Tangga-an vs. Philippine Transmarine Carriers, Inc.

An illegally dismissed overseas contract worker whose employment contract has a term of less than one year is entitled to his salaries for the full unexpired portion of the contract, inclusive of allowances and other benefits or their monetary equivalent, and the "three months for every year of the unexpired term" limitation under Section 10 of RA 8042 does not apply. Attorney's fees may be awarded in actions for recovery of wages without showing that the employer acted maliciously or in bad faith; a plain showing that lawful wages were not paid without justification is sufficient.

The petitioner was a seafarer engaged through Philippine Transmarine Carriers, Inc. (PTC), a local manning agency, for and in behalf of its foreign principal, Universe Tankship Delaware, LLC. The employment contract was for a fixed term of six months as chief engineer of the vessel S.S. "Kure," with a basic salary of US$5,000.00 per month, vacation leave pay of US$2,500.00 per month, and tonnage bonus of US$700.00 per month. The dispute arose under the statutory framework of RA 8042 (Migrant Workers and Overseas Filipinos Act), particularly Section 10 on money claims of illegally dismissed overseas workers, and Article 279 of the Labor Code on security of tenure and full backwages.

Lorenzo T. Tangga-an was a seafarer who, on January 31, 2002, entered into an overseas employment contract with Philippine Transmarine Carriers, Inc. (PTC) for and in behalf of its foreign employer, Universe Tankship Delaware, LLC. Under the contract, he was to be employed for six months as chief engineer of the vessel S.S. "Kure," with a basic salary of US$5,000.00 per month, vacation leave pay equivalent to 15 days per month or US$2,500.00 per month, and tonnage bonus of US$700.00 per month. He was deployed on February 11, 2002.

While performing his duties, Tangga-an noticed that while the vessel was loading liquid cargo at Cedros, Mexico, it suddenly listed too much at the bow. At that time, both the master and the chief mate went on shore leave together, which under maritime standards was prohibited. Tangga-an chose to ignore the conduct of the senior officers to avoid conflict. On or about March 13, 2002, the vessel berthed at a port in Japan to discharge cargo, then sailed to the U.S.A. While the vessel was still at sea, the master required Tangga-an and the rest of the Filipino Engineer Officers to report to his office, where they were informed that they would be repatriated on account of the delay in cargo discharging in Japan — a duty principally belonging to the deck officers. Tangga-an imputed the delay to the non-readiness of the turbo generator and the inoperation of the boom, but upon checking, he found the boom operational. He further alleged that when the vessel berthed in Japan, the cargo hold was not immediately opened and the deck officers did not prepare the stock, and that while cargo discharging was ongoing, both the master and the chief mate again went on shore leave together at 4:00 in the afternoon and returned only after midnight. Tangga-an and the other Engineering Officers were ordered to disembark on April 2, 2002 and were thereafter repatriated.

The respondents, for their part, contended that sometime in March 2002, during a test of the cargo discharging conveyor system, Tangga-an and his assistant engineers failed to start the generator that supplied power to the conveyor, spending three hours trying but failing; it was only the third assistant engineer who previously served in the same vessel who was able to turn on the generator. When the master tried to call the engine room, Tangga-an did not answer and hung up. At another time, during a cargo discharging operation requiring the use of a generator system and the conveyor boom, Tangga-an was nowhere to be found, apparently having gone on shore leave, resulting in a two-hour delay. Both incidents were recorded in the official logbook, and protests were filed by the charterers. The master required Tangga-an to submit a written explanation, which he did but blamed the captain and the chief officer. His explanation not having been found satisfactory, respondents decided to terminate his services, and a notice of dismissal was issued. Tangga-an arrived in the Philippines on April 4, 2002.

