G.R. Nos.

158930-31
March 3, 2008
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner,
vs.
NESTL PHILIPPINES, INCORPORATED, respondent.
x------------------------------------------x
G.R. Nos. 158944-45
March 3, 2008
NESTL PHILIPPINES, INCORPORATED, petitioner,
vs.
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), respondent.
RESOLUTION
CHICO-NAZARIO, J.:
On 22 August 2006, this Court promulgated its Decision 1 in the above-entitled
cases, the dispositive part of which reads
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.
Subsequent thereto, Nestl Philippines, Incorporated (Nestl) filed a Motion for
Clarification2 on 20 September 2006; while Union of Filipro Employees Drug, Food
and Allied Industries Union Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September
2006, filed a Motion for Partial Reconsideration3 of the foregoing Decision.
The material facts of the case, as determined by this Court in its Decision, may be
summarized as follows:
UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file
employees of Nestl belonging to the latters Alabang and Cabuyao plants. On 4
April 2001, as the existing collective bargaining agreement (CBA) between Nestl
and UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and
Cabuyao Divisions of UFE-DFA-KMU informed Nestl of their intent to "open [our]
new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June
2001."6 In response thereto, Nestl informed them that it was also preparing its own
counter-proposal and proposed ground rules to govern the impending conduct of the
CBA negotiations.
On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only) 7,
Nestl reiterated its stance that "unilateral grants, one-time company grants,
company-initiated policies and programs, which include, but are not limited to the
Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their
very nature not proper subjects of CBA negotiations and therefore shall be excluded
therefrom."8
Dialogue between the company and the union thereafter ensued.
On 14 August 2001, however, Nestl requested 9 the National Conciliation and
Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive

mediation proceedings between it and UFE-DFA-KMU owing to an alleged impasse in

said dialogue; i.e., that despite fifteen (15) meetings between them, the parties
failed to reach any agreement on the proposed CBA.
Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed
a Notice of Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of
a bargaining deadlock pertaining to economic issues, i.e., "retirement (plan), panel
composition, costs and attendance, and CBA". 11 On 07 November 2001,
anotherNotice of Strike12 was filed by the union, this time predicated on Nestls
alleged unfair labor practices, that is, bargaining in bad faith by setting preconditions in the ground rules and/or refusing to include the issue of the Retirement
Plan in the CBA negotiations. The result of a strike vote conducted by the members
of UFE-DFA-KMU yielded an overwhelming approval of the decision to hold a strike. 13
On 26 November 2001, prior to holding the strike, Nestl filed with the DOLE
a Petition for Assumption of Jurisdiction,14 praying for the Secretary of the DOLE,
Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the current labor dispute in
order to effectively enjoin any impending strike by the members of the UFE-DFAKMU at the Nestls Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order 15 assuming jurisdiction over
the subject labor dispute. The fallo of said Order states that:
CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the
labor dispute at the Nestl 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
parties 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.
UFE-DFA-KMU sought reconsideration16 of the above but nonetheless moved for
additional time to file its position paper as directed by the Assumption of Jurisdiction
Order.
On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration.
On 15 January 2002, despite the order enjoining the conduct of any strike or lockout
and conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at
Nestls Cabuyao Plant went on strike.
In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas
directed: (1) the members of UFE-DFA-KMU to return-to-work within twenty-four (24)
hours from receipt of such Order; (2) Nestl 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 on-going
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. But notwithstanding the Return-to-Work Order, the members of UFE-DFAKMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the
assistance of the Philippine National Police (PNP) for the enforcement of said order.

On 7 February 2002, Nestl and UFE-DFA-KMU filed their respective position papers.
Nestl addressed several issues concerning economic provisions of the CBA as well
as the non-inclusion of the issue of the Retirement Plan in the collective bargaining
negotiations. On the other hand, UFE-DFA-KMU limited itself to the issue of whether
or not the retirement plan was a mandatory subject in its CBA negotiations.
On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender
its stand on the other issues raised by Nestl but not covered by its initial position
paper by way of a Supplemental Position Paper.
UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several
pleadings, one of which was aManifestation with Motion for Reconsideration of the
Order dated February 11, 2002 assailing the Order of February 11, 2002 for
supposedly being contrary to law, jurisprudence and the evidence on record. The
union posited that Sec. Sto. Tomas "could only assume jurisdiction over the issues
mentioned in the notice of strike subject of the current dispute," 17 and that the
Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA
deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFEDFA-KMU.
Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals,
alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to
lack or excess of jurisdiction when she issued the Orders of 11 February 2002 and 8
March 2002.
In the interim, in an attempt to finally resolve the crippling labor dispute between
the parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with
an Order19 dated 02 April 2002, ruling that:
a. we hereby recognize that the present Retirement Plan at the Nestl Cabuyao
Plant is a unilateral grant that the parties have expressly so recognized subsequent
to the Supreme Courts ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231,
February 4, 1991, and is therefore not a mandatory subject for bargaining;
b. the Unions charge of unfair labor practice against the Company is hereby
dismissed for lack of merit;
c. the parties are directed to secure the best applicable terms of the recently
concluded CBSs between Nestl Phils. Inc. and it eight (8) other bargaining units,
and to adopt these as the terms and conditions of the Nestl 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 Nestl 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 Nestl Cabuyao Plant CBA;
f. the parties shall execute their CBA within thirty (30) days from receipt of this
Order, furnishing this Office a copy of the signed Agreement;
g. this CBA shall, in so far as representation is concerned, be for a term of five (5)
years; all other provisions shall be renegotiated not later than three (3) years after
its effective date which shall be December 5, 2001 (or on the first day six months
after the expiration on June 4, 2001 of the superceded CBA).
UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was
subsequently denied on 6 May 2002.
For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition
for Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the

