Republic
of the
Supreme
Court
SECOND DIVISION
|
KAISAHAN AT KAPATIRAN NG
MGA MANGGAGAWA AT KAWANI SA MWC-EAST ZONE UNION and EDUARDO BORELA,
representing its members, Petitioners, - versus - MANILA WATER COMPANY, INC., Respondent. |
G.R.
No. 174179
Present: CARPIO, J.,
Chairperson, BRION, PEREZ, SERENO, and REYES, JJ. Promulgated: November
16, 2011 |
x------------------------------------------------------------------------------------x
DECISION
BRION, J.:
We
resolve the petition for review on certiorari[1] filed by the petitioners, Kaisahan at Kapatiran ng mga Manggagawa at Kawani
sa MWC-East Zone Union (
The Factual
Antecedents
The
background facts are not disputed and are summarized below.
The
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.[9] Nonetheless, in 2001, the
The Company shall implement
the payment of the Amelioration Allowance and Cost of Living [A]llowance
retroactive August 1, 1997 should the MWSS decide to pay its employees and all
its former employees or upon award of a favorable order by the MWSS Regulatory
Office or upon receipt of [a] final court judgment.[11]
Thereafter,
the Company integrated the AA into the monthly payroll of all its employees beginning
August 1, 2002, payment of the AA and the COLA after an appropriation was made
and approved by the MWSS Board of Trustees.
The Company, however, did not subsequently include the COLA since the
Commission on Audit disapproved its payment because the Company had no funds to
cover this benefit.[12]
As a result,
the Union and Borela filed on April 15, 2003 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).[13]
The Compulsory
Arbitration Rulings
In
his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of the petitioners
and ordered the payment of their AA and COLA, six percent (6%) interest of the
total amount awarded, and ten percent (10%) attorneys fees.[14]
On appeal by
the Company, the NLRC affirmed with modification the LAs decision.[15] It set aside the award of the COLA benefits because
the claim was not proven and established, but ordered the Company to pay the
petitioners their accrued AA of about P107,300,000.00 in lump sum and to continue paying the
AA starting August 1, 2002. It also
upheld the award of 10% attorneys fees to the petitioners.
In its Motion
for Partial Reconsideration of the NLRCs December 19, 2003 decision, the
Company pointed out that the award of ten percent (10%) attorneys fees to the
petitioners is already provided for in their December 19, 2003 Memorandum of
Agreement (MOA) which mandated that
attorneys fees shall be deducted from the AA and CBA receivables.[16] This compromise agreement, concluded between
the parties in connection with a notice of strike filed by the
31. Attorneys
fees 10% to be deducted from AA and CBA receivables.
32. All other issues are
considered withdrawn.[19]
In their
Opposition, the petitioners argued that the MOA only covered the payment of
their share in the contracted attorneys fees, but did not include the
attorneys fees awarded by the NLRC. To
support their claim, the petitioners submitted Borelas affidavit which
relevantly stated:
2. On December
19, 2003, in settlement of the notice of Strike for CBA Deadlock, Manila Water
Company, Inc. and the Union entered into an Agreement settling the deadlock
issued (sic) of the CBA negotiation including [the] payment of the AA and the
mode of payment thereof.
3.
Considering that the AA payment was included in the Agreement, the Union
representation deemed it wise, for practical reason, to authorize the company
to immediately deduct from the benefits that will be received by the
member/employees the 10% attorneys fees in conformity with our contract with
our counsel.
4. The 10% attorneys fees paid by the members/employees is separate and
distinct from the obligation of the company to pay the 10% awarded attorneys
fees which we also gave to our counsel as part of our contingent fee agreement.
5. There was no agreement
that we are going to shoulder the entire attorneys fees as this would cost us 20%
of the amount we would recover. There was also no agreement that the 10%
attorneys fees in the MOA represents the entire attorneys cost because the
said payment represents only our compliance of our share in the attorneys fees
in conformity with our contract. Likewise, we did not waive the awarded 10%
attorneys fees because the same belongs to our counsel and not to us and
beyond our authority.[20] (emphasis ours)
The NLRC
subsequently denied both parties Motions for Partial Reconsideration,[21]
prompting the Company to elevate the
case to the CA via a petition for certiorari
under Rule 65 of the Rules of Court.
