UNION OF FILIPINO EMPLOYEES-DRUG v.

NESTLE
March 6, 2006| Concepcion, J. | Duty to Bargain
Digester: Alexis Bea
SUMMARY: As the CBA between Nestl and UFE-DFA-KMU, the
Presidents of the Alabang & Cabuyao Divisions of the union,
through a Letter of Intent, informed Nestl of their intent to open
Collective Bargaining Negotiation for 2001-2004. Nestle
acknowledged the receipt but claims that certain grants like the
Retirement Plan are non-negotiable. The Union did not agree.
Nestl, claiming to have reached impasse in dialogue, requested
NCMB to conduct preventive mediation proceedings; despite 15
meetings, however, the parties failed to reach any agreement on
the proposed CBA. Conciliation proceedings proved ineffective.

DOCTRINE: Nestles argument that it 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 gratuitous has no merit
The fact that the retirement plan is non-contributory does not
make it a non-issue. 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 Unions demand to
increase the benefits due the employees under said plan, is a valid
CBA issue.

UFE-DFA-KMU filed a Notice of Strike complaining of bargaining

deadlock (on economic issues). It later filed another Notice of
Strike predicated on Nestl's alleged ULP (bargaining in bad
faith: setting pre-conditions in the ground rules by refusing to
include issue of Retirement Plan in the CBA negotiations)

Employees 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 benefits

Nestl filed with DOLE a Petition for Assumption of Jurisdiction,

pursuant to LC 263 (g), effectively enjoying any impending strike.

FACTS:
Before the Court are two (2) petitions for review on certiorari (one
filed by Nestle and one filed by the Union): consolidated since it
basically involves the same issues.
In consideration of the impending expiration of the existing
collective bargaining agreement (CBA) between Nestle and
UFE-DFA-KMU the Presidents of the Alabang and Cabuyao
Divisions of UFE-DFA-KMU informed Nestle of their intent to
open our new Collective Bargaining Negotiation for the year
2001-2004
Nestle acknowledged 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.
o
Nestle 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.

SOLE Sto. Tomas ordered any strike or lockout to be enjoined and

the parties to cease and desist from committing any act that might
lead to the further deterioration of the current labor relations
situation. The parties were further directed to meet and convene
for the discussion of the union proposals and company counterproposals before the NCMB. MR filed by UFE denied.
Despite SOLE Order, the union went on strike. SOLE issued
Return to Work Order. But notwithstanding the such Order, UFE
continued with their strike, prompting SoLE to seek the assistance
of the PNP for the enforcement of said order.
CA: ordered the retirement plan was a unilateral grant and not a
mandatory subject for bargaining and affirmed the dismissal of
ULP charges against Nestl.
SC held that the Retirement Plan is a valid CBA issue.

Nestle, claiming to have reached an impasse in said dialogue,

requested NCMB to conduct preventive mediation proceedings
between it and UFE-DFA-KMU. Nestle alleged that despite
fifteen (15) meetings between them, the parties failed to reach
any agreement on the proposed CBA.
Conciliation proceedings nevertheless proved ineffective.
Complaining of bargaining deadlock pertaining to economic
issues, i.e., retirement (plan), panel composition, costs and
attendance, and CBA, UFE-DFA-KMU filed a Notice of Strike
with the
One week later, another Notice of Strike was filed by the UFEDFA-KMU this time predicated on Nestls 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.
In view of the looming strike, Nestle filed with the DOLE a
Petition for Assumption of Jurisdiction, 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 Code, as amended, thereby
effectively enjoining any impending strike at the Nestle
Cabuyao Plant in Laguna.
Sec. Sto. Tomas issued an Order assuming jurisdiction over the
subject labor dispute between the parties pursuant to Article
263(g) of the LC and enjoined any strike or lockout. She
directed the parties to meet and convene for the discussion of
union proposals before the NCMB
UFE-DFA-KMU sought reconsideration because it alleged that
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; and that
compulsory arbitration is condemned by the ILO and not part
of the present Constitution as a mode of dispute settlement
SOLE: DENIED. Jurisprudence held that 263 (g) of the Labor
Code does not violate the workers constitutional right to strike.
Despite the injunction contained in Sec. Sto. Tomas
Assumption of Jurisdiction Order and conciliation efforts by the
NCMB, the employee members of UFE-DFA-KMU at the Nestle
Cabuyao Plant went on strike.
Sec. Sto. Tomas issued a return to work order

