G.R. No. 158930-31 - Union of Filipro Employees-DFA-KMU vs. Nestle Philippines, Inc.

Case Summary (G.R. No. 158930-31)

Parties, Proceedings, and Anchoring Legal Provisions

In G.R. Nos. 158930-31, UFE-DFA-KMU sought reversal of the Court of Appeals insofar as it failed to find Nestle liable for unfair labor practice (ULP) based on alleged bargaining preconditions. In G.R. Nos. 158944-45, Nestle sought review of the Court of Appeals portion that declared (i) the Retirement Plan as a valid issue in CBA negotiations and (ii) the scope of the DOLE Secretary’s assumption of jurisdiction to be limited to ground rules of CBA negotiations, a limitation which the Court of Appeals had imposed but which the Court ultimately modified in part.

The matter proceeded under Rule 45 of the Rules of Court, with the Court consolidating both petitions by a Resolution dated 29 March 2004. The Court’s disposition was promulgated on 22 August 2006, and the present text dealt with subsequent motions for clarification and partial reconsideration, including the Court’s reaffirmation of its earlier rulings. The legal framework invoked included the Labor Code provisions on the duty to bargain collectively (Articles 252 and 253), and the provisions defining and enumerating unfair labor practices of employers (Articles 247 and 248). The authority of the Secretary of DOLE to assume jurisdiction was anchored on Article 263(g) of the Labor Code.

Factual Background: Bargaining, Letters, and the Retirement Issue

The Court found that UFE-DFA-KMU had been the bargaining agent for Nestle’s rank-and-file employees at the Alabang and Cabuyao plants. The existing CBA was to end on 5 June 2001, prompting union divisional presidents of UFE-DFA-KMU to inform Nestle of the intention to open new CBA negotiations for the years 2001–2004 as early as June 2001. Nestle responded that it would also prepare a counter-proposal and proposed ground rules.

On 29 May 2001, Nestle reiterated to UFE-DFA-KMU (in connection with the Cabuyao Division only) its position that unilateral grants, one-time company grants, and company-initiated policies and programs—explicitly including but not limited to the Retirement Plan, Incidental Straight Duty Pay, and Calling Pay Premium—were not proper subjects of CBA negotiations and should therefore be excluded from bargaining. Dialogue then ensued between company and union.

As conciliation and bargaining progressed, Nestle requested the National Conciliation and Mediation Board (NCMB) to conduct preventive mediation due to an alleged impasse, and the union subsequently filed notices of strike with the NCMB.

Notices of Strike, Preventive Mediation, and the Resort to DOLE Assumption of Jurisdiction

Despite fifteen meetings, the parties failed to reach agreement on the proposed CBA. The union first filed a Notice of Strike dated 31 October 2001, essentially complaining of a bargaining deadlock on economic issues, including the Retirement Plan, panel composition, costs and attendance, and CBA. A second Notice of Strike dated 7 November 2001 followed, this time predicated on alleged ULP, specifically alleging bargaining in bad faith by setting preconditions in the ground rules and/or refusing to include the Retirement Plan issue in CBA negotiations. After a strike vote, the members of UFE-DFA-KMU overwhelmingly approved the decision to hold a strike.

Before the strike could be staged, Nestle filed with the DOLE on 26 November 2001 a Petition for Assumption of Jurisdiction, praying that the Secretary assume jurisdiction to effectively enjoin the impending strike by the union members at the Cabuyao plant. On 29 November 2001, Sec. Sto. Tomas issued an Order assuming jurisdiction over the labor dispute at the Cabuyao plant pursuant to Article 263(g). The Order enjoined any strike or lockout, directed the parties to cease acts that might deteriorate labor relations, and ordered them to meet and convene before the NCMB designated as the facilitator, with the Secretary to define outstanding issues and require position papers if no settlement was reached.

DOLE Orders: Requiring Return-to-Work and Position Papers

UFE-DFA-KMU sought reconsideration of the assumption order, but the Secretary denied it. Nonetheless, notwithstanding the return-to-work and conciliation directives, the employees at the Cabuyao plant went on strike on 15 January 2002. The Secretary then ordered the union members to return to work within twenty-four hours and directed Nestle to accept them back under the same pre-strike terms and conditions, while both parties were ordered to cease acts inimical to conciliation and to submit their position papers.

The parties submitted position papers on 7 February 2002. Nestle addressed multiple economic provisions as well as the non-inclusion of the Retirement Plan in the negotiations. The union initially limited its submissions to the question of whether the retirement plan was a mandatory bargaining subject. The Secretary later allowed the union an opportunity to tender its stand on other issues not covered by its initial position paper, but the union instead filed pleadings assailing the orders as allegedly contrary to law and jurisprudence, including a contention that the Secretary could only assume jurisdiction over issues mentioned in the amended notice of strike. The Secretary denied the motion for reconsideration on 8 March 2002, prompting the union to file petitions for certiorari before the Court of Appeals alleging grave abuse of discretion amounting to lack or excess of jurisdiction in the Secretary’s orders.