Secretary of the DOLE, having been issued in grave abuse of discretion amounting
to lack or excess of jurisdiction.
On 27 February 2003, the appellate court promulgated its Decision on the twin
petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU, the dispositive part
thereof stating
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 (CAG.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CAG.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled:
"IN RE: LABOR DISPUTE AT NESTLE 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-11-10-03901) are hereby ANNULLED and SET ASIDE. Private
respondent is hereby directed to resume the CBA negotiations with the petitioner. 20
Both parties appealed the aforequoted ruling. Nestl essentially assailed that part of
the decision finding the DOLE Secretary to have gravely abused her discretion
amounting to lack or excess of jurisdiction when she ruled that the Retirement Plan
was not a valid issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in
contrast, questioned the appellate courts decision finding Nestl free and clear of
any unfair labor practice.
Since the motions for reconsideration of both parties were denied by the Court of
Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU and Nestl
separately filed the instant Petitions for Review on Certiorariunder Rule 45 of the
Rules of Court, as amended.
G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestl seeking to reverse the
Court of Appeals Decision insofar as the appellate courts failure to find Nestl guilty
of unfair labor practice was concerned; while G.R. No. 158944-45 was instituted by
Nestl against UFE-DFA-KMU likewise looking to annul and set aside the part of the
Court of Appeals Decision declaring that: 1) the Retirement Plan was a valid
collective bargaining issue; and 2) the scope of the power of the Secretary of the
Department of Labor and Employment (DOLE) to assume jurisdiction over the labor
dispute between UFE-DFA-KMU and Nestl was 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.
On 29 March 2004, this Court resolved21 to consolidate the two petitions inasmuch
as they (1) involved the same set of parties; (2) arose from the same set of
circumstances, i.e., from several Orders issued by then DOLE Secretary, Hon.
Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over the labor
dispute between Nestl and UFE-DFA-KMU, Alabang and Cabuyao Divisions; 22 and
(3) similarly assailed the same Decision and Resolution of the Court of Appeals.
After giving due course to the instant consolidated petitions, this Court promulgated
on 22 August 2006 its Decision, now subject of UFE-DFA-KMUs Motion for Partial
Reconsideration and Nestls Motion for Clarification.
In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court
address and discuss anew points or arguments that have basically been passed
upon in this Courts 22 August 2006 Decision. Firstly, it questions this Courts finding
that Nestl was not guilty of unfair labor practice, considering that the transaction
speaks for itself,i.e, res ipsa loquitor. And made an issue again is the question of
whether or not the DOLE Secretary can take cognizance of matters beyond the
amended Notice of Strike.

As to Nestls prayer for clarification, the corporation seeks elucidation respecting

the dispositive part of this Courts Decision directing herein parties to resume
negotiations on the retirement compensation package of the concerned employees.
It posits that "[i]n directing the parties to negotiate the Retirement Plan, the
Honorable Court x x x might have overlooked the fact that here, the Secretary of
Labor had already assumed jurisdiction over the entire 2001-2004 CBA controversy
x x x."
As to the charge of unfair labor practice:
The motion does not put forward new arguments to substantiate the prayer for
reconsideration of this Courts Decision except for the sole contention that the
transaction speaks for itself, i.e., res ipsa loquitor. Nonetheless, even a perusal of
the arguments of UFE-DFA-KMU in its petition and memorandum in consideration of
the point heretofore raised will not convince us to change our disposition of the
question of unfair labor practice. UFE-DFA-KMU argues therein that Nestls "refusal
to bargain on a very important CBA economic provision constitutes unfair labor
practice."23 It explains that Nestl set as a precondition for the holding of collective
bargaining negotiations the non-inclusion of the issue of Retirement Plan. In its
words, "respondent Nestl Phils., Inc. insisted that the Union should first agree that
the retirement plan is not a bargaining issue before respondent Nestl would agree
to discuss other issues in the CBA." 24 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 to the
petitioner for the ULP committed by the respondent." 25
We are unconvinced still.
The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor
Code, as amended, which state
ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously 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 agreements if requested by
either party but such duty does not compel any party to agree to a proposal or to
make any concession.
ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall 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 of conditions of the existing agreement during the 60day period and/or until a new agreement is reached by the parties.
Obviously, the purpose of collective bargaining is the reaching of an agreement
resulting in a contract binding on the parties; but the failure to reach an agreement
after negotiations have continued for a reasonable period does not establish a lack
of good faith. The statutes invite and contemplate a collective bargaining contract,
but they do not compel one. The duty to bargain does not include the obligation to
reach an agreement.
The crucial question, therefore, 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. As we

