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MWC-EAST ZONE UNION and EDUARDO BORELA VS MANILA WATER COMPANY G.R No. 174179
G.R. No. 174179 November 16, 2011
KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA MWC-EAST ZONE UNION and EDUARDO
BORELA, representing its members, Petitioners, vs. MANILA WATER COMPANY, INC., Respondent.

FACTS:
The Union is the duly-recognized bargaining agent of the rank-and-file employees of the respondent Manila Water
Company, Inc. while Borela is the Union President.In 1997, the Metropolitan Waterworks and Sewerage System
(MWSS) entered into a Concession Agreement with the Company to privatize the operations of the MWSS. The
Agreement provides that the Concessionaire shall grant its employees benefits no less favorable than those granted
to MWSS employees at the time of their separation from MWSS.Among the benefits enjoyed by the employees of
the MWSS were the amelioration allowance (AA) and the cost-of-living allowance (COLA).

The payment of the AA and the COLA was discontinued pursuant to Republic Act No. 6758, otherwise known as the
Salary Standardization Law, which integrated the allowances into the standardized salary. The Company agreed to
reinstate them upon renegotiation of the parties CBA but however failed to give them.

As a result, the Union and Borela filed a complaint against the Company for payment of the AA, COLA, moral and
exemplary damages, legal interest, and attorneys fees before the National Labor Relations Commission (NLRC).

In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of the petitioners and
ordered the payment of ten percent (10%) attorneys fees in addition to their benefits and interests. The award of
attorneys fees was upheld by NLRC. However, this was reversed by the CA.

CAs Decision: The additional grant of 10% attorneys fees violates Article 111 of the Labor Code considering that the
MOA between the parties already ensured the payment of 10% attorneys fees, deductible from the AA and CBA
receivables of the Unions members.

ISSUE:
1. Whether or not the workers are entitled to attorneys fees.
2. Whether or not the grant of 10% attorneys fees violate Article 111 of the Labor Code.

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HELD:
1. Yes. The workers are entitled to attorneys fees.

The union members represented by the Union were compelled to litigate and incur legal expenses.

There are two commonly accepted concepts of attorneys feesthe ordinary and extraordinary. In its ordinary
concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services the
former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be
assessed. In its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to be
paid by the losing party to the winning party.Article 111 of the Labor Code, as amended, contemplates the
extraordinary concept of attorneys fees.

In the present case, it is undisputed that the union members are entitled to their AA benefits and that these benefits
were not paid by the Company. That the Company had no funds is not a defense as this was not an insuperable
cause that was cited and properly invoked. As a consequence, the union members represented by the Union were
compelled to litigate and incur legal expenses. On these bases, the Court upholds the NLRCs award of ten percent
(10%) attorneys fees.

2. No.Thegrant of 10% attorneys fees do not violate Article 111 of the Labor Code.

The award by the NLRC cannot be taken to mean an additional grant of attorneys fees, in violation of the ten percent
(10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one
contracted under the MOA

In the present case, the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up
the attorneys fees awarded to the Unions members in favor of their counsel. The award by the NLRC cannot be
taken to mean an additional grant of attorneys fees, in violation of the ten percent (10%) limit under Article 111 of the
Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA. Simply
stated, the attorneys fees contracted under the MOA do not refer to the amount of attorneys fees awarded by the
NLRC; the MOA provision on attorneys fees does not have any bearing at all to the attorneys fees awarded by the
NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred in ruling that
the LAs award of attorneys fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor
Code.
Award of attorneys fees; concepts. There are two commonly accepted concepts of attorneys fees the ordinary
and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his
client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per
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agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed indemnity for damages
ordered by the court to be paid by the losing party to the winning party. This is payable not to the lawyer but to the
client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of
his compensation. Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorneys
fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not
be any showing that the employer acted maliciously or in bad faith when it withheld the wages. Thus the SC
concluded that the CA erred in ruling that a finding of the employers malice or bad faith in withholding wages must
precede an award of attorneys fees under Article 111 of the Labor Code. To reiterate, a plain showing that the lawful
wages were not paid without justification is sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa
MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16,
2011.
The Companys argument that the attorneys fees are unconscionable as they represent 20% of the amount due or
about P21.4 million is more apparent than real. Since the attorneys fees awarded by the LA pertained to the Unions
members as indemnity for damages, it was totally within their right to waive the amount and give it to their counsel as
part of their contingent fee agreement. Beyond the limit fixed by Article 111 of the Labor Code, such as between the
lawyer and the client, the attorneys fees may exceed ten percent (10%) on the basis of quantum meruit, as in the
present case. (Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo
Borela vs. Manila Water Company, Inc., G.R. No. 174179, November 16, 2011)