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
Unions
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
G.R. No. 158930-31. August 22, 2006. *
UNION OF FILIPRO EMPLOYEES-DRUG, FOOD AND
ALLIED INDUSTRIES UNIONS-KILUSANG MAYO UNO
(UFE-DFA-KMU), petitioner, vs. NESTLÉ PHILIPPINES,
INCORPORATED, respondent.
G.R. No. 158944-45. August 22, 2006. *
NESTLÉ PHILIPPINES, INCORPORATED,
petitioner, vs. UNION OF FILIPRO EMPLOYEES-DRUG,
FOOD AND ALLIED INDUSTRIES UNIONS-KILUSANG
MAYO UNO (UFE-DFA-KMU), respondent.
Labor Law; Collective Bargaining Agreements
(CBAs); Retirement Plans; A retirement plan is consensual in
nature.—The present issue is not one of first impression. In Nestlé
Philippines, Inc. v. NLRC, 193 SCRA 504 (1991), ironically involving
the same parties herein, this Court has had the occasion to affirm
that a retirement plan is consensual in nature.
Same; Same; Same; The purpose of collective bargaining is the
acquisition or attainment of the best possible covenants or terms
relating to economic and non-economic benefits granted by employers
and due the employees.—In the case at bar, it cannot be denied that
the CBA that was about to expire at that time contained provisions
respecting the Retirement Plan. As the latter benefit was already
subject of the existing CBA, the members of UFE-DFAKMU 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, as well as 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 and non-economic benefits
granted by employers and due the employees. The Labor Code has
actually imposed as a mutual obligation of both parties, this duty to
bargain collectively. The duty to bargain collectively is categorically
prescribed by Article 252 of the said code.
Retirement Plan cannot operate to divest the employees of their vested
and demand-
_______________
*FIRST DIVISION.
522
522 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
able right over existing benefits voluntarily granted by their
employer.—Contrary to the claim of Nestlé that the categorical
mention of the terms ‘unilateral agreement’ in the letter and the
MOA signed by the representatives of UFE-DFA-KMU, had, for all
intents and purposes worked to estop UFE-DFA-KMU from raising
it as an issue in the CBA negotiations, our reading of the same,
specifically Paragraph 6 and subparagraph 6.2:6. Additionally, the
COMPANY agree to extend the following unilateral grants which
shall not form part of the Collective Bargaining Agreement (CBA):
x x x x 6.2. Review for improvement of the COMPANY’s Retirement
Plan and the reference on the Retirement Plan in the Collective
Bargaining Agreement signed on 4 July 1995 shall be maintained.
hardly persuades us that the members of UFE-DFA-KMU have
agreed to treat the Retirement Plan as a benefit the terms of which
are solely dependent on the inclination of the Nestlé and remove the
subject benefit from the ambit of the 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 voluntarily granted by their employer.”
Besides, the contention that UFE-DFA-KMU has “abandoned” or
forsaken our earlier pronouncement vis-á-vis the consensual nature
of a retirement plan is quite inconsistent with, nay, is negated by its
conduct in doggedly asking for a renegotiation of said benefit.
Same; Same; Same; The consensual nature of the Retirement
Plan neither gives the union members the unfettered right nor the
unbridled prerogative to demand more than what the company can
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
their respective appetites. Suffice it to say that the consensual
nature of the Retirement Plan neither gives the union members the
unfettered right nor the unbridled prerogative to demand more than
what the company can viably give.
Same; Same; Same; Assumption Orders; The power granted to
the Secretary of the DOLE by par. (g) of Article 263 of the Labor Code
authorizes her 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 correlatively, to decide the same.—Declaring
the Secretary of the DOLE to have acted with grave abuse of
discretion for ruling on substantial matters or issues and not
restricting itself merely on the ground rules, the appellate court and
UFE-DFA-KMU would have us treat the subject labor dispute in a
piecemeal fashion. The power granted to the Secretary of the DOLE
by Para-
523
VOL. 499, AUGUST 22, 2006 523
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
graph (g) of Article 263 of the Labor Code, to wit: x x x x authorizes
her 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 correlatively, to decide the same.
Same; Same; Same; Same; The Secretary’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; The authority to assume
jurisdiction over a labor dispute must include and extend to all
questions and controversies arising therefrom.—Nevertheless,
granting for the sake of argument that the meetings undertaken by
the parties had not gone beyond the discussion of the ground rules,
the issue of whether or not the Secretary of the DOLE could decide
issues incidental to the subject labor dispute had already been
answered in the affirmative. The Secretary’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. As held in the case
of International Pharmaceuticals, Inc. v. Sec. of Labor and
Employment, 205 SCRA 59 (1992), “x x x [t]he Secretary was
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. Necessarily, this
authority to assume jurisdiction over the said labor dispute must
include and extend to all questions and controversies arising
therefrom, including cases over which the Labor Arbiter has
exclusive jurisdiction.” Accordingly, 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 the Secretary of the
DOLE for her resolution, validly empowers the latter to take
cognizance of and resolve the same.
Same; Same; Words and Phrases; “Unfair Labor Disputes,”
Explained.—The concept of “unfair labor practice” is defined by the
Labor Code as: ART. 247. CONCEPT OF UNFAIR LABOR
PRACTICE AND PROCEDURE FOR PROSECUTION
THEREOF.—Unfair labor practices violate the constitutional right
of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their
right to bargain collectively and otherwise deal with each other in
an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-
management relations.
524
524 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Same; Same; Presumption of Good Faith; Basic is the principle
that good faith is presumed and he who alleges bad faith has the
duty to prove the same.—Basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to prove the
same. By imputing bad faith unto the actuations of Nestlé, it was
UFE-DFA-KMU, therefore, who had the burden of proof to present
substantial evidence to support the allegation of unfair labor
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
Justices Mercedes Gozo-Dadole and Mariano C. Del Castillo
concurring; Rollo (G.R. No. 158930s-31, Vol. I), pp. 35-44, Annex “A” of the
Petition; Rollo (G.R. Nos. 158944-45), pp. 48-58, Annex “A” of the Petition.
526
526 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
tion dated 27 June 2003, of the Court of Appeals in CA-G.R.
2
SP No.69805 and No. 71540.
