MARCOPPER MINING CORPORATION v.

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