View full case

LORENZO T. TANGGA-AN v. PHILIPPINE TRANSMARINE CARRIERS

FACTS:

Lorenzo Tangga-an was employed by Philippine Transmarine Carriers, Inc. as a chief engineer on the vessel S.S. "Kure" under a six-month contract. He was later ordered to disembark from the vessel and was repatriated. Tangga-an filed a complaint for illegal dismissal, seeking payment of salaries for the unexpired portion of his contract, leave pay, damages, attorney's fees, and interest. The respondents argued that Tangga-an had failed to start the generator during a test and was not present during a cargo discharging operation. The Labor Arbiter ruled in favor of Tangga-an, finding his dismissal illegal. The NLRC affirmed the Labor Arbiter's decision and awarded all the salaries, allowances, and benefits due to Tangga-an. The CA partially granted the respondents' petition and modified the NLRC decision, reducing the amount of back salaries awarded to Tangga-an and deleting the award for attorney's fees. Tangga-an filed a motion for reconsideration, which was denied by the CA. He then filed a petition before the Supreme Court seeking modification of the CA decision and reinstatement of the monetary awards decreed by the Labor Arbiter.

Tangga-an, a seafarer, was prematurely discharged from service without a valid cause. He filed a complaint for illegal dismissal and other monetary claims before the NLRC. The NLRC ruled in his favor and awarded him monetary benefits. However, the CA reversed the NLRC decision and disallowed certain claims, as well as the award of attorney's fees. Tangga-an filed a motion for reconsideration, which was denied by the CA. He then filed a petition for review before the Supreme Court, raising several issues. Tangga-an argued that the CA erred in reversing the NLRC decision and excluding certain claims from the computation of his back salaries. The respondent contended that the CA committed no reversible error and supported the exclusion of certain claims and the disallowance of attorney's fees.

ISSUES:

  1. Whether there is an issue regarding illegal dismissal.

  2. Whether the Court of Appeals (CA) misinterpreted the Court's ruling in Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd.

  3. Whether the CA erred in deleting the award of attorney's fees.

  4. Whether an award of attorney's fees is justified in a case involving illegal termination and withheld wages without valid justification.

  5. Whether a finding of malice or bad faith is necessary for the award of attorney's fees under Article 111 of the Labor Code.

RULING:

  1. There is no issue regarding illegal dismissal as respondents did not take issue with the consistent finding that the petitioner was illegally dismissed.

  2. The CA misinterpreted the Court's ruling in Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd. The Court held that when an illegally dismissed employee's employment contract has a term of less than one year, they shall be entitled to recovery of salaries representing the unexpired portion of the contract. Thus, the petitioner should be awarded his salaries corresponding to the unexpired portion of his six-month employment contract.

  3. The CA erred in deleting the award of attorney's fees. Article 111 of the Labor Code allows for the grant of attorney's fees in cases of unlawful withholding of wages. The fees shall not exceed 10% of the amount awarded and may be deducted from the total amount due the winning party.

  4. Yes, an award of attorney's fees is justified in a case involving illegal termination and withheld wages without valid justification. The petitioner's employment was illegally terminated, resulting in the withholding of his wages and allowances without valid and legal basis. He was impelled to litigate to protect his interests. Thus, he is entitled to receive attorney's fees amounting to 10% of the total amount awarded.

  5. No, a finding of malice or bad faith is not necessary for the award of attorney's fees under Article 111 of the Labor Code. It is sufficient to show that the lawful wages were not paid without justification.

PRINCIPLES:

  • When an illegally dismissed employee's employment contract has a term of less than one year, they shall be entitled to recovery of salaries representing the unexpired portion of the contract.

  • An employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent.

  • In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to 10% of the amount of wages recovered.

  • There are two concepts of attorney's fees: ordinary and extraordinary. Ordinary attorney's fees are the reasonable compensation paid to a lawyer by his client for legal services rendered, while extraordinary attorney's fees are deemed indemnity for damages ordered by the court and are payable to the winning party.

  • Article 111 of the Labor Code contemplates the extraordinary concept of attorney's fees and is an exception to the policy of strict construction in the award of attorney's fees.

  • In actions for recovery of wages, an award of attorney's 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. It is not necessary to show that the employer acted maliciously or in bad faith; it is enough to show that the lawful wages were not paid accordingly.