have said, 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 some degree, the question of good
faith may be a question of credibility. The effect of an employers or a unions
individual actions is not the test of good-faith bargaining, but the impact of all such
occasions or actions, considered as a whole, and the inferences fairly drawn
therefrom collectively may offer a basis for the finding of the NLRC. 26
For a charge of unfair labor practice to prosper, it must be shown that Nestl was
motivated by ill will, "bad 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, wounded feelings, or grave anxiety resulted x x x" 27 in
disclaiming unilateral grants as proper subjects in their collective bargaining
negotiations. While the law makes it an obligation for the employer and the
employees to bargain collectively with each other, such compulsion does not
include the commitment to precipitately accept or agree to the proposals of the
other. All it contemplates is that both parties should approach the negotiation with
an open mind and make reasonable effort to reach a common ground of agreement.
Herein, the union merely bases its claim of refusal to bargain on a letter 28 dated 29
May 2001 written by Nestl where the latter laid down its position that "unilateral
grants, one-time company grants, company-initiated policies and programs, which
include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and
Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom." But as we have stated in
this Courts Decision, said letter is not tantamount to refusal to bargain. In thinking
to exclude the issue of Retirement Plan from the CBA negotiations, Nestl, cannot
be faulted for considering the same benefit as unilaterally granted, considering that
eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan
as a unilaterally granted benefit. This is not a case where the employer exhibited an
indifferent attitude towards collective bargaining, because the negotiations were not
the unilateral activity of the bargaining representative. Nestls desire to settle the
dispute and proceed with the negotiation being evident in its cry for compulsory
arbitration is proof enough of its exertion of reasonable effort at good-faith
bargaining.
In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU.
The corporation simply wanted to exclude the Retirement Plan from the issues to be
taken up during CBA negotiations, on the postulation that such was in the nature of
a unilaterally granted benefit. An employers steadfast insistence to exclude a
particular substantive provision is no different from a bargaining representatives
perseverance to include one that they deem of absolute necessity. Indeed, an
adamant insistence on a bargaining position to the point where the negotiations
reach an impasse does not establish bad faith.[fn24 p.10] It is but natural that at
negotiations, management and labor adopt positions or make demands and offer
proposals and counter-proposals. On account of the importance of the economic
issue proposed by UFE-DFA-KMU, Nestle could have refused to bargain with the
former but it did not. And the managements firm stand against the issue of the
Retirement Plan did not mean that it was bargaining in bad faith. It had a right to
insist on its position to the point of stalemate.
The foregoing things considered, this Court replicates below its clear disposition of
the issue:
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 labormanagement 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]
(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 attorneys 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, Nestl 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 Nestl committed
unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition
in the ground rules (Retirement issue)." (Notice of Strike of 7 November 2001;
Annex "C" of UFE-DFA-KMU Position Paper; DOLE original records, p. 146.) In
contrast, Nestl, in its Position Paper, did not confine itself to the issue of the noninclusion of the Retirement Plan but extensively discussed its stance on other
economic matters pertaining to the CBA. It is 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 the 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 ULP charge hurled against
Nestl. 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.)
In the case at bar, 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 even
a prima facie showing to warrant such a belief. (Tiu v. National Labor Relations
Commission, G.R. No. 123276, 18 August 1997, 277 SCRA 681, 688.)
Employers are accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital. (Capitol Medical Center, Inc. v.
Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) This mass of
privileges comprises the so-called management prerogatives. (Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In
this connection, the rule is that good faith is always presumed. As long as the
companys 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. (Capitol Medical Center, Inc. v. Meris,
G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.)
There is no per se test of good faith in bargaining. (Hongkong Shanghai Banking
Corporation Employees Union v. National Labor Relations Commission, G.R. No.
125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad faith is an
inference to be drawn from the facts. (Hongkong Shanghai Banking Corporation
Employees Union v. National Labor Relations Commission, G.R. No. 125038, 6
November 1997, 281 SCRA 509, 518.) Herein, no proof was presented to exemplify
bad faith on the part of Nestl apart from mere allegation. 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, Nestls inclusion in its Position Paper of
its proposals affecting other matters covered by the CBA negates 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 presumption of good
faith on the part of Nestl, the award of moral and exemplary damages is
unavailing.

