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VOL.

499, AUGUST 22, 2006 521 Same; Same; Same; The characterization by an employer on the
Union of Filipro Employees-Drug, Food and Allied Industries Retirement Plan cannot operate to divest the employees of their vested
and demand-
Unions
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. _______________
G.R. No. 158930-31. August 22, 2006. *

UNION OF FILIPRO EMPLOYEES-DRUG, FOOD AND *FIRST DIVISION.


522
ALLIED INDUSTRIES UNIONS-KILUSANG MAYO UNO
522 SUPREME COURT REPORTS ANNOTATED
(UFE-DFA-KMU), petitioner, vs. NESTLÉ PHILIPPINES,
Union of Filipro Employees-Drug, Food and Allied Industries
INCORPORATED, respondent.
G.R. No. 158944-45. August 22, 2006. *
Unions-
NESTLÉ PHILIPPINES, INCORPORATED, Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
able right over existing benefits voluntarily granted by their
petitioner, vs. UNION OF FILIPRO EMPLOYEES-DRUG,
employer.—Contrary to the claim of Nestlé that the categorical
FOOD AND ALLIED INDUSTRIES UNIONS-KILUSANG
mention of the terms ‘unilateral agreement’ in the letter and the
MAYO UNO (UFE-DFA-KMU), respondent. MOA signed by the representatives of UFE-DFA-KMU, had, for all
Labor Law; Collective Bargaining Agreements intents and purposes worked to estop UFE-DFA-KMU from raising
(CBAs); Retirement Plans; A retirement plan is consensual in it as an issue in the CBA negotiations, our reading of the same,
nature.—The present issue is not one of first impression. In Nestlé specifically Paragraph 6 and subparagraph 6.2:6. Additionally, the
Philippines, Inc. v. NLRC, 193 SCRA 504 (1991), ironically involving COMPANY agree to extend the following unilateral grants which
the same parties herein, this Court has had the occasion to affirm shall not form part of the Collective Bargaining Agreement (CBA):
that a retirement plan is consensual in nature. x x x x 6.2. Review for improvement of the COMPANY’s Retirement
Same; Same; Same; The purpose of collective bargaining is the Plan and the reference on the Retirement Plan in the Collective
acquisition or attainment of the best possible covenants or terms Bargaining Agreement signed on 4 July 1995 shall be maintained.
relating to economic and non-economic benefits granted by employers hardly persuades us that the members of UFE-DFA-KMU have
and due the employees.—In the case at bar, it cannot be denied that agreed to treat the Retirement Plan as a benefit the terms of which
the CBA that was about to expire at that time contained provisions are solely dependent on the inclination of the Nestlé and remove the
respecting the Retirement Plan. As the latter benefit was already subject benefit from the ambit of the CBA. The characterization
subject of the existing CBA, the members of UFE-DFAKMU were unilaterally imposed by Nestlé on the Retirement Plan cannot
only exercising their prerogative to bargain or renegotiate for the operate to divest the employees of their “vested and demandable
improvement of the terms of the Retirement Plan just like they right over existing benefits voluntarily granted by their employer.”
would for all the other economic, as well as non-economic benefits Besides, the contention that UFE-DFA-KMU has “abandoned” or
previously enjoyed by them. Precisely, the purpose of collective forsaken our earlier pronouncement vis-á-vis the consensual nature
bargaining is the acquisition or attainment of the best possible of a retirement plan is quite inconsistent with, nay, is negated by its
covenants or terms relating to economic and non-economic benefits conduct in doggedly asking for a renegotiation of said benefit.
granted by employers and due the employees. The Labor Code has Same; Same; Same; The consensual nature of the Retirement
actually imposed as a mutual obligation of both parties, this duty to Plan neither gives the union members the unfettered right nor the
bargain collectively. The duty to bargain collectively is categorically unbridled prerogative to demand more than what the company can
prescribed by Article 252 of the said code. viably give.—Nestlé further rationalizes that a ruling declaring the
Retirement Plan a valid CBA negotiation issue will inspire other
bargaining units to demand for greater benefits in accordance with otherwise submitted to him for resolution. As held in the case
their respective appetites. Suffice it to say that the consensual of International Pharmaceuticals, Inc. v. Sec. of Labor and
nature of the Retirement Plan neither gives the union members the Employment, 205 SCRA 59 (1992), “x x x [t]he Secretary was
unfettered right nor the unbridled prerogative to demand more than explicitly granted by Article 263 (g) of the Labor Code the authority
what the company can viably give. to assume jurisdiction over a labor dispute causing or likely to cause
Same; Same; Same; Assumption Orders; The power granted to a strike or lockout in an industry indispensable to the national
the Secretary of the DOLE by par. (g) of Article 263 of the Labor Code interest, and decide the same accordingly. Necessarily, this
authorizes her to assume jurisdiction over a labor dispute causing or authority to assume jurisdiction over the said labor dispute must
likely to cause a strike or lockout in an industry indispensable to the include and extend to all questions and controversies arising
national interest, and correlatively, to decide the same.—Declaring therefrom, including cases over which the Labor Arbiter has
the Secretary of the DOLE to have acted with grave abuse of exclusive jurisdiction.” Accordingly, even if not exactly on the
discretion for ruling on substantial matters or issues and not ground upon which the Notice of Strike is based, the fact that the
restricting itself merely on the ground rules, the appellate court and issue is incidental to the resolution of the subject labor dispute or
UFE-DFA-KMU would have us treat the subject labor dispute in a that a specific issue had been submitted to the Secretary of the
piecemeal fashion. The power granted to the Secretary of the DOLE DOLE for her resolution, validly empowers the latter to take
by Para- cognizance of and resolve the same.
523 Same; Same; Words and Phrases; “Unfair Labor Disputes,”
VOL. 499, AUGUST 22, 2006 523 Explained.—The concept of “unfair labor practice” is defined by the
Union of Filipro Employees-Drug, Food and Allied Industries Labor Code as: ART. 247. CONCEPT OF UNFAIR LABOR
Unions- PRACTICE AND PROCEDURE FOR PROSECUTION
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. THEREOF.—Unfair labor practices violate the constitutional right
of workers and employees to self-organization, are inimical to the
graph (g) of Article 263 of the Labor Code, to wit: x x x x authorizes
legitimate interests of both labor and management, including their
her to assume jurisdiction over a labor dispute, causing or likely to
right to bargain collectively and otherwise deal with each other in
cause a strike or lockout in an industry indispensable to the national
an atmosphere of freedom and mutual respect, disrupt industrial
interest, and correlatively, to decide the same.
peace and hinder the promotion of healthy and stable labor-
Same; Same; Same; Same; The Secretary’s assumption of
management relations.
jurisdiction power necessarily includes matters incidental to the 524
labor dispute, that is, issues that are necessarily involved in the
524 SUPREME COURT REPORTS ANNOTATED
dispute itself, not just to those ascribed in the Notice of Strike, or,
otherwise submitted to him for resolution; The authority to assume Union of Filipro Employees-Drug, Food and Allied Industries
jurisdiction over a labor dispute must include and extend to all Unions-
questions and controversies arising therefrom.—Nevertheless, Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
granting for the sake of argument that the meetings undertaken by Same; Same; Presumption of Good Faith; Basic is the principle
the parties had not gone beyond the discussion of the ground rules, that good faith is presumed and he who alleges bad faith has the
the issue of whether or not the Secretary of the DOLE could decide duty to prove the same.—Basic is the principle that good faith is
issues incidental to the subject labor dispute had already been presumed and he who alleges bad faith has the duty to prove the
answered in the affirmative. The Secretary’s assumption of same. By imputing bad faith unto the actuations of Nestlé, it was
jurisdiction power necessarily includes matters incidental to the UFE-DFA-KMU, therefore, who had the burden of proof to present
labor dispute, that is, issues that are necessarily involved in the substantial evidence to support the allegation of unfair labor
dispute itself, not just to those ascribed in the Notice of Strike; or, practice. A perusal of the allegations and arguments raised by UFE-
DFA-KMU in the Memorandum (in G.R. Nos. 158930-31) will Union of Filipro Employees-Drug, Food and Allied Industries
readily disclose that it failed to discharge said onus probandi as Unions-
there is still a need for the presentation of evidence other than its Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
bare contention of unfair labor practice in order to make certain the
presumption of good faith on the part of Nestlé, the award of moral
propriety or impropriety of the unfair labor practice charge hurled
and exemplary damages is unavailing.
against Nestlé. Under Rule XIII, Sec. 4, Book V of the Implementing
Same; Same; Constitutional Law; Social Justice; It must be
Rules of the Labor Code: x x x. In cases of unfair labor practices, the
remembered at all times that the Philippine Constitution, while
notice of strike shall as far as practicable, state the
inexorably committed towards the protection of the working class
acts complained of and the efforts to resolve the dispute
from exploitation and unfair treatment, nevertheless mandates the
amicably.”
policy of social justice so as to strike a balance between an avowed
Same; Same; Same; There is no per se test of good faith in
predilection for labor, on the one hand, and the maintenance of the
bargaining—good faith or bad faith is an inference to be drawn from
legal rights of capital, the proverbial hen that lays the golden egg, on
the facts.—There is no per se test of good faith in bargaining. Good
the other.—It must be remembered at all times that the Phil-ippine
faith or bad faith is an inference to be drawn from the facts, to be
Constitution, while inexorably committed towards the protection of
precise, the crucial question of whether or not a party has met his
the working class from exploitation and unfair treatment,
statutory duty to bargain in good faith typically turns on the facts
nevertheless mandates the policy of social justice so as to strike a
of the individual case. Necessarily, a determination of the validity
balance between an avowed predilection for labor, on the one hand,
of the Nestlé’s proposition involves an appraisal of the exercise of its
and the maintenance of the legal rights of capital, the proverbial hen
management prerogative.
that lays the golden egg, on the other. Indeed, we should not be
Same; Same; Management Prerogatives; Words and
unmindful of the legal norm that justice is in every case for the
Phrases; Employers are accorded rights and privileges to assure their
deserving, to be dispensed with in the light of established facts, the
self-determination and independence and reasonable return of
applicable law, and existing jurisprudence.
capital, and this mass of privileges comprises the so-called
management prerogatives.—Employers are accorded rights and
PETITIONS for review on certiorari of the decision and
privileges to assure their self-determination and independence and
resolution of the Court of Appeals.
reasonable return of capital. This mass of privileges comprises the
so-called management prerogatives. In this connection, the rule is
The facts are stated in the opinion of the Court.
that good faith is always presumed. As long as the company’s
exercise of the same is in good faith to advance its interest and not De La Rosa, Tejero, Nograles for petitioner.
for purpose of defeating or circumventing the rights of employees Nenita C. Mahinay for respondent.
under the law or a valid agreement, such exercise will be upheld.
Construing arguendo that the content of the afore-quoted letter of CHICO-NAZARIO, J.:
29 May 2001 laid down a pre-condition to its agreement to bargain
with UFE-DFA-KMU, Nestlé’s inclusion in its Position Paper of its The Case
proposals affecting other matters covered by the CBA contradicts Before the Court are two (2) petitions for review
the claim of refusal to bargain or bargaining in bad faith. on certiorari under Rule 45 of the Rules of Court, as amended.
Accordingly, since UFE-DFA-KMU failed to proffer substantial Both seek to annul and set aside the joint: (1) Decision dated 1

