MARCOPPER MINING CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL MINES & ALLIED WORKERS UNION, AND HEIRS OF CALIXTO C. GAMBOA, PETRONIO Q. ROBLES, …

The issue before us is the
correct interpretation of the following provision in Article XII of the
collective bargaining agreement between petitioner Marcopper
Mining Corporation and private respondent National Mines and Allied Workers
Union (NAMAWU):

Section 1.  The COMPANY
agrees to grant a severance pay
equivalent to twenty (20) days of base wage for every year of service to regular employees
covered by this Agreement who leave the COMPANY other than for cause before
qualifying for early retirement under the Retirement Plan as provided hereunder, provided,
however, that an employee who voluntarily resigns from the COMPANY shall not be entitled to the
benefits herein unless he has completed at least ten (10) years of services.  Any dismissal on ground of illness shall be
treated in accordance with the provisions of the Labor Code as amended and its
implementing rules and regulations except that where an employee who has
rendered ten (10) or more years of service to the COMPANY shall be entitled to
the above benefit in lieu of what is provided for under the Labor Code.

This case arose when three employees of the petitioner company,
namely, Calixto Gamboa, Petronio Robles and Alfredo Rances,
died after serving therein for
17, 12, and 18 years respectively. 
Pursuant to the CBA, the petitioner paid the heirs of the deceased
employees the proceeds of the group life insurance plan and the cash value of
their unused vacation and sick leaves, besides waiving certain amounts owing to
it by Rances and Robles.  The payments are itemized as follows:^[1]

ALFREDO B. RANCES

[The amount of P47,530.00 excludes the amount of P33,594.68 which
represents share in medical expenses,
Loyola Memorial Chapel charges and various cash advances which were written off
and/or waived by Marcopper in favor of the
heirs of the deceased].

PEDRONIO Q. ROBLES

[They amount of P40,556.55 excludes the amount of P15,739.55
representing various accounts of the deceased with Petitioner which was written
off and/or waived by Marcopper in favor of the heirs
of the Deceased].

CALIXTO C. GAMBOA

After receipt of the foregoing payments, the heirs executed
separate quitclaims-releases in favor of the petitioner.^[2]

Subsequently, NAMAWU demanded from the petitioner severance pay
for the said deceased employees on the basis
of the above-cited Article XII; Section 1, of the CBA.  The demand was rejected and the union
thereupon filed a complaint
on behalf of the heirs for the recovery of the said claim.

After considering the position papers of the parties, Labor
Arbiter Cornelio Linsangan rendered a decision^[3]
on February 13, 1987,
disposing as follows:

WHEREFORE, judgment is hereby rendered ordering the respondent to
pay the heirs of Calixto Gamboa,
Alfredo Rances and Petronio
Robles, all represented by herein complainant union, separation pay equivalent
to twenty (20) days salary for every year of service.

The rationale of the decision was explained thus:

There is an apparent doubt on how Section I is to be
interpreted.  However, in consonance with
Article 4, Preliminary Title, Labor Code, aforesaid provision should be
interpreted in favor of
Labor.  Statutes granting rights to
laborers are liberally construed.  (Union
Trust Co. vs. State, 24 LRA (NS) 111).

But even in the absence of Article 4 of the Labor Code, which
provides –

Construction in favor of labor. 
All doubts in the implementation and interpretation of the provisisons of this Code, including its implementing rules and regulations shall be resolved in favor
of labor.

It would still appear that the claim of
complainant union is founded on cogent logic. 
The granting by the company of severance pay to its employees who leave
other than for cause is, in effect, a recognition of their services worthy of a reward.  It can be easily discussed from subject provision the rationale and
purpose for the granting of severance pay. 
The provision aims and intends to provide to the employee and his family
financial security, at least during the period immediately following his
leaving the company.  It will, therefore,
be absurd and self-defeating if subject CBA provision will be interpreted otherwise
as it is precisely in case of death of the employee that his family
needs most the severance benefit or assistance contemplated in the provision
under consideration.  Needless to state
that by reason of death of Calixto Gamboa, Alfredo Rances and Petronio Robles the
source of livelihood of their heirs was extinguished.  It is only fitting that they should be
rewarded in consideration of their length of service, which reward should be
extended to their heirs in the form of severance pay.

