UNION OF FILIPRO EMPLOYEES-DRUG, FOOD AND ALLIED INDUSTRIES UNIONS- • Nestle now points out in the earlier Ground
now points out in the earlier Ground Rules for 1998 Alabang/Cabuyao
KILUSANG MAYO UNO (UFE-DFA-KMU) vs. NESTLE PHILIPPINES, INC
Bargainable Issues: Mandatory and Permissible Subjects | August 22, 2006 | Chico-Nazario, J.
Nature of Case: Consolidated petitions for review
ISSUE/S & RATIO:
SUMMARY: The CBA between Nestle and its union was about to expire so the union
sought to enter negotiations. Nestle stated that the unilateral grants, including the
retirement plan as voluntarily granted benefits were to be excluded from negotiations so the
union filed a notice of strike for bargaining deadlock, then another notice of strike for bad
faith bargaining by excluding the retirement plan. The SOLE assumed jurisdiction and later
declared the retirement plan as a unilateral grant not subject for bargaining and dismissed
the ULP charge. The CA annulled the SOLE order. The Court held that consensual benefits
which are integral parts in the CBA may be bargained for
DOCTRINE: Consensual (voluntarily granted) and non-contributory (employees do not
contribute to its operation) benefits such as retirement may be an issue in CBA negotiations
FACTS:
• The CBA between Nestle and UFE-DFA-KMU (Union) would expire on June 5, 2001
so the Alabang and Cabuyao divisions informed Nestle of their intent to negotiate
• In a letter addressed to the Union’s Cabuyao Division, Nestle stated its position that
unilateral grants, one-time company grants, company-initiated policies and
programs, including the Retirement Plan, among others, are by their nature not
proper subjects of negotiations and shall be excluded
• Dialogue had begun but on Aug. 14, Nestle requested NCMB Cavite, to conduct
preventive mediation proceedings since no CBA was agreed despite 15 meetings
• A bargaining deadlock resulted due to economic issues, the retirement plan among
others, so the Union filed a 1st Notice of Strike on Oct. 31 for bargaining deadlock. It
filed a 2nd notice of strike based on ULP, that Nestle was bargaining in bad faith by
setting pre-conditions by refusing to include the Retirement Plan
• Nestle filed with the DOLE a Petition for Assumption of Jurisdiction to enjoin any
impending strike at the Cabuyao Plant. This was granted
• The Union argued against the SOLE’s power to assume jurisdiction under LC Art.
263(g) is unconstitutional or that if the law is valid, Nestle is not an industry
indispensable to national interest and even has 5 other plants that can still operate
• Despite the injunction by the SOLE and conciliation by NCMB, the Union went on
strike. PNP assistance was sought when they did not heed a return to work order
• The parties filed their position papers at a hearing. Here, Nestle addressed (1) several
issues on the economic provisions of the CBA (2) non-inclusion of the issue of the
Retirement Plan in CBA negotiations, while the union limited itself to issue (2)
• The SOLE allowed the union to tender its stand on issue (1) by a supplemental
position paper, but the union filed a Manifestation with MR contending that the
SOLE can only assume jurisdiction over issues mentioned in the notice of strike, the
CBA deadlock not being in the 2nd “amended” notice of strike could not be ruled on
• The Union filed its 1st petition for certiorari with TRO and WPI before the CA
• Acting SOLE Brion, ruled that the parties recognized the retirement plan as a
unilateral grant in a prior 1991 case Nestle, Phils. Inc. vs. NLRC so it cannot be
bargained. It also dismissed the ULP charge and directed the parties to adopt the best
terms in the recently conducted CBAs between Nestle and its 8 other BUs
• The union filed its 2nd petition for certiorari. The CA annulled the orders of the SOLE
and ordered Nestle to continue CBA negotiations, but absolved it of ULP
Factories CBA Negotiation that both sides expressly recognized Nestle’s prerogative
to initiate unilateral grants which are not negotiable. It likewise cited the MOA
entered into on Oct. 8 1998, that the retirement plan shall not form part of the CBA
1. WON the Retirement Plan was a proper subject to be included in the CBA
negotiations between the parties – YES
a. Employees have a vested and demandable right over existing benefits
