuela in a Resolution dated January 31, 2002."
6

Consequently, respondent appealed to the CA the Decision and the Resolution of the Panel
of Arbitrators.
7

Ruling of the Court of Appeals
The Court of Appeals ruled that the proper computation for the incremental proceeds
should be as follows:
"Increased Tuition Fee (rate) - Previous Tuition Fee (rate) =
Tuition Fee Increase for Current Year
X
[Number] of Actual Enrollees for Current Year = Incremental Proceeds for
Current Year
"NOTE: The computation of the incremental proceeds for the tertiary level will be on a per
unit basis as the number of units taken by an enrollee may differ from another enrollee
notwithstanding the fact that they are on the same level/year."
8

The CA, in effect, agreed with the computation presented by respondent.
9
To determine the
meaning of incremental proceeds, the appellate court cited Section 5 of Republic Act 6728
(the "Government Assistance to Students and Teachers in Private Education Act"), which
states that seventy percent (70%) of the proceeds from the tuition fee increase must be
given to the teaching and the nonteaching personnel of the school in the form of increases
in salaries and benefits.
10

The CA reasoned that the above computation attains the objective of the law.
11
Thus, it
remanded the case to the panel for re-computation of the incremental proceeds.
12

Hence, this Petition.
13

The Issue
In its Memorandum,
14
petitioner states the issue in the following manner:
"This petition respectfully asks this Honorable Court to settle once and for all the meaning
of incremental proceeds from tuition fee increases x x x.
"Specifically, petitioner submits the question of whether or not there are incremental
proceeds from a tuition fee increase to be distributed as mandated by Republic Act No.
6728 when a school increases tuition fees for a succeeding school year but actually ends
up with a lower income than the previous school year because some of its students can no
longer afford the higher tuition and are forced to drop out or transfer to another school,
public or private, which charges a lower tuition fee they can afford.
"Petitioner x x x submit[s] that in this situation, though there is a tuition fee increase,
there is no incremental proceeds that is derived from the tuition fee increase, and
therefore there is nothing to distribute to the employees. Put in another way, it submits that
because there is no increment income, there are no incremental proceeds to distribute to
the employees."
15

Simply put, the issue before us is the proper computation of the "incremental proceeds"
from a tuition fee increase.
The Courts Ruling
The Petition has no legal merit.
Sole Issue:
I ncremental Proceeds from Tuition Fee I ncrease
Petitioner argues that "incremental proceeds" should be determined on the basis of the
schools income, not merely on the categorical increase in tuition fee as determined by the
CA.
16
Petitioner explains that if the present years income is less than that of the previous
year due to a lesser number of current enrollees, then there may be no gain or "incremental
proceeds," but a loss or "decreased proceeds."
17
To capture its position more accurately, we
quote from its Memorandum:
18