Anent the contention of respondent that the heirs have already
received certain fringe benefits, it should be remembered those were proceeds
emanating from insurance contracts.  The
severance pay being claimed does not spring from said insurance contract but by
virtue of a separate provision
of the CBA.

Marcopper appealed to the NLRC, which affirmed the decision on October 8, 1987, and denied the
motion for reconsideration on January
4, 1988.  This petition for certiorari was then filed on the grounds that the NLRC committed grave abuse of
discretion in its interpretation of the questioned CBA provision; in not taking
into account the various amounts due to Marcopper
from the deceased employees which it had written off as an act of compassion
and in recognition of the deceased employees’ non-entitlement to separation
pay; and in disregarding the affidavits of release and quitclaim executed by
the heirs of the deceased employees.

The petitioner contends that the clause “who leave the
company other than for cause” is clear and unambiguous, leaving no room for interpretation and calling for the
application of Article 1370 of the Civil Code, viz.:

Article 1370.  If the terms
of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall control.

x x
x

“Leave” should be given a literal or dictionary
interpretation as
signifying “willful departure with intent to remain away and not
temporary absence with intention of returning.”^[4]
The word should be understood as
referring to a positive and voluntary act of departure and does not include
death, which is involuntary.  In fact,
the Pilipino equivalent of the word “leave” as used in the official translation
of the CBA, is “aalis.”

Assuming arguendo that
the provision is not really clear, Article 4 of the Labor Code should not have
been resorted to as this applies only in
case of doubt in the interpretation
and implementation of the provisions of the Labor Code and its implementing
rules and regulations.  The CBA being a contract, the rules embodied in the
Civil Code on interpretation of contracts should govern.  The intent of the parties should be
ascertained by considering relevant provisions of the CBA on the retirement plan, the group life insurance, and
bereavement assistance together with Section 1 in the light of Article 1374 of the Civil Code.^[5]

The petitioner further points out that aside from dismissal for
cause, there are only three modes by which an employer-employee relationship is terminated, to wit, voluntary
resignation, retirement and death of the employee.  The Labor Code does not require separation
pay in these instances, but the CBA corrects the omission by providing for these
contingencies.  Thus, death benefits
consisting of bereavement assistance under Section 5^[6]
and insurance proceeds are made available under the group life insurance plan,^[7]
resignation benefits under Section 1,^[8]
and retirement benefits under Section 2,^[9]
of the CBA.

The phrase “other than for cause” in reference to
“early retirement” taken in conjunction
with “leave” connotes a
voluntary, willful and intentional act of separation other than by
retirement.  If “other than for
cause” were construed to include even death, which is involuntary, the
reference to early retirement would be meaningless.

The petitioner adds that insurance proceeds are given in case of
death to help the family of the deceased. 
The grant of severance pay in case of death would extend the scope of
the benefit beyond its purpose and defeat the intent behind the grant of funeral benefits, retirement
benefits and severance coverage in
the CBA.

At any rate, it also maintains, the heirs of the deceased have
executed quitclaims/releases which now bar them from demanding severance pay.

For their part, the respondents argue that while resignation is a voluntary
mode of separation, dismissal on the ground of illness is also provided for in
the same Section 1 of Article XII although it is an involuntary mode of
separation.  Obviously, the word
“leave” is used in its generic sense. 
To grant severance pay to an employee who is dismissed on the ground of
illness and to exclude one who dies is to them “a myopic and constricted view.” The provision should be interpreted under
the spirit that gives life and not the letter that killeth.

The respondents see no reason why the deceased employees should
be placed at a disadvantage merely because they did not resign or were
dismissed on the ground of illness after having served the company for more
than 10 years.  If a worker who willingly
leaves the company is entitled to severance
pay under the CBA, the same benefit should not be denied one, who, through no choice of his own, is
separated from employment by reason of death.

They also contend that the NLRC correctly applied not only
Article 4 of the Labor Code but also Article 1702 of the Civil Code, which applies not only to labor
legislation but also to labor contracts, thus:

Article 1702.  In case of
doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.

