Digest: G.R. No. 198935: MWSA v. Maynilad

 Maynilad Water Supervisors Association v. Maynilad Water Services, Inc., 

G.R. No. 198935 | November 27, 2013

Perez, J.

 

Facts:

For resolution is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse, annul and set aside the Amended Decision and Resolution issued by the Court of Appeals (CA) reinstating the NLRC’s ruling reversing the Labor Arbiter’s ruling that Maynilad Water’s Supervisors Association’s (MWSA’s) claim and directed Maynilad Water Services, Inc. (Maynilad) to pay the cost-of-living allowance (COLA) of the supervisors.

 

Petitioner Maynilad Water Supervisors Association (MWSA) is an association composed of former supervisory employees of Metropolitan Waterworks and Sewerage System (MWSS). These employees claim that during their employment with MWSS, they were receiving a monthly cost of living allowance (COLA) equivalent to 40% of their basic pay.

 

The payment of these allowances and other additional compensation, including the COLA were, however, discontinued without qualification effective 1 November 1989 when the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (CCC No. 10).

 

In 1997, MWSS was privatized and part of it, MWSS West, was acquired by Maynilad Water Services, Inc. (Maynilad). Some of the employees of MWSS, which included members of MWSA, were absorbed by Maynilad subject to the terms and conditions of a Concession Agreement. The payment of COLA was not among those listed as benefits in the exhibit.

 

In 1998, the Supreme Court promulgated a Decision declaring DBM CCC No.10 ineffective for failure to comply with the publication requirement. Consequently, MWSS partially released the COLA payments for its employees, including members of MWSA, covering the years 1989 to 1997, and up to year 1999 for its retained employees.

 

MWSA filed a complaint before the Labor Arbiter praying for the payment of their COLA from the year 1997, the time its members were absorbed by Maynilad, up to the present. MWSA argued that since DBM CCC No. 10 was rendered ineffective, the COLA should be paid as part of the benefits enjoyed by their members at the time of their separation from MWSS, and which should form part of their salaries and benefits with Maynilad.

 

The Labor Arbiter granted MWSA’s claim and directed Maynilad to pay the COLA.

The NLRC granted Maynilad’s motion and reversed the Labor Arbiter’s decision.

The CA then annulled and set aside the NLRC’s decision and reinstated the Labor Arbiter’s ruling. 

However, the CA reconsidered its decision upon motion of Maynilad whereby setting aside its earlier decision and affirming the NLRC’s ruling.

 

Issue/s:

Whether or not Maynilad bound itself under the Concession Agreement to pay the COLA of the employees it absorbed from MWSS

 

Ruling:

NO, Maynilad was not bound under the Concession agreement to pay the COLA of the employees absorbed.

 

The enactment of Republic Act R.A. No. 6758 or the Compensation and Position Classification Act of 1989 which integrated the COLA into the standardized salary rate.  Section 12 thereof provides: “Consolidation of Allowances and Compensation. – All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed.”

 

It is clear from the enumeration on the Concession agreement that COLA is not among the benefits to be received by the absorbed employees. Contrary to the contention of MWSA, the declaration by the Court of the ineffectiveness of DBM CCC No. 10 due to its non-publication in the Official Gazette or in a newspaper of general circulation in the country, did not give rise to the employee’s right to demand payment of the subject benefit from Maynilad.

 

From the aforesaid discussion, it is evident therefore, that at the time the MWSS employees were absorbed by Maynilad in 1997, the COLA was already part and parcel of their monthly salary. The non-publication of DBM CCC No. 10 in the Official Gazette or newspaper of general circulation did not nullify the integration of COLA into the standardized salary rates upon the effectivity of R.A. No. 6758.

 

Therefore, Maynilad is not bound to pay the COLA of the employees absorbed as the COLA is already part and parcel of their monthly salary.