evidence that would overcome the legal 27 February 2003, and (2) Resolu-
525
VOL. 499, AUGUST 22, 2006 525 _______________
1 Penned by Associate Justice B.A. Adefuin-De la Cruz, with Associate 2 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 47-48, Annex “B” of the
Justices Mercedes Gozo-Dadole and Mariano C. Del Castillo Petition; Rollo (G.R. Nos. 158944-45), pp. 60-61, Annex “B” of the Petition.
concurring; Rollo (G.R. No. 158930s-31, Vol. I), pp. 35-44, Annex “A” of the 3 Entitled “Union of Filipro Employees-Drug, Food and Allied Industries

Petition; Rollo (G.R. Nos. 158944-45), pp. 48-58, Annex “A” of the Petition. Unions-Kilusang Mayo Uno (UFE-DFA-KMU) v. Hon. Patricia A. Sto. Tomas
526 and Nestlé Philippines, Inc. (Cabuyao Plant).”
4 Entitled “Union of Filipro Employees-DFA-KMU v. Office of the DOLE
526 SUPREME COURT REPORTS ANNOTATED
Secretary and Nestlé Philippines, Inc.”
Union of Filipro Employees-Drug, Food and Allied Industries 5 Concerning employees at Nestlé’s Alabang and Cabuyao factories.

Unions- 6 SC Resolution dated 29 March 2004; Rollo (G.R. No. 158930s-31, Vol. II),

Kilusang Mayo Uno vs. Nestlé Philippines, Inc. pp. 1247-1248.


527
tion dated 27 June 2003, of the Court of Appeals in CA-G.R.
2

VOL. 499, AUGUST 22, 2006 527


SP No.69805 and No. 71540.
3 4

G.R. No. 158930-31 was filed by Union of Filipro Union of Filipro Employees-Drug, Food and Allied Industries
Employees—Drug, Food and Allied Industries Unions— Unions-
Kilusang Mayo Uno (UFE-DFA-KMU) against Nestlé Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Philippines, Incorporated (Nestlé) seeking the reverse of the The Facts
Court of Appeals Decision in so far as the latter’s failure to From the record and the pleadings filed by the parties, we cull
adjudge Nestlé guilty of unfair labor practice is concerned, as the following material facts in this case:
well as the Resolution of 27 June 2003 denying its Partial On 4 April 2001, in consideration of the impending
Motion for Reconsideration; G.R. No. 158944-45 was instituted expiration of the existing collective bargaining agreement
by Nestlé against UFE-DFA-KMU similarly seeking to annul (CBA) between Nestlé and UFE-DFA-KMU on 5 June 7

and set aside the Decision and Resolution of the Court of 2001, in a letter denominated as a Letter of Intent, the
8

Appeals declaring 1) the Retirement Plan a valid collective Presidents of the Alabang and Cabuyao Divisions of UFE-
bargaining issue; and 2) the scope of assumption of jurisdiction DFA-KMU, Ernesto Pasco and Diosdado Fortuna,
power of the Secretary of the DOLE to be limited to the respectively, informed Nestlé of their intent to “open our new
resolution of questions and matters pertaining merely to the Collective Bargaining Negotiation for the year 2001-2004 x x
ground rules of the collective bargaining negotiations to be x as early as June 2001.” 9

conducted between the parties. In a letter dated 10 April 2001, Nestlé acknowledged
10

In as much as the cases involve the same set of parties; receipt of the aforementioned letter. It also informed UFE-
arose from the same set of circumstances, i.e., from several DFA-KMU that it was preparing its own counter-proposal and
Orders issued by then Secretary of the Department of Labor proposed ground rules that shall govern the conduct of the
and Employment (DOLE), Hon. Patricia A. Sto. Tomas, collective bargaining negotiations.
respecting her assumption of jurisdiction over the labor On 29 May 2001, in another letter addressed to the UFE-
dispute between Nestlé and UFE-DFA-KMU, Alabang and DFA-KMU (Cabuyao Division), Nestlé underscored its
Cabuyao Divisions; and likewise assail the same Decision and
5
position that “unilateral grants, one-time company grants,
Resolution of the Court of Appeals, the Court ordered the company-initiated policies and programs, which include, but
consolidation of the two petitions. 6
are not limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature
_______________ not proper subjects of CBA negotiations and therefore shall be
excluded therefrom.” In addition, it clarified that with the
11 setting preconditions in the ground rules by refusing to include
closure of the Alabang Plant, the CBA negotiations will only the issue of the Retirement Plan in the CBA negotiations. A
be applicable to the covered employees of the Cabuyao Plant; strike vote was then conducted by UFE-DFA-KMU on 22
hence, the Cabuyao Division of UFE-DFA-KMU became the November 2001. The result was an overwhelming approval of
sole bargaining unit involved in the subject CBA negotiations. the decision to hold a strike. 16

Thereafter, dialogue between the company and the union On 26 November 2001, in view of the looming strike, Nestlé
ensued. filed with the DOLE a Petition for Assumption of
Jurisdiction, docketed as OS-AJ-0023-01, fundamentally
17

_______________
praying that the Secretary of the DOLE, Hon. Patricia A. Sto.
7 Alabang and Cabuyao Divisions. Tomas, assume jurisdiction over the current labor dispute as
8 Annex “B” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), p. 281. mandated by Article 263 (g) of the Labor
9 Annex “B” of the Petition (G.R. Nos. 158930-31, Vol. I); Rollo, p. 281.