The private respondents point out that there is nothing in the
CBA which states that insurance
benefits and severance pay are mutually exclusive, unlike retirement and
severance pay under Section 2, Article XII. 
Furthermore, it is the insurance company that pays the insurance
benefits while it is the company or employer that is liable for severance
benefits.  Since the primary purpose of
the CBA is to provide more benefits to workers, the contract would be rendered
more effectual if the heirs were awarded both insurance benefits and severance
pay.

The Solicitor General takes the side of the respondents.  He maintains that the clause “who leave
the company other than for cause” literally includes death as a manner of
leaving the company because death terminates an existing employer-employee
relationship.  It cannot be validly
argued that the leave-taking mentioned in the phrase refers exclusively to
voluntary resignation because the very same article is made applicable also to
any employee who is dismissed on
the ground of illness.  As long as he has
rendered at least 10 years of service, the employee shall also be entitled to
the benefits therein provided although his separation is not voluntary.  If the parties to the CBA had really intended
a restrictive interpretation of
the provision in question, they would have so provided clearly and placed the
word voluntarily before the word “leave.”

These are the arguments of the parties.  Now for the opinion of the Court.

The title of Article XII is SEVERANCE, RETIREMENT AND LIFE
INSURANCE.

Severance is “the termination of contractual association (as
employment).”^[10]
Severance pay is defined as “an allowance usually based on length of
service that is payable to an employee on severance except usually in case of
disciplinary discharge”^[11]
or as “compensation due an employee upon the severance of his employment
status with the employer.”^[12]

The word leave is defined in Black’s Law Dictionary as
“willful departure with intent to remain away” and in Webster’s as to
“desert, abandon, forsake, to terminate association with, quit the service
of.” Given these definitions, the petitioner argues that death should not
be included in the term as this is an involuntary mode of separation that is covered by another provision
of the CBA.

This is a correct conclusion insofar as the word is used in the
basic rule embodied in Section 1 of Article XII of the CBA declaring that those
entitled to severance pay are regular employees “who leave the COMPANY
other than for cause before qualifying for early retirement under the
Retirement Plan as provided
hereunder, provided, however, that an employee who voluntarily resigns from the COMPANY shall not be entitled to the benefits herein unless he has
completed at least ten (10) years of
service.”

The trouble with the petitioner’s contention is that it is a generalization that does
not take into account the specific exception thereto that in fact has been
clearly expressed also in the same provision of the CBA.  The last part of the section reads as
follows:

x x x Any dismissal on ground of illness shall be treated
in accordance with the provisions of the
Labor Code as amended and its
implementing rules  and regulations
except that where an employee who has rendered ten (10) or more years of
service to the COMPANY shall be
entitled to the above benefit in lieu of what is provided for under the Labor
Code.

It would really seem strange, as the private respondent muses,
that while an employee who is dismissed for illness may be entitled to severance pay under this exception, he will not be similarly
benefited if he dies of that illness during his employment.  Death, to be sure, is an involuntary mode of
separation.  We agree with NAMAWU,
however, that it is covered by the situation contemplated in the above-cited
exception, which, if it is to be reasonably interpreted, should include the
aggravation of illness.  The exception, as we understand it, is
intended to provide some measure of relief to the dismissed employee, on the
justification that it is not his fault that he is ill and he needs some financial assistance for his cure and
treatment.  As it is clearly not the
worker’s fault either if he should die in the course of his employment, nor can
it be suggested that he needs in this case less financial assistance, we see no
reason why he should be treated differently.

This interpretation need not be based on the rule that doubts on the meaning of labor
contracts should be resolved in favor of labor. 
It is dictated,
as we see it, by ordinary logic and by the obvious intendment behind the
above-quoted exception.  The Court will
concede that without this exception, the general rule preceding it would have
defeated the private respondents’ claim for severance pay.  But as the petitioner itself correctly
contends, the section must be read in its entirety and, indeed, in relation to
the rest of the CBA.

It is also our belief, and we so hold, that the
quitclaims/releases, while concededly made voluntarily, did not constitute a knowing
waiver of the severance pay because the heirs of the deceased employees were
not aware at
that time that they were entitled to such pay.