As to the jurisdiction of the DOLE Secretary under the amended Notice of Strike:
This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE
Secretary should not have gone beyond the disagreement on the ground rules of
the CBA negotiations. The union doggedly asserts that the entire labor dispute
between herein parties concerns only the ground rules.
Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock
as the basis for the filing of its Notice of Strike; and at the time of the filing of the
first Notice of Strike, several conciliation conferences had already been undertaken
where both parties had already exchanged with each other their respective CBA
proposals. In fact, during the conciliation meetings before the NCMB, but prior to the
filing of the notices of strike, the parties had already delved into matters affecting
the meat of the collective bargaining agreement.
The 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 hereunder:
"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 without any objection on the part of the Union x x x. 29
Had the parties not been at the stage where the substantive provisions of the
proposed CBA had been put in issue, the union would not have based thereon its
initial notice to strike. This Court maintains its original position in the Decision that,
based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE
rightly decided on matters of substance. That the union later on changed its mind is
of no moment because to give premium to such would make the legally mandated
discretionary power of the Dole Secretary subservient to the whims of the parties.
As to the point of clarification on the resumption of negotiations respecting the
Retirement Plan:
As for the supposed confusion or uncertainty of the dispositive part of this Courts
Decision, Nestle moves for clarification of the statement "The parties are directed
to resume negotiations respecting the Retirement Plan and to take action consistent
with the discussion hereinabove set forth. No costs." The entire fallo of this Courts
Decision reads:
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.
Nestle interprets the foregoing as an order for the parties to resume negotiations
by themselves respecting the issue of retirement benefits due the employees of the
Cabuyao Plant. Otherwise stated, Nestle posits that the dispositive part of the
Decision directs the parties to submit to a voluntary mode of dispute settlement.
A read-through of this Courts Decision reveals that the ambiguity is more ostensible
than real. This Courts Decision of 22 August 2006 designated marked boundaries
as to the implications of the assailed Orders of the Secretary of the DOLE. We said
therein 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) Nestl is not
guilty of unfair labor practice. Nowhere in our Decision did we require parties to
submit to negotiate by themselves the tenor of the retirement benefits of the
concerned employees of Nestl, precisely because the Secretary of the DOLE had
already assumed jurisdiction over the labor dispute subject of herein petitions.
Again, we spell out what encompass the Secretarys assumption of jurisdiction
power. The Secretary of the DOLE has been 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. And, as a matter of necessity, it includes
questions incidental to the labor dispute; that is, issues that are necessarily
involved in the dispute itself, and not just to that ascribed in the Notice of Strike or
otherwise submitted to him for resolution. In the case at bar, the issue of retirement
benefits was specifically what was presented before the Secretary of the DOLE;
hence, We reject Nestls interpretation. Our decision is crystal and cannot be
interpreted any other way. The Secretary having already assumed jurisdiction over
the labor dispute subject of these consolidated petitions, the issue concerning the
retirement benefits of the concerned employees must be remanded back to him for
proper disposition.
All told, in consideration of the points afore-discussed and the fact that no
substantial arguments have been raised by either party, this Court remains
unconvinced that it should modify or reverse in any way its disposition of herein
cases in its earlier Decision. The labor dispute between the Nestle and UFE-DFA-KMU
has dragged on long enough. As no other issues are availing, let this Resolution
write an ending to the protracted labor dispute between Nestl and UFE-DFA-KMU
(Cabuyao Division).
WHEREFORE, premises considered, the basic issues of the case having been passed
upon and there being no new arguments availing, the Motion for Partial
Reconsideration is hereby DENIED WITH FINALITY for lack of merit. Let these cases
be remanded to the Secretary of the Department of Labor and Employment for
proper disposition, consistent with the discussions in this Courts Decision of 22
August 2006 and as hereinabove set forth. No costs.
SO ORDERED.
G.R. No. 164060
June 15, 2007

FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY (FAMIT), petitioner,

vs.
HON. COURT OF APPEALS, and MAPUA INSTITUTE OF TECHNOLOGY, respondents.
DECISION
QUISUMBING, J.:
This is an appeal to reverse and set aside the Decision 1 dated August 21, 2003 and
the Resolution2 dated June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479.
The appellate court had reversed the Decision of the Office of the Voluntary
Arbitrators. It held that the incorporation of the new faculty ranking to the 2001
Collective Bargaining Agreement (CBA) between petitioner and private respondent
has been the intention of the parties to the CBA.
The facts in this case are undisputed.
In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur
Andersen to develop a faculty ranking and compensation system. On January 29,
2001, in the 5th CBA negotiation meeting, MIT presented the new faculty ranking
instrument to petitioner Faculty Association of Mapua Institute of Technology
(FAMIT).3 The latter agreed to the adoption and implementation of the instrument,
with the reservation that there should be no diminution in rank and pay of the
faculty members.
On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001. 4 It
incorporated the new ranking for the college faculty in Section 8 of Article V which
states that, "A new faculty ranking shall be implemented in June 2001. However,
there shall be no diminution in the existing rank and the policy same rank, same
pay shall apply."5
The faculty ranking sheet was annexed to the CBA as Annex "B," while the college
faculty rates sheet for permanent faculty and which included the point ranges and
corresponding pay rates per faculty level was added as Annex "C."
When the CBA took effect, the Vice President for Academic Affairs issued a
memorandum to all deans and subject chairs to evaluate and re-rank the faculty
under their supervision using the new ranking instrument. Eight factors were to be
considered and given their corresponding weights/points according to levels
attained per factor. Among these were: (1) educational attainment; (2) professional
honors received; (3) relevant training; (4) relevant professional experience; (5)
scholarly work and creative efforts; (6) award winning works; (7) officership in
relevant technical and professional organizations; and (8) administrative positions
held at MIT.6
After a month, MIT called FAMITs attention to what it perceived to be flaws or
omissions in the CBA signed by the parties. In a letter 7 dated July 5, 2001 to FAMIT,
MIT requested for an amendment of the following CBA annexes Annex "B" (Faculty
Ranking Sheet); Annex "C" (College Faculty Rates for Permanent Faculty Only); and
Annex "D" (H.S. Faculty Rates for Permanent Faculty Only). MIT claimed that with
respect to Annexes "C" and "D," these contained data under the heading "TOTAL
POINTS" that were not germane to the two other columns in both annexes. With
regard to the Faculty Ranking Point Range sheet of the new faculty ranking
instrument, MIT avers that this was inadvertently not attached to the CBA.
FAMIT rejected the proposal. It said that these changes would constitute a violation
of the ratified 2001 CBA and result in the diminution of rank and benefits of FAMIT
college faculty. It argued that the proposed amendment in the ranking system for
the college faculty revised the point ranges earlier agreed upon by the parties and
expands the 19 faculty ranks to 23.

