Union Of Filipro Employees - Drug v. Nestlé Philippines
Union of Filipro Employees - Drug, Food and Allied Industries Unions - Kilusang Mayo Uno (UFE-DFA-KMU) v. Nestlé Philippines, Incorporated, G.R. Nos. 158930-31 and 158944-45, August 22, 2006
- Labor Law
- collective bargaining
- retirement plan
- unilateral grant
- assumption of jurisdiction
- Article 263(g)
- unfair labor practice
- bad faith bargaining
- non-diminution of benefits
- management prerogative
- moral and exemplary damages
I. Facts of the Case
UFE-DFA-KMU, the union of Nestlé Philippines' rank-and-file employees, and Nestlé were negotiating a new CBA for 2001-2004. They quarreled over whether the company Retirement Plan could be a subject of the negotiations, which led to strike notices and the DOLE Secretary's assumption of jurisdiction. The Court of Appeals annulled the DOLE orders, and both parties elevated the case to the Supreme Court. The union claimed Nestlé committed unfair labor practice, while Nestlé disputed the Retirement Plan ruling and the scope of the Secretary's powers.
April 4, 2001
With the existing CBA set to expire on June 5, 2001, the presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU sent Nestlé a Letter of Intent to open new CBA negotiations for 2001-2004.
April 10, 2001
Nestlé acknowledged the letter and said it was preparing a counter-proposal and proposed ground rules for the negotiations.
May 29, 2001
Nestlé wrote the Cabuyao Division that unilateral grants, one-time company grants and company-initiated policies and programs, including the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, were not proper subjects of CBA negotiations and should be excluded. It also said that, with the closure of the Alabang Plant, the negotiations would cover only the Cabuyao Plant.
August 14, 2001
After fifteen meetings, Nestlé claimed an impasse and asked the NCMB Regional Office No. IV to conduct preventive mediation. The conciliation proceedings proved ineffective.
October 31, 2001
UFE-DFA-KMU filed a Notice of Strike citing a bargaining deadlock on economic issues (retirement plan, panel composition, costs and attendance, and CBA).
November 7, 2001
UFE-DFA-KMU filed a second Notice of Strike alleging unfair labor practice, namely bargaining in bad faith by setting a pre-condition in the ground rules (the Retirement Plan issue).
November 22, 2001
A strike vote overwhelmingly approved a strike.
November 26, 2001
Nestlé petitioned the DOLE Secretary to assume jurisdiction over the dispute under Article 263(g) of the Labor Code.
November 29, 2001
DOLE Secretary Sto. Tomas assumed jurisdiction, enjoined any strike or lockout, and directed the NCMB to conciliate and report within 30 days.
January 14, 2002
The Secretary denied the union's motion for reconsideration, which had challenged the constitutionality and application of Article 263(g).
January 15, 2002
Union members at the Cabuyao Plant went on strike despite the injunction.
January 16, 2002
The Secretary ordered the strikers to return to work within 24 hours and Nestlé to accept them back. The union continued the strike, and the Secretary sought PNP assistance to enforce the order.
February 7, 2002
Both parties filed position papers. Nestlé addressed several issues, while the union tackled only whether the retirement plan was a mandatory subject of CBA negotiations.
February 11, 2002
The Secretary denied Nestlé's motion to declare that the union had waived the other issues and allowed the union to file a supplemental position paper.
March 8, 2002
The union filed inconsistent pleadings, a motion for time to file a supplemental position paper and a manifestation with motion for reconsideration. The Secretary denied reconsideration. The union then filed a certiorari petition in the Court of Appeals (CA-G.R. SP No. 69805) questioning the February 11 and March 8, 2002 Orders.
April 2, 2002
Acting Secretary Brion ruled that the Retirement Plan is a unilateral grant and not a mandatory subject of bargaining. He dismissed the union's ULP charge, ordered adoption of the best terms of Nestlé's CBAs with its eight other bargaining units, and set the CBA term.
May 6, 2002
Secretary Sto. Tomas denied the union's motion for reconsideration of the April 2 ruling. The union filed a second certiorari petition in the Court of Appeals (CA-G.R. SP No. 71540).
February 27, 2003
The Court of Appeals granted both petitions and annulled all the assailed DOLE Orders for grave abuse of discretion. It directed Nestlé to resume CBA negotiations with the union. It held the Retirement Plan a valid CBA issue and limited the Secretary's assumption of jurisdiction to the ground rules. It declined to rule on ULP and damages because the union had not raised them before the Secretary.
June 27, 2003
The Court of Appeals denied both parties' motions for reconsideration: Nestlé's on the Retirement Plan ruling and the union's on Nestlé's absolution from ULP.
March 29, 2004
The Supreme Court consolidated the separate petitions for review on certiorari: the union's (G.R. Nos. 158930-31) on the ULP finding, and Nestlé's (G.R. Nos. 158944-45) on the Retirement Plan and the scope of the Secretary's jurisdiction.
II. Issues
Whether the Retirement Plan is a valid subject of the parties' collective bargaining negotiations.
Whether the assumption of jurisdiction power of the Secretary of Labor and Employment under Article 263(g) of the Labor Code is limited to the ground rules of the CBA negotiations or to the grounds alleged in the second Notice of Strike.
Whether Nestlé committed unfair labor practice by allegedly imposing a pre-condition to bargaining, such that moral and exemplary damages are warranted.
