Assignee: DMGracilla

Case Short Name: Union of Filipro Employees v. Nestle Philippines

Topic: Collective Bargaining Agreement (Art 261-266 Labor Code)

[G.R. Nos. 158930-31. March 3, 2008.]

UNION OF FILIPRO EMPLOYEES — DRUG, FOOD AND ALLIED INDUSTRIES UNIONS — KILUSANG
MAYO UNO (UFE-DFA-KMU), petitioner, vs. NESTLÉ PHILIPPINES, INCORPORATED, respondent.

[G.R. Nos. 158944-45. March 3, 2008.]

NESTLÉ PHILIPPINES, INCORPORATED, petitioner, vs. UNION OF FILIPRO EMPLOYEES — DRUG,
FOOD AND ALLIED INDUSTRIES UNIONS — KILUSANG MAYO UNO (UFE-DFA-KMU), respondent.

DOCTRINE

ARTICLE 261. [250] Procedure in Collective Bargaining. — The following procedures shall be observed in
collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a
statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt
of such notice;
(b) Should differences arise on the basis of such notice and reply, either party may request for a conference which
shall begin not later than ten (10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own
initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas
requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and
promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may
disrupt or impede the early settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a
voluntary arbitrator.
ARTICLE 262. [251] Duty to Bargain Collectively in the Absence of Collective Bargaining Agreements. — In the
absence of an agreement or other voluntary arrangement providing for a more expeditious manner of collective
bargaining, it shall be the duty of employer and the representatives of the employees to bargain collectively in
accordance with the provisions of this Code.
ARTICLE 263. [252] Meaning of Duty to Bargain Collectively. — The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment
including proposals for adjusting any grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.
ARTICLE 264. [253] Duty to Bargain Collectively When There Exists a Collective Bargaining Agreement. —
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party
shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both
parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is reached by the parties.
 ARTICLE 265. [253-A] Terms of a Collective Bargaining Agreement.[207] — Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five
(5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period
immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its
execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6)
months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement,
shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the
parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the Collective
Bargaining Agreement, the parties may exercise their rights under this Code.
ARTICLE 266. [254] Injunction Prohibited[208]. — No temporary or permanent injunction or restraining order in
any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise
provided in Articles 218 and 264 [209]of this Code.

FACTS

The purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties;
but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack
of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The
duty to bargain does not include the obligation to reach an agreement.

…whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the
individual case. There is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn
from the facts. To some degree, the question of good faith may be a question of credibility. The effect of an employer’s
or a union’s individual actions is not the test of good-faith bargaining, but the impact of all such occasions or actions,
considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the finding of the
NLRC.

For a charge of unfair labor practice to prosper, it must be shown that Nestlé was motivated by ill will, “bad faith,
or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of
course, that social humiliation, wounded feelings, or grave anxiety resulted x x x” in disclaiming unilateral grants as
proper subjects in their collective bargaining negotiations. While the law makes it an obligation for the employer and
the employees to bargain collectively with each other, such compulsion does not include the commitment to
precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the
negotiation with an open mind and make reasonable effort to reach a common ground of agreement.