3 4
G.R. No. 158930-31 was filed by Union of Filipro
Employees—Drug, Food and Allied Industries Unions—
Kilusang Mayo Uno (UFE-DFA-KMU) against Nestlé
Philippines, Incorporated (Nestlé) seeking the reverse of the
Court of Appeals Decision in so far as the latter’s failure to
adjudge Nestlé guilty of unfair labor practice is concerned, as
well as the Resolution of 27 June 2003 denying its Partial
Motion for Reconsideration; G.R. No. 158944-45 was instituted
by Nestlé against UFE-DFA-KMU similarly seeking to annul
and set aside the Decision and Resolution of the Court of
Appeals declaring 1) the Retirement Plan a valid collective
bargaining issue; and 2) the scope of assumption of jurisdiction
power of the Secretary of the DOLE to be limited to the
resolution of questions and matters pertaining merely to the
ground rules of the collective bargaining negotiations to be
conducted between the parties.
In as much as the cases involve the same set of parties;
arose from the same set of circumstances, i.e., from several
Orders issued by then Secretary of the Department of Labor
and Employment (DOLE), Hon. Patricia A. Sto. Tomas,
respecting her assumption of jurisdiction over the labor
dispute between Nestlé and UFE-DFA-KMU, Alabang and
Cabuyao Divisions; and likewise assail the same Decision and
5
Resolution of the Court of Appeals, the Court ordered the
consolidation of the two petitions. 6
_______________
2 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 47-48, Annex “B” of the
Petition; Rollo (G.R. Nos. 158944-45), pp. 60-61, Annex “B” of the Petition.
3 Entitled “Union of Filipro Employees-Drug, Food and Allied Industries
Unions-Kilusang Mayo Uno (UFE-DFA-KMU) v. Hon. Patricia A. Sto. Tomas
and Nestlé Philippines, Inc. (Cabuyao Plant).”
4 Entitled “Union of Filipro Employees-DFA-KMU v. Office of the DOLE
Secretary and Nestlé Philippines, Inc.”
5 Concerning employees at Nestlé’s Alabang and Cabuyao factories.
6 SC Resolution dated 29 March 2004; Rollo (G.R. No. 158930s-31, Vol. II),
pp. 1247-1248.
527
VOL. 499, AUGUST 22, 2006 527
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
The Facts
From the record and the pleadings filed by the parties, we cull
the following material facts in this case:
On 4 April 2001, in consideration of the impending
expiration of the existing collective bargaining agreement
(CBA) between Nestlé and UFE-DFA-KMU on 5 June 7
2001, in a letter denominated as a Letter of Intent, the
8
Presidents of the Alabang and Cabuyao Divisions of UFE-
DFA-KMU, Ernesto Pasco and Diosdado Fortuna,
respectively, informed Nestlé of their intent to “open our new
Collective Bargaining Negotiation for the year 2001-2004 x x
x as early as June 2001.” 9
In a letter dated 10 April 2001, Nestlé acknowledged
10
receipt of the aforementioned letter. It also informed UFE-
DFA-KMU that it was preparing its own counter-proposal and
proposed ground rules that shall govern the conduct of the
collective bargaining negotiations.
On 29 May 2001, in another letter addressed to the UFE-
DFA-KMU (Cabuyao Division), Nestlé underscored its
position that “unilateral grants, one-time company grants,
company-initiated 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 nature
not proper subjects of CBA negotiations and therefore shall be
excluded therefrom.” In addition, it clarified that with the
11
closure of the Alabang Plant, the CBA negotiations will only
be applicable to the covered employees of the Cabuyao Plant;
hence, the Cabuyao Division of UFE-DFA-KMU became the
sole bargaining unit involved in the subject CBA negotiations.
Thereafter, dialogue between the company and the union
ensued.
_______________
7 Alabang and Cabuyao Divisions.
8 Annex “B” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), p. 281.
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.
528
528 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
In a letter dated 14 August 2001, Nestlé, claiming to have
reached an impasse in said dialogue, requested the National 12
Conciliation and Mediation Board (NCMB), Regional Office
No. IV, Imus, Cavite, to conduct preventive mediation
proceedings between it and UFE-DFA-KMU. Nestlé alleged
that despite fifteen (15) meetings between them, the parties
failed to reach any agreement on the proposed CBA. The
request was docketed as NCMB-RBIV-CAB-PM-08-035-01.
Conciliation proceedings nevertheless proved ineffective.
Complaining, in essence, of bargaining deadlock—pertaining
to economic issues, i.e., “retirement (plan), panel composition,
costs and attendance, and CBA,” UFE-DFA-KMU filed
13
a Notice of Strike on 31 October 2001 with the NCMB
14
docketed as NCMB-RBIV-LAG-NS-10-037-01. One week later,
or on 07 November 2001, another Notice of Strike was filed by 15
the UFE-DFA-KMU docketed as NCMB-RBIV-LAG-NS-11-
10-039-01, this time predicated on Nestlé’s alleged unfair
labor practices i.e., bargaining in bad faith in that it was
setting preconditions in the ground rules by refusing to include
the issue of the Retirement Plan in the CBA negotiations. A
strike vote was then conducted by UFE-DFA-KMU on 22
November 2001. The result was an overwhelming approval of
the decision to hold a strike. 16
On 26 November 2001, in view of the looming strike, Nestlé
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.
Tomas, assume jurisdiction over the current labor dispute as
mandated by Article 263 (g) of the Labor
_______________
12 In a letter addressed to Atty. Jose Velasco, Director, National Conciliation
and Mediation Board, Regional Office No. IV, Imus Cavite; Annex “F” of the
Petition; Rollo (G.R. Nos. 158944-45), p. 104.
13 Original Records, Vol. IV, p. 1.
14 Id.
15 Original Records, Vol. II, p. 146.
16 Of the 789 regular rank-and-file employees of Nestlé (Cabuyao Factory,
Laguna), only 724 employees voted; the YES ballot garnered 708 votes, while
only 13 employees decided against the plan to stage a strike; Records, Vol. II,
p. 150.