It charged the NLRC of grave abuse of discretion in sustaining the award
of attorneys fees on the grounds that: (1) it is contrary to the MOA[22]
concerning the payment of attorneys fees; (2) there was no finding of unlawful
withholding of wages or bad faith on the part of the Company; and (3) the
attorneys fees awarded are unconscionable.
The CA Decision
In its
Decision promulgated on March 6, 2006,[23]
the CA modified the assailed NLRC rulings by deleting [t]he order for
respondent MWCI to pay attorneys fees equivalent to 10% of the total judgment
awards. The CA recognized the binding effect of the MOA between the Company
and the Union; it
stressed that any further award of attorneys fees is unfounded considering
that it did not find anything in the Agreement that is contrary to law, morals,
good customs, public policy or public order.
In resolving
the issue, the CA cited our ruling in Traders
Royal Bank Employees Union-Independent v. NLRC,[24]
where we distinguished between the two commonly accepted concepts of attorneys
fees the ordinary and the extraordinary.
We held in that case that under its ordinary concept, attorneys fees
are the reasonable compensation paid to a lawyer by his client for legal
services rendered. On the other hand, we
ruled that in its extraordinary concept, attorneys fees represent an indemnity
for damages ordered by the court to be paid by the losing party in a litigation
based on what the law provides; it is payable to the client not to the lawyer,
unless there is an agreement to the contrary.
The CA noted
that the fees at issue in this case fall under the extraordinary concept the
NLRC having ordered the Company, as losing party, to pay the Union and its
members ten percent (10%) attorneys fees.
It found the award without basis under Article 111 of the Labor Code
which provides that attorneys fees equivalent to ten percent (10%) of the amount
of wages recovered may be assessed only in cases of unlawful withholding of
wages.
The CA ruled
that the facts of the case do not indicate any unlawful withholding of wages or
bad faith attributable to the Company. It also held that 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
The
The Petition
The petitioners
seek a reversal of the CA rulings on the sole ground that the appellate court
committed a reversible error in reviewing the factual findings of the NLRC and in
substituting its own findings an action that is not allowed under Rule 65 of
the Rules of Court. They question the
CAs re-evaluation of the evidence, particularly the MOA, and its conclusion
that there was no unlawful withholding of wages or bad faith attributable to
the Company, thereby contradicting the factual findings of the NLRC. They also
submit that a petition for certiorari under Rule 65 is confined only to
issues of jurisdiction or grave abuse of discretion, and does not include the
review of the NLRCs evaluation of the evidence and its factual findings.[26]
The
petitioners argue that in the present case, all the parties arguments and
evidence relating to the award of attorneys fees were carefully studied and
weighed by the NLRC. As a result, the
NLRC gave credence to Borelas affidavit claiming that the attorneys fees paid
by the
The Case for the
Company
In its
Memorandum filed on September 7, 2007,[28]the
Company argues that the correctness of the NLRCs interpretation of the
provision of the MOA, the reasonableness of the attorneys fees in question,
and the application or interpretation of a provision of the Labor Code on the
matter are questions of law which the CA validly inquired into in the certiorari proceedings. It argues that the CA correctly ruled that
the NLRC acted with grave abuse of discretion when it affirmed the LAs award
of attorneys fees despite the absence of a finding of any unlawful withholding
of wages or bad faith on the part of the Company. It finally contends that the P21.4 million.
Issues
The core
issues posed for our resolution are: (1) whether the CA can review the factual
findings of the NLRC in a Rule 65 petition; and (2) whether the NLRC gravely
abused its discretion in awarding ten percent (10%) attorneys fees to the
petitioners.
The Courts Ruling
We find the petition
and its arguments meritorious.