10 Annex “3” of the Comment to the Petition; Rollo (G.R. Nos. 158930-31, _______________
Vol. II), p. 1316.
11 Annex “F-1” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), p. 460. 12 In a letter addressed to Atty. Jose Velasco, Director, National Conciliation

528 and Mediation Board, Regional Office No. IV, Imus Cavite; Annex “F” of the
528 SUPREME COURT REPORTS ANNOTATED Petition; Rollo (G.R. Nos. 158944-45), p. 104.
13 Original Records, Vol. IV, p. 1.

Union of Filipro Employees-Drug, Food and Allied Industries 14 Id.

Unions- 15 Original Records, Vol. II, p. 146.

16 Of the 789 regular rank-and-file employees of Nestlé (Cabuyao Factory,


Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Laguna), only 724 employees voted; the YES ballot garnered 708 votes, while
In a letter dated 14 August 2001, Nestlé, claiming to have only 13 employees decided against the plan to stage a strike; Records, Vol. II,
reached an impasse in said dialogue, requested the National 12
p. 150.
Conciliation and Mediation Board (NCMB), Regional Office 17 Dated 23 November 2001; Rollo (G.R. Nos. 158944-45) pp. 112-129.

No. IV, Imus, Cavite, to conduct preventive mediation 529


proceedings between it and UFE-DFA-KMU. Nestlé alleged VOL. 499, AUGUST 22, 2006 529
that despite fifteen (15) meetings between them, the parties Union of Filipro Employees-Drug, Food and Allied Industries
failed to reach any agreement on the proposed CBA. The Unions-
request was docketed as NCMB-RBIV-CAB-PM-08-035-01. Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Conciliation proceedings nevertheless proved ineffective. Code, as amended, thereby effectively enjoining any
Complaining, in essence, of bargaining deadlock—pertaining impending strike at the Nestlé Cabuyao Plant in Laguna.
to economic issues, i.e., “retirement (plan), panel composition, On 29 November 2001, Sec. Sto. Tomas issued an Order in 18

costs and attendance, and CBA,” UFE-DFA-KMU filed


13 OS-AJ-0023-01, NCMB-RBIV-CAV-PM-08-035-01, NCMB-
a Notice of Strike on 31 October 2001 with the NCMB
14 RBIV-LAG-NS-10-037-01 & NCMB-RBIV-LAG-NS-11-10-
docketed as NCMB-RBIV-LAG-NS-10-037-01. One week later, 039-01 assuming jurisdiction over the subject labor dispute
or on 07 November 2001, another Notice of Strike was filed by 15 between the parties, the fallo thereof stating that:
the UFE-DFA-KMU docketed as NCMB-RBIV-LAG-NS-11- CONSIDERING THE FOREGOING, this Office hereby assumes
10-039-01, this time predicated on Nestlé’s alleged unfair jurisdiction over the labor dispute at the Nestlé Philippines, Inc.
labor practices i.e., bargaining in bad faith in that it was
(Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as Union of Filipro Employees-Drug, Food and Allied Industries
amended. Unions-
Accordingly, any strike or lockout is hereby enjoined. The parties Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
are directed to cease and desist from committing any act that might
lead to the further deterioration of the current labor relations
situation.
1. iii.that ILO condemns the continuous exercise by the
The parties are further directed to meet and convene for the Secretary of Labor of the power of compulsory
discussion of the union proposals and company counter-proposals arbitration;
before the National Conciliation and Mediation Board (NCMB) who 2. iv.granting that the law is valid, the Secretary has
is hereby designated as the delegate/facilitator of this Office for this unconstitution-ally applied the law;
purpose. The NCMB shall report to this Office the results of this 3. v.that the company is a business enterprise not
attempt at conciliation and delimitation of the issues within thirty belonging to an industry indispensable to the national
(30) days from the parties’ receipt of this Order, in no case later than interest considering that it is only one among a
December 31, 2001. If no settlement of all the issues is reached, this number of companies in the country producing milk
Office shall thereafter define the outstanding issues and order the and nutritional products; that the Cabuyao plant is
filing of position papers for a ruling on the merits.
only one of the six (6) Nestlé plants in the country and
UFE-DFA-KMU sought reconsideration of the abovequoted
could rely on its highly automated Cagayan de Oro
19

Assumption of Jurisdiction Order on the assertion that:


plant for buffer stocks;
4. vi.that the Secretary acted with grave abuse of
1. i.Article 263 (g) of the Labor Code, as amended, is
discretion in issuing the assailed order without the
invalid and unconstitutional as it is in derogation of
benefit of a prior notice and inquiry. In
the provisions dealing on protection to labor, social
the interregnum, the union interposed a motion for
justice, the bill of rights, and, generally accepted
extension of time to file its position paper as directed
20

principle of international law;


by the Assumption of Jurisdiction Order of 29
2. ii.compulsory arbitration as a mode of dispute
November 2001.
settlement provided for in the Labor Code and sourced
from the 1935 and 1973 constitutions has been
In an Order dated 14 January 2002, Sec. Sto. Tomas denied
21

discarded and deleted by the New Charter which


the aforequoted motion for reconsideration in this wise:
instituted in its stead free collective bargaining; This is not the first time that this Office had occasion to resolve the
grounds and arguments now being raised x x x. In a more recent
_______________
case—In re: labor dispute at Toyota Motor Philippines Corporation
Id., at pp. 130-135.
18
x x x this Office ruled:
19Dated 29 November 2001; Annex “L” of the Petition; Rollo (G.R. Nos. The constitutionality of the power of the Secretary of Labor under Article
158944-45), pp. 136-182. 263 (g) of the Labor Code to assume jurisdiction over a labor dispute in an
530 industry indispensable to the national interest has been upheld as an
530 SUPREME COURT REPORTS ANNOTATED exercise of police power of the constitution. x x x.
xxxx
As ruled by the Supreme Court in the Philtread case:
Article 263 (g) of the Labor Code does not violate the worker’s constitutional right to strike.
xxx xxx
_______________ of the Retirement Plan in the collective bargaining
20 Denominated as Motion for Time.
negotiations. UFE-DFA-KMU, in contrast, limited itself to
21 Annex “F” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), pp. 317-321. tackling the solitary issue of whether or not the retirement
531 plan was a
VOL. 499, AUGUST 22, 2006 531
_______________
Union of Filipro Employees-Drug, Food and Allied Industries
Unions- 22 “x x x x
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. Accordingly, any strike or lockout is hereby enjoined. The parties are
directed to cease and desist from committing any act that might lead to the
further deterioration of the current labor relations situation.
1. The foregoing article clearly does not interfere with the
xxxx
worker’s right to strike but merely regulates it, when in the 23 Rollo (G.R. Nos. 158944-45), pp. 192-193.

exercise of such right, national interests will be affected. 24 Position Paper of Nestlé; Annex “O” of the Petition; Rollo (G.R. Nos.

158944-45), pp. 194-310.


