G.R. No. 108405 - Viernes vs. National Labor Relations Commission

Case Summary (G.R. No. 108405)

Factual Background

The petitioners were engaged by BENECO as meter readers under written appointments dated October 8 to 31, 1990 at a daily rate of P66.75, but they continued performing the same functions beyond October 31, 1990 until January 2, 1991 without a new contract. On January 3, 1991 they were each served identical notices of termination dated December 29, 1990, which stated that termination was for retrenchment due to overstaffing and not for cause. On the same date they filed separate complaints for illegal dismissal, later consolidated, alleging that they were regular employees illegally terminated; BENECO invoked Article 283 of the Labor Code in defense.

Labor Arbiter Proceedings and Decision

The Labor Arbiter found against the complaints for illegal dismissal but ordered remedial monetary relief and limited reinstatement offers: the Arbiter directed BENECO to extend a temporary employment contract to each complainant except Jaime Viernes and to pay each P2,590.50 as indemnity for failure to give the 30-day notice required by Article 283, with an option for each complainant to take P5,000.00 in financial assistance plus the indemnity. The Labor Arbiter also awarded specified amounts for underpayment of wages to each complainant, ordered the reinstatement of Jaime Viernes as a regular meter reader with P2,590.50 indemnity plus underpaid wages, and granted attorneys' fees of P7,000.00.

NLRC Proceedings and Decision

Both parties appealed to the NLRC, which, in its July 2, 1992 decision, modified the Labor Arbiter by declaring the petitioners' dismissal illegal and ordering their reinstatement to former positions as meter readers or to any equivalent position with payment of backwages limited to one year; the NLRC deleted the award of indemnity and attorneys' fees but affirmed the award for underpayment of wages. The petitioners filed a motion for clarification and partial reconsideration on August 27, 1992, which the NLRC denied by resolution dated September 24, 1992.

Issues Presented

The petition framed four central questions: one, whether the NLRC gravely abused its discretion by ordering reinstatement of petitioners on probationary status despite finding them regular employees under Article 280; two, whether the NLRC gravely abused its discretion in limiting backwages to one year despite finding illegal dismissal and contrary to the mandate of full backwages under Article 279 as amended by R.A. No. 6715; three, whether the NLRC gravely abused its discretion in deleting the award of indemnity that had become final and deleting attorneys' fees because of absence of a trial-type hearing; and four, whether the executory effect of NLRC decisions pending motion for reconsideration or appeal operates as provided in Article 223 and the NLRC Rules.

Court's Analysis on Regular Employment and Reinstatement

The Court held that the petitioners were regular employees and must be reinstated as such, not as probationary hires. The Court observed that nothing in the appointment letters indicated probationary status and that Article 281 requires employers to inform probationary employees, at engagement, of the reasonable standards for regularization, which did not occur here. The Court rejected BENECO's reliance on Brent School, Inc. vs. Zamora, explaining that the Brent doctrine applies to knowingly agreed fixed-term contracts entered to avoid security of tenure, whereas here petitioners, though initially hired for a fixed short term, were allowed to continue working beyond October 31, 1990 without new contracts and thus converted their status. Applying the test in De Leon vs. NLRC and Abasolo vs. NLRC, the Court found that the meter-reading function is necessary or desirable to BENECO's usual business, and the employer's continued use of petitioners after the original term evidenced necessity; consequently petitioners attained regular status under Article 280 and were entitled to reinstatement as regular employees.

Court's Ruling on Backwages

The Court held that the NLRC gravely abused its discretion in limiting backwages to one year. It applied Article 279, as amended by R.A. No. 6715, which confers on an illegally dismissed employee full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time compensation was withheld until actual reinstatement. Because petitioners were employed on October 8, 1990, the amended Article 279 applied and therefore the award of backwages could not be truncated to a single year; petitioners were entitled to full backwages from dismissal until actual reinstatement.

Court's Ruling on Indemnity

The Court reinstated the Labor Arbiter's award of indemnity, holding that BENECO violated Article 283 by serving notices that retroactively terminated employment without complying with the one-month notice requirement to the employees and the Department of Labor. The Court explained that indemnity is a form of nominal damages under Article 2221 of the Civil Code, intended to vindicate the employee's right to procedural due process rather than to punish the employer. The Court found no basis to regard indemnity as incompatible with backwages because they serve distinct remedial aims; relying on Del Val vs. NLRC, which fixed an indemnity range from P1,000.00 to P10,000.00, the Court reinstated the Labor Arbiter's indemnity award of P2,590.50 as just and reasonable.