FACTS

● Union of Filipro was the sole and exclusive bargaining agent of the rank-and-file employees of Nestlé’s
Alabang and Cabuyao plants.
● The existing CBA between Nestlé and the Union was to end on 2001, June 5.
● Presidents of the aforementioned plants informed Nestlé of their intention to open a new CBA for 2001-2004.
● In response, Nestlé was also preparing its counter-proposal and rules to govern the new CBA negotiation.
● Through another letter, Nestle reiterated grants and benefits that are not proper subjects of CBA negotiations
and shall thus be excluded:
 o unilateral grants
o one-time company grants
o company-initiated policies and programs, which include, but are not limited to the Retirement Plan,
Incidental Straight Duty Pay and Calling Pay Premium
● Dialogue between the company and the union ensued.
● Later, Nestle requested the NCMB to conduct preventive mediation proceedings between it and the Union
because even after 15 meetings, they failed to reach an agreement.
● The conciliation proceedings likewise failed.
● 1st Notice of Strike. The Union filed a Notice of Strike. It complained of a bargaining deadlock regarding
economic issues ("retirement” plan), panel composition, costs and attendance, and CBA”).
● 2nd Notice of Strike. They filed another notice alleging Nestle’s unfair labor practices due to bargaining in
bad faith by setting pre-conditions for ground rules such as refusing to include issuing Retirement Plan in the
CBA.
● Result of Strike. The overwhelming approval to hold a strike prospered.
● Before the strike, Nestle filed a petition for Assumption of Jurisdiction before the DOLE to enjoin any
impending strike by the Union from the Cabuyao plant.
● Sec. of DOLE, Hon. Sto. Tomas, issued an Order assuming jurisdiction over the subject labor dispute.
o It ordered the parties to convene before the NCMB, who will later submit a report to the DOLE.
o And if no settlement is reached, the Office shall define the outstanding issues and order the filing of
position papers for ruling on the merits.
● The Union sought reconsideration but moved for additional time to file its position paper.
● Sec. Sto. Tomas denied the MR.
● Thus, despite the order to enjoin, the Union went on strike.
● Sec. Sto. Tomas issued another Order:
o Members of the Union shall return to work with 24hrs
o Nestle shall accept all returning workers under the same terms and conditions existing preceding the
strike
o Both parties shall cease and desist from committing acts inimical to the conciliation proceedings
leading to further deterioration of the situation
o Parties shall submit their position papers
● Since the members continued to strike, Sec. Sto. Tomas sought assistance from the PNP.
● Eventually, the parties filed their position papers.
o Nestle: issues re economic provisions of the CBA + non-inclusion of the Retirement Plan
o Union: whether the Retirement Plan was mandatory in CBA nego
● (X) Sec. Sto. Tomas allowed the Union to submit a Supplemental Position Paper answering the claims of
Nestle.
● Instead, the Union filed several pleadings including a Manifestation with MR of the said Order (for
supplemental position paper) as being contrary to law, jurisprudence, and evidence.
● According to the Union, the Sec. of Labor could only assume jurisdiction over the issued mentioned in the
 Notice of Strike and that the amended Notice did not cite the CBA deadlock as one of its grounds.
● (Y) Sec. ST denied the MR.
● Union filed Petition for Certiorari before the CA. That Sec. Sto. Tomas committed grave abuse of discretion
amounting to lack of jurisdiction by issuing X and Y.
● In an attempt to finally resolve the matter, Acting Sec. of DOLE, Hon. Brion, ruled:

a. We hereby recognize that the present Retirement Plan at the Nestlé Cabuyao Plant is a
unilateral grant that the parties have expressly so recognized subsequent to the Supreme
Court's ruling in Nestlé, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is
therefore NOT a mandatory subject for bargaining;

b. the Union's charge of unfair labor practice against the Company is hereby dismissed for
lack of merit;

c. the parties are directed to secure the best applicable terms of the recently concluded CBSs
between Nestlé Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the
terms and conditions of the Nestlé Cabuyao Plant CBA;

d. all union demands that are not covered by the provisions of the CBAs of the other eight (8)
bargaining units in the Company are hereby denied;

e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without any counterpart in
the CBAs of the other eight bargaining units in the Company are hereby ordered maintained
as part of the new Nestlé Cabuyao Plant CBA;

f. the parties shall execute their CBA within thirty (30) days from receipt of this Order,
furnishing this Office a copy of the signed Agreement;

g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all
other provisions shall be renegotiated not later than three (3) years after its effective date
which shall be December 5, 2001 (or on the first day six months after the expiration on June
4, 2001 of the superceded CBA).

● Union moved to reconsider – denied.

● Union filed another Petition for Certiorari before the CA seeking to annul the Orders of the Sec of DOLE.
● CA ruled in the Union’s favor.
● Both parties appealed – both denied by CA.
● Union sought to reverse the CA decision re unfair labor practice. While Nestle sought to annul the CA
decision re retirement plan and the jurisdiction of the Sec. of DOLE.
● SC consolidated the petitions.

ISSUE/S
 1. Whether there is bad faith on the part of Nestle for excluding the grant for Retirement Plan as part of
the CBA. (NO)
1. Whether the Retirement Plan was a proper subject to be included in CBA negotiations (YES)
2. Whether the parties shall resume the negotiations by themselves respecting the issue of retirement
benefits (for the Cabuyao Plant) –– that the parties should submit to voluntary mode of dispute
settlement. (NO)

RULING

1) Whether there is bad faith on the part of Nestle for excluding the grant for Retirement Plan as part of the
CBA. (NO)

NO. No proof was presented to determine bad faith on the part of Nestlé apart from mere allegations. The Union failed
to present substantial evidence that would overcome the legal presumption of good faith on the part of Nestlé.

Nestle never refused to bargain collectively with the Union. The corporation simply wanted to exclude the
Retirement Plan from the issues to be taken up during CBA negotiations, because such was a unilaterally granted
benefit. An employer’s insistence to exclude a particular substantive provision is no different from a bargaining
representative’s perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence on a
bargaining position to the point where the negotiations reach an impasse does not establish bad faith.

● While there is NO test of good faith in bargaining, good faith or bad faith can be inferred from the facts.
● Nestlé's inclusion of the pre-condition in its Position Paper affecting other matters covered by the CBA
negates the claim of refusal to bargain or bargaining in bad faith.