The Acting Secretary’s Subsequent Order and the Court of Appeals Reversal

In the intervening period, the then Acting Secretary of DOLE, Hon. Arturo D. Brion, issued an Order dated 2 April 2002. The Acting Secretary ruled that the Retirement Plan at the Nestle Cabuyao plant was a unilateral grant, referencing Nestle, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and therefore not a mandatory subject for bargaining. The Acting Secretary dismissed the union’s ULP charge for lack of merit and directed the parties to adopt the best applicable terms from CBAs recently concluded between Nestle and eight other bargaining units. Terms not covered by those other CBAs were denied, and any provisions of the expired Cabuyao CBA without counterparts were ordered maintained. The Acting Secretary further ordered the execution of the CBA within thirty days and prescribed the intended term and renegotiation schedule for other provisions.

UFE-DFA-KMU moved for reconsideration, which was denied. The union then again went to the Court of Appeals via a petition for certiorari to annul the orders of April 2, 2002 and May 6, 2002 for grave abuse of discretion. On 27 February 2003, the Court of Appeals granted both petitions, annulled and set aside the assailed DOLE orders, and directed the private respondent to resume CBA negotiations with the union. The Court of Appeals ruling favored UFE-DFA-KMU, leading to separate appeals by both Nestle and the union.

Consolidation and the Court’s Decision of 22 August 2006

The parties filed separate Petitions for Review on Certiorari under Rule 45 after denial of their motions for reconsideration by the Court of Appeals on 27 June 2003. On 29 March 2004, the Court resolved to consolidate the petitions because they involved the same parties, similar circumstances, and attacks on the same Court of Appeals Decision and Resolution relating to DOLE orders issued by Sec. Sto. Tomas. After giving due course, the Court promulgated its Decision on 22 August 2006, later the subject of partial reconsideration and clarification.

In that Decision, the Court denied UFE-DFA-KMU’s petition in G.R. Nos. 158930-31 seeking a finding that Nestle committed ULP based on an alleged precondition to bargaining. The Court, however, partly granted Nestle’s petition in G.R. Nos. 158944-45 by reversing the Court of Appeals ruling that the DOLE Secretary gravely abused her discretion by failing to confine her assumption of jurisdiction power to the ground rules of CBA negotiations. The Court affirmed the Court of Appeals ruling that the Retirement Plan remained a valid issue for CBA negotiations between UFE-DFA-KMU and Nestle. The Court directed the parties to resume negotiations respecting the Retirement Plan, while ordering consistent action with the discussions in the Decision.

Arguments in the Post-Decision Motions: Partial Reconsideration and Clarification

After the Court’s Decision, Nestle filed a Motion for Clarification on 20 September 2006, while UFE-DFA-KMU filed a Motion for Partial Reconsideration on 21 September 2006. The union asked the Court to reconsider points allegedly already settled, including its argument that Nestle was guilty of ULP under a res ipsa loquitur notion and the proposition that the DOLE Secretary could only consider matters confined to the amended notice of strike. The union also maintained the dispute involved only limited issues concerning ground rules, challenging the Secretary’s decision to go beyond that limitation.

Nestle sought clarification of the dispositive directive ordering the parties to resume negotiations respecting the Retirement Plan, asserting that the directive might be read as an instruction for the parties to voluntarily negotiate the retirement benefits without the Secretary’s continued authority, particularly after the Secretary’s assumption of jurisdiction over the entire 2001–2004 CBA controversy.

Issue on Unfair Labor Practice: Good Faith, Statutory Duty, and Burden of Proof

On the ULP issue, the Court reiterated that the duty to bargain collectively was mandated by Articles 252 and 253 of the Labor Code, but the duty did not compel either party to agree to a proposal or to make concessions. The Court stressed that failure to reach an agreement after reasonable negotiations did not automatically establish lack of good faith. It recognized that good faith or bad faith was inferred from the facts and that there was no per se test for good faith in bargaining.

The Court also restate

Case Syllabus (G.R. No. 158930-31)

Parties and Procedural Posture

UFE-DFA-KMU acted as the sole and exclusive bargaining agent of Nestle rank-and-file employees at the Alabang and Cabuyao plants.
Nestle Philippines, Incorporated opposed UFE-DFA-KMU’s claims of unfair labor practice and bargaining preconditions.
The case proceeded via two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court.
G.R. Nos. 158930-31 was filed by UFE-DFA-KMU against Nestle to challenge the Court of Appeals’ failure to find unfair labor practice.
G.R. Nos. 158944-45 was filed by Nestle against UFE-DFA-KMU to challenge the Court of Appeals ruling that the Retirement Plan was a valid collective bargaining issue and that the scope of the DOLE Secretary’s assumption of jurisdiction was not limited to ground rules.
The Court consolidated the two petitions in view of the common parties, common circumstances, and the common assailed Court of Appeals Decision and Resolution.
On 22 August 2006, the Court issued its Decision that denied the UFE-DFA-KMU petition on unfair labor practice, while partly granted the Nestle petition by reversing the Court of Appeals on the limitation of the DOLE Secretary’s assumption of jurisdiction to ground rules.
After the Court’s Decision, Nestle filed a Motion for Clarification, while UFE-DFA-KMU filed a Motion for Partial Reconsideration.
The present resolution denied UFE-DFA-KMU’s Motion for Partial Reconsideration with finality and granted no modification, and it directed remand for proper disposition consistent with the Decision of 22 August 2006.

