MARCOPPER MINING CORPORATION, PETITIONER, VS. THE HONORABLE BLAS OPLE AND AMADO INCIONG, MINISTER AND DEPUTY MINISTER OF LABOR, RESPECTIVELY, AND MARCOPPER EMPLOYEES LABOR UNION…

It is in pursuance of the constitutional principle of the
enjoyment by the people of a decent standard of living^[1]
that a Presidential Decree^[2]
was issued by way of response to the ravages of world-wide inflation, causing
extreme difficulty to laborers and wage-earners.  It reads thus:  “Section 1.  All employers are hereby required to pay all
their employees receiving a basic salary of not more than P1,000 a month,
regardless of the nature of their employment, a 13th-month pay not later than
December 24 of every year.  Sec. 2.  Employers already paying their employees a
13th-month pay or its equivalent are not covered by this Decree Sec. 3.  This Decree shall take effect
immediately.”^[3]
Relying on the above Decree, private respondent Marcopper Employees Labor Union
filed a complaint before the National Labor Relations Commission for the
payment of the 13th-month salary. 
Petitioner Marcopper Mining Corporation opposed on the ground that in view
of its then existing collective bargaining agreement adopted on October 8, 1977
which granted the employees belonging to private respondent mid­year and
year-end bonuses, it was exempt from the ope­ration of such Decree.  Its opposition prevailed with a regional
director, who, on March 29, 1979, dismissed the complaint.  On appeal, then Deputy Minister of Labor,
respondent Amado G. Inciong, on July 25, 1979, reversed such order.  He explicitly stated that the bonuses under
the collective bargaining agreement are “by their very nature of a different
character from the 13th month pay ordained by the Decree.” He went on to
say:  “Foremost to consider and in
point is, Section 10 of the Rules and Regulations Implementing PD No. 851 which
deals on prohibition against reduction or elimination of the benefits provided
by the Decree.  Said section provides as
follows:  ‘Nothing herein shall be
construed to authorize any employer to eliminate, or diminish in any way,
supplements, or other employee benefits or favorable practice being enjoyed by
the employee at the time of the promulgation of this issuance.’ Both the
mid-year and year-end bonuses are benefits being enjoyed by complainants at the
time of the promulgation of PD 851, hence, covered by the foregoing
prohibition.  In fact, said benefits were
negotiated and re-incorporated in subsequent collective bargaining agreement
which gives them a character separate and distinct from the 13th month
pay.  By reason of the collective
bargaining agreement, complainants acquired a vested right over such benefits
on a mutual and contractual understanding. 
Any subsequent grant of benefit, extended by law, will not operate to
disturb the existing agreement and to construe otherwise will result to the
prejudice of the workers.  If we must
consider deeper the grant of the bonuses, we will find that it is a voluntary
gesture on the part of the respondent irrespective of the amount of salary of
the employees and does not form part of their pay.  It is likewise conditional in that the same
could be availed of only when profit in business has been realized.  Once profit is declared, then bonuses must be
automatically granted in the amount to be determined by the company.  On the other hand, the grant of 13th month
pay to employees is mandatory, irrespective of loss or profit by the
company.”^[4]

Hence this petition.  It
was alleged that there was a grave abuse of discretion as under the term of the
Decree, in relation to a section cited,^[5]
petitioner is excluded from its coverage and that there was lack of
jurisdiction of respondent Inciong.  In
the answer of public respondents submitted by Solicitor General Estelito
Mendoza,^[6]
the above contentions were characterized as devoid of merit.  Reference was made to the inability of
petitioner to demonstrate that it clearly falls under the exempting clause of
the above Decree, citing not only the section of the implementing rules and
regulations relied upon by petitioner, but a later section which reads thus:  “Nothing herein shall be construed to
authorize any employer to eliminate or diminish in any way, supplements, or
other employee benefits or favorable practice being enjoyed by the employee at
the time of promulgation of this issuance.”^[7]
The answer discussed the matter further thus: 
“In the case at bar, the payment of the mid-year and Christmas
bonuses in those years when petitioner’s operation is profitable is a matter of
contractual obligation on the part of the petitioner.  It should be noted that the CBA clearly
states that petitioner ‘shall grant mid-year and end-year bonuses to employees
following years in which it had profitable operations.’ The only thing that is
left to the discretion of petitioner is the amount of such mid-year and
end-year bonuses; but there is no question that petitioner has to grant such
bonuses.  Since said bonuses granted in fulfillment of petitioner’s
contractual obligations under the CBA are employee benefits enjoyed by
petitioner’s employees at the time PD 851 took effect and since the payment of
such bonuses is obligatory on the part of petitioner, the petitioner does not
come under the exempting clause of PD 851 and it has to pay its employees the
13th month pay required under said Decree. 
In other words, all employee monetary benefits provided in the CBA are
in addition to, and may not be taken as substitute for, the employee benefits
granted by law, otherwise there would be no reason for the execution of the
CBA.”^[8]

