University of the Immaculate Conception vs. NLRC

A voluntary arbitrator acquires jurisdiction over a labor dispute upon the explicit agreement of the parties to resort to voluntary arbitration, even in the absence of a collective bargaining agreement. Furthermore, constructive dismissal does not exist where the employee does not cease employment but promptly resumes work after the expiration of a valid suspension period.

Teodora Axalan, an associate professor and union president at the University of the Immaculate Conception (UIC), attended two out-of-town seminars without securing official leave. UIC charged her with being absent without official leave (AWOL) on both occasions. An ad hoc grievance committee found her guilty and recommended a six-month suspension without pay for each charge, which the university president approved, imposing a total one-year suspension without pay. Axalan filed a complaint for illegal suspension and constructive dismissal. While the case was pending before the Labor Arbiter, Axalan resumed her teaching duties immediately upon the expiration of her one-year suspension.

• Employment Status: Teodora Axalan was a regular faculty member at the University of the Immaculate Conception (UIC), holding the position of Associate Professor II and serving as the elected president of the employees' union.
• First AWOL Incident: From November 18 to 22, 2002, Axalan attended a website development seminar in Quezon City. She claimed she held online classes during this period and was under the impression that conducting online classes would prevent her from being marked absent. Dean Maria Rosa Celestial issued a memorandum charging her with AWOL. The university president offered to drop the charge if Axalan admitted to the AWOL and wrote a letter of contrition; Axalan refused, maintaining her innocence.
• Second AWOL Incident: From January 28 to February 3, 2003, Axalan attended an advanced paralegal training seminar in Baguio City. She claimed she sought approval from Vice-President for Academics Alicia Sayson, but VP Sayson denied approving the leave application, stating that only the university president could approve it. Axalan was subsequently charged with a second count of AWOL.
• Administrative Finding and Penalty: UIC's ad hoc grievance committee conducted hearings and found Axalan guilty of both AWOL charges, recommending a six-month suspension without pay for each instance. The university president approved the recommendation and imposed a total penalty of one-year suspension without pay, effective immediately.
• Filing of Complaint and Return to Work: On December 1, 2003, Axalan filed a complaint for illegal suspension, constructive dismissal, unfair labor practice, and damages with the Labor Arbiter. On October 1, 2004, upon the expiration of her one-year suspension, Axalan promptly resumed her teaching duties at UIC.
• Labor Arbiter Decision: On October 11, 2004, the Labor Arbiter declared Axalan constructively dismissed and ordered her reinstatement and the payment of backwages, salary differentials, damages, and attorney's fees, despite Axalan having already returned to work.

• Jurisdiction: Petitioner argued that the voluntary arbitrator had jurisdiction over the labor dispute because the parties' counsels explicitly agreed to resort to voluntary arbitration during the ad hoc grievance committee hearing.
• Constructive Dismissal: Petitioner maintained that constructive dismissal did not occur because Axalan eagerly reported for work after her suspension expired, precluding any finding that she was forced to quit due to unbearable discrimination or insensibility.
• Computation of Backwages: Petitioner contended that, assuming entitlement to backwages, the computation should have been based on Axalan's average gross monthly income at the time of her suspension in SY 2003-2004 (₱14,145.00), rather than her higher income in SY 2002-2003 (₱18,502.00).

• Jurisdiction: Respondent countered that the Labor Arbiter properly exercised jurisdiction because the complaint involved constructive dismissal and unfair labor practice, which fall under the Labor Arbiter's original and exclusive jurisdiction under Article 217 of the Labor Code.
• Constructive Dismissal: Respondent argued that the factual finding of constructive dismissal, affirmed by the NLRC and the Court of Appeals, should be binding on the Supreme Court. She claimed the AWOL charges were baseless and constituted harassment and unfair labor practice.
• Monetary Awards: Respondent maintained that her average gross monthly income was reduced in SY 2003-2004 because she was deprived of an overload assignment, resulting in a diminution of income. She asserted that the award of damages was proper given the baseless and unlawful nature of her suspension.

