Union of Filipro Employees-Drug, Food and Allied Industries Unions Kilusang Mayo Uno vs. Nestlé Philippines, Inc.

VOL.
499, AUGUST 22, 2006 521

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.
Same; Same; Same; The characterization by an employer on the

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-
able right over existing benefits voluntarily granted by their

employer.·Contrary to the claim of Nestlé that the categorical
mention of the terms Âunilateral agreementÊ 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 COMPANYÊs 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

Unions-
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 SecretaryÊs 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 SecretaryÊs 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

Unions-
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
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.‰
Same; Same; Same; There is no per se test of good faith in

bargaining·good faith or bad faith is an inference to be drawn from
the facts.·There is no per se test of good faith in bargaining. Good
faith or bad faith is an inference to be drawn from the facts, to be
precise, the crucial question of whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of
the individual case. Necessarily, a determination of the validity of
the NestléÊs proposition involves an appraisal of the exercise of its
management prerogative.
Same; Same; Management Prerogatives; Words and Phrases;

Employers are accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital,
and this mass of privileges comprises the so-called management
prerogatives.·Employers are accorded rights and privileges to
assure their self-determination and independence and reasonable
return of capital. This mass of privileges comprises the so-called
management prerogatives. In this connection, the rule is that good
faith is always presumed. As long as the companyÊs 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. Construing
arguendo that the content of the afore-quoted letter of 29 May 2001
laid down a pre-condition to its agreement to bargain with UFE-
DFA-KMU, NestléÊs 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 would
overcome the legal
525
VOL. 499, AUGUST 22, 2006 525

Unions-
presumption of good faith on the part of Nestlé, the award of moral

and exemplary damages is unavailing.
Same; Same; Constitutional Law; Social Justice; 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.·It must be remembered at all times that the Phil-ippine
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.
PETITIONS for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.

De La Rosa, Tejero, Nograles for petitioner.
Nenita C. Mahinay for respondent.
CHICO-NAZARIO, J.:
The Case
Before the Court are two (2) petitions for review on

certiorari under Rule 45 of the Rules of Court, as amended.1
Both seek to annul and set aside the joint: (1) Decision
dated 27 February 2003, and (2) Resolu-
_______________
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
Industries Unions-
2
tion dated 27 June3
2003, of the 4Court of Appeals in CA-
G.R. SP No.69805 and No. 71540.
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 latterÊs
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 Nestlé5 and UFE-DFA-KMU,
Alabang and Cabuyao Divisions; and likewise assail the
same Decision and Resolution of the Court of Appeals,6
the
Court ordered the consolidation of the two petitions.
_______________
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 NestléÊs 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

Industries Unions-
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 7
agreement
(CBA)8 between Nestlé and UFE-DFA-KMU on 5 June
2001, in a letter denominated as a Letter of Intent, the
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
9
for the year 2001-
2004 x x x as early
10
as June 2001.‰
In a letter dated 10 April 2001, Nestlé 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.
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 CBA11negotiations and
therefore shall be excluded therefrom.‰ In addition, it
clarified that with the 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

Industries Unions-
In a letter dated 14 August 2001, Nestlé, claiming to12 have

reached an impasse in said dialogue, requested the
National 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 13
(plan), panel
composition, costs and attendance,
14
and CBA,‰ UFE-DFA-
KMU filed a Notice of Strike on 31 October 2001 with the
NCMB docketed as NCMB-RBIV-LAG-NS-10-037-01. One
week 15later, or on 07 November 2001, another Notice of
Strike was filed by the UFE-DFA-KMU docketed as
NCMB-RBIV-LAG-NS-11-10-039-01, this time predicated
on NestléÊs 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 16
overwhelming approval of the decision to
hold a strike.
On 26 November 2001, in view of the looming strike,
Nestlé filed 17
with the DOLE a Petition for Assumption of
Jurisdiction, docketed as OS-AJ-0023-01, fundamentally
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

Industries Unions-
Code, as amended, thereby effectively enjoining any

impending strike at the Nestlé Cabuyao Plant in Laguna. 18
On 29 November 2001, Sec. Sto. Tomas issued an Order
in 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 partiesÊ 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.
19
UFE-DFA-KMU sought reconsideration of the
abovequoted Assumption of Jurisdiction Order on the
assertion that:
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;
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;
_______________
18 Id., at pp. 130-135.

