G.R. No. L-36896. August 31, 1981
UNITED STATES EMPLOYEES ASSOCIATION EMPLOYEES ASSOCIATION (USEAEA), FRANCISCO BAUTISTA, FILOMENO SARNO, ANTONIO NATIVIDAD JESUS ABRIA, ADORACION AGOR, TRINIDAD AQUINO, PRIMO ARC…
MAKASIAR, J.:
Petition for review on certiorari of the Order or the
Court of Industrial Relations, dated December 2, 1972, dismissing petitioners’
complaint for unfair labor practice.
Records of the case show that petitioner United States Employees
Association Employees Association (hereinafter referred to as USEAEA) is a
legitimate labor organization composed of the employees (individual
petitioners named herein) of the respondent United States Employees
Association, or USEA, formerly the U.S. Embassy Commissary Association, located
at Seafront Compound, Roxas Boulevard, Manila.
Francis G. Ready, Eugene Adams, Patrick Herlihy, George Warren and
Antonio Fernandez are officers of the said respondent association.
It appears on record that
on June 15, 1972, the petitioners, then complainants, filed with the Court of
Industrial Relations an unfair labor practice complaint against private
respondents for terminating petitioners from their employment because of
“union activities among which was the persistent demand of petitioner
union that the respondent association (USEA) bargain collectively with the
former (USEAEA) and which culminated in the strike of November 18, 1971”
[p. 9, rec.]. The case was docketed as
Case No. 5798-ULP and was assigned to Judge Ansberto Paredes.
On July 29, 1972, private
respondent filed a motion to dismiss the aforesaid complaint alleging, among
others, that the CIR has no jurisdiction because (a) said respondent
association is immune from suits, it being an agency or instrumentality of the
United States government; and (b) said association is not established for
profit, therefore, outside the scope of the Industrial Peace Act [p. 55, rec.].
On September 9, 1972
herein petitioners filed their opposition to the motion to dismiss filed by
private respondents.
Acting on private
respondents’ motion to dismiss, respondent CIR issued an order dated December
2, 1972 dismissing the complaint for unfair labor practice and made findings
that albeit the respondent USEA is not an agency of the U.S. government and
therefore not immune from suit, it is nonetheless, not established for profit and therefore outside
the scope of R.A. 875.
Petitioner union (USEAEA)
filed a motion for reconsideration which was denied by the respondent CIR en
banc in
a resolution dated April 7, 1973 [p. 172, rec.].
Petitioners appealed from
the Order of respondent CIR, with the following assignment of errors:
“I. The respondent Court erred in dismissing
the case for lack of jurisdiction, on the ground that respondent Association
(USEA) is not established for profit and therefore outside the scope of R.A.
875, considering that the issue of
whether said association is established for profit or not has already been
decided in a previous case.
“II. The
respondent Court erred in holding that the respondent Association is not established
for profit considering that its
constitution and by-laws allows it to operate for profit, hence,
contrary to the evidence.
“III. The respondent Court erred in considering
respondent Association outside the scope of R.A. 875, even assuming that it is
not established for profit, because its purpose of providing comfort and benefits to its members and their
guests cannot be equated to the benevolent and lofty purpose as in the case of
Boy Scouts of the Philippines, the Philippine National Red Cross, and
hospitals, hence contrary to established jurisprudence” [pp. 13-14,
rec.].
As can be deduced from the assignment of errors raised by herein
petitioners, the only issue to be resolved in this case is whether or not the
private respondent United States Employees Association (USEA) is established
for profit.
The undisputed facts show that the respondent United States
Employees Association (USEA) is a facility created pursuant to the U.S. Foreign
Service Act of 1946, as amended, pertinent portions of which read:
“Section 1139.
Commissary and mess services and recreation facilities abroad; charges;
transportation.
“(a) The Secretary may, under such regulations
as he may prescribe, establish and maintain emergency commissary or mess services
in such places abroad where, in his judgment, such services are necessary
temporarily to insure the effective and efficient performance of the duties
and responsibilities of the service, such services to be available to the
officers and employees of all Government agencies located in any such places
abroad. Reimbursement incident to the
maintenance and operation of commissary or mess service shall be at not less
than cost as determined by the Secretary and shall be used as working
funds: Provided, that an amount equal to
the amount expended for such services shall be covered into the Treasury as
Miscellaneous receipts.
