Viernes v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Fifteen individuals were employed by Benguet Electric Cooperative, Inc. (BENECO) as meter readers on a fixed-term contract from October 8 to October 31, 1990. Despite the contract's expiration, they continued working until January 2, 1991, when they received termination notices citing retrenchment due to overstaffing. The employees contended they were regular employees illegally dismissed, while BENECO invoked Article 283 of the Labor Code regarding retrenchment. Procedural History: The consolidated cases for illegal dismissal, underpayment of wages, and indemnity pay were initially heard by a Labor Arbiter. The Labor Arbiter dismissed the illegal dismissal claims but ordered BENECO to extend temporary employment contracts or provide financial assistance, along with indemnity for lack of notice and payment for underpaid wages. Both parties appealed to the National Labor Relations Commission (NLRC). The NLRC modified the decision, declaring the dismissal illegal, ordering reinstatement with backwages limited to one year, and affirming the award for underpayment of wages while deleting indemnity and attorney's fees. The NLRC denied the complainants' motion for reconsideration. The Petition: The petitioners filed a petition for certiorari with the Supreme Court, arguing that the NLRC committed grave abuse of discretion. They contended that their reinstatement should be as regular employees, not probationary; that backwages should be full until actual reinstatement, not limited to one year; that the award of indemnity pay, which was not appealed by BENECO, should be reinstated; and that attorney's fees should be awarded. The Supreme Court, noting that memoranda were filed before a relevant ruling on jurisdiction, opted to resolve the case, finding the petition partly meritorious.
Issue(s)
Whether the NLRC committed grave abuse of discretion in ordering the reinstatement of petitioners on probationary status despite finding them to be regular employees. Whether the NLRC committed grave abuse of discretion in limiting the backwages to one year. Whether the NLRC committed grave abuse of discretion in deleting the award of indemnity pay and attorney's fees. Whether the mandate of immediately executory reinstatement pending appeal applies to NLRC decisions pending a motion for reconsideration or appeal via certiorari.
Ruling
The petition is partially granted. The NLRC decision is modified. BENECO is ordered to reinstate petitioners as regular employees without loss of seniority rights and privileges, with full backwages from dismissal until actual reinstatement. The indemnity pay of P2,590.50 is reinstated, and BENECO is ordered to pay attorney's fees equivalent to ten percent (10%) of the total monetary award. The NLRC decision and resolution are affirmed in all other respects.
Ratio Decidendi
On the first issue (Reinstatement Status): The Court found that the NLRC committed grave abuse of discretion in ordering reinstatement on probationary status. Petitioners were not probationary employees, as there was no indication in their appointment letters, nor were they informed of the standards for regular employment. Their initial fixed-term employment, which was allowed to continue beyond its expiration without a new contract or renewed term, transformed their status into regular employees. The Court reiterated that under Article 280 of the Labor Code, regular employment is determined by the necessity and desirability of the activity to the employer's business or by rendering at least one year of service. The job of a meter reader is necessary for BENECO's business of billing customers, and their continued service beyond the fixed term indicated the necessity and desirability of their work, thus making them regular employees entitled to reinstatement as such, not probationary. On the second issue (Backwages): The Court held that the NLRC gravely abused its discretion in limiting the backwages to one year. Article 279 of the Labor Code, as amended by R.A. No. 6715, mandates full backwages, inclusive of allowances and other benefits, from the time compensation was withheld until actual reinstatement. Since the petitioners' employment began on October 8, 1990, the amended provisions of Article 279 apply. Therefore, limiting the backwages to one year was patently erroneous and contrary to the law's mandate. On the third issue (Indemnity Pay and Attorney's Fees): The Court found that the NLRC committed grave abuse of discretion in deleting the award of indemnity pay. Indemnity, in the form of nominal damages, is awarded when an employer fails to comply with due process requirements in dismissing an employee. BENECO failed to comply with Article 283 of the Labor Code by serving notices of termination retroactively (effective December 29, 1990, when served on January 3, 1991), thus violating procedural due process. The indemnity awarded by the Labor Arbiter (P2,590.50, equivalent to one month's salary) was deemed just and reasonable. Regarding attorney's fees, Article 111 of the Labor Code justifies their award in cases of unlawful withholding of wages, and the ten percent (10%) award was deemed proper. On the fourth issue (Executory Nature of Reinstatement): The Court clarified that Article 223 of the Labor Code and Section 2(b), Rule VIII of the NLRC Rules of Procedure are consistent. The ten-day period for a decision to become final and executory, as provided in Article 223, is reckoned from the receipt of the resolution on a motion for reconsideration if one is filed. In this case, the decision became executory on November 2, 1992, after the petitioners received the resolution denying their motion for reconsideration on October 22, 1992. The Court found no inconsistency in the application of these rules.
Main Doctrine
Employees initially hired on a fixed-term basis who continue to work beyond the stipulated period without a new contract or renewed fixed term attain the status of regular employees. Such regular employees illegally dismissed are entitled to full backwages until actual reinstatement and indemnity for violation of procedural due process.