19 Dated 29 November 2001; Annex „L‰ of the Petition; Rollo (G.R.
Nos. 158944-45), pp. 136-182.
530

Industries Unions-
iii. that ILO condemns the continuous exercise by the

Secretary of Labor of the power of compulsory
arbitration;
iv. granting that the law is valid, the Secretary has
unconstitution-ally applied the law;
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;
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 20union interposed a motion for
extension of time to file its position paper as
directed by the Assumption of Jurisdiction Order of
29 November 2001.
21
In an Order dated 14 January 2002, Sec. Sto. Tomas
denied 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 workerÊs 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

Unions-
The foregoing article clearly does not interfere with the

workerÊs right to strike but merely regulates it, when in the
exercise of such right, national interests will be affected.
22
On 15 January 2002, despite the injunction contained in
Sec. Sto. TomasÊ 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 consideration23
of the above, Sec.
Sto. Tomas issued yet another Order directing: (1) the
members of 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 24
their respective position papers. In
its position paper, Nestlé 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
_______________
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

Industries Unions-
mandatory subject in its CBA negotiations with the

company on the contention „that the Order of Assumption 25
of Jurisdiction covers only the issue of Retirement Plan.‰
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 26discussing
only one (1) issue. Sec. Sto. Tomas, in an Order dated 11
February 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 27
with
existing laws and the evidence on re-cord,‰ as the
Secretary of the DOLE „could only assume jurisdiction over
the issues mentioned
28
in the notice of strike subject of the
current dispute.‰ UFE-DFA-KMU then went on to clarify
that 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

Industries Unions-
Frustrated with the foregoing turn 29

of events, UFE-DFA-
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 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 of30
the DOLE, Hon. Arturo D. Brion, came out with an Order
dated 02 April 2002, in the main, ruling that:
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 CourtÊs ruling in Nestlé,
Phils. Inc. vs. NLRC, G.R. No. 90231, February 4,
1991, and is therefore not a mandatory subject for
bargaining;
b. the UnionÊs 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 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;
d. all union demands that are not covered by the
provisions of the CBAs of the other eight (8)
bargaining units in the Company are hereby
denied;
e. all existing provisions of the expired Nestlé
Cabuyao Plant CBA without any counterpart in the
CBAs of the other eight bargaining units in the
Company are hereby ordered maintained as part of
the new Nestlé Cabuyao Plant CBA;
f. the parties shall execute their CBA within thirty
(30) days from receipt of this Order, furnishing this
Office a copy of the signed Agreement;
g. this CBA shall, in so far as representation is
concerned, be for a term of five (5) years; all other
provisions shall be renegotiated not later than three
(3) years after its effective date which shall be
December 5, 2001 (or on
_______________
29 CA Rollo (CA-G.R. SP No. 69805).

30 Annex „BB‰ of the Petition; Rollo (G.R. Nos. 158944-45), pp. 508-
520.
534

Industries Unions-
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, 31
Hon. Sto.
Tomas, issued the last of the assailed Orders. This order
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
32
CBA negotiations with the petitioner‰
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
_______________
31 Annex „L‰ of the Petition; Rollo (G.R. Nos. 158930-31, Vol. I), pp.
802-806.
32 Id., at p. 43.
535
VOL. 499, AUGUST 22, 2006 535

Industries Unions-
questions, in essence, the appellate courtÊs decision in
absolving Nestlé of the charge of unfair labor practice.
The partiesÊ 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-KMUÊs 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 NESTLÉÊS PART
AND THAT PETITIONER DID NOT RAISE THE ISSUE OF ULP
IN ITS ARGUMENTS BEFORE THE COURT OF APPEALS IS
33
GROSSLY ERRONEOUS.
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

Unions-
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED

SERIOUS ERROR IN ANNULING THE SECRETARY OF
LABORÊS JUDGMENT ON THE RETIREMENT PLAN ISSUE
WHICH WAS MERELY A PART OF THE COMPLETE
34
RESOLUTION OF THE LABOR DISPUTE.
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 CourtÊs 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

Unions-
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
35
collective bargaining issue right from the start.‰
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 CourtÊs attention to the Ground Rules for 1998
Alabang/Cabuyao FactoriesÊ CBA Negotiation (citation
omitted) signed by it and the representatives of UFE-DFA-
KMU where both sides „expressly‰ recognized NestléÊs
prerogative to initiate unilateral grants which are Ânot
negotiable.Ê36 It likewise cited the Memorandum of
Agreement entered into by the parties 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
37
initiative and discretion of Nestlé.
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-
_______________

36 Annex „2‰ of NestléÊs Comment in CA-G.R. SP No. 71540, pp. 614-
619; Annex „E‰ of NestléÊs Memorandum; Rollo (G.R. Nos. 158944-45),
pp. 1270-1275.
37 Rollo (G.R. Nos. 158944-45), p. 1235.
538