17 Dated 23 November 2001; Rollo (G.R. Nos. 158944-45) pp. 112-129.
529
VOL. 499, AUGUST 22, 2006 529
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Code, as amended, thereby effectively enjoining any
impending strike at the Nestlé Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order in 18
OS-AJ-0023-01, NCMB-RBIV-CAV-PM-08-035-01, NCMB-
RBIV-LAG-NS-10-037-01 & NCMB-RBIV-LAG-NS-11-10-
039-01 assuming jurisdiction over the subject labor dispute
between the parties, the fallo thereof stating that:
CONSIDERING THE FOREGOING, this Office hereby assumes
jurisdiction over the labor dispute at the Nestlé Philippines, Inc.
(Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as
amended.
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.
The parties are further directed to meet and convene for the
discussion of the union proposals and company counter-proposals
before the National Conciliation and Mediation Board (NCMB) who
is hereby designated as the delegate/facilitator of this Office for this
purpose. The NCMB shall report to this Office the results of this
attempt at conciliation and delimitation of the issues within thirty
(30) days from the parties’ receipt of this Order, in no case later than
December 31, 2001. If no settlement of all the issues is reached, this
Office shall thereafter define the outstanding issues and order the
filing of position papers for a ruling on the merits.
UFE-DFA-KMU sought reconsideration of the abovequoted
19
Assumption of Jurisdiction Order on the assertion that:
1. i.Article 263 (g) of the Labor Code, as amended, is
invalid and unconstitutional as it is in derogation of
the provisions dealing on protection to labor, social
justice, the bill of rights, and, generally accepted
principle of international law;
2. ii.compulsory arbitration as a mode of dispute
settlement provided for in the Labor Code and sourced
from the 1935 and 1973 constitutions has been
discarded and deleted by the New Charter which
instituted in its stead free collective bargaining;
_______________
Id., at pp. 130-135.
18
19Dated 29 November 2001; Annex “L” of the Petition; Rollo (G.R. Nos.
158944-45), pp. 136-182.
530
530 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
1. iii.that ILO condemns the continuous exercise by the
Secretary of Labor of the power of compulsory
arbitration;
2. iv.granting that the law is valid, the Secretary has
unconstitution-ally applied the law;
3. v.that the company is a business enterprise not
belonging to an industry indispensable to the national
interest considering that it is only one among a
number of companies in the country producing milk
and nutritional products; that the Cabuyao plant is
only one of the six (6) Nestlé plants in the country and
could rely on its highly automated Cagayan de Oro
plant for buffer stocks;
4. vi.that the Secretary acted with grave abuse of
discretion in issuing the assailed order without the
benefit of a prior notice and inquiry. In
the interregnum, the union interposed a motion for
extension of time to file its position paper as directed
20
by the Assumption of Jurisdiction Order of 29
November 2001.
In an Order dated 14 January 2002, Sec. Sto. Tomas denied
21
the aforequoted motion for reconsideration in this wise:
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
x x x this Office ruled:
The constitutionality of the power of the Secretary of Labor under Article
263 (g) of the Labor Code to assume jurisdiction over a labor dispute in an
industry indispensable to the national interest has been upheld as an
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
_______________
20 Denominated as Motion for Time.
21 Annex “F” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), pp. 317-321.
531
VOL. 499, AUGUST 22, 2006 531
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
1. The foregoing article clearly does not interfere with the
worker’s right to strike but merely regulates it, when in the
exercise of such right, national interests will be affected.
On 15 January 2002, despite the injunction contained in Sec. 22
Sto. Tomas’ Assumption of Jurisdiction Order and conciliation
efforts by the NCMB, the employee members of UFE-DFA-
KMU at the Nestlé Cabuyao Plant went on strike.
On 16 January 2002, in consideration of the above, Sec. Sto.
Tomas issued yet another Order directing: (1) the members of
23
UFE-DFA-KMU to return-to-work within twenty-four (24)
hours from receipt of such Order; (2) Nestlé to accept back all
returning workers under the same terms and conditions
existing preceding to the strike; (3) both parties to cease and
desist from committing acts inimical to the ongoing
conciliation proceedings leading to the further deterioration of
the situation; and (4) the submission of their respective
position papers within ten (10) days from receipt thereof.
Notwithstanding the Return-To-Work Order, the members
of UFE-DFA-KMU continued with their strike and refused to
go back to work as instructed. Thus, Sec. Sto. Tomas sought
the assistance of the Philippine National Police (PNP) for the
enforcement of said order.
At the hearing called on 7 February 2002, Nestlé and UFE-
DFA-KMU filed their respective position papers. In its
position paper, Nestlé addressed several issues allegedly
24
pertaining to the current labor dispute, i.e., economic
provisions of the CBA as well as the non-inclusion of the issue
of the Retirement Plan in the collective bargaining
negotiations. UFE-DFA-KMU, in contrast, limited itself to
tackling the solitary issue of whether or not the retirement
plan was a
_______________
22 “x x x x
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.
xxxx
23 Rollo (G.R. Nos. 158944-45), pp. 192-193.
24 Position Paper of Nestlé; Annex “O” of the Petition; Rollo (G.R. Nos.
158944-45), pp. 194-310.
532
SUPREME COURT REPORTS ANNOTATED 532
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
mandatory subject in its CBA negotiations with the company
on the contention “that the Order of Assumption of
Jurisdiction covers only the issue of Retirement Plan.” 25
On 8 February 2002, Nestlé moved that UFE-DFA-KMU be
declared to have waived its right to present arguments
respecting the other issues raised by the company on the
ground that the latter chose to limit itself to discussing only
one (1) issue. Sec. Sto. Tomas, in an Order dated 11 February
26
2002, however, did not see fit to grant said motion. She instead
allowed UFE-DFA-KMU the chance to tender its stand on the
other issues raised by Nestlé but not covered by its initial
position paper paper by way of a Supplemental Position Paper.
