MWSA v MAYNILAD

F: Petitioner MWSA is an associated composed of former supervisory employees of

MWSS. They claim that during their employment with MWSS, they received a monthly
COLA equivalent to 40% of their basic pay.
The payment of these allowances and other additional compensation, including the
COLA, were discontinued without qualification effective 1 Nov 1989 when the DBM
issued Corporate Compensation Circular No. 10.
In 1997, MWSS was privatized and part of it, MWSS West, was acquired by Maynilad
. Some of the employees of MWSS, including members of MWSA, were absorbed by Ma
ynila subject to the terms and conditions of a Concession Agreement, a portion o
f which reads:
- benefits at least equal to those enjoyed...
- ... the concessionare shall grant to all concessionaire employees bene
fits no less favorable than those granted to such employees...
COLA was not listed as a benefit under the agreement.
In 1998, the SC promulgated a decision declaring CCC No. 10 ineffective for fail
ure to comply with the publication requirement. As a result, MWSS partially rele
ased the COLA payments for its employees, including members of MWSA, from 1989-1
997, and up to 1999 for retained employees.
In 2002, MWSS filed a complaint before the LA praying for the payment of their C
OLA from 1997 to the present.
- As DBM CCC No. 10 was rendered ineffective, the COLA should be paid as
part of the benefits enjoyed at the time of separation from MWSS, and which sho
uld form part of their salaries and benefits with Maynilad.
LA: Granted.
NLRC: Reversed LA decision.
CA: Reinstated LA decision, but later reversed on MR.
I: Whether or not the MWSA members are entitled to COLA under the Concession agr
eement.
- The Concession Agreement does not seem to include COLA as one of the benefits
to be granted to the absorbed employees. Allowances include PERA, ACA, RATA, med
ical expenses, rice, uniform, meal, longevity, children, and hazard pay. COLA wa
s not mentioned in the bonuses section (it would have been with year-end financi
al assistance).
- What of the ineffectiveness of DBM CCC No. 10? The ruling in the SC case did n
ot affect MWSA's relationship with Maynilad because they already have a separate
compensation package. The Court ruling in that case does not apply because: (1)
the ruling did not apply to private entities, and (2) the parties to the Conces
sion Agreement could not have thought of including the COLA in the agreement bec
ause as early as 1989, the government already resolved to remove the COLA. This
led to RA 6758, which integrated the COLA into the standardized salary rate.
- The said law provides: All allowances, except for representation and transport
ation allowances; clothing and laundry allowances; subsistence allowance of mari
ne officers and crew on board government vessels and hospital personnel; hazard
pay; allowances of foreign service personnel stationed abroad; and such other ad
ditional compensation not otherwise specified herein as may be determined by the
DBM, shall be deemed included in the standardized salary rates herein prescribe
d.
- Cited case: Gutierrez v DBM: COLA was deemed already incorporated as it was in
the tenor of 'such other additional compensation under Sec. 12.7.
- Clearly, COLA is not in the nature of an allowance intended to reimburse expen
ses incurred by officials and employees of the government in the performance of
their official functions. It is not payment in consideration of the fulfillment
of official duty.16 As defined, cost of living refers to "the level of prices re
lating to a range of everyday items"17 or "the cost of purchasing those goods an
d services which are included in an accepted standard level of consumption."18 B
ased on this premise, COLA is a benefit intended to cover increases in the cost
of living.
- So when the employees were absored by Maynila, COLA was already part and parce
l of their salary. The non-publication did not nullify that integration. Grantin
g COLA would mean receiving an additional COLA amounting to 40% of their basic s
alary when their salary already contained the COLA. This greats far greater righ
ts than other employees.
- Further, it was wrong for them to seek to have the COLA incorporated in the co
mpensation-- the employment contracts of the MWSA members were terminated when t
hey worked for MAYNILAD.
- This Court has ruled that unless expressly assumed, labor contracts such as em
ployment contracts and collective bargaining agreements are not enforceable agai
nst a transferee of an enterprise, labor contracts being in personam, thus bindi
ng only between the parties.
- Only commitment: package no less favorable than those granted by the M
WSS at the time of separation
- Maynilad complied with this, especially given the COLA was not agreed
upon.
- In Norton Resources and Development Corporation v. All Asia Bank Corporation,2
3 this Court ruled that the agreement or contract between the parties is the for
mal expression of the parties rights, duties and obligations. It is the best evid
ence of the intention of the parties. Thus, when the terms of an agreement have
been reduced to writing, it is considered as containing all the terms agreed upo
n and there can be no evidence of such terms other than the contents of the writ
ten agreement between the parties and their successors in interest.
- Time and again, we have stressed the rule that a contract is the law between t
he parties, and courts have no choice but to enforce such contract so long as it
is not contrary to law, morals, good customs or public policy. Otherwise, court
s would be interfering with the freedom of contract of the parties. Simply put,
courts cannot stipulate for the parties or amend the latters agreement, for to do
so would be to alter the real intention of the contracting parties when the con
trary function of courts is to give force and effect to the intention of the par
ties.