On the CAs Review of the NLRCs Factual Findings
We agree with the petitioners that as a rule, the CA cannot undertake a re-assessment of the evidence presented in the case in certiorari proceedings under Rule 65 of the Rules of Court.[29] However, the rule admits of exceptions. In Mercado v. AMA Computer College-Paraaque City, Inc.,[30] we held that the CA may examine the factual findings of the NLRC to determine whether or not its conclusions are supported by substantial evidence, whose absence justifies a finding of grave abuse of discretion. We ruled:
We agree with the
petitioners that, as a rule in certiorari proceedings under Rule 65 of the Rules
of Court, the CA does not assess and weigh each piece of evidence introduced in
the case. The CA only
examines the factual findings of the NLRC to determine whether or not the
conclusions are supported by substantial evidence whose absence points to grave
abuse of discretion amounting to lack or excess of jurisdiction. In the recent case of Protacio v. Laya Mananghaya &
Co., we emphasized that:
As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate court does not assess and weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC based their conclusion. The query in this proceeding is limited to the determination of whether or not the NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion in rendering its decision. However, as an exception, the appellate court may examine and measure the factual findings of the NLRC if the same are not supported by substantial evidence. The Court has not hesitated to affirm the appellate courts reversals of the decisions of labor tribunals if they are not supported by substantial evidence. [31] (italics and emphasis supplied; citation omitted)
As discussed
below, our review of the records and of the CA decision shows that the CA erred
in ruling that the NLRC gravely abused its discretion in awarding the
petitioners ten percent (10%) attorneys fees without basis in fact and in
law. Corollary to the above-cited rule
is the basic approach in the Rule 45 review of Rule 65 decisions of the CA in
labor cases which we articulated in Montoya
v. Transmed Manila Corporation[32]
as a guide and reminder to the CA. We
laid down that:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?[33] (italics and emphases supplied)
In the
present case, we are therefore tasked to determine whether the CA correctly
ruled that the NLRC committed grave abuse of discretion in awarding 10%
attorneys fees to the petitioners.
On the Award of Attorneys Fees
Article 111 of the Labor Code, as amended, governs the
grant of attorneys fees in labor cases:
Art. 111. Attorneys fees.- (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings for the recovery of
wages, attorneys fees which exceed ten percent of the amount of wages
recovered.
Section 8, Rule VIII, Book III of its
Implementing Rules also provides, viz.:
Section 8.
Attorneys fees. Attorneys fees in
any judicial or administrative proceedings for the recovery of wages shall not
exceed 10% of the amount awarded. The
fees may be deducted from the total amount due the winning party.
We explained in PCL Shipping Philippines, Inc. v. National
Labor Relations Commission[34]that
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 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. The instances when these may be awarded
are enumerated in Article 2208 of the Civil Code, specifically in its paragraph
7 on actions for recovery of wages, and 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 compensation.[35]
We also held in PCL
Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorneys
fees and that Article 111 is an
exception to the declared policy of strict construction
in the award 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. In carrying out and interpreting the Labor Code's provisions and implementing regulations, the employee's welfare should be the primary and paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as embodied in
Article 4 of the Labor Code (which provides that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code],
including its implementing rules and regulations, shall be resolved in favor of
labor") and Article 1702 of the Civil Code (which provides that "[i]n
case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer).[36]
We similarly so ruled in RTG Construction, Inc. v. Facto[37]and
in Ortiz v. San Miguel Corporation.[38] In RTG
Construction, we specifically stated:
Settled is the rule that in actions for recovery of wages,
or where an employee was forced to litigate and, thus, incur expenses to
protect his rights and interests, a monetary award by way of attorneys fees is
justifiable under Article 111 of the Labor Code; Section 8, Rule VIII, Book III
of its Implementing Rules; and paragraph 7, Article 2208 of the Civil
Code. The award of attorneys fees is proper, and there need not be any
showing that the employer acted maliciously or in bad faith when it withheld
the wages. There need only be a showing
that the lawful wages were not paid accordingly.[39] (emphasis ours)
In PCL Shipping, we found the award of attorneys fees due and
appropriate since the respondent therein incurred legal expenses after he was
forced to file an action for recovery of his lawful wages and other benefits to
protect his rights.[40] From this perspective and the above
precedents, we conclude 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.
In the present case, we
find it 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
The more significant
issue in this case is the effect of the MOA provision that attorneys fees
shall be deducted from the AA and CBA receivables. In this regard, the CA held that the additional grant of 10% attorneys
fees by the NLRC 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 P21.4 million.