UFE-DFA-KMU afterward filed several pleadings: (1)
an Urgent Motion to File a Reply dated 13 February 2002; (2)
a Motion for Time to File Supplemental Position Paper dated
22 February 2002; and (3) a Manifestation with Motion for
Reconsideration of the Order dated February 11, 2002 dated 27
February 2002. The latter pleading was an absolute
contradiction of the second one praying for additional time to
file the subject supplemental position paper. In
said Manifestation, UFE-DFA-KMU explained that it
“realized that the Order of February 11, 2002 appears to be
contrary to law and jurisprudence and is not in conformity
with existing laws and the evidence on re-cord,” as the
Secretary of the DOLE “could only assume jurisdiction over
the issues mentioned in the notice of strike subject of the
current dispute.” UFE-DFA-KMU then went on to clarify that
28
the Amended Notice of Strike did not cite, as one of the
grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for
reconsideration of UFE-DFA-KMU.
_______________
25 Annexes “P” & “Q” of the Petition; Rollo (G.R. No. 158944-45), pp. 311-
336 and pp. 337-339.
26 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 323-324.
27 Rollo (G.R. Nos. 158944-45), p. 428.
28 Id.
533
VOL. 499, AUGUST 22, 2006 533
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Frustrated with the foregoing turn of events, UFE-DFA-KMU
filed a petition for certiorari with application for the issuance
29
of a temporary restraining order or a writ of preliminary
injunction before the Court of Appeals. The petition was
predicated on the question of whether or not the DOLE
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
DOLE, Hon. Arturo D. Brion, came out with an Order dated
02 April 2002, in the main, ruling that:
1. 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.
27 NLRC, G.R. No. 90231, February 4, 1991, and is
therefore not a mandatory subject for bargaining;
2. b.the Union’s charge of unfair labor practice against the
Company is hereby dismissed for lack of merit;
3. c.the parties are directed to secure the best applicable
terms of the recently concluded CBs between Nestlé
Phils. Inc. and its eight (8) other bargaining units, and
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
provisions of the CBAs of the other eight (8) bargaining
units in the Company are hereby denied;
5. 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;
6. 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;
7. 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
_______________
CA Rollo (CA-G.R. SP No. 69805).
29
30
Annex “BB” of the Petition; Rollo (G.R. Nos. 158944-45), pp. 508-520.
30
534
534 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
the first day six months after the expiration on June 4, 2001
of the superceded CBA).
Not surprisingly, UFE-DFA-KMU moved to reconsider the
aforequoted position of the DOLE.
On 6 May 2002, the Secretary of the DOLE, Hon. Sto.
Tomas, issued the last of the assailed Orders. This order
31
resolved to deny the preceding motion for reconsideration of
UFE-DFA-KMU.
Undaunted still, UFE-DFA-KMU, for the second time, went
to the Court of Appeals likewise via a petition
for certiorari seeking to annul, on the ground of grave abuse of
discretion, the Orders of 02 April 2002 and 06 May 2002 of the
Secretary of the DOLE.
The Court of Appeals, acting on the twin petitions
for certiorari, determined the issues in favor of UFE-DFA-
KMU in a joint Decision dated 27 February 2003. The
dispositive part thereof states that:
“WHEREFORE, in view of the foregoing, there being grave abuse on
the part of the public respondent in issuing all the assailed Orders,
both petitions are hereby GRANTED. The assailed Orders dated
February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as
well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP
No. 71540) of the Secretary of Labor and Employment in the case
entitled: “IN RE: LABOR DISPUTE AT NESTLÉ PHILIPPINES
INC. (CABUYAO FACTORY)” under OS-AJ-0023-01 (NCMB-RBIV-
CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB-
RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED and SET
ASIDE. Private respondent is hereby directed to resume the CBA
negotiations with the petitioner”32
Dissatisfied, both parties separately moved for the
reconsideration of the abovequoted decision—with Nestlé
basically assailing that part of the decision finding the DOLE
Secretary to have gravely abused her discretion when she
ruled that the Retirement Plan is not a valid issue for
collective bargaining negotiations; while UFE-DFA-KMU
_______________
Annex “L” of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), pp. 802-806.
31
Id., at p. 43.
32
535
VOL. 499, AUGUST 22, 2006 535
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
questions, in essence, the appellate court’s decision in
absolving Nestlé of the charge of unfair labor practice.
The parties’ efforts were all for naught as the Court of
Appeals stood pat in its earlier pronouncements and denied
the motions for reconsideration in a joint Resolution dated 27
June 2003.
Hence, these petitions for review on certiorari separately
filed by the parties. Said petitions were ordered consolidated
in a Supreme Court Resolution dated 29 March 2004.
The Issues
UFE-DFA-KMU’s petition for review docketed as G.R. No.
158930-31, is predicated on the following alleged errors:
I.
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF
LAW IN
NOT HOLDING THAT RESPONDENT IS GUILTY OF UNFAIR
LABOR PRACTICE IN REFUSING TO PROCEED WITH THE
CBA NEGOTIATIONS UNLESS PETITIONER FIRST ADMITS
THAT THE RETIREMENT PLAN IN THE COMPANY IS A NON-
CBA MATTER; and
II.
THE CONTENTION THAT THERE IS NO EVIDENCE OF
UNFAIR LABOR PRACTICE ON RESPONDENT NESTLÉ’S PART
AND THAT PETITIONER DID NOT RAISE THE ISSUE OF ULP
IN ITS ARGUMENTS BEFORE THE COURT OF APPEALS IS
GROSSLY ERRONEOUS. 33
Whereas in G.R. No. 158944-45, petitioner Nestlé challenges
the conclusion of the Court of Appeals on the basis of the
following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN HOLDING THAT THE POWERS GRANTED
TO THE SECRETARY OF LABOR TO RESOLVE NATIONAL
INTEREST DISPUTES UNDER ARTICLE 263 (G) OF THE
LABOR CODE MAY BE LIMITED BY A (SECOND) NOTICE OF
STRIKE; and
_______________
33 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1669.
536
536 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN ANNULING THE SECRETARY OF
LABOR’S JUDGMENT ON THE RETIREMENT PLAN ISSUE
WHICH WAS MERELY A PART OF THE COMPLETE
RESOLUTION OF THE LABOR DISPUTE. 34
On the whole, the consolidated cases only raise three (3)
fundamental issues for deliberation by this Court, that is,
whether or not the Court of Appeals committed reversible
error, first, in finding the Secretary of Labor and Employment
to have gravely abused her discretion in her pronouncement
that the Retirement Plan was not a proper subject to be
included in the CBA negotiations between the parties; hence,
non-negotiable; second, in holding that the assumption
powers of the Secretary of Labor and Employment should have
been limited merely to the grounds alleged in the second
Notice of Strike; and third, in not ruling that Nestlé was
guilty of unfair labor practice despite allegedly setting a pre-
condition to bargaining—the non-inclusion of the Retirement
Plan as an issue in the collective bargaining negotiations.
