Case Summary (G.R. No. 203328)
Factual Background
Joselito A. Alva was employed by High Capacity Security Force, Inc. as a security guard beginning November 1, 2003 and received promotions to Assistant Security Officer and then Security Officer. While assigned as Assistant Officer-in-Charge at HRD-PTE, Ltd., one guard under his supervision committed a security lapse. Alva was suspended for one month beginning October 21, 2007, then placed on floating status and, despite requests for reassignment, was not given duty after November 23, 2007. Alva filed a complaint for illegal dismissal and various wage-related claims against High Capacity and its General Manager, Armando M. Villanueva.
Labor Arbiter Proceedings
The Labor Arbiter found High Capacity guilty of illegal dismissal in the Decision dated October 28, 2008. The Arbiter concluded that Alva was on floating status from October 21, 2007 to April 22, 2008 and that the failure to reinstate him after six months rendered the dismissal illegal. The Arbiter ordered reinstatement with backwages computed from six months after floating status to promulgation, or separation pay in lieu of reinstatement, and awarded attorney's fees equivalent to ten percent of the total monetary award.
NLRC Ruling and Subsequent Resolution
On December 8, 2009 the NLRC modified the Labor Arbiter's decision. The NLRC found that Alva had been dismissed for cause (caught sleeping on duty) but that procedural due process was not observed. It deleted the backwages and separation pay awards, substituted nominal damages of PHP 30,000, awarded Alva specified wage-related amounts, and maintained attorney's fees equal to ten percent of the judgment award. After motions for reconsideration, the NLRC issued a Resolution on March 30, 2010 deleting the award of attorney's fees on the ground that Alva’s dismissal was justified and that no bad faith was imputable to High Capacity.
Court of Appeals Decision
The consolidated petitions reached the Court of Appeals, which on February 24, 2012 found that Alva was constructively dismissed by reason of being placed on floating status for more than six months and that procedural due process was not observed. The CA ordered the payment of backwages, separation pay in lieu of reinstatement at Alva’s request, and Alva's monetary claims for holiday pay, service incentive leave pay and 13th month pay. The CA, however, deleted the award of attorney's fees solely because Alva was represented by the Public Attorney's Office (PAO). The CA denied the parties' motions for reconsideration in its August 30, 2012 Resolution.
Issue Presented to the Supreme Court
The sole issue presented by Joselito A. Alva in the petition was whether the Court of Appeals gravely erred in deleting the award of attorney's fees, asserting entitlement under Article 2208 and that his representation by the PAO did not bar the award. High Capacity contended that representation by the PAO precluded attorney's fees, relying on Lambo v. NLRC, and that Alva incurred no expense to justify such an award.
Parties' Contentions before the Court
Alva argued that his wages and benefits were unlawfully withheld and that he was compelled to litigate, thereby entitling him to attorney's fees under Article 111, Labor Code, and Article 2208, Civil Code; he further invoked R.A. No. 9406 to show that attorney's fees awarded against an adversary of PAO clients are deposited as a trust fund for PAO special allowances. High Capacity maintained that Article 2208 requires that the plaintiff be compelled to incur expenses and that Alva incurred none because he availed himself of free PAO services; it relied on precedent disallowing attorney's fees to PAO-represented litigants.
Governing Legal Principles on Attorney's Fees in Labor Cases
The Court recited the two concepts of attorney's fees: the ordinary contract-based fee and the extraordinary fee as indemnity for damages. It explained that in labor cases attorney's fees generally assume the extraordinary character and are payable to the winning employee as indemnity unless otherwise agreed. The Court identified specific statutory bases permitting attorney's fees: Article 111, Labor Code (unlawful withholding of wages, permitting attorney's fees up to ten percent of wages recovered) and enumerated subsections of Article 2208, Civil Code including when the defendant compelled the plaintiff to litigate or when action involves recovery of wages of laborers. The Court emphasized jurisprudence holding that unlawful withholding of wages need not be shown to be motivated by bad faith to justify attorney's fees.
The PAO Issue and Legislative Change
The Court addressed the Court of Appeals' deletion of attorney's fees on the ground of PAO representation and held that the CA erred. The Court explained that Congress enacted R.A. No. 9406 in 2007 to amend E.O. 292 by expressly providing that costs, attorney's fees and contingent fees imposed upon the adversary of PAO clients after successful litigation shall be deposited in the National Treasury as a trust fund for the special allowances of PAO officials and lawyers. The Court cited Our Haus Realty Development Corporation v. Alexander Parian, et al., which held that employees represented by the PAO remain entitled to attorney's fees and that such fees should be paid to the PAO as token recompense for provision of free legal services.
Treatment of Precedent Reliance by Respondents
The Court distinguished Lambo v. NLRC, relied upon by High Capacity, observing that Lambo was decided in 1999 under the administrative code regime prior to the enactment of R.A. No. 9406 and that its rationale
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Case Syllabus (G.R. No. 203328)
Parties and Posture
- Joselito A. Alva was the Petitioner who sought review under Rule 45 from the decision of the Court of Appeals.
- High Capacity Security Force, Inc. and Armando M. Villanueva were the Respondents and former employer and general manager respectively.
- The petition assailed the deletion by the Court of Appeals of an award of attorney's fees previously granted by the Labor Arbiter and the NLRC.
Key Facts
- Alva was hired on November 1, 2003 as a security guard and later promoted to Assistant Security Officer and Security Officer with daily wages stated as Three Hundred Thirty Pesos (Php 330.00) and Four Hundred Thirty Pesos (Php 430.00).
- Alva was suspended for one month beginning October 21, 2007 and thereafter placed on floating status and was not given any assignment despite requests for reinstatement.
- Alva filed a Complaint for Illegal Dismissal and assorted monetary claims and was assisted by the Public Attorney's Office (PAO) before the Labor Arbiter.
Labor Arbiter Ruling
- The Labor Arbiter found High Capacity guilty of illegal dismissal and ordered reinstatement and backwages computed from six months after floating status until promulgation.
- The Labor Arbiter awarded separation pay in lieu of reinstatement and granted attorney's fees equivalent to ten percent of the total monetary award.
NLRC Ruling
- The National Labor Relations Commission modified the Labor Arbiter's decision by finding that Alva was dismissed for just cause but that procedural due process was not observed.
- The NLRC deleted backwages and separation pay, awarded nominal damages of Thirty Thousand Pesos (Php 30,000.00) and monetary claims aggregating Fifty Two Thousand Eight Hundred Ninety Pesos (Php 52,890.00), and initially maintained attorney's fees equivalent to ten percent of the judgment award.
- Upon motions for reconsideration, the NLRC issued a resolution deleting the award of attorney's fees on the ground that no bad faith was imputed to High Capacity because the dismissal was justified.
Court of Appeals Ruling
- The Court of Appeals found that Alva was constructively dismissed when placed on floating status for more than six months and that procedural due process was lacking.
- The Court of Appeals ordered payment of backwages, separation pay in lieu of reinstatement, and Alva's monetary claims but deleted the award of attorney's fees on the basis that Alva was represented by the PAO.
- The Court of Appeals denied the parties' motions for reconsideration in its Resolution dated August 30, 2012.
Issue
- The sole issue before the Supreme Court was whether the deletion of the award of attorney's fees by the Court of Appeals was proper.
Parties' Contentions
- Alva contended that he was entitled to attorney's fees under Article 2208 paragraphs (2) and (7) of the Civil Code, that he was compelled to litigate due to unlawful withholding of wages, and that representation by the PAO did not preclude the award of attorney's fees under R.A