Tangga-an filed a Complaint for illegal dismissal with prayer for payment of salaries for the unexpired portion of his contract, leave pay, exemplary and moral damages, attorney's fees and interest. The Labor Arbiter found him illegally dismissed, noting that in his letter to respondent Universe Tankship Delaware, LLC dated April 1, 2002, he categorically denied any negligence on his part relative to the delay in the discharge of the cargo, and opined that an investigation should have been conducted instead of dismissing him outright. The Labor Arbiter awarded three months' salary inclusive of vacation leave pay and tonnage bonus (US$24,600) pursuant to Section 10 of RA 8042, plus attorney's fees of 10%, but denied damages for failure to prove bad faith. The NLRC affirmed, holding that no notice of hearing was served and no hearing was conducted, and that respondents could not dispense with the twin requirements of notice and hearing. The NLRC likewise found respondents guilty of bad faith and upheld the inclusion of vacation leave pay and tonnage bonus under Article 279 of the Labor Code.

• Propriety of Certiorari: Petitioner contended that respondents' resort to an original Petition for Certiorari in the CA was erroneous because the issues raised did not involve questions of jurisdiction but of fact and law, and that the CA Decision went against the factual findings of the labor tribunals which ought to be binding given their expertise.
• Inclusion of Benefits: Petitioner contended that the CA erred in excluding his vacation leave pay and tonnage bonus in the computation of his back salaries, as they form part of his salaries and benefits under his employment contract, and that under Article 279 of the Labor Code, he is entitled to full backwages inclusive of allowances and other benefits or their monetary equivalent.
• Misapplication of Skippers Pacific: Petitioner accused the CA of misapplying the doctrine in Skippers Pacific, Inc. vs. Skippers Maritime Services, Ltd. and pointed out that the pronouncement therein should have benefited him rather than the respondents.
• Attorney's Fees: Petitioner argued that the presence of bad faith is not necessary to justify an award of attorney's fees, maintaining that the grant of attorney's fees in labor cases constitutes an exception to the general requirement that bad faith or malice on the part of the adverse party must first be proved.

• Exclusion of Benefits: Respondents submitted that the CA committed no reversible error in excluding petitioner's claims for vacation leave pay, tonnage bonus, and attorney's fees.
• Reliance on Skippers Pacific: Respondents supported and agreed with the CA's reliance upon Skippers Pacific, Inc. vs. Skippers Maritime Services, Ltd.
• Attorney's Fees: Respondents emphasized that in the absence of bad faith on their part, petitioner may not recover attorney's fees.

• Propriety of Certiorari: Whether the CA's issuance of the writ of certiorari reversing the NLRC decision was in accordance with law.
• Scope of Indemnity: Whether the indemnity provided in Section 10 of RA 8042 should be limited only to the seafarer's basic monthly salary or should include, based on the civil law concept of damages as well as the Labor Code concept of backwages, allowances/benefits or their monetary equivalent.
• Duration of Award: Whether the indemnity awarded by the CA consisting only of three months' basic salaries conforms with the proper interpretation of Section 10 of RA 8042 and with the ruling in Skippers Pacific, Inc. vs. Mira, or whether petitioner is entitled to at least four months' salaries being the unexpired portion of his contract.
• Attorney's Fees: Whether the CA's disallowance of the award of attorney's fees, based on the alleged absence of bad faith on the part of respondents, is in accordance with law, or whether attorney's fees awarded by the NLRC to petitioner, who was forced to litigate to enforce his rights, is justified.

• Propriety of Certiorari: Not directly ruled upon as a separate ground for reversal; the Court granted the petition on the merits of the monetary claims, noting that the finding of illegal dismissal was already final as respondents did not take issue with it.
• Scope of Indemnity: Yes. The indemnity includes vacation leave pay and tonnage bonus. These benefits were expressly provided and guaranteed in the employment contract as part of the monthly salary and benefit package, were guaranteed to be paid on a monthly basis, and were not made contingent. Article 279 of the Labor Code mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent.
• Duration of Award: Four months. Under Section 10 of RA 8042, the "three months for every year of the unexpired term" limitation applies only when the employment contract has a term of at least one year. Since the petitioner's contract was for six months, he is entitled to salaries for the full unexpired portion of his contract, or four months.
• Attorney's Fees: Yes. Attorney's fees are awardable without proof of the employer's bad faith. A plain showing that the lawful wages were not paid without justification is sufficient 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.

