G.R. No. L-21501 - Manila Club Employees Union vs. Manila Club, Inc.

The Manila Club was organized on August 23, 1907, as a non-stock corporation with a corporate life of 50 years.
Its income derived from various sources including monthly membership dues, the sale of alcoholic beverages (whisky, liquor, wine, and beer), restaurant income, and charges from games.
Throughout its existence, the club operated under the names “Manila Club” and “Manila Club, Inc.”, which were used in employees’ chits, vouchers, and communications.
Although its original corporate life expired on August 19, 1957, an extension of three years was granted to allow for the winding-up of its affairs, after which it was re-incorporated as Manila Club, Inc. on August 10, 1960.

When the club’s life term was nearing termination, its employees were offered a retirement scheme: one-half of their monthly salary for each year of service, allowing them to retire after 12 years of service.
Only 13 employees accepted this retirement offer, while the remaining employees (27 or 29, as indicated) did not accept, and were subsequently served notices of temporary employment.
On August 23, 1960, those declining the retirement offer began signing month-to-month employment contracts, with management later discontinuing such appointments for five complainants after a three-month period.
Those who accepted the offer were paid accordingly and re-employed as new employees under the newly incorporated Manila Club, Inc.

On February 10, 1961, the Acting Prosecutor of the Court of Industrial Relations (CIR) filed a complaint accusing respondents of unfair labor practice under Section 4(a) (subsections 1 and 6) in relation to Sections 13 and 14 of Republic Act 875.
The complaint was based on two grounds: (a) the refusal of respondents to engage in collective bargaining with the petitioner union; and (b) the dismissal of five complainants from service.
Respondents moved to dismiss the complaint on the ground of lack of jurisdiction, a motion which was opposed by the petitioner but deferred until a determination on the merits.

On December 18, 1962, Trial Judge Baltazar M. Villanueva rendered a decision finding respondents guilty of unfair labor practice for refusing to bargain collectively.
Respondents filed a motion for reconsideration on December 28, 1962, with supporting arguments submitted within the reglementary period (the memorandum was filed on January 7, 1963).
On May 28, 1963, the Court of Industrial Relations, acting en banc, issued a resolution dismissing the case for lack of jurisdiction over the subject matter.

The central factual contention presented was whether the Manila Club, Inc. was organized for profit or as a non-profit entity.
The club’s articles of incorporation clearly state its purpose: “to promote social relations among its members” and affirm that it is a “non-stock and non-profit corporation” with all incomes devoted to the furtherance of its activities.
Although the club operated a bar and restaurant generating some profit, such operations were incidental to its primary purpose of fostering social relations among members.
Precedents such as the Elks Club case and similar decisions in other cases highlighted that incidental profit does not convert a non-profit entity into a profit-making one.

Whether the Court of Industrial Relations had jurisdiction over the subject-matter given that the dispute arose from labor practices involving a non-profit entity.
Whether the operation of a bar and restaurant, and the incidental profit arising therefrom, would alter the non-profit character of Manila Club, Inc.

Whether respondents’ motion for reconsideration, filed on December 28, 1962, with its memorandum submitted within the reglementary period, complied with the procedural requirements stipulated by the Rules of Court of Industrial Relations.

Whether the stated purpose in the articles of incorporation—to promote social relations—effectively determines the entity’s non-profit status despite the presence of income from ancillary business operations.