On 15 January 2002, despite the injunction contained in Sec. 22 532
Sto. Tomas’ Assumption of Jurisdiction Order and conciliation SUPREME COURT REPORTS ANNOTATED 532
efforts by the NCMB, the employee members of UFE-DFA- Union of Filipro Employees-Drug, Food and Allied Industries
KMU at the Nestlé Cabuyao Plant went on strike. Unions-
On 16 January 2002, in consideration of the above, Sec. Sto. Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Tomas issued yet another Order directing: (1) the members of
23 mandatory subject in its CBA negotiations with the company
UFE-DFA-KMU to return-to-work within twenty-four (24) on the contention “that the Order of Assumption of
hours from receipt of such Order; (2) Nestlé to accept back all Jurisdiction covers only the issue of Retirement Plan.” 25

returning workers under the same terms and conditions On 8 February 2002, Nestlé moved that UFE-DFA-KMU be
existing preceding to the strike; (3) both parties to cease and declared to have waived its right to present arguments
desist from committing acts inimical to the ongoing respecting the other issues raised by the company on the
conciliation proceedings leading to the further deterioration of ground that the latter chose to limit itself to discussing only
the situation; and (4) the submission of their respective one (1) issue. Sec. Sto. Tomas, in an Order dated 11 February
26

position papers within ten (10) days from receipt thereof. 2002, however, did not see fit to grant said motion. She instead
Notwithstanding the Return-To-Work Order, the members allowed UFE-DFA-KMU the chance to tender its stand on the
of UFE-DFA-KMU continued with their strike and refused to other issues raised by Nestlé but not covered by its initial
go back to work as instructed. Thus, Sec. Sto. Tomas sought position paper paper by way of a Supplemental Position Paper.
the assistance of the Philippine National Police (PNP) for the UFE-DFA-KMU afterward filed several pleadings: (1)
enforcement of said order. an Urgent Motion to File a Reply dated 13 February 2002; (2)
At the hearing called on 7 February 2002, Nestlé and UFE- a Motion for Time to File Supplemental Position Paper dated
DFA-KMU filed their respective position papers. In its 22 February 2002; and (3) a Manifestation with Motion for
position paper, Nestlé addressed several issues allegedly
24 Reconsideration of the Order dated February 11, 2002 dated 27
pertaining to the current labor dispute, i.e., economic February 2002. The latter pleading was an absolute
provisions of the CBA as well as the non-inclusion of the issue contradiction of the second one praying for additional time to
file the subject supplemental position paper. In 1. a.we hereby recognize that the present Retirement Plan
said Manifestation, UFE-DFA-KMU explained that it at the Nestlé Cabuyao Plant is a unilateral grant that
“realized that the Order of February 11, 2002 appears to be the parties have expressly so recognized subsequent to
contrary to law and jurisprudence and is not in conformity the Supreme Court’s ruling in Nestlé, Phils. Inc. vs.
with existing laws and the evidence on re-cord,” as the 27 NLRC, G.R. No. 90231, February 4, 1991, and is
Secretary of the DOLE “could only assume jurisdiction over therefore not a mandatory subject for bargaining;
the issues mentioned in the notice of strike subject of the 2. b.the Union’s charge of unfair labor practice against the
current dispute.” UFE-DFA-KMU then went on to clarify that
28 Company is hereby dismissed for lack of merit;
the Amended Notice of Strike did not cite, as one of the 3. c.the parties are directed to secure the best applicable
grounds, the CBA deadlock. terms of the recently concluded CBs between Nestlé
On 8 March 2002, Sec. Sto. Tomas denied the motion for Phils. Inc. and its eight (8) other bargaining units, and
reconsideration of UFE-DFA-KMU. to adopt these as the terms and conditions of the Nestlé
Cabuyao Plant CBA;
_______________
4. d.all union demands that are not covered by the
25 Annexes “P” & “Q” of the Petition; Rollo (G.R. No. 158944-45), pp. 311-
provisions of the CBAs of the other eight (8) bargaining
336 and pp. 337-339. units in the Company are hereby denied;
26 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 323-324.
5. e.all existing provisions of the expired Nestlé Cabuyao
27 Rollo (G.R. Nos. 158944-45), p. 428.

28 Id.
Plant CBA without any counterpart in the CBAs of the
533 other eight bargaining units in the Company are
VOL. 499, AUGUST 22, 2006 533 hereby ordered maintained as part of the new Nestlé
Union of Filipro Employees-Drug, Food and Allied Industries Cabuyao Plant CBA;
Unions- 6. f.the parties shall execute their CBA within thirty (30)
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. days from receipt of this Order, furnishing this Office
a copy of the signed Agreement;
Frustrated with the foregoing turn of events, UFE-DFA-KMU
7. g.this CBA shall, in so far as representation is
filed a petition for certiorari with application for the issuance
29

concerned, be for a term of five (5) years; all other


of a temporary restraining order or a writ of preliminary
provisions shall be renegotiated not later than three
injunction before the Court of Appeals. The petition was
(3) years after its effective date which shall be
predicated on the question of whether or not the DOLE
December 5, 2001 (or on
Secretary committed grave abuse of discretion in issuing the
Orders of 11 February 2002 and 8 March 2002. _______________
Meanwhile, in an attempt to finally resolve the crippling
labor dispute between the parties, then Acting Secretary of the CA Rollo (CA-G.R. SP No. 69805).
29

DOLE, Hon. Arturo D. Brion, came out with an Order dated 30


Annex “BB” of the Petition; Rollo (G.R. Nos. 158944-45), pp. 508-520.
30

534
02 April 2002, in the main, ruling that:
534 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries _______________
Unions- Annex “L” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), pp. 802-806.
31

Kilusang Mayo Uno vs. Nestlé Philippines, Inc. Id., at p. 43.


32

the first day six months after the expiration on June 4, 2001 535
of the superceded CBA). VOL. 499, AUGUST 22, 2006 535
Not surprisingly, UFE-DFA-KMU moved to reconsider the Union of Filipro Employees-Drug, Food and Allied Industries
aforequoted position of the DOLE. Unions-
On 6 May 2002, the Secretary of the DOLE, Hon. Sto. Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Tomas, issued the last of the assailed Orders. This order
31
questions, in essence, the appellate court’s decision in
resolved to deny the preceding motion for reconsideration of absolving Nestlé of the charge of unfair labor practice.
UFE-DFA-KMU. The parties’ efforts were all for naught as the Court of
Undaunted still, UFE-DFA-KMU, for the second time, went Appeals stood pat in its earlier pronouncements and denied
to the Court of Appeals likewise via a petition the motions for reconsideration in a joint Resolution dated 27
for certiorari seeking to annul, on the ground of grave abuse of June 2003.
discretion, the Orders of 02 April 2002 and 06 May 2002 of the Hence, these petitions for review on certiorari separately
Secretary of the DOLE. filed by the parties. Said petitions were ordered consolidated
The Court of Appeals, acting on the twin petitions in a Supreme Court Resolution dated 29 March 2004.
for certiorari, determined the issues in favor of UFE-DFA- The Issues
KMU in a joint Decision dated 27 February 2003. The UFE-DFA-KMU’s petition for review docketed as G.R. No.
dispositive part thereof states that: 158930-31, is predicated on the following alleged errors:
“WHEREFORE, in view of the foregoing, there being grave abuse on
the part of the public respondent in issuing all the assailed Orders, I.
both petitions are hereby GRANTED. The assailed Orders dated
February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF
well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP LAW IN
No. 71540) of the Secretary of Labor and Employment in the case NOT HOLDING THAT RESPONDENT IS GUILTY OF UNFAIR
entitled: “IN RE: LABOR DISPUTE AT NESTLÉ PHILIPPINES LABOR PRACTICE IN REFUSING TO PROCEED WITH THE
INC. (CABUYAO FACTORY)” under OS-AJ-0023-01 (NCMB-RBIV- CBA NEGOTIATIONS UNLESS PETITIONER FIRST ADMITS
CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB- THAT THE RETIREMENT PLAN IN THE COMPANY IS A NON-
RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED and SET CBA MATTER; and
ASIDE. Private respondent is hereby directed to resume the CBA
negotiations with the petitioner”32 II.
Dissatisfied, both parties separately moved for the
THE CONTENTION THAT THERE IS NO EVIDENCE OF
reconsideration of the abovequoted decision—with Nestlé
UNFAIR LABOR PRACTICE ON RESPONDENT NESTLÉ’S PART
basically assailing that part of the decision finding the DOLE
AND THAT PETITIONER DID NOT RAISE THE ISSUE OF ULP
Secretary to have gravely abused her discretion when she IN ITS ARGUMENTS BEFORE THE COURT OF APPEALS IS
ruled that the Retirement Plan is not a valid issue for GROSSLY ERRONEOUS. 33