“(b) The Secretary, under such regulations as he
may prescribe, may authorize and assist in the establishment, maintenance, and
operation, by officers and employees of the Service, of non-Government-operated
commissary and mess service and recreation facilities at posts abroad, including
the furnishing of space, utilities, and properties owned or lease by the United
States for use by its diplomatic and consular missions. The provisions of the Foreign Service
Buildings Act 1926, as amended, may be utilized by the Secretary in providing
such assistance. Commissary or mess
services and recreation facilities established pursuant to this subsection
shall be made available, insofar as practicable, to offices and employees of
other Government agencies and their dependents who are Stationed abroad. Such services or facilities shall not be
established in localities where another United States agency operates similar
services or facilities unless the Secretary determined that such additional services or facilities are necessary”
[pp. 131-132, rec., underscoring supplied].
As can be gleaned from
the aforequoted provisions of the U.S. Foreign Service Act, it does appear
clear that respondent United States Employees Association is a
non-government-operated facility created pursuant to paragraph (b) of said
act. The purpose of the association, as
declared in its constitution, is to “provide for its members and their
dependents recreational activities and a source of food and other items at
minimum prices that are consistent with good service and efficient
management” [p. 164, rec.].
A perusal of the
constitution of private respondent association shows the following pertinent
provisions:
“All present members of the United States Embassy Commissary
Association and the Seafront Recreation Association retain their membership in
the association when this constitution is adopted.
“Any American who is allowed to import goods duty-free because
of his connection with a civilian agency of the United States in the Manila
area may be admitted to membership.
xx xx xx
“A new member must contribute to the Association as
follows: The head of the family must contribute
to the association three percent of his annual base salary; a single person
must contribute one and one half percent of his base salary with a minimum of
$75.00. This contribution, less the
prescribed dues, will be refunded when the member ends his membership or when
the association is dissolved. At such
times, any debts to the association will be deducted. During the life of each membership, the
association has the right to collect from this contribution any debts to the
association.
xx xx xx xx
“A member and his dependents may enjoy the facilities of the
Association, and participate in its activities, and buy for cash in reasonable
quantities foods and other items, provided such member is an employee of the
U.S. Government and is entitled to duty-free entry privileges. Such purchases shall be only for the needs of
the member and his family.
xx xx xx xx
“Other facilities operated by the Association shall be available
only to members of the Association, their dependents, and guests, provided however
that those local employees who are members of the Seafront Recreation
Association at the time this constitution is adopted may continue to
participate in those activities in which they are now participating, at current
rates of dues of the Recreation Association.
xx xx xx
“The Board of Directors will carry on all of the association’s
business; however, its action will be subject to the review of the ambassador.
xx xx xx
“It will watch the Association’s operation closely to insure
that the Board’s policies are carried out — whether they concern finances,
member relations, working conditions, pricing practices, food storage or any
other details of operation.
xx xx xx
“It will fix wages and insure that fair labor practices
are carried out in the Association, in accordance with the laws of the
Philippines.
xx xx xx
“Profits of the Association will be kept at a minimum, consistent
with efficient operation.
xx xx xx
“AT the end of each fiscal period, 10 percent of the net
earnings will be put into a Reserve Fund if this fund is below $50,000 in value. This fund will be used at the discretion
of the Board of Directors for capital improvements and to absorb operating
deficits or any kind of loss. The
remainder of the net earnings will be used to reduce prices.
xx xx xx
“Membership contributions will be returned to the members
after individual deductions of any debts to the association.
xx xx xx
“The association’s assets and liabilities will be
liquidated in the most practicable manner and consistent with Philippine law“
[pp. 164-170, rec.; underlining supplied].
A further perusal of the constitution of the respondent
association shows that apart from the regular dues collected from the members,
the association also derived revenues from the commissary, gas station, snack
bars, swimming pool and other activities operated by the association. In carrying out its affairs, the respondent
association employed the petitioners as waiters, bartenders, busboys,
janitors, janitresses, dietitians, cooks, stock custodians, warehousemen,
typists, clerks, storeclerks, stock clerks and utility men [p. 147, rec.].
The ratiocination advanced by respondent association in support
of its stand dwells on the assertion that respondent USEA is a non-profit
organization and, therefore, beyond the ambit of the Industrial Peace Act (R.A.
875, as amended) and the jurisdiction of this Court. Specifically, private respondent USEA asserts
that its non-profit character is discernible from the fact that there is no
distribution of earnings or profits by way of dividends or otherwise and the members do not
receive any interest in the net funds and assets resulting from liquidation.
WE find the foregoing contention of private respondent USEA
untenable.