WHEREFORE, premises considered, the basic issues of the case having been passed upon and there being no
new arguments availing, the Motion for Partial Reconsideration is hereby DENIED WITH FINALITY for
lack of merit. Let these cases be remanded to the Secretary of the Department of Labor and Employment for
proper disposition, consistent with the discussions in this Court's Decision of 22 August 2006 and as
hereinabove set forth. No costs.

ADDITIONAL NOTES
Other matters…
● Whether Nestle’s pre-condition for collective bargaining negotiations is an act of Unfair Labor Practice. (NO)
No, it cannot be construed as unfair labor practice because neither the second Notice of Strike nor
records of the case indicates such. It is not enough that the union believed that the employer
committed acts of unfair labor practice when the circumstances clearly negate even a prima facie
showing to warrant such a belief.

ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. — It shall be unlawful for an

employer to commit any of the following unfair labor practices
(g) To violate the duty to bargain collectively as prescribed by this Code

For a charge of ULP to prosper, it must be shown that Nestlé was motivated by ill will, “bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public
policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted x x x” in
disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. While the
 law makes it an obligation for the employer and the employees to bargain collectively with each
other, such compulsion does not include the commitment to precipitately accept or agree to the
proposals of the other. All it contemplates is that both parties should approach the negotiation with
an open mind and make reasonable effort to reach a common ground of agreement.

2) Whether the Retirement Plan was a proper subject to be included in CBA negotiations (YES)

YES. SC upheld the Union's contention, saying that there is nothing in either of the documents that prove that it agreed
to treat the Retirement Plan as a unilateral grant of the company which is outside the scope of the CBA.

In a similar case involving the same parties, the Court ruled a retirement plan is consensual in nature.

"The fact that the retirement plan is non-contributory does not make it a non-issue in the CBA negotiations.
Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand to increase the
benefits due the EEs under said plan is a valid CBA issue."

Here, as this benefit was already subject to the existing CBA, the members of Union were only exercising their
prerogative to bargain or renegotiate for the improvement of the terms of the Retirement Plan just like they would for
all the other economic & non-economic benefits previously enjoyed by them.

Precisely, the purpose of collective bargaining is the acquisition or attainment of the best possible covenants or terms
relating to economic & non-economic benefits granted by ERs due to EEs.

The Labor Code has imposed a mutual obligation on both parties to bargain collectively (LC 252 & 253).

Hence, the Retirement Plan was a proper subject to the CBA.

2.1) Whether assumption of powers of SOLE should have been limited merely to grounds alleged in the Second
Notice of Strike (NO)

NO. SOLE's assumption of jurisdiction power necessarily includes matters incidental to the labor dispute, that is,
issues that are necessarily involved in the dispute itself, not just to those ascribed in the Notice of Strike, or otherwise
submitted to him for resolution.

Even if not exactly on the ground upon which the Notice of Strike is based, the fact that the issue is incidental to the
resolution of the subject labor dispute or that a specific issue had been submitted to SOLE for her resolution, validly
empowers the latter to take cognizance of and resolve the same.

In any event, the question as to whether the Retirement Plan should be included in the CBA Negotiations between the
parties unavoidably dictates upon SOLE to go into the substantive matter of CBA negotiations.

3) Whether the parties shall resume the negotiations by themselves respecting the issue of retirement benefits (for the
Cabuyao Plant) –– that the parties should submit to voluntary mode of dispute settlement. (NO)

No, the Court did not require the parties to submit to negotiate by themselves regarding the retirement benefits because
the Secretary of the DOLE had already assumed jurisdiction over the labor dispute subject of herein petitions.

● "The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent
with the discussion hereinabove set forth. No costs."
● Again, we spell out what encompass the Secretary's assumption of jurisdiction power.

The Secretary of the DOLE has been explicitly granted by Article 263 (g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, and decide the same accordingly.

It includes questions incidental to the labor dispute;

● that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of
Strike or otherwise submitted to him for resolution.

HERE, the issue of retirement benefits was specifically what was presented before the Secretary of the DOLE.

THUS, the Secretary having already assumed jurisdiction over the labor dispute subject of these consolidated petitions,
the issue concerning the retirement benefits of the concerned employees must be remanded back to him for proper
disposition.

DISPOSITIVE

WHEREFORE, premises considered, the basic issues of the case having been passed upon and there being no new
arguments availing, the Motion for Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit.
Let these cases be remanded to the Secretary of the Department of Labor and Employment for proper disposition,
consistent with the discussions in this Court's Decision of 22 August 2006 and as hereinabove set forth. No costs.

SO ORDERED.