collective bargaining negotiations; while UFE-DFA-KMU


Whereas in G.R. No. 158944-45, petitioner Nestlé challenges Notice of Strike; and third, in not ruling that Nestlé was
the conclusion of the Court of Appeals on the basis of the guilty of unfair labor practice despite allegedly setting a pre-
following issues: condition to bargaining—the non-inclusion of the Retirement
Plan as an issue in the collective bargaining negotiations.
I. The Court’s Ruling
Foremost for our resolution is the matter of the non-inclusion
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
of the Retirement Plan in the CBA negotiations between
SERIOUS ERROR IN HOLDING THAT THE POWERS GRANTED
TO THE SECRETARY OF LABOR TO RESOLVE NATIONAL Nestlé and UFE-DFA-KMU (Cabuyao Division).
INTEREST DISPUTES UNDER ARTICLE 263 (G) OF THE In finding the Secretary of the DOLE to have gravely
LABOR CODE MAY BE LIMITED BY A (SECOND) NOTICE OF abused her discretion in holding that the Retirement Plan
STRIKE; and is not a valid CBA issue, the Court of Appeals explained that:
Although the Union, thru its President Diosdado Fortuna, signed a
_______________ Memorandum of Agreement dated October 8, 1998 together with the
private respondent which clearly states that the “Company agree to
33 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1669.
extend the following unilateral grants which shall not form part of
536
the CBA” (citation omitted) however, the same document made a
536 SUPREME COURT REPORTS ANNOTATED
proviso that “reference on the Retirement Plan in the CBA signed on
Union of Filipro Employees-Drug, Food and Allied Industries July 4, 1995, shall be maintained,” x x x thus, this Court is of the
Unions- belief and so holds that the Retirement Plan is
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
_______________
II.
34 Id., at p. 1735.
537
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN ANNULING THE SECRETARY OF
VOL. 499, AUGUST 22, 2006 537
LABOR’S JUDGMENT ON THE RETIREMENT PLAN ISSUE Union of Filipro Employees-Drug, Food and Allied Industries
WHICH WAS MERELY A PART OF THE COMPLETE Unions-
RESOLUTION OF THE LABOR DISPUTE. 34 Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
On the whole, the consolidated cases only raise three (3) still a valid CBA issue, hence, it could not be argued that the true
fundamental issues for deliberation by this Court, that is, intention of the parties is that the Retirement Plan, although
whether or not the Court of Appeals committed reversible referred in the CBA, would not in any way form part of the CBA
error, first, in finding the Secretary of Labor and Employment (citation omitted) as it could be clearly inferred by this Court that it
to have gravely abused her discretion in her pronouncement is to be used as an integral part of the CBA and to be used as a topic
for future bargaining, in consonance with the ruling of the Supreme
that the Retirement Plan was not a proper subject to be
Court in the previous Nestlé Case that “the Retirement Plan was a
included in the CBA negotiations between the parties; hence,
collective bargaining issue right from the start.” 35

non-negotiable; second, in holding that the assumption In filing the present petition, Nestlé is of the view that after
powers of the Secretary of Labor and Employment should have
the 1991 Supreme Court Decision was promulgated, there was
been limited merely to the grounds alleged in the second
obviously an agreement by the parties to no longer consider
the Retirement Plan as a negotiable item subject to improvement of the current Retirement Plan and nothing
39

bargaining. Rather, said benefit would be regarded as a else. UFE-DFA-KMU rationalizes that:
unilateral grant outside the ambit of negotiation. Nestlé Had the objective of the parties been to consider the Retirement
justifies such contention by directing the Court’s attention to Plan as not a subject for collective bargaining, they would have
the Ground Rules for 1998 Alabang/Cabuyao Factories’ CBA stated so in categorical terms. Or, they could have deleted the said
Negotiation (citation omitted) signed by it and the benefit from the CBA.
Unfortunately for petitioner, the documents relied upon by it do
representatives of UFE-DFA-KMU where both sides
not state that the Retirement Plan is no longer a bargainable item.
“expressly” recognized Nestlé’s prerogative to initiate
The said benefit was not also removed or deleted from the CBA.
unilateral grants which are ‘not negotiable.’ It likewise cited If ever, what was “unilaterally granted” by petitioner company
the Memorandum of Agreement entered into by the parties
36
as appearing on the above-stated letter and MOA were the
on 08 October 1998, which also “categorically” referred to the “improvements” on the Retirement Plan. The Retirement Plan could
Retirement Plan as one of the unilateral grants alluded to in not have been unilaterally granted by the said letter and MOA since
the aforementioned Ground Rules. Nestlé then concluded that: the said Plan predates the said letter and MOA by over two decades.
Indeed, the foregoing uncontroverted documents very clearly UFE-DFA-KMU concludes that “[s]ince the Retirement Plan
established the clear agreement of the parties, after the 1991 did not derive its existence from the letter and MOA x x x, the
Supreme Court Decision, to remove the Retirement Plan from the nature of the Retirement Plan was not altered or changed by
scope of bargaining negotiation, and leave the matter upon the sole the subsequent issuance by petitioner company of the said
initiative and discretion of Nestlé.
letter and MOA. The Retirement Plan remained a CBA item
37

In contrast, UFE-DFA-KMU posits that there is nothing in which is a proper subject of collective bargaining pursuant to
either of the documents aboveclaimed that proves that it the 1991 ruling of this Honorable Court.” 40

agreed “to treat the Retirement Plan as a unilateral grant of We agree.


the company which is outside the scope of the CBA and hence, The present issue is not one of first impression. In Nestlé
not a proper subject of bargain- Philip-pines, Inc. v. NLRC, ironically involving the same
41

_______________ parties herein, this Court has had the occasion to affirm that
a retirement plan is consensual in nature.
35 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 42-43. By way of background, the parties therein resorted to a
Annex “2” of Nestlé’s Comment in CA-G.R. SP No. 71540, pp. 614-619;
“slowdown” and walked out of the factory prompting the
36

Annex “E” of Nestlé’s Memorandum; Rollo (G.R. Nos. 158944-45), pp. 1270-
1275. management to shut down its operations. Collective
37 Rollo (G.R. Nos. 158944-45), p. 1235. bargaining negotiations were con-
538
538 SUPREME COURT REPORTS ANNOTATED _______________
Union of Filipro Employees-Drug, Food and Allied Industries 38 Respondent’s Memorandum in G.R. Nos. 158944-45, p. 12; Rollo(G.R. Nos.

Unions- 158930-31, Vol. II), p. 1703.


Kilusang Mayo Uno vs. Nestlé Philippines, Inc. 39 Id.

40 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1704.


ing.” It explained that the MOA alluded to by Nestlé merely 41 G.R. No. 91231, 4 February 1991, 193 SCRA 504.

speaks of the improvement or the review for the


38
539
VOL. 499, AUGUST 22, 2006 539
Union of Filipro Employees-Drug, Food and Allied Industries benefits due the employees under said plan, is a valid CBA
Unions- issue. x x x
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. xxxx
x x x [E]mployees do have a vested and demandable right
ducted but a deadlock was subsequently declared. The
over existing benefits voluntarily granted to them by their
Secretary of Labor assumed jurisdiction over the labor dispute employer. The latter may not unilaterally withdraw,
and issued a return-to-work order. The NLRC thereafter eliminate or diminish such
issued its resolution modifying Nestlé’s existing “non- 540
contributory” Retirement Plan. The company filed a petition 540 SUPREME COURT REPORTS ANNOTATED
for certiorari alleging grave abuse of discretion on the part of Union of Filipro Employees-Drug, Food and Allied Industries
the NLRC as Nestlé was arguing that since its Retirement Unions-
Plan is non-contributory, it should be a non-issue in CBA Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
negotiations. Nestlé had the sole and exclusive prerogative to benefits (Art. 100, Labor Code; other citation omitted). [Emphases
define the terms of the plan as the employees had no vested supplied.]
42

