NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, PETITIONER, VS. NWSA CONSOLIDATED LABOR UNIONS NOW KAISAHAN KAPATIRAN NG MANGGAGAWA AT KAWANI SA NAWASA (PAFLU) AND COURT OF INDUSTRI…

National Waterworks and Sewerage Authority versus NWSA Consolidated Labor Unions

The Case

This is a petition for review brought by the National Waterworks and Sewerage Authority, the government-owned water utility, against the NWSA Consolidated Labor Unions, later renamed Kaisahan Kapatiran ng mga Manggagawa at Kawani sa NAWASA, and against the Court of Industrial Relations. The Authority asks the Supreme Court to undo an order of the industrial court that granted several of the union's demands arising from a failed renegotiation of their collective bargaining agreement. The case matters because it shows how the Supreme Court reviews the industrial court's wage and benefit awards, and because it draws a firm line between benefits the law still permits and benefits a presidential circular has already withdrawn.

Procedural History

The dispute began as a petition filed by the union with the Court of Industrial Relations, which was then the labor tribunal of the land. On December 8, 1961, that court issued an order denying most of the union's demands but granting four items: an increase in the commissions of bill collectors, the continuance of existing benefits including meal allowance for overtime service, a Christmas bonus for the year 1961, and the check-off of union dues. The Authority moved for reconsideration as to the first three items. The industrial court, sitting en banc, denied the motion in a resolution dated July 17, 1962. The Authority then came to the Supreme Court on a petition for review of both the order and the resolution. The case was submitted for decision without briefs or memoranda, upon the petition and the answer of the industrial court as respondent.

Facts

The union and the Authority had a collective bargaining agreement effective for three years from October 1, 1956. Before it expired, the union submitted proposals for its renewal. Protracted controversies and negotiations followed, and conciliation efforts by the Department of Labor failed. The union declared a strike on October 28, 1959, and again on December 8, 1959. The President certified the dispute to the Court of Industrial Relations, which issued a return-to-work order on December 9, 1959.

Earlier, on November 13, 1959, the union had filed a petition with the industrial court containing a set of demands: annual wage increases, additional commissions for bill collectors, strike-duration pay, check-off of union dues, Christmas bonus, continuance of existing benefits, and an extension of the effectivity of the collective bargaining agreement during the pendency of the case.

The industrial court granted only four items, and the Authority challenged three of them before the Supreme Court: the commission increase, the meal allowance for overtime service, and the Christmas bonus.

Issues

• Whether or not the increase in the commissions of bill collectors is already included in the adjustment of salaries under the WAPCO salary standardization plan, so that no separate commission may be granted.
• Whether or not the meal allowance for overtime service may continue to be enjoyed under the draft agreement's clause on existing benefits, despite the prohibition in Memorandum Circular Number 24 of the President.
• Whether or not the industrial court may award a Christmas bonus for 1961 even though the collective bargaining agreement granting it had already expired.

Applicable Provisions

The draft agreement proposed by the Authority contained a clause on existing benefits, which provides:

RIGHTS TO EXISTING BENEFITS. - Unless otherwise specified herein, it is understood and agreed that all existing benefits being enjoyed by the employees and laborers prior to the effectivity of this agreement shall remain in force and form part of this Agreement, except in cases where such benefits are curtailed, suspended or suppressed as a disciplinary measure for misfeasance or nonfeasance in office, and subject to the provisions of existing law on the matter.

The clause saves existing benefits only subject to existing law, and Memorandum Circular Number 24 of the President is exactly such a law for the meal allowance.

Memorandum Circular Number 24 of the President, issued on January 1, 1959, enjoins all heads of departments and other government offices, including government-owned or controlled corporations, that:

Payment of meal allowance for overtime service except in meritorious cases, shall not be allowed.

This circular withdraws the meal allowance as a general rule, so that it may continue only if justified as a meritorious case, which the record does not show.

Ruling

On the first issue, the Court held that the commission increase stands. The WAPCO rule defining previous salary as excluding commissions applies only for purposes of fixing and adjusting salaries. The other WAPCO rule invoked by the Authority, on food, lodging or other thing or service, does not cover commissions, which are not grants in kind or in service but sums of money compensating bill collectors for the special nature of their work. A bill collector may be on the road the whole day and show nothing for his efforts, so a commission fairly compensates him and provides an incentive to persist until the bill is actually collected.

On the second issue, the Court held that the meal allowance must be excluded. The collective bargaining agreement had expired and could no longer define the rights of the employees in this regard. The industrial court relied on the draft agreement's clause on existing benefits but overlooked or misinterpreted the phrase subject to the provisions of existing law on the matter. Memorandum Circular Number 24 prohibits payment of meal allowance for overtime service except in meritorious cases, and no such justification appears in the record.

On the third issue, the Court held that the Christmas bonus for 1961 was properly awarded. As a matter of law, a bonus is an act of liberality that may be withheld once the agreement granting it has expired. But the Court has held that even if a bonus is not demandable for not forming part of the wage, salary or compensation of the employee, the same may nevertheless be granted on equitable considerations. The industrial court found that the employees had continuously enjoyed the bonus, even during the operation of the defunct Metropolitan Water District and while the case was pending, when the Authority granted a Christmas bonus in December 1960. These considerations justified the award.

Doctrine

First, commissions paid to bill collectors are not included in the adjusted salary under the WAPCO salary standardization plan, because the rule excluding commissions from previous salary applies only for purposes of fixing and adjusting salaries, and commissions are compensation for the special nature of the work, not grants in kind or in service.

Second, a clause continuing existing benefits subject to the provisions of existing law on the matter must yield to Memorandum Circular Number 24 of the President, which prohibits meal allowance for overtime service except in meritorious cases. The general rule applies, and the exception must be justified by the record.

Third, a Christmas bonus is not demandable as part of wages once the collective bargaining agreement expires, but the industrial court may grant it on equitable considerations, especially where the employees have continuously enjoyed it and the employer itself granted it during the pendency of the case.

Disposition

The Supreme Court affirmed the orders of the industrial court except as to the grant of meal allowance for overtime service, which it eliminated, with no pronouncement as to costs.

Remember This

Memorize the line that a bonus, though not demandable as part of wages, may be granted on equitable considerations, and that a clause continuing existing benefits is always subject to existing law. Examiners use this case to test the WAPCO salary standardization rules on commissions and the effect of presidential circulars on meal allowance for overtime service.