G.R. No. 83207; August 5, 1991
MARCOPPER MINING CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL MINES & ALLIED WORKERS UNION, and HEIRS OF CALIXTO C. GAMBOA, PETRONIO Q. ROBLES, and ALFREDO B. RANCES, respondents.

FACTS

Petitioner Marcopper Mining Corporation and respondent union NAMAWU were parties to a Collective Bargaining Agreement (CBA). Its Article XII, Section 1, provided for severance pay equivalent to twenty days’ wage per year of service for regular employees “who leave the COMPANY other than for cause” before qualifying for early retirement, with a proviso excluding those who voluntarily resign with less than ten years of service. It further stated that dismissal due to illness would be treated under the Labor Code, except that an employee with ten or more years of service would be entitled to the CBA benefit instead. Three employees, Gamboa, Robles, and Rances, died after 17, 12, and 18 years of service, respectively. Marcopper paid their heirs group life insurance proceeds and cash for unused leaves, and waived certain outstanding debts of the deceased. The heirs subsequently executed quitclaims. NAMAWU later demanded severance pay under the CBA for the deceased employees, which Marcopper refused, arguing death did not constitute “leaving” under the contract.

ISSUE

Whether the heirs of the deceased employees are entitled to severance pay under Article XII, Section 1, of the CBA.

RULING

Yes, the heirs are entitled to severance pay. The Supreme Court held that while the CBA clause “who leave the company” typically denotes a voluntary act, the provision must be interpreted as a whole and in favor of labor, pursuant to Article 4 of the Labor Code. The clause on dismissal due to illness, which grants the CBA benefit in lieu of the Labor Code provision for employees with over ten years of service, indicates an intent to provide a safety net for employees separated through no voluntary fault of their own. Death is an even more compelling instance of involuntary separation. The Court reasoned that the purpose of severance pay is to provide financial security following loss of employment, a need that is most acute for the family upon the employee’s death. The earlier payments made (insurance, leave credits) arose from distinct sources and did not preclude the separate CBA entitlement. However, the amounts waived by Marcopper for Robles and Rances were applied to offset their severance pay, with any remaining balance considered condoned. Gamboa’s heirs were entitled to full payment as no offsetting debt was indicated. The quitclaims were disregarded as they did not specifically cover the severance pay claim.