We are not persuaded that the insurance benefits should be discounted
because they do not come from the insurance company and not the petitioner
itself.  On the contrary, the private respondents should be properly
grateful therefore because these would not have been available at all if the
petitioner had not paid the premiums on the group insurance of its employees,
who have not contributed a single centavo for such payment.  Nevertheless, we agree that the insurance
benefits do not exclude the severance pay as there is no clear agreement on that point
nor has the petitioner pointed to any law
or rule clearly providing for such exclusion.

The Court is convinced
that the petitioner has acted in complete
good faith in this case and that its position is based on a sincere
and even reasonable interpretation of the section in question.  To repeat, it should have operated in its
favor were it not for the exception embodied therein as we now interpret
it.  We must add that Marcopper
should be commended for its treatment of the heirs of the deceased employees,
particularly Rances and Robles, whose respective
accountabilities in the amounts of P33,594.68 and P15,739.55 it voluntarily and
graciously wrote off as a gesture of good will and generosity.  This speaks well of its attitude toward its
loyal employees, who for their part appear to be appreciative enough albeit
they cannot yield on this question before us. 
That is their right, of course. 
At any rate, the Court is gratified over the intelligent and respectful
debate of the parties in their pleadings which it found especially noteworthy
for the lack of acrimony and bellicoseness that
usually taint adversarial discussions, particularly in labor disputes.

We rule for the private respondents, but not completely.  The Court feels that if the private
respondents are to be given severance pay, as we here hold, it is only
fair that the amounts earlier condoned by the petitioner be also taken
into account in the final disposition of the conflicting claims.  Thus, even as we disregard the quitclaims of
the private respondents on the ground that these did not cover the severance
pay, so too must we in fairness deduct such severance pay from the amounts the
petitioner has waived in good faith.

The record shows that Robles is entitled to severance pay of
P11,508.00 for 12 years service and Rances to
P21,096.00 for 18 years service, and that they had outstanding liabilities of
P15,739.55 and P33,594.68, respectively, that were condoned by the
petitioner.  Their severance pay should
now be charged against their indebtedness, leaving a balance of P4,231.55 against Robles
and P12,498.68, respectively, still due to the petitioner.  These are the amounts only that are deemed
waived by the petitioner after full settlement of the severance pay of the
deceased employees.

WHEREFORE, the petition is DISMISSED and the challenged
decision AFFIRMED, but with the modification that the severance pay due to the
private respondents is deemed paid and covered by the amounts previously
condoned by the petitioner.  The severance
pay owing to Calixto Gamboa shall be paid in full.  No costs.

SO ORDERED.

Narvasa, (Chairman), Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Rollo, p. 14.

^[2]
Ibid., pp. 88-90.

^[3]
Id., p. 104.

^[4]
Black’s Law Dictionary, Revised Fourth Edition, p. 1036 citing Landreth v. Casey, 340 I11. 519. 173 N.E. 84, 85.

^[5]
Art. 1374.  The various stipulations of a
contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of
them taken jointly.

^[6]
Section 5.  Bereavement Assistance.  The COMPANY will grant the following
financial assistance for burial expenses:

(a) For an employee’s death
P2,000.00

(b) For the
death of a spouse or a dependent child as defined in Article XI, Section
2(a) hereof 1,000.00

^[7]

ANNEX “B”

GROUP LIFE INSURANCE PLAN WITH ACCIDENTAL DEATH AND
DISMEMBERMENT BENEFIT

This is a brief description of the group life insurance plan for Marcopper employees. 
The complete details are in the Group Life Insurance Policy.  All cases under this plan are to be governed by the provisions
of this insurance policy.

BASIC INSURANCE

ELIGIBILITY

All regular employees actively at
work shall be covered by a non-contributory
group insurance plan the insurable amount of which shall be 2-1/2 times the
amount of an employee’s annual basic salary or wage.  The insurable amount shall be rounded off to
the nearest P100.00 and the
premium shall be borne exclusively by the Company.

^[8] Supra.

^[9]
Section 2.  Retirement Plan.  The COMPANY will continue with the existing
Retirement Plan as referred to
in Annex “D.” The employee’s availment of
the retirement benefits under the Retirement Plan does not entitle him to the
benefits provided under Section 1 above.

^[10]
Webster’s Third New International Dictionary, 1969 ed., p. 2081.

^[11]
Ibid.

^[12]
48 Am. Jur. 2d., Labor and Labor Relations 1242.