The Court’s Ruling
Foremost for our resolution is the matter of the non-inclusion
of the Retirement Plan in the CBA negotiations between
Nestlé and UFE-DFA-KMU (Cabuyao Division).
In finding the Secretary of the DOLE to have gravely
abused her discretion in holding that the Retirement Plan
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
extend the following unilateral grants which shall not form part of
the CBA” (citation omitted) however, the same document made a
proviso that “reference on the Retirement Plan in the CBA signed on
July 4, 1995, shall be maintained,” x x x thus, this Court is of the
belief and so holds that the Retirement Plan is
_______________
34 Id., at p. 1735.
537
VOL. 499, AUGUST 22, 2006 537
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
still a valid CBA issue, hence, it could not be argued that the true
intention of the parties is that the Retirement Plan, although
referred in the CBA, would not in any way form part of the CBA
(citation omitted) as it could be clearly inferred by this Court that it
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
Court in the previous Nestlé Case that “the Retirement Plan was a
collective bargaining issue right from the start.” 35
In filing the present petition, Nestlé is of the view that after
the 1991 Supreme Court Decision was promulgated, there was
obviously an agreement by the parties to no longer consider
the Retirement Plan as a negotiable item subject to
bargaining. Rather, said benefit would be regarded as a
unilateral grant outside the ambit of negotiation. Nestlé
justifies such contention by directing the Court’s attention to
the Ground Rules for 1998 Alabang/Cabuyao Factories’ CBA
Negotiation (citation omitted) signed by it and the
representatives of UFE-DFA-KMU where both sides
“expressly” recognized Nestlé’s prerogative to initiate
unilateral grants which are ‘not negotiable.’ It likewise cited
the Memorandum of Agreement entered into by the parties
36
on 08 October 1998, which also “categorically” referred to the
Retirement Plan as one of the unilateral grants alluded to in
the aforementioned Ground Rules. Nestlé then concluded that:
Indeed, the foregoing uncontroverted documents very clearly
established the clear agreement of the parties, after the 1991
Supreme Court Decision, to remove the Retirement Plan from the
scope of bargaining negotiation, and leave the matter upon the sole
initiative and discretion of Nestlé.
37
In contrast, UFE-DFA-KMU posits that there is nothing in
either of the documents aboveclaimed that proves that it
agreed “to treat the Retirement Plan as a unilateral grant of
the company which is outside the scope of the CBA and hence,
not a proper subject of bargain-
_______________
35 Rollo (G.R. Nos. 158930-31, Vol. I), pp. 42-43.
Annex “2” of Nestlé’s Comment in CA-G.R. SP No. 71540, pp. 614-619;
36
Annex “E” of Nestlé’s Memorandum; Rollo (G.R. Nos. 158944-45), pp. 1270-
1275.
37 Rollo (G.R. Nos. 158944-45), p. 1235.
538
538 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
ing.” It explained that the MOA alluded to by Nestlé merely
speaks of the improvement or the review for the
38
improvement of the current Retirement Plan and nothing
39
else. UFE-DFA-KMU rationalizes that:
Had the objective of the parties been to consider the Retirement
Plan as not a subject for collective bargaining, they would have
stated so in categorical terms. Or, they could have deleted the said
benefit from the CBA.
Unfortunately for petitioner, the documents relied upon by it do
not state that the Retirement Plan is no longer a bargainable item.
The said benefit was not also removed or deleted from the CBA.
If ever, what was “unilaterally granted” by petitioner company
as appearing on the above-stated letter and MOA were the
“improvements” on the Retirement Plan. The Retirement Plan could
not have been unilaterally granted by the said letter and MOA since
the said Plan predates the said letter and MOA by over two decades.
UFE-DFA-KMU concludes that “[s]ince the Retirement Plan
did not derive its existence from the letter and MOA x x x, the
nature of the Retirement Plan was not altered or changed by
the subsequent issuance by petitioner company of the said
letter and MOA. The Retirement Plan remained a CBA item
which is a proper subject of collective bargaining pursuant to
the 1991 ruling of this Honorable Court.” 40
We agree.
The present issue is not one of first impression. In Nestlé
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.
By way of background, the parties therein resorted to a
“slowdown” and walked out of the factory prompting the
management to shut down its operations. Collective
bargaining negotiations were con-
_______________
38 Respondent’s Memorandum in G.R. Nos. 158944-45, p. 12; Rollo(G.R. Nos.
158930-31, Vol. II), p. 1703.
39 Id.
40 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1704.
41 G.R. No. 91231, 4 February 1991, 193 SCRA 504.
539
VOL. 499, AUGUST 22, 2006 539
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
ducted but a deadlock was subsequently declared. The
Secretary of Labor assumed jurisdiction over the labor dispute
and issued a return-to-work order. The NLRC thereafter
issued its resolution modifying Nestlé’s existing “non-
contributory” Retirement Plan. The company filed a petition
for certiorari alleging grave abuse of discretion on the part of
the NLRC as Nestlé was arguing that since its Retirement
Plan is non-contributory, it should be a non-issue in CBA
negotiations. Nestlé had the sole and exclusive prerogative to
define the terms of the plan as the employees had no vested
and demandable rights thereon—the grant of such not being a
contractual obligation but simply gratuitous. In a ruling
contrary to Nestlé’s position, this Court, through Madame
Justice Griño-Aquino, declared that:
The company’s [Nestlé] contention that its retirement plan is
nonnegotiable, is not well-taken. The NLRC correctly observed
that the inclusion of the retirement plan in the collective
bargaining agreement as part of the package of economic
benefits extended by the company to its employees to provide
them a measure of financial security after they shall have ceased to
be employed in the company, reward their loyalty, boost their
morale and efficiency and promote industrial peace, gives “a
consensual character” to the plan so that it may not be
terminated or modified at will by either party (citation
omitted).