The petition must be dismissed. 
Such a conclusion is unavoidable in the light of the mandatory language
of the Presidential Decree, the conditional character of the contractual
obligation under the collective bargaining agreement, and on the construction
that should be fastened on statutes or decrees intended to promote social and
economic rights.

1.     
The Decree is specific and mandatory.  Employers, without exception, are required to
pay their employees receiving a basic salary of not more than P1,000 a month
irrespective of the nature of employment, a 13th-month pay not later than
December 24 of every year.  That is the
plain and specific command.  That is an
obligation imposed by law and must be obeyed. 
Where the employers, however, actually grant such for the 13th-month
pay, they could be exempted from the operation of the Decree.  To fall within the exempting clause, it must
be shown that there is such actual payment. 
There is no such showing here. 
Instead, reliance of petitioner corporation is on a clause in the
existing bargaining contract which in its opinion amounts to the fulfillment of
its duty under the Decree.  The memorandum
of Solicitor General Mendoza makes clear why such a submission is
unwarranted.  Thus:  “In the case at bar, the payment of
mid-year and Christmas bonuses in the years when petitioner’s operation is
profitable is a matter of contractual obligation on the part of the
petitioner.  The only thing that is left
to the discretion of petitioner is the amount of such mid-year and end-year
bonuses; but there is no question that petitioner has to grant such bonuses.  Since said bonuses granted in fulfill­ment of
petitioner’s contractual obligations under the CBA are employee benefits
enjoyed by petitioner’s employees at the time PD No. 851 took effect and since
the payment of such bonuses is obligatory on the part of the petitioner, then
the petitioner does not come under the exempting clause of PD No. 851 and it
has to pay its employees the 13th month pay required under said Decree.  On the other hand, if the company earns no
profit in a particular year, then it is not obligated, under the CBA, to grant
bonuses to its employees.  If it grants
bonuses notwithstanding the fact that it is not in profitable operation, the
grant thereof is a purely voluntary gesture on the part of the company, and the
company is then entitled to credit the same as the 13th month salary under the
Decree.  In other words, all employee
monetary benefits provided in the CBA are in addition to, and may not be taken
as substitute for, the employee benefits granted by law, otherwise there would
be no reason for the execution of the CBA.”^[9]
The Solicitor General then went on to state that a bonus under the collective
bargaining agreement and the 13th-month pay are of different category.  For while the former is an obligation created
by contract, the other is created by law; while the former is contractual in
character, only if there are profits, the latter is absolute and mandatory on
the part of the employer; while the former benefits only those earning P1,000
or less a month, the latter applies to all rank and file workers.  It is clear, therefore, that a 13th-month pay
is in the nature of wages while the bonuses provided for are mere supplements
or fringe benefits.  Further the
memorandum continues:  “The 13th
month pay is, by its nature and purpose, part of wages, considering the express
recitals in PD No. 851 that ‘it is necessary to protect the level of real wages
from the ravage of world-wide inflation’ and ‘there has been no increase in the
legal minimum wage rates since 1970’ * * * CBA bonuses and benefits are not
part of wages but merely supplements or fringe benefits.”^[10]
On the authority of Atok-Big Wedge Association v. Atok-Big Wedge Co.^[11]
it is contended, and correctly, by the Solicitor General that clearly “the
bonuses and other benefits granted to the employees by the petitioner under the
current CBA are ‘supplements’ and do not form part of wages.”^[12]