and demandable rights thereon—the grant of such not being a In the case at bar, it cannot be denied that the CBA that was
contractual obligation but simply gratuitous. In a ruling about to expire at that time contained provisions respecting
contrary to Nestlé’s position, this Court, through Madame the Retirement Plan. As the latter benefit was already subject
Justice Griño-Aquino, declared that: of the existing CBA, the members of UFE-DFA-KMU were
The company’s [Nestlé] contention that its retirement plan is only exercising their prerogative to bargain or renegotiate for
nonnegotiable, is not well-taken. The NLRC correctly observed the improvement of the terms of the Retirement Plan just like
that the inclusion of the retirement plan in the collective they would for all the other economic, as well as non-economic
bargaining agreement as part of the package of economic
benefits previously enjoyed by them. Precisely, the purpose of
benefits extended by the company to its employees to provide
them a measure of financial security after they shall have ceased to
collective bargaining is the acquisition or attainment of the
be employed in the company, reward their loyalty, boost their best possible covenants or terms relating to economic and
morale and efficiency and promote industrial peace, gives “a noneconomic benefits granted by employers and due the
consensual character” to the plan so that it may not be employees. The Labor Code has actually imposed as a mutual
terminated or modified at will by either party (citation obligation of both parties, this duty to bargain collectively. The
omitted). duty to bargain collectively is categorically prescribed by
The fact that the retirement plan is non-contributory, i.e., Article 252 of the said code. It states:
that the employees contribute nothing to the operation of the ART. 252. MEANING OF DUTY TO BARGAIN
plan, does not make it a non-issue in the CBA negotiations. As COLLECTIVELY.—The duty to bargain collectively means the
a matter of fact, almost all of the benefits that the petitioner has performance of a mutual obligation to meet and confer promptly and
granted to its employees under the CBA—salary increases, rice expeditiously and in good faith for the purpose of negotiating an
allowances, midyear bonuses, 13th and 14th month pay, seniority agreement with respect to wages, hours of work, and all other terms
pay, medical and hospitalization plans, health and dental services, and conditions of employment including proposals for adjusting any
vacation, sick & other leaves with pay—are non-contributory grievances or questions arising under such agreement and
benefits. Since the retirement plan has been an integral part executing a contract incorporating such agreement if requested by
of the CBA since 1972, the Union’s demand to increase the
either party, but such duty does not compel any party to agree to a of the Collective Bargaining Agreement (CBA):
proposal or to make any concession. xxxx
Further, Article 253, also of the Labor Code, defines the
parameter of said obligation when there already exists a 1. 6.2.Review for improvement of the COMPANY’s
CBA, viz.: Retirement Plan and the reference on the Retirement
ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN Plan in the Collective Bargaining Agreement signed on
THERE EXISTS A COLLECTIVE BARGAINING 4 July 1995 shall be maintained.43

AGREEMENT.—The duty to bargain collectively shall also mean


that either party shall not terminate nor modify such agreement
hardly persuades us that the members of UFE-DFA-KMU
during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior
have agreed to treat the Retirement Plan as a benefit the
to its expiration date. It shall be the duty of both parties to keep the terms of which are solely dependent on the inclination of the
status quo and to continue in full force and effect the terms and Nestlé and remove the subject benefit from the ambit of the
conditions of CBA. The characterization unilaterally imposed by Nestlé on
the Retirement Plan cannot operate to divest the employees of
_______________ their “vested and demandable right over existing benefits
42 Id., at pp. 508-509.
voluntarily granted by their employer.” Besides, the
44

541 contention that UFE-DFA-KMU has “abandoned” or forsaken


VOL. 499, AUGUST 22, 2006 541 our earlier pronouncement vis-á-vis the consensual nature of
Union of Filipro Employees-Drug, Food and Allied Industries a retirement plan is quite inconsistent with, nay, is negated by
Unions- its conduct in doggedly asking for a renegotiation of said
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. benefit.
the existing agreement during the sixty day period and/or until a _______________
new agreement is reached by the parties.
And, in demanding that the terms of the Retirement Plan be Rollo (G.R. Nos. 158944-45), p. 1273.
43

opened for renegotiation, the members of UFE-DFA-KMU are Art. 100 of the Labor Code.
44

acting well within their rights as we have, indeed, declared 542

that the Retirement Plan is consensual in character; and so, 542 SUPREME COURT REPORTS ANNOTATED
negotiable. Union of Filipro Employees-Drug, Food and Allied Industries
Contrary to the claim of Nestlé that the categorical mention Unions-
of the terms ‘unilateral agreement’ in the letter and the MOA Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
signed by the representatives of UFE-DFA-KMU, had, for all Worth noting, at this point, is the fact that the aforequoted
intents and purposes worked to estop UFE-DFA-KMU from paragraph 6 and its subparagraphs, particularly
raising it as an issue in the CBA negotiations, our reading of subparagraph 6.2, highlights an undeniable fact—that Nestlé
the same, specifically Paragraph 6 and subparagraph 6.2: recognizes that the Retirement Plan is part of the existing
Collective Bargaining Agreement.
1. 6.Additionally, the COMPANY agree to extend the Nestlé further rationalizes that a ruling declaring the
following unilateral grants which shall not form part Retirement Plan a valid CBA negotiation issue will inspire
other bargaining units to demand for greater benefits in Union of Filipro Employees-Drug, Food and Allied Industries
accordance with their respective appetites. Suffice it to say Unions-
that the consensual nature of the Retirement Plan neither Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
gives the union members the unfettered right nor the ment was made during the preventive mediation proceedings
unbridled prerogative to demand more than what the company and the UFE-DFA-KMU had not yet filed any notice of strike.
can viably give. It further emphasizes that it was UFE-DFA-KMU who first
As regards the scope of the assumption powers of the alleged bargaining deadlock as the basis for the filing of its
Secretary of the DOLE, the appellate court ruled that Sec. Sto. Notice of Strike. Finally, Nestlé clarifies that before the first
Tomas’ assumption of jurisdiction powers should have been Notice of Strike was filed, several conciliation conferences had
limited to the disagreement on the ground rules of the already been undertaken where both parties had exchanges of
collective bargaining negotiations. The Court of Appeals their respective CBA proposals.
referred to the minutes of the meeting held on 30 October In this, we agree with Nestlé. Declaring the Secretary of the
2001. That the representative Nestlé was recorded to have DOLE to have acted with grave abuse of discretion for ruling
stated that “we are still discussing ground rules and not yet on on substantial matters or issues and not restricting itself
the CBA negotiations proper, a deadlock cannot be merely on the ground rules, the appellate court and UFE-DFA-
declared,” was a telling fact. The Court of Appeals, thus,
45
KMU would have us treat the subject labor dispute in a
declared that the Secretary “should not have ruled on the piecemeal fashion.
questions and issues relative to the substantive aspect of the The power granted to the Secretary of the DOLE by
CBA simply because there was no conflict on the CBA yet.” 46
Paragraph (g) of Article 263 of the Labor Code, to wit:
UFE-DFA-KMU agrees in the above and contends that the ART. 263. STRIKES, PICKETING, AND LOCKOUTS.—
requisites of judicial inquiry require, first and foremost the xxxx
presence of an actual case controversy. It then concludes that (g) When, in his opinion, there exists a labor dispute causing or
“[i]f the courts of law cannot act and decide in the absence of likely to cause a strike or lockout in an industry indispensable to the
an actual case or controversy, so should be (sic) also the national interest, the Secretary of Labor and Employment may
Honorable DOLE Secretary.” 47
assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such
Nestlé, however, contradicts the preceding disquisitions on
assumption or certification shall have the effect of automatically
the ground that such referral to the minutes of the meeting enjoining the intended or impending strike or lockout as specified in
was erroneous and misleading. It avers that the Court of the assumption or certification order. If one has already taken place
Appeals failed to consider the circumstance surrounding said at the time of assumption or certification, all striking or locked out
utterance—that the state- employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the
_______________
same terms and conditions prevailing before the strike or lockout.
45 CA Rollo (CA G.R.-SP No. 69805), p. 503.
The Secretary of Labor and Employment or the Commission may
46 Rollo (G.R. Nos. 158930-31, Vol. I), p. 41. seek the assistance of law enforcement agencies to ensure
47 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1699. compliance with this provision as well as with such orders as he may
543 issue to enforce the same.
VOL. 499, AUGUST 22, 2006 543 xxxx
authorizes her to assume jurisdiction over a labor dispute, substance. Further, it is a fact that during the conciliation
causing or likely to cause a strike or lockout in an industry meetings before the NCMB, but prior to the filing of the notices
indispensable to the national interest, and correlatively, to of strike, the parties had already delved into matters affecting
decide the same. the meat of the collective bargaining agreement. The appellate
544 court’s reliance on the statement of the representative of
49

544 SUPREME COURT REPORTS ANNOTATED Nestlé in ruling that the labor dispute had yet
Union of Filipro Employees-Drug, Food and Allied Industries
Unions- _______________