Meanwhile, MIT instituted some changes in the curriculum during the school year
2000-2001 which resulted in changes in the number of hours for certain subjects.
Thus, MIT adopted a new formula for determining the pay rates of the high school
faculty: Rate/Load x Total Teaching Load = Salary where total teaching load equals
number of classes multiplied by hours of service per week divided by 3 hours (as
practiced, one unit subject is equal to 3 hours service).
Upon learning of the changes, FAMIT opposed the formula. It averred that unknown
to FAMIT, MIT has not been implementing the relevant provisions of the 2001 CBA.
In particular, FAMIT cites Section 2 of Article VI, which states as follows:
ARTICLE VI
General Wage Clause
xxxx
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty
according to corresponding faculty rank, to wit:
25% increase in per rate/load for all high school faculty members effective
November 2000;
10% increase in per rate/load for all permanent high school faculty members
effective June 2001.8(Emphasis supplied.)
On July 20, 2001, FAMIT met with MIT to settle this second issue but to no avail. MIT
maintained that it was within its right to change the pay formula used.
Hence, together with the issue pertaining to the ranking of the college faculty,
FAMIT brought the matter to the National Conciliation and Mediation Board for
mediation. Proceedings culminated in the submission of the case to the Panel of
Voluntary Arbitrators for resolution.
The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the
private respondent to:
1. Implement the agreed upon point range system with 19 faculty ranks, along with
the corresponding pay levels for the college faculty, consistent with the provisions
of Article V, Section 8 of the 2001 CB[A] and Annex C of the said CBA, and
2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past
practices or formula in computing the pay of high school faculty based on rate per
load and to pay the faculty their corresponding rates on this basis,
Both actions of which (sic) should be made concurrent with the effectivity of the
current CBA.
SO ORDERED.9
On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary
Arbitrators and decreed as follows:
WHEREFORE, the petition is hereby GRANTED. The assailed decision of the
voluntary arbitrators isREVERSED. Accordingly, petitioners proposal to include the
faculty point range sheet in Annex "B" of the 2001 CBA, as well as to replace Annex
"C" with the document on the 23-level faculty ranking instrument and replace the
column containing the heading "Total Points" which is attached in Annexes "C" and
"D" of the 2001 CBA with the correct data is also GRANTED.
SO ORDERED.10
Hence, the instant petition.
The petitioner enumerated issues for resolution, to wit:
I
WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER,
CHANGE AND/OR MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE
[BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED, ENTERED INTO AND SIGNED

