MARCOPPER MINING CORPORATION v. NLRC and NATIONAL MINES 1.

1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all
AND ALLIED WORKERS UNION (NAMAWU-MIF) employees and workers within the bargaining units (sic) as follows:
March 29, 1996 |Kapunan, J. | Application of Technical Rules: How to deal with doubt (a) 5% effective May 1,1986.
Digester: de Vera, Clarissa M. This will mean that the members of the bargaining unit will get an effective increase
of 10% from May 1, 1986.
SUMMARY: the parties entered into a CBA providing for the increase of wage of the (b) 5% effective May 1,1987.
workers by 5% in the years 1986 and 1987. Meanwhile, EO178 was promulgated which 2. The COMPANY hereby grants an increase of the facilities allowance from
provides for the COLA. The union representing the union filed for the payment of P50.00 to P100.00 per month effective May 1, 1986.
wage differentials alleging that the COLA should be included in the definition of basic
wage, in accordance with EO178. The petitioner allege that it should not be included  In compliance with the amended CBA, petitioner implemented the initial 5% wage
because COLA is not contemplated to be included in the definition of basic wage when increase due on 1 May 1986.
the CBA was entered into. The LA ruled in favor of the union, prompting the petitioner  On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated mandating the
to appeal with the NLRC. The NLRC, however, dismissed the appeal. The SC affirmed integration of the cost of living allowance under Wage Orders Nos. 1, 2, 3, 5 and 6
the decisions of the LA and the NLRC, stating that the purpose of EO178 is to increase into the basic wage of workers, its effectivity retroactive to 1 May 1987.
the wage of the workers.
 Consequently, effective on 1 May 1987, the basic wage rate of petitioners laborers
DOCTRINE: While the terms and conditions of the CBA constitute the law between
categorized as non-agricultural workers was increased by P9.00 per day.
the parties, it is not, however, an ordinary contract to which is applied the principles of
law governing ordinary contracts. A CBA, as a labor contract within the contemplation  Petitioner implemented the second five percent (5%) wage increase due on 1 May
of Article 1700 of the Civil Code of the Philippines which governs the relations between 1987 and thereafter added the integrated COLA.
labor and capital, is not merely contractual in nature but impressed with public interest,  Private respondent, however, assailed the manner in which the second wage
thus, it must yield to the common good. As such, it must be construed liberally rather increase was effected. It argued that the COLA should first be integrated into the
than narrowly and technically, and the courts must place a practical and realistic basic wage before the 5% wage increase is computed.
construction upon it, giving due consideration to the context in which it is negotiated  On December 15, 1988, the union filed a complaint for underpayment of wages
and purpose which it is intended to serve. before the Regional Arbitration Branch IV, Quezon City.
 The LA promulgated a decision in favor of the union , ordering the petitioner to
FACTS: pay the wage differentials due its rank-and-file workers, retroactive to May 1, 1987.
 Petitioner Marcopper Mining Corporation is a corporation duly organized and o The LA emphasized the provision embossed in Section 1, Article V of the
existing under the laws of the Philippines, engaged in the business of mineral Collective Agreement:
prospecting, exploration and extraction while private respondent NAMAWU-MIF It is expressly understood that this wage increase shall be exclusive of increase in
is a labor federation duly organized and registered with the Department of Labor the minimum wage and/or mandatory living allowance that may be promulgated during
and Employment (DOLE), to which the Marcopper Employees Union (the the life of this Agreement.
exclusive bargaining agent of all rank-and-file workers of petitioner) is affiliated. o The foregoing phrase albeit innocuously framed offers the cue. This
 On 23 August 1984, the parties entered into a Collective Bargaining Agreement ushers us to the inner sanctum of what really was the intention of the
(CBA) effective from 1 May 1984 until 30 April 1987, Section 1, Article V of which parties to the contract. Treading along its lines, it becomes readily
provides that: discernible that this portion of the contract is the stop-lock gate or known
Effectivity Increase per day on the Basic Wage: in its technical term as the non-chargeability clause.
May 1, 1985 5% o There can be no quibbling that on the strength of this provision, the
May 1, 1986 5% wage/allowance granted under this accord cannot be credited to similar
It is expressly understood that this wage increase shall be exclusive of form of benefit that may be thereafter ordained by the government
any increase in the minimum wage and/or mandatory living allowance that through legislation.
may be promulgated during the life of this Agreement. o There cannot likewise be any rivalry that if the Executive Order were to
retroact to 2 May 1987 or a day after the last contractual increase, this
 Prior to the expiration of the aforestated Agreement, on 25 July 1986, petitioner
question will not arise. It is in this sense of fairness that we cannot allow
and private respondent executed a Memorandum of Agreement (MOA) wherein
this one (1) day to be an insulating medium to deny the workers the
the terms of the CBA, specifically on matters of wage increase and facilities
benediction endowed by Executive Order No. 178.