Kilusang Mayo Uno vs. Nestlé Philippines, Inc. 48Rollo (G.R. Nos. 158930-31, Vol. I), pp. 333-334.
In the case at bar, the Secretary of the DOLE simply relied on 49“we are still discussing ground rules and not yet on the CBA negotiations
the Notices of Strike that were filed by UFE-DFA-KMU as proper, a deadlock cannot be declared.”
545
stated in her Order of 08 March 2002, to wit:
x x x The records disclose that the Union filed two Notices of Strike. VOL. 499, AUGUST 22, 2006 545
The First is dated October 31, 2001 whose grounds are cited Union of Filipro Employees-Drug, Food and Allied Industries
verbatim here-under: Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
1. “A.Bargaining Deadlock to progress from the discussion of the ground rules of the CBA
negotiations is clearly misleading; hence, erroneous.
1. 1.Economic issues (specify) Nevertheless, granting for the sake of argument that the
2. 1.Retirement
meetings undertaken by the parties had not gone beyond the
3. 2.Panel Composition
discussion of the ground rules, the issue of whether or not the
4. 3.Costs and Attendance
5. 4.CBA”
Secretary of the DOLE could decide issues incidental to the
subject labor dispute had already been answered in the
The second Notice of Strike is dated November 7, 2001 and the affirmative. The Secretary’s assumption of jurisdiction power
cited ground is like quoted verbatim below: necessarily includes matters incidental to the labor dispute,
that is, issues that are necessarily involved in the dispute
1. “B.Unfair Labor Practices (specify) itself, not just to those ascribed in the Notice of Strike; or,
Bargaining in bad faith— otherwise submitted to him for resolution. As held in the case
Setting pre-condition in the ground of International Pharmaceuticals, Inc. v. Sec. of Labor and
rules (Retirement issue)” Employment, “x x x [t]he Secretary was explicitly granted by
50

Article 263 (g) of the Labor Code the authority to assume


Nowhere in the second Notice of Strike is it indicated that this jurisdiction over a labor dispute causing or likely to cause a
Notice is an amendment to and took the place of the first Notice of
strike or lockout in an industry indispensable to the national
Strike. In fact, our Assumption of Jurisdiction Order dated
interest, and decide the same accordingly. Necessarily, this
November 29, 2001 specifically cited the two (2) Notices of Strike
without any objection on the part of the Union x x x. 48
authority to assume jurisdiction over the said labor dispute
Thus, based on the Notices of Strike filed by UFE-DFA-KMU, must include and extend to all questions and controversies
the Secretary of the DOLE rightly decided on matters of arising therefrom, including cases over which the Labor
Arbiter has exclusive jurisdiction.” Accordingly, even if not
51 award damages to the petitioner for the ULP committed by the
exactly on the ground upon which the Notice of Strike is based, respondent.” 54

the fact that the issue is incidental to the resolution of the Nestlé refutes the above argument and asserts that it was
subject labor dispute or that a specific issue had been only before the Court of Appeals, and in the second Petition
submitted to the Secretary of the DOLE for her resolution, for Certiorari at that, did UFE-DFA-KMU raise the matter of
validly empowers the latter to take cognizance of and resolve unfair labor practice. It reasoned that the subject of unfair
the same. labor practice should have been threshed out with the
Secretary Sto. Tomas correctly assumed jurisdiction over appropriate labor tribunal. In justifying the failure of the
the questions incidental to the current labor dispute and those Court of Appeals to find it guilty of unfair labor practice, it
matters raised by the parties. In any event, the query as to stated that:
whether or not the Retirement Plan is to be included in the Under the circumstances, therefore, there was no way for the Court
CBA negotiations between the parties ineluctably dictates of Appeals to make a ruling on the issues of unfair labor practice
upon the Secretary of the DOLE to go into the substantive and damages, simply because there was nothing to support or justify
matter of the CBA negotiations. such action. Although petitioner was afforded by the Secretary the
opportunity to be heard and more, it simply chose to omit the said
Lastly, the third issue pertains to the alleged reversible
issues in the proceedings below.
error committed by the Court of Appeals in holding, albeit
55

We are persuaded.
impliedly, Nestlé free and clear from any unfair labor practice.
The concept of “unfair labor practice” is defined by the
UFE-DFA-KMU argues
Labor Code as:
_______________ ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE
ANDPROCEDURE FOR PROSECUTION THEREOF.—Unfair
G.R. Nos. 92981-83, 9 January 1992, 205 SCRA 59.
50 labor practices
Id., at pp. 65-66.
51

546 _______________
546 SUPREME COURT REPORTS ANNOTATED
52 Petitioner’s Memorandum, pp 10-11; Rollo (G.R. Nos. 158930-31), pp. 1672-
Union of Filipro Employees-Drug, Food and Allied Industries 1673.
Unions-Kilusang Mayo Uno vs. Nestlé Philippines, Inc. 53 Id.
Id., at pp. 1671-1672.
that Nestlé’s “refusal to bargain on a very important CBA
54

55 Respondent’s Memorandum, pp. 22-23; Rollo (G.R. Nos. 158930-31, Vol. II),

economic provision constitutes unfair labor practice.” It 52


pp. 1627-1628.
explained that Nestlé set as a precondition for the holding of 547
collective bargaining negotiations the non-inclusion of the VOL. 499, AUGUST 22, 2006 547
issue of Retirement Plan. In its words, “respondent Nestlé Union of Filipro Employees-Drug, Food and Allied Industries
Phils., Inc. insisted that the Union should first agree that the Unions-
retirement plan is not a bargaining issue before respondent Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Nestlé would agree to discuss other issues in the CBA.” It 53
violate the constitutional right of workers and employees to self-
then concluded that “the Court of Appeals committed a legal organization, are inimical to the legitimate interests of both labor
error in not ruling that respondent company is guilty of unfair and management, including their right to bargain collectively and
labor practice. It also committed a legal error in failing to otherwise deal with each other in an atmosphere of freedom and
mutual respect, disrupt industrial peace and hinder the promotion 548
of healthy and stable labor-management relations. x x x x. 548 SUPREME COURT REPORTS ANNOTATED
The same code likewise provides the acts constituting unfair Union of Filipro Employees-Drug, Food and Allied Industries
labor practices committed by employers, to wit: Unions-
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS.—It Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
shall be unlawful for an employer to commit any of the following
unfair labor practices: 1. (f)To dismiss, discharge, or otherwise prejudice or
discriminate against an employee for having given or being
1. (a)To interfere with, restrain or coerce employees in the about to give testimony under this Code;
exercise of their right to self-organization; 2. (g)To violate the duty to bargain collectively as
2. (b)To require as a condition of employment that a person or prescribed by this Code;
an employee shall not join a labor organization or shall 3. (h)To pay negotiation or attorney’s fees to the union or its
withdraw from one to which he belongs; officers or agents as part of the settlement of any issue in
3. (c)To contract out services or functions being performed by collective bargaining or any other dispute; or
union members when such will interfere with, restrain or 4. (i)To violate a collective bargaining agreement.
coerce employees in the exercise of their right to self-
organization; The provisions of the preceding paragraph notwithstanding, only
4. (d)To initiate, dominate, assist or otherwise interfere with the officers and agents of corporations associations or partnerships
the formation or administration of any labor organization, who have actually participated, authorized or ratified unfair labor
including the giving of financial or other support to it or its practices shall be held criminally liable. [Emphasis supplied.]
organizers or supporters;
Herein, Nestlé is accused of violating its duty to bargain
5. (e)To discriminate in regard to wages, hours of work, and
other terms and conditions of employment in order to
collectively when it purportedly imposed a pre-condition to its
encourage or discourage membership in any labor agreement to discuss and engage in collective bargaining
organization. Nothing in this Code or in any other law shall negotiations with UFE-DFA-KMU.
stop the parties from requiring membership in a recognized A meticulous review of the record and pleadings of the cases
collective bargaining agent as a condition for employment, at bar shows that, of the two notices of strike filed by UFE-
except those employees who are already members of DFA-KMU before the NCMB, it was only on the second that
another union at the time of the signing of the collective the ground of unfair labor practice was alleged. Worse, the 7
bargaining agreement. November 2001 Notice of Strike merely contained a general
allegation that Nestlé committed unfair labor practice by
Employees of an appropriate collective bargaining unit who are bargaining in bad faith for supposedly “setting precondition in
not members of the recognized collective bargaining agent may be the ground rules (Retirement issue).” On the contrary, Nestlé,
56