"When a school applies for a tuition fee increase, it is not for the sake of raising tuition fee
rates; it is for the specific purpose of increasing tuition fee income so that the school would
have the means to increase the salaries and benefits of its employees (up to at least 70%
thereof; in this case, up to 85% thereof), to improve physical plant and facilities (up to
20% thereof) and to give a return on the capital or equity of the school (up to 10% thereof).
"For lack of a better guide, the school when applying for a tuition fee increase ASSUMES
that the enrollment of the coming year will be the same as that of the previous year. On
this basis (estimate or guess), the school informs the Department of Education or the
Commission on Higher Education that it expects to have so much of income to pay
increased salaries and benefits, improve facilities and if there is still something left over, to
apply it as return on investment or equity.
"Unfortunately, what the school expects to receive as increased tuition fee income from the
tuition fee increase (rate per student) is not always realized. If the parents of the students
cannot afford the increased tuition fee for the following year, they simply transfer their
children to a school charging a tuition fee they can afford, or better still, to a public high
school or public elementary school which does not charge any tuition or other fees.
"Hence, if a school that has ten (10) students paying P10,000.00 a year in tuition fee in
Year 1 (and therefore a tuition fee income of P100,000.00) should increase tuition fees in
Year 2 to P12,000.00 a year, it is with the intention or purpose of raising tuition fee
income to P120,000.00, which in turn will enable them to pay its employees at 70% of the
incremental proceeds.
"But if four (4) students cannot afford the increased tuition fee of P12,000.00 and transfer
to another school, the school will have only six (6) students paying P12,000 in Year 2
which means a tuition fee income of P72,000 instead of the expected or projected income
of P120,000.00. Based on this example, the tuition fee increase clearly did not result in any
gain or addition or incremental proceeds but in a loss or decreased proceeds. In
this example, undoubtedly, there was a tuition fee increase BUT this tuition fee
increase DID NOT RESULT in any incremental proceeds which can be distributed to
the employees mandated by the law.1awphi1.nt
"The bottom line in determining incremental proceeds is tuition fee income that takes
into account all relevant factors, such the rate of increase of tuition fees, the number of
students, the number of scholars (those who are exempted from paying the whole or part of
the tuition fee), the number of students who drop out during the year (and therefore do not
pay the whole tuition fee for the year, and the actual bad debts (the amount of tuition fee
that some students do not pay because of financial inability).
"And it is this net increase in tuition fee INCOME (not the rate or amount of increase in
tuition fees charged) thatenables the school to DISTRIBUTE increase in salaries and
benefits of the employees. The law says the school must DISTRIBUTE. This means
cash, not estimates, hopes and dreams that have not been realized." (Emphasis in original)
In the above simplified example, petitioner maintains that the schools gross income from
tuition fees in Year 2 is only P72,000, which is less than the gross income of P100,000 in
Year 1. Hence, despite the tuition fee increase for each student from P10,000 to P12,000,
there are no "incremental proceeds" that can be distributed to the teachers and the
employees.
Under the CA Decision, the "incremental proceeds" should be determined simply from the
additional fees charged per student times the number of students, regardless of the gross
income and of the number of enrollees for the period in question. Hence, in the simplified
example given, there would still be "incremental proceeds" of P12,000, computed
at P2,000 (the amount of increase in tuition fee per student) times 6 (the number of
enrollees). The foregoing CA position is mathematically restated thus:
IP = N2 x (TF2-TF1)
= 6 x (12,000 less 10,000)
= 6 x 2,000
= 12,000
Petitioner insists that the CAs formula actually oppresses the schools, because it would
require them to pay increases in employee compensation despite a loss in tuition income.
Such situation may eventually lead to their closure, it concludes.
Respondent, on the other hand, contends that petitioner has not cited any law or
jurisprudence to support its claim. It submits that the CAs formula is the result of a plain
reading of the law.
At the outset, let it be clear that this Court understands the plight of private schools and
their need to support their operation from tuition income. We realize their role in educating
the youth and in molding them as responsible citizens. In this sense, private schools
perform an indispensable task in nation-building. Hence, they deserve the support of the
State to help them carry out their sacred mission.
Indeed, this Court sympathizes with the dilemma of petitioner and other educational
institutions similarly situated. In their desire to raise teacher compensation and to expand
school facilities, they resort to sometimes painful increases in tuition fees, only to find out
later that -- despite their good intentions -- their gross revenues actually decrease because
of the lesser number of enrollees who can afford the increases. However, the Court cannot
agree with their position on the present legal issue because of the following reasons.
