Tabangao Shell Refinery Employees Association vs. Pilipinas Shell

Tabangao Shell Refinery Employees Association vs. Pilipinas Shell Petroleum Corporation, G.R. No. 170007, April 7, 2014

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 from the company a full details 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. 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. After series of negotiation and meeting the company reiterated its reason of affordability in comparison with the then existing wage levels of allied industry and the then existing total pay and benefit package of the employees. Alleging failure on the part of the company to justify its offer, the union manifested that the company was bargaining in bad faith. 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.

Issue: WON the company is guilty of bargaining in bad faith?

Held:

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.