assessed a reasonable fee equivalent to the dues and other fees paid
in its Position Paper, did not confine itself to the issue of the
by members of the recognized collective bargaining agent, if such
non-union members accept the benefits under the collective
non-inclusion of the Retirement Plan but extensively
agreement. Provided, That the individual authorization required discussed its stance on other economic matters pertaining to
under Article 242, paragraph (o) of this Code shall not apply to the the CBA.
nonmembers of the recognized collective bargaining agent; [The Basic is the principle that good faith is presumed and he
article referred to is 241, not 242.—CAA] who alleges bad faith has the duty to prove the same. By 57
imputing bad faith unto the actuations of Nestlé, it was UFE- and therefore shall be excluded therefrom,” such attitude is not
DFA-KMU, therefore, who had the burden of proof to present tantamount to refusal to bargain. This is especially true when
substantial evidence to sup- it is viewed in the light of the fact that eight out of nine
bargaining units have allegedly agreed to treat the Retirement
_______________
Plan as a unilateral grant. Nestlé, therefore, cannot be faulted
56 Notice of Strike of 7 November 2001; Annex “C” of UFE-DFA-KMU
for considering the same benefit as unilaterally granted. To be
Position Paper; Records, p. 146. sure, it must be shown that Nestlé was motivated by ill will,
57 Chua v. Court of Appeals, 312 Phil. 405, 411; 242 SCRA 341, 345 (1995).
“bad
549
VOL. 499, AUGUST 22, 2006 549 _______________
Union of Filipro Employees-Drug, Food and Allied Industries 58 Tiu v. National Labor Relations Commission, 343 Phil. 478, 486-487; 277

Unions- SCRA 680, 688 (1997).


Kilusang Mayo Uno vs. Nestlé Philippines, Inc. 59 “x x x [U]nilateral grants, one-time company grants, company-initiated

port the allegation of unfair labor practice. A perusal of the policies and programs, which include, but are not limited to the Retirement
Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very
allegations and arguments raised by UFE-DFA-KMU in the nature not proper subjects of CBA negotiations and therefore shall be excluded
Memorandum (in G.R. Nos. 158930-31) will readily disclose therefrom.”
that it failed to discharge said onus probandi as there is still a 550
need for the presentation of evidence other than its bare 550 SUPREME COURT REPORTS ANNOTATED
contention of unfair labor practice in order to make certain the Union of Filipro Employees-Drug, Food and Allied Industries
propriety or impropriety of the unfair labor practice charge Unions-
hurled against Nestlé. Under Rule XIII, Sec. 4, Book V of the Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Implementing Rules of the Labor Code: faith, or fraud, or was oppressive to labor, or done in a manner
x x x. In cases of unfair labor practices, the notice of strike shall contrary to morals, good customs, or public policy, and, of
as far as practicable, state the acts complained of and the course, that social humiliation, wounded feelings, or grave
efforts to resolve the dispute amicably.” [Emphasis supplied.]
anxiety resulted x x x” in disclaiming unilateral grants as
60

Except for the assertion put forth by UFE-DFA-KMU, neither proper subjects in their collective bargaining negotiations.
the second Notice of Strike nor the records of these cases There is no per se test of good faith in bargaining. Good 61

substantiate a finding of unfair labor practice. It is not enough faith or bad faith is an inference to be drawn from the facts, to 62

that the union believed that the employer committed acts of be precise, the crucial question of whether or not a party has
unfair labor practice when the circumstances clearly negate met his statutory duty to bargain in good faith typically turns
even a prima facie showing to warrant such a belief. In its 58
on the facts of the individual case. Necessarily, a
letter to UFE-DFA-KMU of 29 May 2001, though Nestlé
59
determination of the validity of the Nestlé’s proposition
underscored its position that “unilateral grants, onetime involves an appraisal of the exercise of its management
company grants, company-initiated policies and programs, prerogative.
which include, but are not limited to the Retirement Plan, Employers are accorded rights and privileges to assure
Incidental Straight Duty Pay and Calling Pay Premium, are their selfdetermination and independence and reasonable
by their very nature not proper subjects of CBA negotiations return of capital. This mass of privileges comprises the so-
63
called management prerogatives. In this connection, the rule
64 of capital, the proverbial hen that lays the golden egg, on the
is that good faith is always presumed. As long as the other. Indeed, we should not be unmindful of the legal norm
company’s exercise of the same is in good faith to advance its that justice is in every case for the deserving, to be dispensed
interest and not for purpose of defeating or circumventing the with in the light of established facts, the applicable law, and
rights of employees under the law or a valid agreement, such existing jurisprudence. 66

exercise will be upheld. 65 In sum, from the facts and evidence extant in the records of
Construing arguendo that the content of the aforequoted these consolidated petitions, this Court finds that 1) the
letter of 29 May 2001 laid down a pre-condition to its Retirement Plan is still a valid issue for herein parties
agreement to bargain with UFE-DFA-KMU, Nestlé’s inclusion collective bargaining negotiations; 2) the Court of Appeals
in its Position Paper of its proposals affecting other matters committed reversible error in limiting to the issue of the
covered by the CBA contradicts the claim of refusal to bargain ground rules the scope of the power of the Secretary of Labor
or bargaining in bad faith. Accordingly, since UFE-DFA-KMU to assume jurisdiction over the subject labor dispute; and 3)
failed to proffer substantial evidence that Nestlé is not guilty of unfair labor practice. As no other issues
are availing, this ponencia writes finis to the protracted labor
_______________
dispute between Nestlé and UFE-DFA-KMU (Cabuyao
60 San Miguel Corporation v. Del Rosario, G.R. Nos. 168194 & 168603, 13 Division).
December 2005, 477 SCRA 604, 619. WHEREFORE, in view of the foregoing, the Petition in G.R.
61 The Hongkong and Shanghai Banking Corporation Employees Union v.
No. 158930-31 seeking that Nestlé be declared to have
National Labor Relations Commission, 346 Phil. 524, 534; 281 SCRA 509, 518
committed unfair labor practice in allegedly setting a
(1997).
62 Id.
precondition to bargaining is DENIED. The Petition in G.R.
63 Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September No. 158944-45, however, is PARTLY GRANTED in that we
2005, 470 SCRA 125, 136. REVERSE the ruling of the Court of Appeals in CA G.R. SP
64 Id.

65 Id.
No. 69805 in so far as it ruled that the Secretary of the DOLE
551 gravely abused her discretion in failing to confine her
VOL. 499, AUGUST 22, 2006 551 assumption of jurisdiction power over the ground rules of the
Union of Filipro Employees-Drug, Food and Allied Industries CBA negotiations; but the ruling of the Court of Appeals on
Unions- the inclusion of the Retirement Plan as a valid issue in the
Kilusang Mayo Uno vs. Nestlé Philippines, Inc. collective bargaining negotiations between UFE-DFA-KMU
would overcome the legal presumption of good faith on the part and Nestlé is AFFIRMED. The parties are directed to resume
of Nestlé, the award of moral and exemplary damages is negotiations respecting the Retirement Plan
unavailing. _______________
It must be remembered at all times that the Philippine
Constitution, while inexorably committed towards the 66 Philippine National Oil Company-Energy Development Corporation
(PNOC-EDC) v. Abella, G.R. 153904, 17 January 2005, 448 SCRA 549, 574.
protection of the working class from exploitation and unfair
552
treatment, nevertheless mandates the policy of social justice
552 SUPREME COURT REPORTS ANNOTATED
so as to strike a balance between an avowed predilection for
Trust International Paper Corporation vs. Pelaez
labor, on the one hand, and the maintenance of the legal rights
and to take action consistent with the discussions hereinabove
set forth. No costs.
SO ORDERED.
Panganiban (C.J., Chairperson), Ynares-
Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Petition in G.R. Nos. 158930-31 denied, while that in G.R.
Nos. 158944-45 partly granted.
Notes.—An arbitral award can be considered as an
approximation of a collective bargaining agreement which
would otherwise have been entered into by the parties.
(Manila Electric Company vs. Qui-sumbing, 326 SCRA
172[2000])
Although union security clauses embodied in the collective
bargaining agreement may be validly enforced and that
dismissals pur-suant thereto may likewise be valid, this does
not erode the fundamental requirement of due process.
(Malayang Samahan ng mga Manggagawa sa M. Greenfield
(MSMG-UWP) vs. Ramos, 326 SCRA 428[2000])

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