The fact that the retirement plan is non-contributory, i.e.,
that the employees contribute nothing to the operation of the
plan, does not make it a non-issue in the CBA negotiations. As
a matter of fact, almost all of the benefits that the petitioner has
granted to its employees under the CBA—salary increases, rice
allowances, midyear bonuses, 13th and 14th month pay, seniority
pay, medical and hospitalization plans, health and dental services,
vacation, sick & other leaves with pay—are non-contributory
benefits. Since the retirement plan has been an integral part
of the CBA since 1972, the Union’s demand to increase the
benefits due the employees under said plan, is a valid CBA
issue. x x x
xxxx
x x x [E]mployees do have a vested and demandable right
over existing benefits voluntarily granted to them by their
employer. The latter may not unilaterally withdraw,
eliminate or diminish such
540
540 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
benefits (Art. 100, Labor Code; other citation omitted). [Emphases
supplied.]
42
In the case at bar, it cannot be denied that the CBA that was
about to expire at that time contained provisions respecting
the Retirement Plan. As the latter benefit was already subject
of the existing CBA, the members of UFE-DFA-KMU 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, as well as 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 and
noneconomic benefits granted by employers and due the
employees. The Labor Code has actually imposed as a mutual
obligation of both parties, this duty to bargain collectively. The
duty to bargain collectively is categorically prescribed by
Article 252 of the said code. It states:
ART. 252. MEANING OF DUTY TO BARGAIN
COLLECTIVELY.—The duty to bargain collectively means the
performance of a mutual obligation to meet and confer promptly and
expeditiously and 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 agreement if requested by
either party, but such duty does not compel any party to agree to a
proposal or to make any concession.
Further, Article 253, also of the Labor Code, defines the
parameter of said obligation when there already exists a
CBA, viz.:
ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN
THERE EXISTS A COLLECTIVE BARGAINING
AGREEMENT.—The duty to bargain collectively shall also mean
that either party shall not 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
_______________
42 Id., at pp. 508-509.
541
VOL. 499, AUGUST 22, 2006 541
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
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
opened for renegotiation, the members of UFE-DFA-KMU are
acting well within their rights as we have, indeed, declared
that the Retirement Plan is consensual in character; and so,
negotiable.
Contrary to the claim of Nestlé that the categorical mention
of the terms ‘unilateral agreement’ in the letter and the MOA
signed by the representatives of UFE-DFA-KMU, had, for all
intents and purposes worked to estop UFE-DFA-KMU from
raising it as an issue in the CBA negotiations, our reading of
the same, specifically Paragraph 6 and subparagraph 6.2:
1. 6.Additionally, the COMPANY agree to extend the
following unilateral grants which shall not form part
of the Collective Bargaining Agreement (CBA):
xxxx
1. 6.2.Review for improvement of the COMPANY’s
Retirement Plan and the reference on the Retirement
Plan in the Collective Bargaining Agreement signed on
4 July 1995 shall be maintained.43
hardly persuades us that the members of UFE-DFA-KMU
have agreed to treat the Retirement Plan as a benefit the
terms of which are solely dependent on the inclination of the
Nestlé and remove the subject benefit from the ambit of the
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
voluntarily granted by their employer.” Besides, the
44
contention that UFE-DFA-KMU has “abandoned” or forsaken
our earlier pronouncement vis-á-vis the consensual nature of
a retirement plan is quite inconsistent with, nay, is negated by
its conduct in doggedly asking for a renegotiation of said
benefit.
_______________
Rollo (G.R. Nos. 158944-45), p. 1273.
43
Art. 100 of the Labor Code.
44
542
542 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
Worth noting, at this point, is the fact that the aforequoted
paragraph 6 and its subparagraphs, particularly
subparagraph 6.2, highlights an undeniable fact—that Nestlé
recognizes that the Retirement Plan is part of the existing
Collective Bargaining Agreement.
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 their respective appetites. Suffice it to say
that the consensual nature of the Retirement Plan neither
gives the union members the unfettered right nor the
unbridled prerogative to demand more than what the company
can viably give.
As regards the scope of the assumption powers of the
Secretary of the DOLE, the appellate court ruled that Sec. Sto.
Tomas’ assumption of jurisdiction powers should have been
limited to the disagreement on the ground rules of the
collective bargaining negotiations. The Court of Appeals
referred to the minutes of the meeting held on 30 October
2001. That the representative Nestlé was recorded to have
stated that “we are still discussing ground rules and not yet on
the CBA negotiations proper, a deadlock cannot be
declared,” was a telling fact. The Court of Appeals, thus,
45
declared that the Secretary “should not have ruled on the
questions and issues relative to the substantive aspect of the
CBA simply because there was no conflict on the CBA yet.” 46
UFE-DFA-KMU agrees in the above and contends that the
requisites of judicial inquiry require, first and foremost the
presence of an actual case controversy. It then concludes that
“[i]f the courts of law cannot act and decide in the absence of
an actual case or controversy, so should be (sic) also the
Honorable DOLE Secretary.” 47
Nestlé, however, contradicts the preceding disquisitions on
the ground that such referral to the minutes of the meeting
was erroneous and misleading. It avers that the Court of
Appeals failed to consider the circumstance surrounding said
utterance—that the state-
_______________
45 CA Rollo (CA G.R.-SP No. 69805), p. 503.
46 Rollo (G.R. Nos. 158930-31, Vol. I), p. 41.
47 Rollo (G.R. Nos. 158930-31, Vol. II), p. 1699.
543
VOL. 499, AUGUST 22, 2006 543
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
ment was made during the preventive mediation proceedings
and the UFE-DFA-KMU had not yet filed any notice of strike.
It further emphasizes that it was UFE-DFA-KMU who first
alleged bargaining deadlock as the basis for the filing of its
Notice of Strike. Finally, Nestlé clarifies that before the first
Notice of Strike was filed, several conciliation conferences had
already been undertaken where both parties had exchanges of
their respective CBA proposals.
In this, we agree with Nestlé. Declaring the Secretary of the
DOLE to have acted with grave abuse of discretion for ruling
on substantial matters or issues and not restricting itself
merely on the ground rules, the appellate court and UFE-DFA-
KMU would have us treat the subject labor dispute in a
piecemeal fashion.