• Propriety of Certiorari: The Court did not separately resolve this procedural issue, as the petition was granted on the substantive merits of the monetary claims. The Court noted that there remained no issue regarding illegal dismissal, as respondents did not take issue with the consistent finding below, rendering all pronouncements on the matter final.
• Scope of Indemnity: The Court held that the CA utterly misinterpreted the ruling in Skippers Pacific, Inc. vs. Skippers Maritime Services, Ltd., using it to support a view which that case precisely ventured to strike down. The Court quoted its ruling in Marsaman Manning Agency, Inc. vs. NLRC, which held that a plain reading of Section 10 of RA 8042 reveals that the choice of whether to award the salaries for the unexpired portion of the employment contract or three months' salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract has a term of at least one year or more. This is evident from the wording "for every year of the unexpired term" which follows "salaries for three months." To follow the contrary view would disregard and overlook some words used in the statute, contrary to the rule in legal hermeneutics that every part or word of a statute should be given effect. The Court further held that the petitioner's vacation leave pay and tonnage bonus were expressly provided and guaranteed in his employment contract as part of his monthly salary and benefit package, were guaranteed to be paid on a monthly basis, and were not made contingent. Their monetary equivalent was fixed under the contract: US$2,500.00 for vacation leave pay and US$700.00 for tonnage bonus each month. Thus, petitioner was entitled to back salaries of US$32,800 (US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months). The Court cited Article 279 of the Labor Code, which mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent, and the principle that it is the obligation of the employer to pay an illegally dismissed employee the whole amount of salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed.
• Duration of Award: The Court applied the ruling in Skippers Pacific, Inc. vs. Skippers Maritime Services, Ltd. and Marsaman Manning Agency, Inc. vs. NLRC, holding that when the illegally dismissed employee's employment contract has a term of less than one year, he shall be entitled to recovery of salaries representing the unexpired portion of his employment contract. Since the petitioner's contract was for six months and he worked for approximately two months, he was entitled to the remaining four months' salaries. The Court reminded the lower courts to read and apply the Court's labor pronouncements with utmost care and caution, taking to mind that labor cases occupy a special place in the judicial system, as they involve the fundamental survival of employees and their families.
• Attorney's Fees: The Court cited its discussion in Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union vs. Manila Water Company, Inc., which explained that Article 111 of the Labor Code contemplates the extraordinary concept of attorney's fees and is an exception to the declared policy of strict construction in the award of attorney's 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. The Court quoted RTG Construction, Inc. vs. Facto, which stated that in actions for recovery of wages, or where an employee was forced to litigate and incur expenses to protect his rights and interests, a monetary award by way 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, and there need not be any showing that the employer acted maliciously or in bad faith. Since the petitioner's employment was illegally terminated, his wages and allowances were withheld without valid and legal basis, and he was impelled to litigate to protect his interests. Thus, he was entitled to attorney's fees in the amount of US$3,280 (US$32,800 x 10%).

• Interpretation of Section 10, RA 8042 (Money Claims of Overseas Workers) — The choice of whether to award an illegally dismissed overseas contract worker his salaries for the unexpired portion of his employment contract or three months' salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract has a term of at least one year or more. This is evident from the wording "for every year of the unexpired term" which follows "salaries for three months." In this case, since the petitioner's contract was for six months, he was entitled to the full unexpired portion of four months, not merely three months' salary.
• Full Backwages Inclusive of Allowances and Benefits — Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to full backwages inclusive of allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld up to the time of actual reinstatement. It is the obligation of the employer to pay an illegally dismissed employee the whole amount of salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed. In this case, the petitioner's vacation leave pay and tonnage bonus, being contractually guaranteed monthly benefits with fixed monetary equivalents, were included in the computation of his back salaries.
• Attorney's Fees in Labor Cases (Extraordinary Concept) — Article 111 of the Labor Code contemplates the extraordinary concept of attorney's fees and is an exception to the declared policy of strict construction in the award of attorney's fees. In actions for recovery of wages, or where an employee was forced to litigate and incur expenses to protect his rights and interests, a monetary award by way 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. There need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages; a plain showing that the lawful wages were not paid without justification is sufficient.