voluntarily granted to them by their employer which may not be
unilaterally withdrawn or diminished (LC Art. 100)
b. In Nestle Philippines, Inc. v. NLRC (1991), the Court affirmed that a
retirement plan is consensual in nature (voluntarily granted). In said case,
the NLRC issued its resolution modifying Nestle’s existing non-
contributory Retirement Plan. Nestle contested that it was a unilateral
grant, but the Court held that the NLRC properly noted the consensual
character of the plan so that it may not be terminated or modified at will
c. The fact that the retirement plan is non-contributory, since employees
contribute nothing to its operation, does not make it a non-issue in CBA
negotiations. Almost all of the benefits such as salary increases, rice
allowances, midyear bonuses, etc. are non-contributory. The retirement
plan has also been integral in the CBA since 1972 so it is a valid CBA issue
d. The MOA cited by Nestle merely speaks of improvements to the plan. What
was unilaterally granted were improvements, not the Retirement Plan itself
which actually predates the letter (Ground Rules) and MOA by 2 decades
e. Par. 6 of the MOA itself does not show that the union agreed to treat the
Retirement Plan as a benefit solely dependent on the inclination of Nestle.
Besides, such characterization by Nestle cannot divest the employees of
their right over existing benefits voluntarily granted. Subparagraph 6.2
even shows that Nestle recognizes the Retirement Plan as part of the CBA
f. Here, the CBA about to expire contained provisions respecting the
Retirement Plan so the union was only exercising its right to bargain for its
improvement like any other benefit previously enjoyed. Since the
Retirement Plan is consensual in character, it is negotiable. However, this
does not give the right to demand more than what the company can give
2. WON the SOLE could cover issues not alleged in the 2nd notice of strike – YES
a. While the CA ruled that the assumption of jurisdiction should have been
limited to the disagreement on the ground rules, the basis of the 2 nd notice
of strike, and not on the substantive aspect of the CBA, the power granted
to the SOLE 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
b. The SOLE relied on the 2 Notices of Strike filed by the union, the 1st for
Bargaining Deadlock and the 2nd for ULP for bargaining in bad faith,
Setting pre-condition in the ground rules (Retirement issue)
c. Nowhere in the 2nd Notice of Strike is it indicated that this Notice is an
amendment, so the matters of substance alleged in the 1 st notice of strike
were properly decided on. Also, the parties had delved into the substance
of the CBA at the NCMB and even before
d. Even assuming that the meetings had not gone beyond the ground rules,
the SOLE could decide matters incidental to the labor dispute, not just to
those ascribed in the Notice of Strike
 3. WON Nestle was guilty of ULP for refusal to bargain on the retirement plan – NO
a. The record shows that only the 2nd notice of strike alleged ULP and this was
only a general allegation that Nestle bargained in bad faith
b. Good faith is presumed and he who alleges bad faith has the duty to prove
the same. The union had the burden of proof which it did not overcome
c. In its letter to the union, Nestle underscored its position that unilateral
grants including the retirement plan were not proper subjects of CBA
negotiations, but such is not tantamount to refusal to bargain, especially
when the 8 other BUs treated the retirement plan as a unilateral grant
d. Nestle’s inclusion in its Position Paper at the SOLE of its proposals affecting
other matters covered by the CBA contradicts the claim that Nestle refused
to bargain or it bargained in bad faith

RULING: WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that
Nestl 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 Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the
Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs.
SO ORDERED.

NOTE:
MOA
6. Additionally, the COMPANY agree to extend the following unilateral grants which shall
not form part of the Collective Bargaining Agreement (CBA):
6.2. Review for improvement of the COMPANYs Retirement Plan and the reference on the
Retirement Plan in the Collective Bargaining Agreement signed on 4 July 1995 shall be
maintained.