The power granted to the Secretary of the DOLE by
Paragraph (g) of Article 263 of the Labor Code, to wit:
ART. 263. STRIKES, PICKETING, AND LOCKOUTS.—
xxxx
(g) When, in his opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in
the assumption or certification order. If one has already taken place
at the time of assumption or certification, all striking or locked out
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.
The Secretary of Labor and Employment or the Commission may
seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may
issue to enforce the same.
xxxx
authorizes her 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 correlatively, to
decide the same.
544
substance. Further, it is a fact that during the conciliation
meetings before the NCMB, but prior to the filing of the notices
of strike, the parties had already delved into matters affecting
the meat of the collective bargaining agreement. The appellate
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
Notice is an amendment to and took the place of the first Notice of
Strike. In fact, our Assumption of Jurisdiction Order dated
November 29, 2001 specifically cited the two (2) Notices of Strike
without any objection on the part of the Union x x x. 48
Thus, based on the Notices of Strike filed by UFE-DFA-KMU,
the Secretary of the DOLE rightly decided on matters of
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. Necessarily, this
authority to assume jurisdiction over the said labor dispute
must include and extend to all questions and controversies
arising therefrom, including cases over which the Labor
Arbiter has exclusive jurisdiction.” Accordingly, even if not
51
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 the Secretary of the DOLE for her resolution,
validly empowers the latter to take cognizance of and resolve
the same.
Secretary Sto. Tomas correctly assumed jurisdiction over
the questions incidental to the current labor dispute and those
matters raised by the parties. In any event, the query as to
whether or not the Retirement Plan is to be included in the
CBA negotiations between the parties ineluctably dictates
upon the Secretary of the DOLE to go into the substantive
matter of the CBA negotiations.
Lastly, the third issue pertains to the alleged reversible
error committed by the Court of Appeals in holding, albeit
impliedly, Nestlé free and clear from any unfair labor practice.
UFE-DFA-KMU argues
_______________
G.R. Nos. 92981-83, 9 January 1992, 205 SCRA 59.
50
Id., at pp. 65-66.
51
546
546 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
that Nestlé’s “refusal to bargain on a very important CBA
economic provision constitutes unfair labor practice.” It 52
explained that Nestlé set as a precondition for the holding of
collective bargaining negotiations the non-inclusion of the
issue of Retirement Plan. In its words, “respondent Nestlé
Phils., Inc. insisted that the Union should first agree that the
retirement plan is not a bargaining issue before respondent
Nestlé would agree to discuss other issues in the CBA.” It 53
then concluded that “the Court of Appeals committed a legal
error in not ruling that respondent company is guilty of unfair
labor practice. It also committed a legal error in failing to
award damages to the petitioner for the ULP committed by the
respondent.” 54
Nestlé refutes the above argument and asserts that it was
only before the Court of Appeals, and in the second Petition
for Certiorari at that, did UFE-DFA-KMU raise the matter of
unfair labor practice. It reasoned that the subject of unfair
labor practice should have been threshed out with the
appropriate labor tribunal. In justifying the failure of the
Court of Appeals to find it guilty of unfair labor practice, it
stated that:
Under the circumstances, therefore, there was no way for the Court
of Appeals to make a ruling on the issues of unfair labor practice
and damages, simply because there was nothing to support or justify
such action. Although petitioner was afforded by the Secretary the
opportunity to be heard and more, it simply chose to omit the said
issues in the proceedings below.
55
We are persuaded.
The concept of “unfair labor practice” is defined by the
Labor Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE
ANDPROCEDURE FOR PROSECUTION THEREOF.—Unfair
labor practices
_______________
52 Petitioner’s Memorandum, pp 10-11; Rollo (G.R. Nos. 158930-31), pp. 1672-
1673.
53 Id.
Id., at pp. 1671-1672.
54
55 Respondent’s Memorandum, pp. 22-23; Rollo (G.R. Nos. 158930-31, Vol. II),
pp. 1627-1628.
547
VOL. 499, AUGUST 22, 2006 547
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and
mutual respect, disrupt industrial peace and hinder the promotion
of healthy and stable labor-management relations. x x x x.
The same code likewise provides the acts constituting unfair
labor practices committed by employers, to wit:
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS.—It
shall be unlawful for an employer to commit any of the following
unfair labor practices:
1. (a)To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;
2. (b)To require as a condition of employment that a person or
an employee shall not join a labor organization or shall
withdraw from one to which he belongs;
3. (c)To contract out services or functions being performed by
union members when such will interfere with, restrain or
coerce employees in the exercise of their right to self-
organization;
4. (d)To initiate, dominate, assist or otherwise interfere with
the formation or administration of any labor organization,
including the giving of financial or other support to it or its
organizers or supporters;
5. (e)To discriminate in regard to wages, hours of work, and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall
stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment,
except those employees who are already members of
another union at the time of the signing of the collective
bargaining agreement.
Employees of an appropriate collective bargaining unit who are
not members of the recognized collective bargaining agent may be
assessed a reasonable fee equivalent to the dues and other fees paid
by members of the recognized collective bargaining agent, if such
non-union members accept the benefits under the collective
agreement. Provided, That the individual authorization required
under Article 242, paragraph (o) of this Code shall not apply to the
nonmembers of the recognized collective bargaining agent; [The
article referred to is 241, not 242.—CAA]
548
548 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
1. (f)To dismiss, discharge, or otherwise prejudice or
discriminate against an employee for having given or being
about to give testimony under this Code;
2. (g)To violate the duty to bargain collectively as
prescribed by this Code;
3. (h)To pay negotiation or attorney’s fees to the union or its
officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute; or
4. (i)To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only
the officers and agents of corporations associations or partnerships
who have actually participated, authorized or ratified unfair labor
practices shall be held criminally liable. [Emphasis supplied.]
Herein, Nestlé is accused of violating its duty to bargain
collectively when it purportedly imposed a pre-condition to its
agreement to discuss and engage in collective bargaining
negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases
at bar shows that, of the two notices of strike filed by UFE-
DFA-KMU before the NCMB, it was only on the second that
the ground of unfair labor practice was alleged. Worse, the 7
November 2001 Notice of Strike merely contained a general
allegation that Nestlé committed unfair labor practice by
bargaining in bad faith for supposedly “setting precondition in
the ground rules (Retirement issue).” On the contrary, Nestlé,
56
in its Position Paper, did not confine itself to the issue of the
non-inclusion of the Retirement Plan but extensively
discussed its stance on other economic matters pertaining to
the CBA.