2.     
There is no vagueness in the Decree.  At the most, there could be ambiguity by the
use of the word “equivalent” in Section 2 thereof.  If it were a 13th-month pay, then obviously petitioner is entitled to be
exempted.  Thus it is understandable why
it made much of Section 3 of the implementing rules and regulations, referring,
as already noted, to a Christmas bonus as well as a mid-year bonus.  That would be, though, as was pointed out by
the Solicitor General, to ignore an even clearer provision in the implementing
rules, namely Section 10 thereof. 
Thus:  “Nothing herein shall
be construed to authorize any employer to eliminate or diminish in any way,
supplements, or other employee benefits or favorable practice being enjoyed by
the employee at the time of promulgation of this issuance.”^[13]
The purpose that animated the Decree is thus rendered even clearer.  It was issued in the expectation that
“whatever employee benefits or favorable practice being enjoyed by the
employee” when it was promulgated should not be eliminated or
diminished.  If it were otherwise, it
would lose its character as a measure intended to cope with the problems that
the low salaried employees face in view of the inflationary state of the
economy.  The situation, instead of
improving, has grown worse the past six years, the Decree being issued in
1975.  It would be, therefore, to defeat
the purpose of the Decree if the contention urged by petitioner would be
sustained.

3.  The conclusion reached by
the Court receives an even more compelling justification from the
Constitution.  The 1935 Constitution
enshrined the concepts of social justice^[14]
and protection to labor.^[15]
Even then, there was a realization of
their importance in vitalizing a regime of liberty not just as immunity from
governmental restraint but as the assumption by the State of an obligation to
assure a life of dignity for all, especially the poor and the needy.  The expanded social justice^[16] and protection to labor provisions^[17] of the present Constitution lend added
emphasis to the concern for social and economic rights.  The memorandum of the Solicitor General
quoted this excerpt from La Mallorca v. Workmen’s Compensation Commission:^[18] “A decisive consideration, much more compelling
in character, precludes acceptance of the view now pressed
by petitioner.  Time and time again, we
have stressed that statutes intended to benefit labor should be accorded the
most hospitable scope to attain their dominant purpose.  Thereby fidelity is manifested to the
constitutional policy embodied in the principle of social justice and the
mandate of protection to labor.  They
cannot be made to yield a meaning that would emasculate their terms or allow evasion.  To do so could even give rise to serious
constitutional questions, for the legislative body would then be deemed to have
enacted measures which, rather than translate into reality such worthy
constitutional objective, would frustrate it. 
Such an approach certainly cannot find any favor with courts, if the
oft-repeated doctrine that no interpretation is allowable that would bring
doubts as to the validity of any statutory provision for repugnancy to the
funda­mental law were to be, as it should be, respected.”^[19] That was so under the 1935
Constitution.  Such an approach is even
more valid now.  As a matter of fact, in
the first case after the applicability of the 1973 Constitution where social
and economic rights were involved, this Court in Alfanta v. Noe,^[20]
through Justice Antonio, stated: 
“In the environment of a new social order We can do no less.  Thus, under the new Constitution, property
ownership has been impressed with a social function.  This implies that the owner has the
obligation to use his property not only to benefit himself but society as
well.  Hence, it provides under Section 6
of Article II thereof, that in the promotion of social justice, the State
‘shall regulate the acquisition, ownership, use, enjoyment, and dispo­sition of
private property, and equitably diffuse property ownership and profits.’ The
Constitution also ensures that the worker shall have a just and living wage
which should assure for himself and his family an existence worthy of human dignity and give him opportunities
for a better life.”^[21]
Such a sentiment finds expression in subsequent opinions.^[22]

4.  The second point raised
in the petition is the allegation that respondent Deputy Minister was without
jurisdiction.  This contention on its
face clearly lacks support in law.  As
far back as Philippine American Management & Financing Co., Inc. v.
Management & Supervisors Association of the Philippine-American Management
& Financing Co., Inc.,^[23]
decided in 1972, this Court left no doubt as to the labor tribunal, then the
Court of Industrial Relations, being vested with competence to pass upon a
declaratory relief petition for the interpretation of a collective bargaining
agree­ment, not a Court of First Instance. 
There is no justi­fication for a departure from the principle which was
announced in the light of a careful study of previous decisions and precisely
enunciated to settle all doubts on the matter.^[24]
The allegation that this is a money claim falsifies reality.  What is involved here and what persuaded this
Court to give due course to this petition is that a serious question of the
appli­cability of Presidential Decree No. 851 was raised in the light of the
stipulation in the collective bargain­ing contract between petitioner and
respondent union as to the mid-year and Christmas bonus.

WHEREFORE, the petition is dismissed for lack of
merit.  No costs.

Barredo, Makasiar, Fernandez, Guerrero, Abad Santos, and De Castro, JJ., concur.