Court's Ruling on Attorneys' Fees

The Court restored the award of attorneys' fees, reasoning that Article 111 of the Labor Code authorizes attorneys' fees in cases of unlawful withholding of wages and limits such fees to ten percent of the amount of wages recovered. The NLRC's deletion of attorneys' fees was therefore erroneous, and the Court ordered attorneys' fees equivalent to ten percent of the total monetary award due to the petitioners.

Court's

Case Syllabus (G.R. No. 108405)

Parties and Procedural Posture

Petitioners were fifteen complainants who filed consolidated complaints for illegal dismissal, underpayment of wages, and indemnity pay against Benguet Electric Cooperative, Inc. (BENECO) and its Acting General Manager, Gerardo P. Versoza.
National Labor Relations Commission (Third Division) reviewed the Labor Arbiter's adverse and favorable findings on appeal and issued the decision and resolution challenged by the petition for certiorari.
The Labor Arbiter rendered a decision dated October 18, 1991, which dismissed the illegal dismissal complaints but awarded underpayments, indemnity, reinstatement for one complainant, and attorneys fees.
NLRC modified the Labor Arbiter's decision on July 2, 1992 by declaring the dismissals illegal, ordering reinstatement as meter readers or equivalent with backwages limited to one year, and deleting the awards of indemnity and attorneys fees, and denied reconsideration on September 24, 1992.
The petitioners filed the present petition for certiorari to annul the NLRC decision and resolution, and the parties submitted memoranda prior to the Court's later pronouncements on NLRC review procedure.

Key Factual Allegations

Petitioners were engaged as meter readers under written appointments dated October 8, 1990 that fixed their employment from October 8 to October 31, 1990 at a daily rate of P66.75.
Petitioners continued to perform meter-reading duties beyond October 31, 1990 and worked up to January 2, 1991 without execution of a new contract or re-fixation of term.
Petitioners received identical notices of termination dated December 29, 1990 that were served on January 3, 1991 and stated that termination was due to retrenchment for alleged overstaffing.
Petitioners alleged they were regular employees illegally dismissed without due process and with underpayment of wages, while BENECO invoked Article 283 of the Labor Code in justification of its retrenchment.

Issues Presented

Whether the NLRC committed grave abuse of discretion in ordering reinstatement of petitioners on probationary status despite finding that they were regular employees under Article 280 of the Labor Code.
Whether the NLRC committed grave abuse of discretion in limiting petitioners' backwages to one year despite declaring the dismissal illegal and contrary to the rule on full backwages in Article 279, as amended by R.A. No. 6715.
Whether the NLRC committed grave abuse of discretion in deleting the award of indemnity and attorneys fees when the labor arbiter had previously awarded them and the indemnity award became final.
Whether the NLRC decision reinstating employees is immediately executory pending appeal or pending a motion for reconsideration and how Article 223 of the Labor Code and the NLRC Rules govern executory effect.

Labor Arbiter and NLRC Dispositions

The Labor Arbiter dismissed the illegal dismissal complaints for lack of merit but awarded each petitioner one-month indemnity of P2,590.50 in lieu of 30-day notice, underpayment awards in varying amounts, reinstatement for one petitioner as regular employee, and P7,000.00 as attorneys fees.
The NLRC declared the dismissals illegal, ordered reinstatement as meter readers or equivalent, limited backwages to one year, deleted the indemnity and attorneys fees awards, and affirmed the underpayment awards.
The NLRC denied the petitioners' motion for clarification and partial reconsideration, rendering its decision final and subject to challenge in this petition for certiorari.

Supreme Court Ruling and Disposition

The petition was partially granted and the NLRC decision dated July 2, 1992 was modified.
BENECO was ordered to reinstate petitioners to their former or substantially equivalent positions as regular employees without loss of seniority rights and other privileges appurtenant thereto.
The Court ordered payment of full backwages from the time of dismissal until actual reinstatement and reinstated the indemnity award of P2,590.50 per petitioner as adjudged by the Labor Arbiter.
The Court reinstated attorneys fees and awarded attorneys fees