allowance, were modified:
 Petitioners appealed to the NLRC, however, it dismissed the appeal, ruling that:
 o Increments to the laborers financial gratification, be they in the form of  Petitioners’ arguments eventually lose steam in the light of the fact that compliance
salary increases or changes in the salary scale are aimed at one thing - with the law is mandatory and beyond contractual stipulation by and between the
improvement of the economic predicament of the laborers. As such, they parties; consequently, whether or not petitioner intended the basic wage to include
should be viewed in the light of the States avowed policy to protect labor. the COLA becomes immaterial. There is evidently nothing to construe and
 Their MR having been denied by the NLRC, the petitioner challenged the decision interpret because the law is clear and unambiguous.
of the NLRC before the SC, arguing the following:  Unfortunately for petitioner, said law, by some uncanny coincidence, retroactively
o The NLRC acted with grave abuse of discretion in affirming the decision took effect on the same date the CBA increase became effective. Therefore, there
of the LA directing the pay of wage differentials, considering that at the cannot be any doubt that the computation of the CBA increase on the basis of the
time the CBA was entered, and as amended, COLA is not included in the integrated wage does not constitute a violation of the CBA.
meaning of basic wage  Petitioners contention that under the Rules Implementing E.O. No. 178, the
o The reliance on Section 1, Article V of the CBA is misplaced and without definition of the term -basic wage has remained unchanged is off the mark since
basis as it does not offer a hint of what basic wage is at the time the said definition expressly allows integration of monetary benefits into the regular pay
agreement was entered into and as amended. of employees:
o There was no underpayment because the petitioner computed the 5% o Chapter 1, Section (Definition of Terms): (j) Basic Wage means all regular
wage increase based on the unintegrated basic wage in accordance with remuneration or earnings paid by an employer for services rendered on
the intent and terms of the CBA normal working days and hours but does not include cost-of- living allowances,
o The doctrine of liberal interpretation in favor of labor does not apply in profit-sharing payments, premium payments, 13th month pay, and other monetary
this case. Instead, the rules on interpretation of contracts should apply in benefits which are not considered as part of or integrated into the regular salary of the
that the “intention of the contracting parties, their contemporaneous and employee on the date the Order became effective.
subsequent acts shall be principally considered” (Art. 1371, NCC)  What E.O. No. 178 did was exactly to integrate the COLA under Wage Orders
 The OSG sided with the petitioners, asserting that since the CBA is a contractual Nos. 1, 2, 3, 5 and 6 into the basic pay so as to increase the statutory daily
obligation, thus, the CBA is the law between the parties and that the benefits given minimum wage. Section 2 of the Rules is quite explicit: Section 2. Amount to be
by law should be treated as separate and distinct. Integrated. - Effective on the dates specified, as a result of the integration, the basic
 Private respondent counters by asserting that the purpose, nature and essence of wage rate of covered workers shall be increased by the following amounts:
CBA negotiation is to obtain wage increases and benefits over and above what the  While the terms and conditions of the CBA constitute the law between the parties,
law provides and that the principle of non-diminution of benefits should prevail. it is not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. A CBA, as a labor contract within the contemplation
RULING: WHEREFORE, premises considered, the petition is hereby of Article 1700 of the Civil Code of the Philippines which governs the relations
DISMISSED. The Court ruled in favor of the respondents. between labor and capital, is not merely contractual in nature but impressed with
public interest, thus, it must yield to the common good. As such, it must be
Whether the basic wage should be construed as the integrated basic wage which construed liberally rather than narrowly and technically, and the courts must place a
includes the COLA or not – YES, the COLA should be included in construing practical and realistic construction upon it, giving due consideration to the context
the meaning of basic wage in which it is negotiated and purpose which it is intended to serve. (Davao Integrated
 The principle that the CBA is the law between the contracting parties stands strong Port Stevedoring Services v. Abarquez)
and true. However, the present controversy involves not merely an interpretation  While petitioner acknowledges that all doubts in the interpretation of the Labor
of CBA provisions. More importantly, it requires a determination of the effect of Code shall be resolved in favor of labor, it insists that what is involved-here is the
an executive order on the terms and the conditions of the CBA. This is, and should amended CBA which is essentially a contract between private persons. What
be, the focus of the instant case. petitioner has lost sight of is the avowed policy of the State, enshrined in our
 It is unnecessary to delve too much on the intention of the parties as to what they Constitution, to accord utmost protection and justice to labor, a policy, we are,
allegedly meant by the term basic wage at the time the CBA and MOA were likewise, sworn to uphold.
executed because there is no question that as of 1 May 1987, as mandated by E.O.  When conflicting interests of labor and capital are to be weighed on the scales of
No. 178, the basic wage of workers, or the statutory minimum wage, was increased social justice, the heavier influence of the latter should be counter-balanced by
with the integration of the COLA. As of said date, then, the term basic wage sympathy and compassion the law must accord the underprivileged worker. The
includes the COLA. This is what the law ordains and to which the collective purpose of E.O. No. 178 is to improve the lot of the workers covered by the said
bargaining agreement of the parties must conform. statute. We are bound to ensure its fruition.