III. Ruling
Whether the Retirement Plan is a valid subject of the parties' collective bargaining negotiations.
The Retirement Plan is consensual in character and is therefore a valid, negotiable subject of CBA negotiations. Nestlé's labeling of it as a unilateral grant does not take it out of bargaining.
How the Court reasoned
- The Court had already declared in Nestlé Philippines, Inc. v. NLRC (1991) that this very Retirement Plan is consensual in character, so it is negotiable.
- Under Articles 252 and 253 of the Labor Code, the parties must bargain over wages, hours and other terms and conditions of employment, and a benefit of this kind falls within them.
- The Memorandum of Agreement of October 8, 1998 and the ground rules did not turn the Plan into a unilateral grant outside the CBA, and the union is not estopped from renegotiating it.
- The fact that eight other bargaining units treated the Plan as a unilateral grant does not bind this union.
- Nestlé's own characterization cannot take away employees' vested and demandable right over benefits voluntarily granted by the employer.
- The union members were therefore acting within their rights in demanding that the Plan's terms be opened for renegotiation. The Court of Appeals was correct on this point.
“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.”
Rule applied
Nestlé Philippines, Inc. v. NLRC, G.R. No. 90231, February 4, 1991; Article 100 of the Labor Code (non-diminution of benefits); Articles 252 and 253 of the Labor Code (duty to bargain collectively)
Whether the assumption of jurisdiction power of the Secretary of Labor and Employment under Article 263(g) of the Labor Code is limited to the ground rules of the CBA negotiations or to the grounds alleged in the second Notice of Strike.
The Secretary's assumption of jurisdiction covers all questions and controversies arising from the labor dispute and matters incidental to it. It is not limited to the ground rules or to the grounds stated in the Notice of Strike, so the Court of Appeals erred in limiting it.
How the Court reasoned
- Article 263(g) lets the Secretary assume jurisdiction over a labor dispute in an industry indispensable to the national interest and decide it, and the strike or lockout is automatically enjoined.
- Case law reads this power broadly: it extends to all questions and controversies arising from the dispute and to matters incidental to it, not only the specific grounds in the Notice of Strike.
- The Court of Appeals erred in confining the Secretary to the ground rules and in relying on the minutes of the October 30, 2001 meeting.
- Based on the two Notices of Strike, which cited a deadlock on economic issues including the Retirement Plan, the Secretary rightly decided matters of substance.
- The Secretary therefore properly assumed jurisdiction over questions incidental to the dispute and those matters the parties themselves raised.
“Secretary Sto. Tomas correctly assumed jurisdiction over the questions incidental to the current labor dispute and those matters raised by the parties.”
Rule applied
Article 263(g) of the Labor Code, as amended; International Pharmaceuticals, Inc. v. Sec. of Labor and Employment; Philtread case; In re: labor dispute at Toyota Motor Philippines Corporation
Whether Nestlé committed unfair labor practice by allegedly imposing a pre-condition to bargaining, such that moral and exemplary damages are warranted.
Nestlé was not shown to have committed unfair labor practice because the union did not present substantial evidence of bad faith. The award of moral and exemplary damages is therefore unavailing.
How the Court reasoned
- Good faith is presumed. The union, as the party alleging bad faith, had the burden of proving it with substantial evidence.
- Nestlé's position that unilateral grants are not proper CBA subjects is not a refusal to bargain. It was an exercise of management prerogative made in good faith, and there is no per se test of good faith in bargaining.
- Nestlé's Position Paper discussed its stand on other economic CBA matters, which contradicts the claim that it refused to bargain.
- The union's general allegation in its second Notice of Strike about a pre-condition in the ground rules was unsupported by substantial evidence.
- The Court of Appeals also could not rule on ULP because the issue was not raised before the labor tribunal and had no basis in the record.
- Without ULP, there is no ground for moral and exemplary damages.
“Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of Nestlé, the award of moral and exemplary damages is unavailing.”
Rule applied
Articles 247 and 248 of the Labor Code (unfair labor practice); presumption of good faith; substantial evidence rule
Doctrines
A retirement plan that is consensual in character is a valid, negotiable subject of collective bargaining. An employer's unilateral characterization of it as a gratuity does not divest employees of their vested and demandable right over benefits voluntarily granted.
The Secretary of Labor's assumption of jurisdiction under Article 263(g) extends to all questions and controversies arising from the labor dispute and to matters incidental to it, not just the specific grounds in the notice of strike.
Good faith in collective bargaining is presumed. A party alleging unfair labor practice by bad faith bargaining must prove it by substantial evidence, and there is no per se test of good faith.
An employer's insistence that certain items are unilateral grants outside the CBA, made in good faith and while bargaining on other matters, is an exercise of management prerogative and not a refusal to bargain.
Final Disposition
WHEREFORE, the petition in G.R. Nos. 158930-31 of UFE-DFA-KMU is DENIED, and the petition in G.R. Nos. 158944-45 of Nestlé is PARTLY GRANTED. The Retirement Plan is a valid issue in the CBA negotiations and Nestlé is not guilty of unfair labor practice. The Court of Appeals erred in limiting the Secretary's assumption of jurisdiction to the ground rules. The parties are directed to resume negotiations on the Retirement Plan.
Notes
The first chunk's extraction records the consolidated petitions as both partly granted/denied in different ways. The disposition here follows the second chunk's summary: the union's petition denied, Nestlé's partly granted. The decision was penned by Justice Chico-Nazario for the First Division.