First, the judiciary merely applies what the law is, not what it should be.
19
Section
5(2) of Republic Act (RA) 6728 allows a tuition fee increase only under the
condition that at least 70 percent of the increase shall be disbursed as salaries,
wages, allowances and other benefits for teaching and nonteaching personnel. The
law imposes this requirement without exceptions or qualifications:
"2) x x x tuition fees under subparagraph (c) may be increased, on the condition
that seventy percent (70%)x x x of the tuition fee increases shall go to the
payment of salaries, wages, allowances and other benefits of teaching and non-
teaching personnel x x x. At least 20% shall go to the improvement or
modernization of buildings, equipment, libraries, laboratories, gymnasia and
similar facilities and to the payment of other costs of operation. For this purpose,
schools shall maintain a separate record of accounts for all assistance received
from the government, any tuition fee increase, and the detailed disposition and
use thereof, which record shall be made available for periodic inspection x x x."
(Underscoring supplied)
To repeat, the law plainly states that 70 percent of the tuition fee increase shall be
allotted for the teaching and the nonteaching personnel; and that the payment of
other costs of operation, together with the improvement of the schools
infrastructure, shall be taken only from the remaining 30 percent. The law does
not speak, directly or indirectly, of the contention of petitioner that in the event
that its total tuition income is lesser than that in the previous year, then the whole
amount of the increase in tuition fee, and not merely up to 30 percent as provided
by law, may be used for the improvement and modernization of infrastructure and
for the payment of other costs of operation.1a\^/phi1.net
Indeed, in an analogous case promulgated in 1987, this Court has already
enunciated its policy of non-interference in deciding on the wisdom of a law (or
the lack of it). Such policy is clear in CIT v. Ople,
20
in which we said:
"Amidst these opposing forces the task at hand becomes saddled with the
resultant implications that the interpretation of the law would bear upon such
varied interests. But this Court cannot go beyond what the legislature has laid
down. Its duty is to say what the law is as enacted by the lawmaking body. That is
not the same as saying what the law should be or what is the correct rule in a
given set of circumstances. It is not the province of the judiciary to look into the
wisdom of the law nor to question the policies adopted by the legislative branch.
Nor is it the business of this Tribunal to remedy every unjust situation that may
arise from the application of a particular law. It is for the legislature to enact
remedial legislation if that would be necessary in the premises. But as always,
with apt judicial caution and cold neutrality, the Court must carry out the delicate
function of interpreting the law, guided by the Constitution and existing
legislation and mindful of settled jurisprudence. The Court's function is therefore
limited, and accordingly, must confine itself to the judicial task of saying what the
law is, as enacted by the lawmaking body."
Second, the question of whether to increase tuition fees within the parameters of
the law lies within the discretion and power of the school, not the personnel
thereof. When such a decision is made, it is assumed that the school has
undertaken a serious and thorough study of the probable consequences. In this
sense, the action on whether to raise these fees becomes an entrepreneurial risk
that the owner assumes.
21
In case such action turns out to be unwise or
inconvenient, its result should be the primary responsibility of the risk taker. The
personnel -- while presumed to be equally interested in the continued financial
viability of the school -- had little or no say in that action. Hence, they should not
be held responsible for its consequent ill effects. The moral lesson is simply that
the school must take all relevant circumstances and precautions in making its
decisions, realizing that any misstep or miscalculation or ill effect would be borne
by it.
Third, apart from making theoretical calculations, petitioner has not provided the
Court with hard evidence on the actual loss it has incurred as a result of the
tuition fee increase. Note that a mere decrease in the gross income of a
corporation does not necessarily and automatically translate into a negative
bottom line.
22
Decreased income may also mean decreased expenses. Petitioner
has failed to present evidence showing it actually suffered bottom line losses as a
direct and necessary consequence of the tuition fee increase. As it is then, its
averments are mere conjectures, sorely insufficient to overturn the CAs
judgment.
Fourth, if the law is indeed disadvantageous to the educational system and
grossly harmful to private schools, the remedy lies not in this Court but in
Congress which controls not only issues of policy, but also the purse strings of
government. We are confident that, given the opportunity to weigh the
contentious sides of this question, Congress will find a wise answer.
Damages
In its Memorandum, respondent prays for relief in the form of legal interest from June 1,
2000, the alleged date when the personnel benefits accrued, until the actual payment
thereof. However, this Court cannot pass upon this matter, as respondent did not appeal
from the Decision of the appellate court.
23

WHEREFORE, the Petition is DENI ED, and the assailed Decision and
Resolution AFFI RMED. Costs against petitioner.
SO ORDERED.