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 Nestle and UFE-DFA-KMU filed their respective
position papers. In its position paper, Nestle addressed several
issues allegedly 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 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
Sec. Sto. Tomas denied the motion for reconsideration of UFEDFA-KMU. Frustrated with the foregoing turn of events, UFEDFA-KMU filed a petition for certiorari with application for the
issuance 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
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 ruling
that:
a. The present Retirement Plan at the Nestle Cabuyao
Plant is a unilateral grant that the parties have
expressly so recognized and is therefore not a
mandatory subject for bargaining;
b. the Unions 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 CBs between Nestle
Phils. Inc. and it eight (8) other bargaining units, and to
adopt these as the terms and conditions of the Nestle
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 Nestle 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 Nestle 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).
UFE-DFA-KMU moved to reconsider the aforequoted position
of the DOLE.
The Secretary of the DOLE, Hon. Sto. Tomas 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 the Secretary of the DOLE.
The Court of Appeals determined the issues in favor of UFEDFA-KMU in a joint Decision dated 27 February 2003.
Dissatisfied, both parties separately moved for the
reconsideration of the decision with:
o Nestle 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;
o UFE-DFA-KMU questions, in essence, the appellate
courts decision in absolving Nestle of the charge of
unfair labor practice.
CA affirmed. Hence, these petitions for review on certiorari
separately filed by the parties.

RULING: Petition PARTLY Granted

Whether or not the Retirement Plan was not a proper
subject to be included in the CBA negotiations between the
parties (non-negotiable)NO. It is negotiable.
The Retirement Plan is still a valid CBA issue. Nestles
argument that it 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 gratuitous has no merit.

The fact that the retirement plan is non-contributory does not

make it a non-issue. 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 Unions demand to increase the benefits due the
employees under said plan, is a valid CBA issue.
o Employees 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 benefits

Whether or not the SOLE should have been limited merely

to the grounds alleged in the second notice of strike
(assumption of jurisdiction)NO
CA: Sec. Sto. Tomas assumption of jurisdiction powers should
have been limited to the disagreement on the ground rules of
the collective bargaining negotiations.
o Referred to the minutes of the meeting held on 30
October 2001, that the representative Nestle 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.
o It 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 (Basically wala pang controversy)
Nestle: CA failed to consider the circumstance surrounding
said utterance that the statement was made during the
preventive mediation proceedings and the UFE-DFA-KMU had
not yet filed any notice of strike.
o And it was UFE-DFA-KMU who first alleged bargaining
deadlock as the basis for the filing of its Notice of
Strike.
o 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.
SC: Agrees with Nestle. 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 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.
o (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.
In the case at bar, the Secretary of the DOLE simply relied on
the Notices of Strike that were filed by UFE-DFA-KMU as
stated in her Order of 08 March 2002
o The records disclose that the Union filed two Notices of
Strike.
o 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, the Assumption of Jurisdiction Order specifically cited
the two (2) Notices of Strike without any objection on the part
of the Union
Thus, based on the Notices of Strike filed by UFE-DFA-KMU,
the Secretary of the DOLE rightly decided on matters of
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 CAs reliance on the
statement of the representative of Nestle in ruling that the
labor dispute had yet to progress from the discussion of the
ground rules of the CBA negotiations is clearly misleading;
hence, erroneous.
Assuming arguendo 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 Secretarys 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.
o The 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.
o 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.
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.

Whether or not Nestle was guilty of unfair labor practice

NO (I wont go into detail na since this isnt the topic)
Basic is the principle that good faith is presumed and he
who alleged bad faith has the duty to prove the same

By imputing bad faith into the actions of Nestle, it was the

Unions duty to assume the burden of proof and present
substantial evidence to support these allegations
It is not enough that the union believed that the employer
committed acts of ULP when the circumstances clearly
negate even a prima facie showing to warrant such a belief

Nestle did not refuse to bargain with the Union it merely

believed that the Retirement Plan, being a Unilateral Grant,
is non-negotiable.