(G.R. No. 170007. April 7, 2014.) Tabangao Shell Refinery Employees Association, Petitioner, vs. Pilipinas Shell Petroleum CORPORATION, Respondent

[G.R. No. 170007. April 7, 2014.
TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION, petitioner, vs. PILIPINAS SHELL PETROLEUM
CORPORATION, respondent.
Facts:
In anticipation of the expiration on April 30, 2004 of the 2001-2004 Collective Bargaining Agreement
(CBA) between the petitioner and the respondent Pilipinas Shell Petroleum Corporation, the parties
started negotiations for a new CBA. After several meetings on the ground rules that would govern the
negotiations and on political items, the parties started their discussion on the economic items on July
27, 2004, their 31st meeting. The union proposed a 20% annual across-the-board basic salary increase
for the next three years that would be covered by the new CBA. In lieu of the annual salary increases,
the company made a counter-proposal to grant all covered employees a lump sum amount of
P80,000.00 yearly for the three-year period of the new CBA.
The union requested the company to present its counter-proposal in full detail, similar to the
presentation by the union of its economic proposal. The company explained that the lump sum amount
was based on its affordability for the corporation, the then current salary levels of the members of the
union relative to the industry, and the then current total pay and benefits package of the employees.
Not satisfied with the company's explanation, the union asked for further justification of the lump sum
amount offered by the company. When the company refused to acknowledge any obligation to give
further justification, the union rejected the company's counter-proposal and maintained its proposal for
a 20% annual increase in basic pay for the next three years.
On the 39th meeting of the parties on August 24, 2004, the union lowered its proposal to 12% annual
across-the-board increase for the next three years. For its part, the company increased its counter-
proposal to a yearly lump sum payment of P88,000.00 for the next three years. The union requested
financial data for the manufacturing class of business in the Philippines. It also requested justification for
the company's counter-offer. In response, the company stated that financial measures for Tabangao
were available in the refinery scorecard regularly cascaded by the management to the employees. The
company reiterated that its counter-offer is based on its affordability for the company, comparison with
the then existing wage levels of allied industry, and the then existing total pay and benefits package of
the employees. The company subsequently provided the union with a copy of the company's audited
financial statements.
However, the union remained unconvinced and asked for additional documents to justify the company's
counter-offer. The company invited the attention of the union to the fact that additional data, such as
the refinery performance scorecard, were available from the refinery's website and shared network
drives. The company also declared that the bases of its counter-offer were already presented to the
union and contained in the minutes of previous meetings. The union thereafter requested for a copy of
the comparison of the salaries of its members and those from allied industries. The company denied the
request on the ground that the requested information was entrusted to the company under a
confidential agreement. Alleging failure on the part of the company to justify its offer, the union
manifested that the company was bargaining in bad faith. 5 The company, in turn, expressed its
disagreement with the union's manifestation.
On the parties' 41st meeting held on September 2, 2004, the company proposed the declaration of a
deadlock and recommended that the help of a third party be sought. The union replied that they would
formally answer the proposal of the company a day after the signing of the official minutes of the
meeting. On that same day, however, the union filed a Notice of Strike in the National Conciliation and
Mediation Board (NCMB), alleging bad faith bargaining on the part of the company. The NCMB
immediately summoned the parties for the mandatory conciliation-mediation proceedings but the
parties failed to reach an amicable settlement. Secretary of Labor and Employment (SOLE) took over the
dispute.
SOLE Ruling:
Now, is the Company guilty of bargaining in bad faith? This Office rules in the negative.
The duty to bargain does not compel any party to accept a proposal, or make any concession, as
recognized by Article 252 of the Labor Code, as amended. The purpose of collective bargaining is the
reaching of an agreement resulting in a contract binding on the parties; however, the failure to reach an
agreement after negotiations continued for a reasonable period does not establish a lack of good faith.
The laws 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. Thus, the Company's insistence on a
bargaining position to the point of stalemate does not establish bad faith. The Company's offer[,] a lump
sum of Php88,000 per year, for each covered employee in lieu of a wage increase cannot, by itself, be
taken as an act of bargaining in bad faith. The minutes of the meetings of the parties, show that they
both exerted their best efforts, to try to resolve the issues at hand. Many of the proposed improvements
or changes, were either resolved, or deferred for further discussion. It is only on the matter of the wage
increase, that serious debates were registered. However, the totality of conduct of the Company as far
as their bargaining stance with the Union is concerned, does not show that it was bargaining in bad
faith.
Issue:
1. Whether or not there is bargaining deadlock?

2. Was the company guilty of Bargaining in bad faith despite the lapse of time?
SC Ruling:
1. The issue of whether there was already deadlock between the union and the company is
likewise a question of fact. It requires the determination of evidence to find whether there is a
"counteraction" of forces between the union and the company and whether each of the parties
exerted "reasonable effort at good faith bargaining." This is so because a deadlock is defined as
follows:
A 'deadlock' is . . . the counteraction of things producing entire stoppage; . . . There is a deadlock when
there is a complete blocking or stoppage resulting from the action of equal and opposed forces . . . . The
word is synonymous with the word impasse, which . . . 'presupposes reasonable effort at good faith
bargaining which, despite noble intentions, does not conclude in agreement between the parties.'
2. The final and executory Decision dated June 8, 2005 of the Secretary of Labor and Employment
squarely addressed the contention of the union that the company was guilty of bargaining in
bad faith. The said Decision correctly characterized the nature of the duty to bargain, that is, it
does not compel any party to accept a proposal or to make any concession. While the purpose
of collective bargaining is the reaching of an agreement between the employer and the
employee's union resulting in a binding contract between the parties, the failure to reach an
agreement after negotiations continued for a reasonable period does not mean lack of good
faith. The laws invite and contemplate a collective bargaining contract but do not compel one.
For after all, a CBA, like any contract is a product of mutual consent and not of compulsion. As
such, the duty to bargain does not include the obligation to reach an agreement. In this light,
the corporation's unswerving position on the matter of annual lump sum payment in lieu of
wage increase did not, by itself, constitute bad faith even if such position caused a stalemate in
the negotiations, as correctly ruled by the Secretary of Labor and Employment in its decision.

(G.R. No. 170007. April 7, 2014.) Tabangao Shell Refinery Employees Association, Petitioner, vs. Pilipinas Shell Petroleum CORPORATION, Respondent

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(G.R. No. 170007. April 7, 2014.) Tabangao Shell Refinery Employees Association, Petitioner, vs. Pilipinas Shell Petroleum CORPORATION, Respondent

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[G.R. No. 170007. April 7, 2014.

1. Whether or not there is bargaining deadlock?

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