Industries Unions-
ing.‰ It explained that the MOA38alluded to by Nestlé merely

speaks of the 39
improvement or the review for the
improvement of the current Retirement Plan and nothing
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
40
pursuant to the 1991 ruling of this Honorable
Court.‰
We agree.
The present issue is not one
41
of first impression. In Nestlé
Philip-pines, Inc. v. NLRC, ironically involving the same
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 RespondentÊs Memorandum in G.R. Nos. 158944-45, p. 12; Rollo

(G.R. Nos. 158930-31, Vol. II), p. 1703.
39 Id.
41 G.R. No. 91231, 4 February 1991, 193 SCRA 504.
539
VOL. 499, AUGUST 22, 2006 539

Industries Unions-
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 NestléÊs 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 NestléÊs position,
this Court, through Madame Justice Griño-Aquino,
declared that:
The companyÊs [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 UnionÊs 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

Unions-
benefits (Art. 100, Labor Code; other citation omitted). [Emphases

42
supplied.]
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

Unions-
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 Âunilateral agreementÊ 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):
xxxx
6.2. Review for improvement of the COMPANYÊs

Retirement Plan and the reference on the
Retirement Plan in the Collective Bargaining
Agreement 43signed 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 44
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.
_______________
43 Rollo (G.R. Nos. 158944-45), p. 1273.

44 Art. 100 of the Labor Code.
542

Industries Unions-
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. TomasÊ 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 45
negotiations proper, a deadlock cannot be
declared,‰ was a telling fact. The Court of Appeals, thus,
declared that the Secretary „should not have ruled on the
questions and issues relative to the substantive aspect of
the CBA
46
simply because there was no conflict on the CBA
yet.‰
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,
47
so should be
(sic) also the Honorable DOLE Secretary.‰
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.
543
VOL. 499, AUGUST 22, 2006 543

Industries Unions-
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

Industries Unions-
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, to wit:
x x x The records disclose that the Union filed two Notices of Strike.
The First is dated October 31, 2001 whose grounds are cited
verbatim here-under:
„A. Bargaining Deadlock
1. Economic issues (specify)

1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA‰
The second Notice of Strike is dated November 7, 2001 and the

cited ground is like quoted verbatim below:
„B. Unfair Labor Practices (specify)

Bargaining in bad faith·
Setting pre-condition in the ground
rules (Retirement issue)‰
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
48
without any objection on the part of the Union x x x.
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. 49
The appellate courtÊs reliance on the
statement of the representative of Nestlé in ruling that
the labor dispute had yet
_______________

49 „we are still discussing ground rules and not yet on the CBA
negotiations proper, a deadlock cannot be declared.‰
545
VOL. 499, AUGUST 22, 2006 545

Industries Unions-
to progress from the discussion of the ground rules of the

CBA negotiations is clearly misleading; hence, erroneous.
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 SecretaryÊs 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 50
Pharmaceuticals, Inc. v. Sec. of Labor and Employment, „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 51 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.
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
_______________
50 G.R. Nos. 92981-83, 9 January 1992, 205 SCRA 59.

51 Id., at pp. 65-66.
546

Industries Unions-Kilusang Mayo Uno vs. Nestlé
Philippines, Inc.
that NestléÊs „refusal to bargain on a very important CBA

52
economic provision constitutes unfair labor practice.‰ It
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 53 Nestlé would agree to discuss other
issues in the CBA.‰ It 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 54to
the petitioner for the ULP committed by the respondent.‰
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
55
omit the said issues in the proceedings below.
We are persuaded.
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
_______________
52 PetitionerÊs Memorandum, pp 10-11; Rollo (G.R. Nos. 158930-31), pp.

1672-1673.
53 Id.
54 Id., at pp. 1671-1672.
55 RespondentÊs Memorandum, pp. 22-23; Rollo (G.R. Nos. 158930-31, Vol.
II), pp. 1627-1628.
547
VOL. 499, AUGUST 22, 2006 547
Unions-
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:
(a) To interfere with, restrain or coerce employees in the

exercise of their right to self-organization;
(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;
(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;
(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;
(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

Unions-
(f) To dismiss, discharge, or otherwise prejudice or discriminate

against an employee for having given or being about to give
testimony under this Code;
(g) To violate the duty to bargain collectively as
prescribed by this Code;
(h) To pay negotiation or attorneyÊs 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
(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 56precondition in the ground rules
(Retirement issue).‰ On the contrary, Nestlé, 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 57
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 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

Industries Unions-
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
58
even a59prima facie showing to
warrant such a belief. In its letter to UFE-DFA-KMU of
29 May 2001, though Nestlé 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