Key Collective Bargaining Facts

The parties’ existing collective bargaining agreement (CBA) was set to end on 5 June 2001, with negotiations for the new term covering 2001-2004.
The Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed Nestle of the intent to open new negotiations as early as June 2001.
Nestle responded by preparing counter-proposals and proposed ground rules for the impending negotiations.
On 29 May 2001, Nestle reiterated that unilateral grants, one-time company grants, and company-initiated policies and programs, including but not limited to the Retirement Plan, were not proper subjects of CBA negotiations and would be excluded.
After dialogue, Nestle requested preventive mediation from the NCMB due to an alleged impasse, after multiple meetings.
UFE-DFA-KMU filed a first Notice of Strike on 31 October 2001 alleging a bargaining deadlock involving economic issues including retirement, panel composition, costs and attendance, and CBA.
UFE-DFA-KMU filed a second Notice of Strike on 7 November 2001, this time predicated on alleged unfair labor practices and alleging bargaining in bad faith through pre-conditions in the ground rules and/or refusal to include the Retirement Plan.
A strike vote among the members of UFE-DFA-KMU produced overwhelming approval to hold a strike.

DOLE Assumption of Jurisdiction

Prior to the strike, Nestle filed with the DOLE a petition for assumption of jurisdiction on 26 November 2001 to enjoin an impending strike at the Nestle Cabuyao plant.
On 29 November 2001, Sec. Patricia A. Sto. Tomas issued an Order assuming jurisdiction pursuant to Article 263(g) of the Labor Code, as amended.
The assumption order enjoined any strike or lockout and directed the parties to cease acts deteriorating labor relations while meeting before the NCMB as delegate/facilitator.
The order required NCMB to report results within a specified period and provided for subsequent definition of outstanding issues and position-paper submission if no settlement was reached.
UFE-DFA-KMU sought reconsideration but also moved for additional time to file its position paper, and the denial of reconsideration occurred on 14 January 2002.
Despite the return-to-work orders and continued conciliation efforts, UFE-DFA-KMU’s members at Cabuyao went on strike on 15 January 2002.
On 16 January 2002, the Secretary directed immediate return-to-work, required Nestle to accept returning workers under the same terms and conditions as before the strike, ordered both parties to desist from acts inimical to conciliation, and required position paper submission.
Both parties submitted position papers on 7 February 2002, with Nestle raising issues on economic provisions and non-inclusion of the Retirement Plan, while UFE-DFA-KMU limited its initial position paper to whether the retirement plan was a mandatory CBA subject.
On 11 February 2002, the Secretary allowed UFE-DFA-KMU to tender a stand on other issues through a supplemental position paper.
Instead of filing a supplemental position paper, UFE-DFA-KMU filed pleadings including a manifestation with motion for reconsideration, assailing the February 11 order as allegedly contrary to law, jurisprudence, and the evidence.
UFE-DFA-KMU argued that the Secretary could only assume jurisdiction over issues mentioned in the amended Notice of Strike and that its amendment did not cite CBA deadlock as a ground.
On 8 March 2002, the Secretary denied the motion for reconsideration.

Court of Appeals Outcome

UFE-DFA-KMU filed petitions for certiorari before the Court of Appeals, alleging grave abuse of discretion amounting to lack or excess of jurisdiction by the Secretary’s February 11 and March 8 orders.
In the meantime, then Acting Secretary Arturo D. Brion issued an order on 2 April 2002 recognizing the Retirement Plan at Cabuyao as a unilateral grant, dismissing the ULP charge for lack of merit, and directing adoption of terms from recently concluded CBAs in other bargaining units.
UFE-DFA-KMU moved for reconsideration of the Acting Secretary’s April 2 order, and the motion was denied on 6 May 2002.
The Court of Appeals resolved the twin certiorari petitions in favor of UFE-DFA-KMU on 27 February 2003, annulling and setting aside the challenged Secretary orders.
The Court of Appeals directed the parties to resume CBA negotiations.
On appeal to the Supreme Court, Nestle challenged the portion finding grave abuse in DOLE’s treatment of the Retirement Plan as a valid CBA issue, while UFE-DFA-KMU challenged the part finding Nestle free from unfair labor pract