• Jurisdiction: Whether the voluntary arbitrator had jurisdiction over the labor dispute.
• Constructive Dismissal: Whether Axalan was constructively dismissed.
• Monetary Award: Whether the Labor Arbiter’s computation of backwages, damages, and attorney’s fees was correct.

• Jurisdiction: Jurisdiction properly belonged to the voluntary arbitrator. Under Article 262 of the Labor Code, a voluntary arbitrator has jurisdiction over all other labor disputes upon agreement of the parties. The transcript of the administrative hearing clearly showed that both parties' counsels agreed to resort to voluntary arbitration, satisfying the jurisdictional requirement even in the absence of a collective bargaining agreement. The Labor Arbiter should have dismissed the complaint and referred the matter to the voluntary arbitrator upon the university's motion to dismiss.
• Constructive Dismissal: Constructive dismissal was not established. Constructive dismissal requires a cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, leaving the employee no option but to quit. Axalan promptly resumed teaching upon the expiration of her suspension, demonstrating that she never quit and that employment relations never ceased. The Labor Arbiter's order of reinstatement for an employee who had already returned to work was absurd.
• Monetary Award: The issue of the computation of backwages, damages, and attorney's fees was rendered moot by the finding that no constructive dismissal occurred. The suspension was valid for cause and in accordance with procedural due process, eliminating any legal basis for the monetary awards.

• Jurisdiction of Voluntary Arbitrators — Under Article 262 of the Labor Code, voluntary arbitrators have jurisdiction over all labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the parties. Such agreement may be stipulated in a collective bargaining agreement or, in the absence thereof, may be evidenced by the records showing the parties agreed to resort to voluntary arbitration. The Court applied this doctrine by recognizing the parties' stipulation on the record during the administrative hearing as a valid conferment of jurisdiction to the voluntary arbitrator.
• Constructive Dismissal — Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay, or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit. The Court applied this doctrine by ruling that because Axalan resumed teaching immediately after her suspension expired, there was no cessation of work and thus no constructive dismissal.
• Management Prerogative — Employers have the right to discipline employees for serious violations of company rules, provided due process is observed and evidence warrants. Courts will not interfere with management prerogatives regarding employee discipline as long as they do not violate labor laws, collective bargaining agreements, and general principles of fairness and justice. The Court applied this doctrine by upholding the validity of Axalan's one-year suspension for incurring AWOL on two separate occasions.

• "Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit."
• "The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with prerogatives of management on the discipline of employees, as long as they do not violate labor laws, collective bargaining agreements if any, and general principles of fairness and justice."

• San Miguel Corp. v. NLRC, 325 Phil. 401 (1996) — Followed. Established that for the exception to Labor Arbiter jurisdiction to apply under Article 262, there must be an agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator, which may be stipulated in a CBA or evidenced by the record.
• La Rosa v. Ambassador Hotel, G.R. No. 177059, 13 March 2009 — Followed. Cited for the definition and elements of constructive dismissal.
• Sugue v. Triumph International (Phils.), Inc., G.R. No. 164804, 30 January 2009 — Followed. Cited to support the ruling that without constructive dismissal, there is no legal basis for an order of reinstatement and payment of backwages.
• Mendoza v. Rural Bank of Lucban, G.R. No. 155421, 7 July 2004 — Followed. Cited for the principle that courts will not interfere with management prerogatives on employee discipline absent violation of labor laws or fairness.

• Article 217, Labor Code — Grants Labor Arbiters original and exclusive jurisdiction over unfair labor practice cases and termination disputes, except as otherwise provided. The Court noted this provision as the general rule on jurisdiction.
• Article 262, Labor Code — Grants Voluntary Arbitrators jurisdiction over all other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the parties. The Court applied this as the exception, finding that the parties' agreement during the administrative hearing vested jurisdiction in the voluntary arbitrator.
• Section 3, Article XIII, 1987 Constitution — Declares it state policy to promote the preferential use of voluntary modes in settling disputes. The Court cited this to reinforce the ruling favoring voluntary arbitration when agreed upon by the parties.

Antonio Eduardo B. Nachura, Diosdado M. Peralta, Roberto A. Abad, Jose C. Mendoza.