In Traders Royal Bank
Employees Union-Independent v. NLRC,[41]
we expounded on the concept of attorneys fees in the context of Article 111 of
the Labor Code, as follows:
In the first place, the fees mentioned here are the
extraordinary attorneys fees recoverable as indemnity for damages sustained by and payable to the prevailing part[y]. In the second place, the ten percent (10%) attorneys fees provided for in Article 111
of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules
is the maximum of the award that may
thus be granted. Article 111 thus fixes only the limit on
the amount of attorneys fees the victorious party may recover in any
judicial or administrative proceedings and it does not even prevent the NLRC
from fixing an amount lower than the ten percent (10%) ceiling prescribed by
the article when circumstances warrant it.[42] (emphases ours; citation omitted)
In the present case, the ten percent (10%) attorneys fees
awarded by the NLRC on the basis of Article 111 of the Labor Code accrue to the
Unions members as indemnity for damages and not to the Unions counsel as
compensation for his legal services, unless,
they agreed that the award shall be given to their counsel as additional or
part of his compensation; in this 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. This is supported by Borelas affidavit which
stated that [t]he 10%
attorneys fees paid by the members/employees is separate and distinct from the
obligation of the company to pay the 10% awarded attorneys fees which we also
gave to our counsel as part of our contingent fee agreement.[43] The limit to this
agreement is that the indemnity for
damages imposed by the NLRC on the losing party (i.e., the Company) cannot exceed ten percent (10%).
Properly viewed from this
perspective, the award 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.
Under this
interpretation, 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
WHEREFORE, premises considered, the petition
is hereby GRANTED. The assailed decision
dated March 6, 2006 and the resolution
dated August 15, 2006 of the Court of Appeals in CA-G.R. SP No. 83654 are REVERSED and SET ASIDE. The Labor
Arbiters award of attorneys fees equivalent to ten percent (10%) of the total
judgment award is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED.
ARTURO
D. BRION
Associate
Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate
Justice
Chairperson
|
JOSE Associate
Justice |
MARIA Associate
Justice |
BIENVENIDO L. REYES
Associate
Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO
T. CARPIO
Associate
Justice
Chairperson,
Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson's Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO
C. CORONA
Chief
Justice
[1] Rollo, pp. 3-26; under Rule 45 of the Rules of Court.
[2] Dated
March 6, 2006, id. at 34-43; penned
by Associate Justice Arcangelita M. Romilla-Lontok, and concurred in by
Associate Justices Conrado M. Vasquez, Jr. (retired) and Martin S. Villarama, Jr.
(now a member of this Court).
[3] Dated August 15, 2006, id. at 31-32.
[4] Manila Water Company, Inc. v. National Labor Relations Commission, et al.
[5] Rollo, pp. 267-268.
[6]
[7]
[8] Ibid.
[9] Ibid.
[10]
[11] Ibid.
[12]
[13]
[14]
[15] Decision
rendered on December 19, 2003; id. at 102-118.
[16]
[17] NCMB NCR-NS-11-311-03, id. at 478.
[18] Ibid.
[19]
[20]
[21]
[22]
[23] Supra note 2.
[24] 336 Phil. 705, 712 (1997).
[25] Supra note 3.
[26] Supra note 1.
[27] Ibid.
[28]
[29] Protacio v. Laya Mananghaya & Co., G.R. No. 168654, March 25, 2009, 582 SCRA 417, 427.
[30] G.R. No. 183572, April 13, 2010, 618 SCRA 218.
[31]
[32] G.R. No. 183329, August 27, 2009, 597 SCRA 334.
[33]
[34] G.R. No. 153031, December 14, 2006, 511 SCRA 44.
[35]
[36] Ibid.
[37] G.R. No. 163872, December 21, 2009, 608 SCRA 615.
[38] G.R. Nos. 151983-84, July 31, 2008, 560 SCRA 654.
[39] Supra note 37, at 625-626.
[40] Supra note 34, at 65.
[41] Supra note 24.
[42]
[43] Supra note 20.
[44]