• "A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the wording 'for every year of the unexpired term' which follows the wording 'salaries x x x for three months.'" — This passage, quoted from Marsaman Manning Agency, Inc. vs. NLRC and adopted in Skippers Pacific, states the controlling interpretation of Section 10 of RA 8042 and is the ratio decidendi for the Court's award of four months' salaries.
• "Article 279 of the Labor Code mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent." — This states the basis for including vacation leave pay and tonnage bonus in the computation of the petitioner's back salaries, as these were contractually guaranteed monthly benefits.
• "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 attorney's fees is justifiable under Article Ill of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 208 of the Civil Code. The award of attorney's 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." — This passage, quoted from RTG Construction, Inc. vs. Facto, states the rule that bad faith need not be shown to justify an award of attorney's fees in wage recovery cases, and is the basis for reinstating the attorney's fees award.

• Skippers Pacific, Inc. vs. Skippers Maritime Services, Ltd., 440 Phil. 906 (2002) — Controlling precedent. The Court held that when an illegally dismissed employee's employment contract has a term of less than one year, he is entitled to recovery of salaries representing the unexpired portion of his employment contract. The CA in this case misinterpreted this ruling, and the Court corrected the error.
• Marsaman Manning Agency, Inc. vs. National Labor Relations Commission, 371 Phil. 827 (1999) — Followed. This case established the plain reading of Section 10 of RA 8042 that the "three months for every year of the unexpired term" limitation applies only when the contract term is at least one year.
• Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union vs. Manila Water Company, Inc., G.R. No. 174179, November 16, 2011, 660 SCRA 263 — Followed. Cited for the discussion on the extraordinary concept of attorney's fees under Article 111 of the Labor Code and the rule that no showing of employer bad faith is required.
• PCL Shipping Philippines, Inc. vs. National Labor Relations Commission — Followed. Cited for the two concepts of attorney's fees (ordinary and extraordinary) and the ruling that Article 111 of the Labor Code contemplates the extraordinary concept and is an exception to the strict construction policy in awarding attorney's fees.
• RTG Construction, Inc. vs. Facto — Followed. Cited for the rule that in actions for recovery of wages, attorney's fees are justifiable without showing that the employer acted maliciously or in bad faith.
• Equitable Banking Corporation (EQUITABLE-PCI BANK) vs. Sadac, 523 Phil. 781 (2006) — Cited for the proposition that Article 279 of the Labor Code mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent.
• Sarona vs. National Labor Relations Commission, G.R. No. 185280, January 18, 2012, 663 SCRA 394 — Cited for the principle that it is the obligation of the employer to pay an illegally dismissed employee the whole amount of salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Provides that in case of termination of overseas employment without just, valid or authorized cause, the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. The Court interpreted this provision to apply the "three months" limitation only when the contract term is at least one year.
• Article 279, Labor Code — Provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. The Court applied this provision to include vacation leave pay and tonnage bonus in the computation of back salaries.
• Article 111, Labor Code — Governs the grant of attorney's fees in labor cases, providing that in cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. The Court applied this provision to award attorney's fees without proof of bad faith.
• Section 8, Rule VIII, Book III, Implementing Rules of the Labor Code — Provides that attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The Court cited this provision in support of the attorney's fees award.
• Paragraph 7, Article 2208, Civil Code — Enumerates the instances when attorney's fees may be awarded, including actions for recovery of wages. The Court cited this provision as one of the bases for the award of attorney's fees.

Carpio, J. (Chairperson), Brion, J., Villarama, Jr., J., and Perlas-Bernabe, J., concurred in the decision.