G.R. No. 171351 - Metropolitan Waterworks and Sewerage System vs. Bautista

Petitioner Metropolitan Waterworks and Sewerage System (MWSS) is a government-owned and controlled corporation organized under Republic Act No. 6234.
Private respondents are incumbent and former employees of MWSS who, prior to November 1, 1989, were receiving various allowances, fringe benefits, and a Cost of Living Allowance (COLA) equivalent to either 40% of their basic monthly salary or P300.00 a month, whichever was higher.
The granting of these benefits was discontinued pursuant to Republic Act No. 6758 (Salary Standardization Law), which consolidated allowances and additional compensation into standardized salary rates.

In implementation of RA 6758, the Department of Budget and Management (DBM) issued Corporate Circular No. 10, which ordered the discontinuance of all allowances and fringe benefits, including COLA, effective November 1, 1989.
In the earlier case of De Jesus v. Commission on Audit, DBM Circular No. 10 was declared ineffective due to a lack of publication. The defect was later remedied when the Circular was published in the Official Gazette in March 1999.
The Office of the Government Corporate Counsel (OGCC) subsequently issued a memorandum opining that government-owned and controlled corporation employees are entitled to receive COLA (and amelioration allowance) during the period the benefit was suspended, without the need for prior DBM determination.

Despite the OGCC’s opinion, MWSS initially granted only a 5% COLA to its employees via a Board Resolution on May 23, 2003, citing payment limitations based on available funds and referencing a previous dismissal in a similar mandamus case.
Private respondents demanded the balance of the COLA—an amount equivalent to 95% of what was due from November 1989 up to March 16, 1999.
MWSS contended that it had already acted by distributing a total of 30% COLA in several board resolutions and that payment of the balance was deferred due to lack of funds and the prior court dismissal.

Private respondents filed a petition for mandamus with the Regional Trial Court (RTC) in Quezon City to compel MWSS to pay the COLA balance.
The RTC ruled in favor of the petitioners, ordering MWSS to pay the 95% balance of COLA along with segregation of a 10% portion for litigation expenses payable to Genaro Bautista, acting as the attorney-in-fact.
The Court of Appeals (CA) affirmed with modifications—upholding the entitlement to COLA and mandating payment, but modifying the award for litigation expenses by replacing the 10% deduction with a fixed amount of PhP500,000.00.
Later, on motion for reconsideration, the CA further adjusted the award by deleting the attorney’s fees component equivalent to 5% of the total claims, while validating the segregation of 10% as litigation expenses and attorney’s fees for those private respondents who had executed the agreement with Bautista.
MWSS eventually filed a petition for review with the Supreme Court.

Whether mandamus is the proper remedy to compel MWSS to pay the full and immediate balance (95%) of COLA to private respondents from November 1989 up to March 16, 1999.
Whether private respondents, as a matter of law, are entitled to receive the balance COLA despite assertions that the allowance might have been integrated into their salaries.

Whether the award and segregation of 10% of the total COLA due as attorney’s fees and litigation expenses is proper and reasonable.
Whether such an agreement binding only on the private respondents who signed the contract with Genaro Bautista can be validly enforced against all MWSS employees.