G.R. No. L-51254 June 11, 1981
MARCOPPER MINING CORPORATION, petitioner, vs. THE HONORABLE BLAS OPLE and AMADO INCIONG, Minister and Deputy Minister of Labor, respectively, and MARCOPPER EMPLOYEES LABOR UNION (NAMAWU), respondents.

FACTS

Marcopper Employees Labor Union filed a complaint before the National Labor Relations Commission seeking payment of the 13th-month pay mandated by Presidential Decree No. 851. Petitioner Marcopper Mining Corporation opposed the claim, arguing it was exempt from the Decree because its existing Collective Bargaining Agreement (CBA), adopted in 1977, already granted employees midyear and year-end bonuses. A regional director initially dismissed the complaint, agreeing with Marcopper.
On appeal, Deputy Minister of Labor Amado Inciong reversed the order. He ruled that the CBA bonuses were distinct in character from the statutory 13th-month pay. The bonuses were conditional, granted only in profitable years, and were a product of contractual negotiation. The 13th-month pay, in contrast, was a mandatory benefit irrespective of company profit. Inciong cited Section 10 of the implementing rules, which prohibits the elimination or diminution of existing benefits enjoyed by employees at the time of the Decree’s promulgation.

ISSUE

Whether the grant of midyear and year-end bonuses under a Collective Bargaining Agreement exempts an employer from the mandatory obligation to pay the 13th-month pay under Presidential Decree No. 851.

RULING

No. The Supreme Court dismissed Marcopper’s petition and affirmed the Deputy Minister’s ruling. The legal logic is anchored on the mandatory and non-diminution principles. PD 851 imposes an unqualified obligation on all employers to pay a 13th-month pay to covered employees. The exemption under Section 2 applies only to employers already paying a 13th-month pay “or its equivalent.” The Court held that the conditional CBA bonuses, being voluntary and profit-dependent, are not equivalent to the mandatory, unconditional 13th-month pay required by law.
Crucially, the implementing rules explicitly prohibit using the Decree to eliminate or diminish existing benefits. The CBA bonuses, as benefits enjoyed prior to the Decree, are protected by this non-diminution clause. Therefore, the statutory 13th-month pay is an additional benefit that supplements, and does not substitute, the contractual bonuses. To hold otherwise would allow the law to diminish a favorable practice, contravening the rules and the social justice intent of the labor decree. The obligation under the CBA and the obligation under PD 851 are separate and cumulative.