Mactan Workers Union vs. Don Ramon Aboitiz

The benefits of a collective bargaining agreement extend to all laborers and employees in the collective bargaining unit, including non-members of the exclusive bargaining representative; enforcement of the agreement lies with the ordinary courts, and the city court has jurisdiction where the demand does not exceed P10,000 and no unfair labor practice is involved.

Cebu Shipyard & Engineering Works, Inc. employed laborers and employees belonging to two rival labor unions: Mactan Workers Union and Associated Labor Union. Associated Labor Union was the exclusive collective bargaining representative of the workers and entered into a collective bargaining agreement with the company containing a profit-sharing bonus scheme. The dispute implicated the jurisdiction of city courts under Section 88 of the Judiciary Act and the Industrial Court’s authority over unfair labor practice cases.

Cebu Shipyard & Engineering Works, Inc., in Lapulapu City, employed laborers and employees belonging to two rival labor unions. Seventy-two employees or laborers named in the complaint were affiliated with Mactan Workers Union, while the rest were members of intervenor Associated Labor Union. On November 28, 1964, the company and Associated Labor Union entered into a collective bargaining agreement. Article XIII provided that the company agreed to give a profit-sharing bonus to its employees and laborers from 10% of its net profits or net income derived from the direct operation of its shipyard and shop in Lapulapu City, after deducting income tax and the bonus annually given to its General Manager, Superintendent, members of the Board of Directors, and Secretary. The bonus was payable in two installments, the first in March and the second in June each year. The 10% was to be distributed among employees and laborers in proportion to their salaries or wages, and only income derived from the direct operation of the shipyard and shop in Lapulapu City, commencing with earnings during 1964, was included. The company was to pay the bonus to Associated Labor Union, which would deliver it to the employees and laborers concerned and furnish the company receipts signed by them within 60 days from receipt. If an employee or laborer did not want to accept the bonus, Associated Labor Union was required to return the money to the company within 60 days from receipt.

In compliance with the CBA, in March 1965 the company delivered to Associated Labor Union the first installment of the profit-sharing bonus for 1965 for distribution to the laborers or employees. In June 1965, the company again delivered to Associated Labor Union the second installment for 1965. The members of Mactan Workers Union failed to receive their shares in the second installment because they did not like to go to the office of Associated Labor Union to collect their shares. After 60 days, in accordance with the CBA, Associated Labor Union returned the uncollected shares of the Mactan Workers Union members to the company. Associated Labor Union also advised the company not to deliver the amount to the Mactan Workers Union members unless ordered by the Court, otherwise it would take steps to protect the interest of its members.

Because of that warning, the company did not pay the plaintiffs the sum of P4,035.82 that Associated Labor Union had returned. Instead, the company deposited the amount with the Labor Administrator. For recovery of this amount, the case was filed with the lower court.

The lower court found that the facts were not in dispute. It determined that the Mactan Workers Union members had failed to collect their shares from Associated Labor Union’s office, that the uncollected shares were returned to the company, and that the company deposited the amount with the Labor Administrator. The amount involved was P4,035.82.

• Lack of Cause of Action: Intervenor-appellant Associated Labor Union, as the party seeking reversal, argued that the complaint failed to state a cause of action.
• Jurisdiction of the City Court: It argued that the City Court of Lapulapu lacked jurisdiction over the suit.
• Personality of Mactan Workers Union: It argued that Mactan Workers Union had no personality to represent its members in the action.

• CBA Benefits to Non-Members: Whether the benefits of the collective bargaining agreement, particularly the second installment profit-sharing bonus for 1965, extend to members of Mactan Workers Union who are not members of Associated Labor Union, the exclusive bargaining representative.
• Cause of Action: Whether the complaint stated a cause of action.
• Jurisdiction: Whether the City Court of Lapulapu had jurisdiction over the action for enforcement of the CBA’s profit-sharing provision.
• Personality to Sue: Whether Mactan Workers Union could file suit on behalf of its members.

• CBA Benefits to Non-Members: Yes. The terms and conditions of a collective bargaining contract constitute the law between the parties, and its benefits extend to all laborers and employees in the collective bargaining unit, including non-members of the exclusive bargaining representative.
• Cause of Action: Yes. There was a right violated on the part of the Mactan Workers Union members, and the grievance called for redress.
• Jurisdiction: Yes. The City Court had jurisdiction because the amount claimed was P4,035.82 and, with damages and attorney’s fees, did not exceed P10,000 under Section 88 of the Judiciary Act; enforcement of a CBA provision lies with the ordinary courts absent unfair labor practice or other Industrial Court matters.
• Personality to Sue: Yes. A labor union may sue on behalf of its members to defend their rights; the contention that Mactan Workers Union lacked personality was without merit.

• CBA Benefits to Non-Members: The Court explained that the terms and conditions of a collective bargaining contract constitute the law between the parties. Those entitled to its benefits can invoke its provisions, and if an obligation imposed therein is not fulfilled, the aggrieved party has the right to go to court for redress. It rejected the defense that the claim was made on behalf of non-members of Associated Labor Union, because it is a well-settled doctrine that the benefits of a collective bargaining agreement extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization. The exclusive bargaining representative does not act for its members alone; it represents all employees in the bargaining unit. Any other view would be discrimination, and it would frustrate the purpose of collective bargaining to secure better terms for labor. The lower court merely compelled literal compliance with the CBA’s profit-sharing scheme.
• Cause of Action: The Court found no merit in the alleged lack of cause of action. There was a right violated on the part of the members of Mactan Workers Union, and that grievance called for redress. The claim was not baseless but sought enforcement of a clear contractual entitlement.
• Jurisdiction: The amount claimed by Mactan Workers Union on behalf of its members was P4,035.82; adding damages and attorney’s fees, the total was less than P10,000. Section 88 of the Judiciary Act provides that city courts have exclusive original jurisdiction in civil actions where the value of the subject matter or amount of the demand does not exceed P10,000, exclusive of interests and costs. While an unfair labor practice element would place the matter solely within the Court of Industrial Relations, the question of enforcing a CBA provision had been held to be for the regular courts. The Court cited Seno vs. Mendoza, where it was held that an issue arising from a labor dispute but not involving an industry indispensable to the national interest certified by the President, minimum wage, hours of employment, or unfair labor practice, but seeking enforcement of a CBA provision, falls under the ordinary courts and not the Industrial Court.
• Personality to Sue: The Court found the challenge to Mactan Workers Union’s personality to be a half-hearted attempt, noting that Associated Labor Union devoted only half a page to it. The contention appeared oblivious to how far a labor union can go in defending the rights of its rank and file. Coming from a labor organization, the argument was surprising, and it did not defeat the union’s standing to sue on behalf of its members.