WITH THE PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE

PARTIES; AND
II
WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,]
ALTER AND/OR REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A
PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE
SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND DOWNGRADING OF
RANKS, OF ITS COLLEGE AND HIGH SCHOOL FACULTY.11
Simply put, the issues for our determination are: (1) Is MITs new proposal,
regarding faculty ranking and evaluation, lawful and consistent with the ratified
CBA? and (2) Is MITs development of a new pay formula for the high school
department, without the knowledge of FAMIT, lawful and consistent with the ratified
CBA?
On the first issue, FAMIT avers that MITs new proposal on faculty ranking and
evaluation for the college faculty is an unlawful modification, alteration or
amendment of the existing CBA without approval of the contracting parties.
On the other hand, MIT argues that the new faculty ranking instrument was made in
good faith and in the exercise of its inherent prerogative to freely regulate according
to its own discretion and judgment all aspects of employment.
Considering the submissions of the parties, in the light of the existing CBA, we find
that the new point range system proposed by MIT is an unauthorized modification of
Annex "C" of the 2001 CBA. It is made up of a faculty classification that is
substantially different from the one originally incorporated in the current CBA
between the parties. Thus, the proposed system contravenes the existing provisions
of the CBA, hence, violative of the law between the parties.
As observed by Office of the Voluntary Arbitrators, the evaluation system differs
from past evaluation practices (e.g., those that give more weight to tenure and
faculty load) such that the system can lead to a demotion in rank for a faculty
member. A perfect example of this scenario was cited by FAMIT in its Memorandum:
xxxx
Take the case of a faculty member with 17 years of teaching experience who has a
Phd. Degree. For school year 2000-2001 his corresponding rank is Professor 3 with
4001-4500 points using the previous CBA. If the college faculty member is ranked
based on the ratified 2001 CBA, his/her corresponding rank would increase to
Professor 5 with 5001-5500 points.
But if the proposal of private respondent is used, the professor, would be ranked as
Associate Professor 5 with 5001-5749 points, instead of Professor 5 as recognized
by the 2001 CBA. True, there may be an increase in points but there is also a
resulting diminution in rank from Professor 3 based on the previous CBA to
Associate Professor 5. This would translate to a reduction of the salary increase he
is entitled to under the 2001 CBA. 12
According to FAMIT, this patently is a violation of Section 8, Article V of the 2001
CBA.
Noteworthy, Article 253 of the Labor Code states:
ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement.When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall 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 the existing agreement during the
60-day period and/or until a new agreement is reached by the parties.
REVISED PAGE
Until a new CBA is executed by and between the parties, they are duty-bound to
keep the status quo and to continue in full force and effect the terms and conditions
of the existing agreement. The law does not provide for any exception nor
qualification on which economic provisions of the existing agreement are to retain
its force and effect. Therefore, it must be understood as encompassing all the terms
and conditions in the said agreement.13
The CBA during its lifetime binds all the parties. The provisions of the CBA must be
respected since its terms and conditions "constitute the law between the parties."
Those who are entitled to its benefits can invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the aggrieved party has the right to go to
court and ask redress.14 The CBA is the norm of conduct between petitioner and
private respondent and compliance therewith is mandated by the express policy of
the law.15
On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in
determining the salary of a high school faculty. MIT counters that it is entitled to
consider the actual number of teaching hours to arrive at a fair and just salary of its
high school faculty.
Again, we are in agreement with FAMITs submission. We rule that MIT cannot adopt
its unilateral interpretation of terms in the CBA. It is clear from the provisions of the
2001 CBA that the salary of a high school faculty member is based on a rate per
load and not on a rate per hour basis. Section 2, Article VI of the 2001 CBA provides:
xxxx
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty
according to corresponding faculty rank, to wit:
25% increase in per rate/load for all high school faculty members effective
November 2000.
10% increase in per rate/load for all permanent high school faculty members
effective June 2001.16(Emphasis supplied.)
In our view, there is no room for unilateral change of the formula by MIT. Needless
to stress, the Labor Code is specific in enunciating that in case of doubt in the
interpretation of any law or provision affecting labor, such should be interpreted in
favor of labor.17 The appellate court committed a grave error in the interpretation of
the CBA provision and the governing law.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003
and the Resolution dated June 3, 2004 of the Court of Appeals denying the motion
for reconsideration are REVERSED and SET ASIDE. The decision of the Office of the
Voluntary Arbitrators is REINSTATED. MITs unilateral change in the ranking of
college faculty from 19 levels to 23 levels, and the computation of high school
faculty salary from rate per load to rate per hour basis is DECLARED NULL AND
VOID for being violative of the parties CBA and the applicable law.
Costs against private respondent MIT.
SO ORDERED.
G.R. No. 180866
March 2, 2010
LEPANTO CERAMICS, INC., Petitioner,
vs.
LEPANTO CERAMICS EMPLOYEES ASSOCIATION, Respondent.

DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 1 of the 1997
Rules of Civil Procedure filed by petitioner Lepanto Ceramics, Inc. (petitioner),
assailing the: (1) Decision2 of the Court of Appeals, dated 5 April 2006, in CA-G.R. SP
No. 78334 which affirmed in toto the decision of the Voluntary Arbitrator 3 granting
the members of the respondent association a Christmas Bonus in the amount of
Three Thousand Pesos (P3,000.00), or the balance of Two Thousand Four Hundred
Pesos (P2,400.00) for the year 2002, and the (2) Resolution 4 of the same court
dated 13 December 2007 denying Petitioners Motion for Reconsideration.
The facts are:
Petitioner Lepanto Ceramics, Incorporated is a duly organized corporation existing
and operating by virtue of Philippine Laws. Its business is primarily to manufacture,
make, buy and sell, on wholesale basis, among others, tiles, marbles, mosaics and
other similar products.5
Respondent Lepanto Ceramics Employees Association (respondent Association) is a
legitimate labor organization duly registered with the Department of Labor and
Employment. It is the sole and exclusive bargaining agent in the establishment of
petitioner.6
In December 1998, petitioner gave a P3,000.00 bonus to its employees, members of
the respondent Association.7
Subsequently, in September 1999, petitioner and respondent Association entered
into a Collective Bargaining Agreement (CBA) which provides for, among others, the
grant of a Christmas gift package/bonus to the members of the respondent
Association.8 The Christmas bonus was one of the enumerated "existing benefit,
practice of traditional rights" which "shall remain in full force and effect."
The text reads:
Section 8. All other existing benefits, practice of traditional rights consisting of
Christmas Gift package/bonus, reimbursement of transportation expenses in case of
breakdown of service vehicle and medical services and safety devices by virtue of
company policies by the UNION and employees shall remain in full force and effect.
Section 1. EFFECTIVITY
This agreement shall become effective on September 1, 1999 and shall remain in
full force and effect without change for a period of four (4) years or up to August 31,
2004 except as to the representation aspect which shall be effective for a period of
five (5) years. It shall bind each and every employee in the bargaining unit including
the present and future officers of the Union.
In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead,
petitioner gave each of the members of respondent Association Tile Redemption
Certificates equivalent to P3,000.00.9 The bonus for the year 2002 is the root of the
present dispute. Petitioner gave a year-end cash benefit of Six Hundred Pesos
(P600.00) and offered a cash advance to interested employees equivalent to one (1)
month salary payable in one year. 10 The respondent Association objected to
the P600.00 cash benefit and argued that this was in violation of the CBA it
executed with the petitioner.
The parties failed to amicably settle the dispute. The respondent Association filed a
Notice of Strike with the National Conciliation Mediation Board, Regional Branch No.
IV, alleging the violation of the CBA. The case was placed under preventive
mediation. The efforts to conciliate failed. The case was then referred to the