Industries Unions-
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,
60
wounded feelings, or
grave anxiety resulted x x x‰ in disclaiming unilateral
grants as proper subjects in their collective bargaining
negotiations. 61
There is no per se test of good faith in bargaining. Good
faith 62or bad faith is an inference to be drawn from the
facts, to be precise, the crucial question of whether or not
a party has met his statutory duty to bargain in good faith
typically turns on the facts of the individual case.
Necessarily, a determination of the validity of the NestléÊs
proposition involves an appraisal of the exercise of its
management prerogative.
Employers are accorded rights and privileges to assure
their selfdetermination
63
and independence and reasonable
return of capital. This mass of privileges
64
comprises the so-
called management prerogatives. In this connection, the
rule is that good faith is always presumed. As long as the
companyÊs exercise of the same is in good faith to advance
its interest and not for purpose of defeating or
circumventing the rights of employees under65the law or a
valid agreement, such exercise will be upheld.
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, NestléÊs
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

Industries Unions-
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
66
facts, the applicable law, and existing
jurisprudence.
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

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])
··o0o··
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Union of Filipro Employees-Drug, Food and Allied Industries Unions Kilusang Mayo Uno vs. Nestlé Philippines, Inc.

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VOL.

499, AUGUST 22, 2006 521

UNION OF FILIPRO EMPLOYEES-DRUG, FOOD AND

NESTLÉ PHILIPPINES, INCORPORATED, petitioner, vs.

Labor Law; Collective Bargaining Agreements (CBAs);

Same; Same; Same; The purpose of collective bargaining is the

Same; Same; Same; The characterization by an employer on the

522 SUPREME COURT REPORTS ANNOTATED

Union of Filipro Employees-Drug, Food and Allied Industries

able right over existing benefits voluntarily granted by their

Same; Same; Same; The consensual nature of the Retirement

Same; Same; Same; Assumption Orders; The power granted to

VOL. 499, AUGUST 22, 2006 523

Union of Filipro Employees-Drug, Food and Allied Industries

graph (g) of Article 263 of the Labor Code, to wit: x x x x authorizes

Same; Same; Same; Same; The SecretaryÊs assumption of

Same; Same; Words and Phrases; „Unfair Labor Disputes,‰

524 SUPREME COURT REPORTS ANNOTATED

Union of Filipro Employees-Drug, Food and Allied Industries

Same; Same; Presumption of Good Faith; Basic is the principle

Same; Same; Same; There is no per se test of good faith in

Same; Same; Management Prerogatives; Words and Phrases;

VOL. 499, AUGUST 22, 2006 525

Union of Filipro Employees-Drug, Food and Allied Industries

presumption of good faith on the part of Nestlé, the award of moral

Same; Same; Constitutional Law; Social Justice; It must be

PETITIONS for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

Before the Court are two (2) petitions for review on

1 Penned by Associate Justice B.A. Adefuin-De la Cruz, with Associate

VOL. 499, AUGUST 22, 2006 527

From the record and the pleadings filed by the parties, we

7 Alabang and Cabuyao Divisions.

528 SUPREME COURT REPORTS ANNOTATED

In a letter dated 14 August 2001, Nestlé, claiming to12 have

12 In a letter addressed to Atty. Jose Velasco, Director, National

VOL. 499, AUGUST 22, 2006 529

Code, as amended, thereby effectively enjoining any

CONSIDERING THE FOREGOING, this Office hereby assumes

i. Article 263 (g) of the Labor Code, as amended, is

18 Id., at pp. 130-135.

530 SUPREME COURT REPORTS ANNOTATED

iii. that ILO condemns the continuous exercise by the

The constitutionality of the power of the Secretary of Labor under Article

20 Denominated as Motion for Time.

VOL. 499, AUGUST 22, 2006 531

The foregoing article clearly does not interfere with the

SUPREME COURT REPORTS ANNOTATED 532

mandatory subject in its CBA negotiations with the

VOL. 499, AUGUST 22, 2006 533

Frustrated with the foregoing turn 29

a. we hereby recognize that the present Retirement

29 CA Rollo (CA-G.R. SP No. 69805).

534 SUPREME COURT REPORTS ANNOTATED

the first day six months after the expiration on June 4,

„WHEREFORE, in view of the foregoing, there being grave abuse

Dissatisfied, both parties separately moved for the

VOL. 499, AUGUST 22, 2006 535

UFE-DFA-KMUÊs petition for review docketed as G.R. No.

THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF

THE CONTENTION THAT THERE IS NO EVIDENCE OF

Whereas in G.R. No. 158944-45, petitioner Nestlé

WHETHER OR NOT THE COURT OF APPEALS COMMITTED