A close examination of the constitution of respondent
association will show that while it is true that the members of the association
do not receive dividends in the form of cash, nevertheless, they do receive
benefits in the form of commissary privileges, such as the importation of goods
duty-free, purchase of food and other items at minimum or reduced prices; and
return or refund of the capital at the end of membership or upon dissolution of
the association. The same constitution
likewise provides that profits of the association will be kept at a minimum and
at the end of each fiscal period, 10 per cent of the net earnings will be put
into a Reserve Fund if this fund is below $50,000 in value, to be used at the
discretion of the Board of Directors for capital improvements and to absorb
operating deficits or any kind of loss.
What then is the meaning of “profit”?
The following authorities
concerning the meaning of the word “profit” are relevant:
1. Black’s
Law Dictionary, Fourth Edition, defines profit as “the advance in the
price of goods sold beyond the cost of purchase. The gain made by the sale of prodice or
manufactures, after deducting the value of the labor, materials, rents, and all
expenses, together with the interest of the capital employed. Webster.
Lapham vs. Tax Com’r, 244 Mass. 40, 138 N.E. 708, 710; McCready vs. Bullis,
59 Cal. App. 286, 210 P. 638, 640. Gain
realized from business or investment over and above expenditures. Citizens Nat. Bank vs. Corl. 225 N.C. 96, 33
S.E. 2d 613, 616. Fairchild vs. Gray,
242 N.Y.S. 192, 196, 136 Misc.
704. An excess of the value of returns
over the value of advances. The same as
net profits. Crawford vs. Surety Iv.
Co., 91 Kan. 748, 139 P.481, 484.
“x x x This is a word of very extended signification. In commerce, it means the advance in the price
of goods sold beyond the cost of purchase.
In distinction from the wages of labor, it is well understood to imply
the net return to the capital of stock employed, after deducting all the
expenses, including not only the wages of those employed by the capitalist, but
the wages of the capitalist himself for superintending the employment of his
capital or stock. Columbus Mining Co.
vs. Ross, 218 Ky. 98, 290 S.W. 1052, 1053,
50 A.L.R. 1394. After indemnifying
the capitalist for his outlay, there commonly
remains a surplus, which is his profit, the net income from his capital. 1
Mill, Polit. Econ. C. 15.
“In a wider sense, profit means any advantage, any accession
of goods from labour or exertion.
‘Profit’ it is said, is broad enough to cover any sort of advance, or
gain and benefits of any kind (Simcoke vs. Sayre, 148 Iowa 132, 126 NW 816,
817). But profits may exist in kind as
well as in cash. (In re Spanish
Prospecting Co., Ltd. [1911] 1 Ch. 92, 20 Ann Cas 677).
“The term ‘profit,’ as
applied to a corporation, has a larger meaning than ‘dividends,’ and
covers benefits of any kind, the excess of value over cost, acquisition beyond
expenditures, gain or advance. Booth vs.
Gross, Kelley & Co., 30 N.M. 465, 238 P. 289, 831, 41 A.L.R. 868.
“The term ‘profit’ has likewise been consistently defined as
the ‘excess of receipts over expenditures, that is, net earnings. Connolly vs. Davidson, 15 Minn. 519 (Gil
428), 2 Am. Rep. 154; Samet vs. Klaff, 818 N.G. 502, 107; S.E. 2; Tooey vs.
C.L. Percival Co., 192 Iowa, 267, 182 N.W.
403, 406; Vidal vs. South American Securities Co., et al. (C.O.A.) 276
F-855, 871 App. Div. 677, 165 N.Y.S. 863, 864; McDaniel vs. State Fair of
Texas (ex. Ci. App.) 286 S.W. 513,
516; Read vs. Tidewater Coal Exch., 13 Del. Ch. 1954, 116 A. 898, 904.”
2. Ballentine’s
Law Dictionary, 3rd Edition, gives the usual and ordinary meaning of the term
‘profit’ as the “return to capital rather than earnings from labor
performed or services rendered.”
On the basis of the foregoing authorities, We hold that the respondent United States
Employees Association (USEA) is an entity created and operated for profit and,
therefore, falls within the ambit of the Industrial Peace Act (R.A. 875).
WHEREFORE, THIS CASE IS HEREBY REMANDED TO THE
NATIONAL LABOR RELATIONS COMMISSION, AS SUCCESSOR OF THE DEFUNCT COURT OF
INDUSTRIAL RELATIONS, FOR HEARING AND DECISION.
NO COSTS.
SO ORDERED.
Fernandez, Guerrero, and Melencio-Herrera,
JJ., concur.
Teehankee, J., (Chairman), in
the result.