• Collective Bargaining Agreement as Law Between Parties — The terms and conditions of a collective bargaining contract constitute the law between the parties. Those entitled to its benefits may invoke its provisions, and if an obligation therein is not fulfilled, the aggrieved party may go to court for redress. The Court applied this to require compliance with the CBA’s profit-sharing clause.
• CBA Benefits Extend to Non-Members — The benefits of a collective bargaining agreement extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization. The exclusive bargaining representative represents all employees in the unit, not merely its own members. The Court applied this to allow Mactan Workers Union members to recover their second installment profit-sharing bonus despite not being members of Associated Labor Union.
• Jurisdiction over CBA Enforcement — Enforcement of a collective bargaining agreement provision lies with the ordinary courts, not the Industrial Court, unless the matter involves an industry indispensable to the national interest certified by the President, minimum wage, hours of employment, or unfair labor practice. City courts have exclusive original jurisdiction where the demand does not exceed P10,000 under Section 88 of the Judiciary Act. The Court applied this to affirm the City Court’s jurisdiction.
• Union Standing to Sue on Behalf of Members — A labor union may file suit on behalf of its members to defend their rights. The Court applied this to reject the challenge to Mactan Workers Union’s personality to represent its members.
• Constitutional Protection to Labor — Constitutional protection is accorded to labor, or more specifically the working men and women, not to labor organizations; the latter are merely instrumentalities through which the welfare of workers is promoted and fostered. The Court invoked this principle as an admonition against inter-union rivalry causing injustice to workers.

• "The terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress." — States the ratio on the binding force of a CBA and the right of aggrieved parties to seek judicial enforcement.
• "Nor does it suffice as a defense that the claim is made on behalf of non-members of intervenor Associated Labor Union, for it is a well-settled doctrine that the benefits of a collective bargaining agreement extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization." — Articulates the doctrine that CBA benefits extend to non-members within the bargaining unit.
• "The labor union that gets the majority vote as the exclusive bargaining representative does not act for its members alone. It represents all the employees in such a bargaining unit." — Defines the representative character of the exclusive bargaining agent.
• "As the issue involved in the instant case, although arising from a labor dispute, does not refer to one affecting an industry which is indispensable to the national interest and certified by the President to the Industrial Court, nor to minimum wage under the Minimum Wage Law, nor to hours of employment under the Eight-Hour Labor Law, nor to an unfair labor practice, but seeks the enforcement of a provision of the collective bargaining agreement, ..., jurisdiction pertains to the ordinary courts and not to the Industrial Court." — States the jurisdictional rule for enforcement of CBA provisions.

• United Restauror's Employees and Labor Union vs. Torres, L-24993, December 18, 1968, 26 SCRA 435 — Cited for the rule that the right to be the exclusive representative of all employees in an appropriate collective bargaining unit is vested in the labor union designated or selected by the majority.
• Seno vs. Mendoza, L-20565, Nov. 29, 1967, 21 SCRA 1124 — Cited for the rule that enforcement of a collective bargaining agreement provision, absent unfair labor practice or other Industrial Court matters, pertains to the ordinary courts.
• Shell Oil Workers Union vs. Shell Company of the Philippines, L-28607, May 31, 1971, 39 SCRA 276 — Cited in footnote 6 as authority for the binding effect of CBA terms as law between the parties.
• Rivera vs. San Miguel Brewery, Inc., L-26197, July 20, 1968, 24 SCRA 86 — Cited for the doctrine that CBA benefits extend to non-members; it in turn cited Leyte Land Transportation vs. Leyte Farmers' and Laborers' Union, 80 Phil. 842 (1948); Land Settlement and Development Corporation vs. Caledonia Pile Workers' Union, 90 Phil. 817 (1952); Price Stabilization Corporation vs. Prisco Workers' Union, 104 Phil. 1066 (1958); and International Oil Factory Workers Union vs. Martinez, 110 Phil. 595 (1960).
• Republic Savings Bank vs. Court of Industrial Relations, L-20303, Sept. 27, 1967, 21 SCRA 226 — Cited for the proposition that unfair labor practice matters are solely cognizable by the Court of Industrial Relations.

• Article 1159, Civil Code — Cited in footnote 6 as authority for the binding effect of the collective bargaining contract as law between the parties.
• Articles 1700–1702, Civil Code — Cited in footnote 6, together with Article 1159, as authority for the binding effect of the collective bargaining contract.
• Section 88, Judiciary Act, Republic Act No. 296 (1948) — Provides that city courts have exclusive original jurisdiction in civil actions where the value of the subject matter or amount of the demand does not exceed P10,000, exclusive of interests and costs. Applied because the claim was P4,035.82 and, with damages and attorney’s fees, less than P10,000.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar and Antonio, JJ., concur.