Basic is the principle that good faith is presumed and he
who alleges bad faith has the duty to prove the same. By 57
imputing bad faith unto the actuations of Nestlé, it was UFE-
DFA-KMU, therefore, who had the burden of proof to present
substantial evidence to sup-
_______________
56 Notice of Strike of 7 November 2001; Annex “C” of UFE-DFA-KMU
Position Paper; Records, p. 146.
57 Chua v. Court of Appeals, 312 Phil. 405, 411; 242 SCRA 341, 345 (1995).
549
VOL. 499, AUGUST 22, 2006 549
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
port the allegation of unfair labor practice. A perusal of the
allegations and arguments raised by UFE-DFA-KMU in the
Memorandum (in G.R. Nos. 158930-31) will readily disclose
that it failed to discharge said onus probandi as there is still a
need for the presentation of evidence other than its bare
contention of unfair labor practice in order to make certain the
propriety or impropriety of the unfair labor practice charge
hurled against Nestlé. Under Rule XIII, Sec. 4, Book V of the
Implementing Rules of the Labor Code:
x x x. In cases of unfair labor practices, the notice of strike shall
as far as practicable, state the acts complained of and the
efforts to resolve the dispute amicably.” [Emphasis supplied.]
Except for the assertion put forth by UFE-DFA-KMU, neither
the second Notice of Strike nor the records of these cases
substantiate a finding of unfair labor practice. 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. In its
letter to UFE-DFA-KMU of 29 May 2001, though Nestlé
59
underscored its position that “unilateral grants, onetime
company grants, company-initiated 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 nature not proper subjects of CBA negotiations
and therefore shall be excluded therefrom,” such attitude is not
tantamount to refusal to bargain. This is especially true when
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
for considering the same benefit as unilaterally granted. To be
sure, it must be shown that Nestlé was motivated by ill will,
“bad
_______________
58 Tiu v. National Labor Relations Commission, 343 Phil. 478, 486-487; 277
SCRA 680, 688 (1997).
59 “x x x [U]nilateral grants, one-time company grants, company-initiated
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
nature not proper subjects of CBA negotiations and therefore shall be excluded
therefrom.”
550
550 SUPREME COURT REPORTS ANNOTATED
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
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
60
proper subjects in their collective bargaining negotiations.
There is no per se test of good faith in bargaining. Good 61
faith or bad faith is an inference to be drawn from the facts, to 62
be precise, the crucial question of whether or not a party has
met his statutory duty to bargain in good faith typically turns
58
on the facts of the individual case. Necessarily, a
determination of the validity of the Nestlé’s proposition
involves an appraisal of the exercise of its management
prerogative.
Employers are accorded rights and privileges to assure
their selfdetermination and independence and reasonable
return of capital. This mass of privileges comprises the so-
63
called management prerogatives. In this connection, the rule
64
is 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 for purpose of defeating or circumventing the
rights of employees under the law or a valid agreement, such
exercise will be upheld. 65
Construing arguendo that the content of the aforequoted
letter of 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 proposals affecting other matters
covered by the CBA contradicts the claim of refusal to bargain
or bargaining in bad faith. Accordingly, since UFE-DFA-KMU
failed to proffer substantial evidence that
_______________
60 San Miguel Corporation v. Del Rosario, G.R. Nos. 168194 & 168603, 13
December 2005, 477 SCRA 604, 619.
61 The Hongkong and Shanghai Banking Corporation Employees Union v.
National Labor Relations Commission, 346 Phil. 524, 534; 281 SCRA 509, 518
(1997).
62 Id.
63 Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September
2005, 470 SCRA 125, 136.
64 Id.
65 Id.
551
VOL. 499, AUGUST 22, 2006 551
Union of Filipro Employees-Drug, Food and Allied Industries
Unions-
Kilusang Mayo Uno vs. Nestlé Philippines, Inc.
would overcome the legal presumption of good faith on the part
of Nestlé, the award of moral and exemplary damages is
unavailing.
It must be remembered at all times that the Philippine
Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair
treatment, nevertheless mandates the policy of social justice
so as to strike a balance between an avowed predilection for
labor, on the one hand, and the maintenance of the legal rights
of capital, the proverbial hen that lays the golden egg, on the
other. Indeed, we should not be unmindful of the legal norm
that justice is in every case for the deserving, to be dispensed
with in the light of established facts, the applicable law, and
existing jurisprudence. 66
In sum, from the facts and evidence extant in the records of
these consolidated petitions, this Court finds that 1) the
Retirement Plan is still a valid issue for herein parties
collective bargaining negotiations; 2) the Court of Appeals
committed reversible error in limiting to the issue of the
ground rules the scope of the power of the Secretary of Labor
to assume jurisdiction over the subject labor dispute; and 3)
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
Division).
WHEREFORE, in view of the foregoing, the Petition in G.R.
No. 158930-31 seeking that Nestlé be declared to have
committed unfair labor practice in allegedly setting a
precondition to bargaining is DENIED. The Petition in G.R.
No. 158944-45, however, is PARTLY GRANTED in that we
REVERSE the ruling of the Court of Appeals in CA G.R. SP
No. 69805 in so far as it ruled that the Secretary of the DOLE
gravely abused her discretion in failing to confine her
assumption of jurisdiction power over the ground rules of the
CBA negotiations; but the ruling of the Court of Appeals on
the inclusion of the Retirement Plan as a valid issue in the
collective bargaining negotiations between UFE-DFA-KMU
and Nestlé is AFFIRMED. The parties are directed to resume
negotiations respecting the Retirement Plan
_______________
66 Philippine National Oil Company-Energy Development Corporation
(PNOC-EDC) v. Abella, G.R. 153904, 17 January 2005, 448 SCRA 549, 574.
552
552 SUPREME COURT REPORTS ANNOTATED
Trust International Paper Corporation vs. Pelaez
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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