Voluntary Arbitrator for resolution where the Complaint was docketed as Case No.
LAG-PM-12-095-02.
In support of its claim, respondent Association insisted that it has been the
traditional practice of the company to grant its members Christmas bonuses during
the end of the calendar year, each in the amount of P3,000.00 as an expression of
gratitude to the employees for their participation in the companys continued
existence in the market. The bonus was either in cash or in the form of company
tiles. In 2002, in a speech during the Christmas celebration, one of the companys
top executives assured the employees of said bonus. However, the Human
Resources Development Manager informed them that the traditional bonus would
not be given as the companys earnings were intended for the payment of its bank
loans. Respondent Association argued that this was in violation of their CBA.
The petitioner averred that the complaint for nonpayment of the 2002 Christmas
bonus had no basis as the same was not a demandable and enforceable obligation.
It argued that the giving of extra compensation was based on the companys
available resources for a given year and the workers are not entitled to a bonus if
the company does not make profits. Petitioner adverted to the fact that it was debtridden having incurred net losses for the years 2001 and 2002 totaling to P1.5
billion; and since 1999, when the CBA was signed, the companys accumulated
losses amounted to over P2.7 billion. Petitioner further argued that the grant of a
one (1) month salary cash advance was not meant to take the place of a bonus but
was meant to show the companys sincere desire to help its employees despite its
precarious financial condition. Petitioner also averred that the CBA provision on a
"Christmas gift/bonus" refers to alternative benefits. Finally, petitioner emphasized
that even if the CBA contained an unconditional obligation to grant the bonus to the
respondent Association, the present difficult economic times had already legally
released it therefrom pursuant to Article 1267 of the Civil Code. 11
The Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring that
petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 for
the reason that the bonus was given prior to the effectivity of the CBA between the
parties and that the financial losses of the company is not a sufficient reason to
exempt it from granting the same. It stressed that the CBA is a binding contract and
constitutes the law between the parties. The Voluntary Arbitrator further expounded
that since the employees had already been given P600.00 cash bonus, the same
should be deducted from the claimed amount of P3,000.00, thus leaving a balance
of P2,400.00. The dispositive portion of the decision states, viz:
Wherefore, in view of the foregoing respondent LCI is hereby ordered to pay the
members of the complainant union LCEA their respective Christmas bonus in the
amount of three thousand (P3,000.00) pesos for the year 2002 less the P600.00
already given or a balance of P2,400.00.12
Petitioner sought reconsideration but the same was denied by the Voluntary
Arbitrator in an Order dated 27 June 2003, in this wise:
The Motion for Reconsideration filed by the respondent in the above-entitled case
which was received by the Undersigned on June 26, 2003 is hereby denied pursuant
to Section 7 Rule XIX on Grievance Machinery and Voluntary Arbitration; Amending
The Implementing Rules of Book V of the Labor Code of the Philippines; to wit:
Section 7. Finality of Award/Decision The decision, order, resolution or award of
the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory
after ten (10) calendar days from receipt of the copy of the award or decision by the
parties and it shall not be subject of a motion for reconsideration. 13

Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari
under Rule 65 of the Rules of Court docketed as CA-G.R. SP No. 78334. 14 As
adverted to earlier, the Court of Appeals affirmed in toto the decision of the
Voluntary Arbitrator. The appellate court also denied petitioners motion for
reconsideration.
In affirming respondent Associations right to the Christmas bonus, the Court of
Appeals held:
In the case at bar, it is indubitable that petitioner offered private respondent a
Christmas bonus/gift in 1998 or before the execution of the 1999 CBA which
incorporated the said benefit as a traditional right of the employees. Hence, the
grant of said bonus to private respondent can be deemed a practice as the same
has not been given only in the 1999 CBA. Apparently, this is the reason why
petitioner specifically recognized the grant of a Christmas bonus/gift as a practice or
tradition as stated in the CBA. x x x.
xxxx
Evidently, the argument of petitioner that the giving of a Christmas bonus is a
management prerogative holds no water. There were no conditions specified in the
CBA for the grant of said benefit contrary to the claim of petitioner that the same is
justified only when there are profits earned by the company. As can be gleaned from
the CBA, the payment of Christmas bonus was not contingent upon the realization
of profits. It does not state that if the company derives no profits, there are no
bonuses to be given to the employees. In fine, the payment thereof was not related
to the profitability of business operations.
Moreover, it is undisputed that petitioner, aside from giving the mandated 13th
month pay, has further been giving its employees an additional Christmas bonus at
the end of the year since 1998 or before the effectivity of the CBA in September
1999. Clearly, the grant of Christmas bonus from 1998 up to 2001, which brought
about the filing of the complaint for alleged non-payment of the 2002 Christmas
bonus does not involve the exercise of management prerogative as the same was
given continuously on or about Christmas time pursuant to the CBA. Consequently,
the giving of said bonus can no longer be withdrawn by the petitioner as this would
amount to a diminution of the employees existing benefits. 15
Not to be dissuaded, petitioner is now before this Court. The only issue before us is
whether or not the Court of Appeals erred in affirming the ruling of the voluntary
arbitrator that the petitioner is obliged to give the members of the respondent
Association a Christmas bonus in the amount of P3,000.00 in 2002.16
We uphold the rulings of the voluntary arbitrator and of the Court of Appeals.
Findings of labor officials, who are deemed to have acquired expertise in matters
within their respective jurisdictions, are generally accorded not only respect but
even finality, and bind us when supported by substantial evidence. This is the rule
particularly where the findings of both the arbitrator and the Court of Appeals
coincide.17
As a general proposition, an arbitrator is confined to the interpretation and
application of the CBA. He does not sit to dispense his own brand of industrial
justice: his award is legitimate only in so far as it draws its essence from the
CBA.18 That was done in this case.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something
given in addition to what is ordinarily received by or strictly due the recipient. A
bonus is granted and paid to an employee for his industry and loyalty which

contributed to the success of the employers business and made possible the
realization of profits.19
A bonus is also granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits. 20
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to
be enforceable, it must have been promised by the employer and expressly agreed
upon by the parties.21 Given that the bonus in this case is integrated in the CBA, the
same partakes the nature of a demandable obligation. Verily, by virtue of its
incorporation in the CBA, the Christmas bonus due to respondent Association has
become more than just an act of generosity on the part of the petitioner but a
contractual obligation it has undertaken.22
A CBA refers to a negotiated contract between a legitimate labor organization and
the employer, concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit. As in all other contracts, the parties to a CBA
may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided these are not contrary to law, morals, good customs, public
order or public policy.23
It is a familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. 24 This
principle stands strong and true in the case at bar.1avvphi1
A reading of the provision of the CBA reveals that the same provides for the giving
of a "Christmas gift package/bonus" without qualification. Terse and clear, the said
provision did not state that the Christmas package shall be made to depend on the
petitioners financial standing. The records are also bereft of any showing that the
petitioner made it clear during CBA negotiations that the bonus was dependent on
any condition. Indeed, if the petitioner and respondent Association intended that
the P3,000.00 bonus would be dependent on the company earnings, such intention
should have been expressed in the CBA.
It is noteworthy that in petitioners 1998 and 1999 Financial Statements, it took
note that "the 1997 financial crisis in the Asian region adversely affected the
Philippine economy."25
From the foregoing, petitioner cannot insist on business losses as a basis for
disregarding its undertaking. It is manifestly clear that petitioner was very much
aware of the imminence and possibility of business losses owing to the 1997
financial crisis. In 1998, petitioner suffered a net loss of P14,347,548.00.26 Yet it
gave a P3,000.00 bonus to the members of the respondent Association. In 1999,
when petitioners very own financial statement reflected that "the positive
developments in the economy have yet to favorably affect the operations of the
company,"27 and reported a loss of P346,025,733.00,28 it entered into the CBA with
the respondent Association whereby it contracted to grant a Christmas gift
package/bonus to the latter. Petitioner supposedly continued to incur losses in the
years 200029 and 2001. Still and all, this did not deter it from honoring the CBA
provision on Christmas bonus as it continued to give P3,000.00 each to the
members of the respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its
obligation under the CBA. The rule is settled that any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded
on the constitutional mandate to protect the rights of workers and to promote their
welfare and to afford labor full protection. 30

Hence, absent any proof that petitioners consent was vitiated by fraud, mistake or
duress, it is presumed that it entered into the CBA voluntarily and had full
knowledge of the contents thereof and was aware of its commitments under the
contract.
The Court is fully aware that implementation to the letter of the subject CBA
provision may further deplete petitioners resources. Petitioners remedy though lies
not in the Courts invalidation of the provision but in the parties clarification of the
same in subsequent CBA negotiations. Article 253 of the Labor Code is relevant:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. - When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall 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 the existing agreement during the
sixty (60)-day period and/or until a new agreement is reached by the parties.
WHEREFORE, Premises considered, the petition is DENIED for lack of merit. The
Decision of the Court of Appeals dated 5 April 2006 and the Resolution of the same
court dated 13 December 2007 in CA-G.R. SP No. 78334 areAFFIRMED.
SO ORDERED.