Teehankee, Aquino, and
Melencio-Herrera, JJ., reserve their vote.

Concepcion, Jr., J., on leave.

^[1] According to Article II, Sec. 7 of the
Constitution:  “The State shall
establish, maintain, and ensure adequate social services in the field of
education, health, housing, employment, welfare, and social security to
guarantee the enjoyment by the people of a decent standard of living.”

^[2] Presidential Decree No. 851 (1975).

^[3] Ibid.

^[4] Memorandum, 6-7.

^[5]
Sec. 3 of the Rules and Regulations Implementing Presidential Decree No. 851.

^[6]
He was assisted by Assistant Solicitor General Ruben Agpalo and Solicitor Deusdedit
Quijano.

^[7]
Sec. 10 of the Rules and Regulations Implementing Presidential Decree No. 851.

^[8] Answer, 7-8.

^[9] Memorandum, 8-9.

^[10] Ibid, 10.

^[11] L-7349, July 19, 1955, 51 SCRA 3432.

^[12] Memorandum, 11.

^[13] Sec. 10 of the Rules and Regulations Implementing
Presidential Decree No. 851.

^[14] According to Article II, Sec. 5 of the 1935
Constitution:  “The promotion of
social justice to insure the well-being and economic security of all the people
should be the concern of the State.”

^[15] According to Article XIV, Sec. 6 of the 1935
Constitution:  “The State shall
afford protection to labor, especially to working women and minors, and shall
regulate the relation between landowner and tenant, and between labor and
capital in industry and in agriculture. 
The State may provide for compulsory arbitration.”

^[16] According to Article II, Sec. 6 of the
present Constitution:  “The State
shall promote social justice to ensure the dignity, welfare, and security of
all the people.  Towards this end, the
State shall regulate the acquisition, ownership, use, enjoyment, and
disposition of private property, and equitably diffuse property ownership and
profits.”

^[17]
According to Article II, Sec. 9 of the present Constitution:  “The State shall afford protection to
labor, promote full employment and equality in employment, ensure equal work
opportunities regardless of sex, race, or creed, and regulate the relations
between workers and employers.  The State
shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and
humane conditions of work.  The State may
provide for compulsory arbitration.”

^[18] L-29315, November 28, 1969, 30 SCRA 613.

^[19] Ibid, 618-619.

^[20]
L-32362, September 19, 1973, 53 SCRA 76.

^[21] Ibid,
84-85.

^[22]
Cf. Chavez v. Zobel, L-25009, January 17, 1974, 55 SCRA 26; Herald
Delivery Carriers Union v. Heral Publications, L-29966, February 28,
1974, 55 SCRA 713; Philippine Air Lines Inc. v. Philippine Airlines
Employees Association, L-24626, June 28, 1974, 57 SCRA 489; Almira v. B.F.
Goodrich Philippines Inc., L-34974, July 25, 1974, 58 SCRA 120; Radio
Communications of the Philippines v. Philippine Commu­nications Workers
Federation, L-37662, August 30, 1974, 58 SCRA 762; Firestone Employees Asso. v.
Firestone Tire and Rubber Co. of the Philippines, L-37952, December 10, 1974,
61 SCRA 338; E. Lim and Sons Manufacturing Co. v. Court of Industrial
Relations, L-39117, September 25, 1975, 67 SCRA 124.

^[23]
L-27953, November 29, 1972, 48 SCRA 187.

^[24]
Cf. Allied Free Workers Union v. Apostol, 102 Phil. 292 (1957); Bay View
Hotel Inc. v. Manila Hotel Workers Union, L-21803, December 17, 1966, 18
SCRA 946; Republic Savings Bank v. Court of Industrial Relations,
L-20303, September 27, 1967, 21 SCRA 226; Seno v. Mendoza, L-20565,
November 29, 1967, 21 SCRA 1124; Security Bank Employees Union v.
Security Bank and Trust Company, L-28536, April 30, 1968, 23 SCRA 503; Manila
Hotel Co. v. Pines Hotel Employees Asso., L-24314, September 28, 1970,
35 SCRA 96; Alhambra Industries, Inc. v. Court of Industrial Relations,
L-25984, October 30, 1970, 35 SCRA 550; Espanilla v. La Carlota Sugar
Central, L-23722, March 31, 1971, 38 SCRA 186; Mindanao Rapid Co., Inc. v.
Omandam, L-23058, November 27, 1971, 42 SCRA 250.