Tuesday, October 23, 2012

Moral and exemplary damages in labor cases. Bad faith of corporate officers not presumed in illegal dismissal cases. When attorney's fees awarded.

"x x x.

Petitioner is not entitled to moral and exemplary damages

In Nazareno v. City of Dumaguete,[45] the Court expounded on the requisite elements for a litigant’s entitlement to moral damages, thus:

Moral damages are awarded if the following elements exist in the case: (1) an injury clearly sustained by the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by the defendant as the proximate cause of the injury sustained by the claimant; and (4) the award of damages predicated on any of the cases stated Article 2219 of the Civil Code. In addition, the person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, and serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive. Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence in support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.:[46]

According to jurisprudence, “basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.” By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations deserve no credit.

This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification Administration (NEA),[47] in this wise:

It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc., “According to jurisprudence, ‘basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.’” Moreover, in Spouses Palada v. Solidbank Corporation, the Court stated, “Allegations of bad faith and fraud must be proved by clear and convincing evidence.”

Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC. Aliling has not presented any clear and convincing evidence to show bad faith. The fact that he was illegally dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that “[t]here was no sufficient showing of bad faith or abuse of management prerogatives in the personal action taken against petitioner.”[48] In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,[49] the Court ruled:

A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the dismissed employee to moral damages. The award of moral and exemplary damages cannot be justified solely upon the premise that the employer dismissed his employee without authorized cause and due process.

The officers of WWWEC cannot be held
jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and severally liable for the monetary awards of Aliling on the ground that the officers are considered “employers” acting in the interest of the corporation. The CA cited NYK International Knitwear Corporation Philippines (NYK) v. National Labor Relations Commission[50] in support of its argument. Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.[51]

Such ruling has been reversed by the Court in Alba v. Yupangco,[52] where the Court ruled:

By Order of September 5, 2007, the Labor Arbiter denied respondent’s motion to quash the 3rd alias writ. Brushing aside respondent’s contention that his liability is merely joint, the Labor Arbiter ruled:

Such issue regarding the personal liability of the officers of a corporation for the payment of wages and money claims to its employees, as in the instant case, has long been resolved by the Supreme Court in a long list of cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the cases of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the aforementioned cases, the Supreme Court has expressly held that the irresponsible officer of the corporation (e.g. President) is liable for the corporation’s obligations to its workers. Thus, respondent Yupangco, being the president of the respondent YL Land and Ultra Motors Corp., is properly jointly and severally liable with the defendant corporations for the labor claims of Complainants Alba and De Guzman. x x x

x x x x

As reflected above, the Labor Arbiter held that respondent’s liability is solidary.

There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires. MAM Realty Development Corporation v. NLRC, on solidary liability of corporate officers in labor disputes, enlightens:

x x x A corporation being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, acting as such corporate agents are not theirs but the direct accountabilities of the corporation they represent. True solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;

x x x x

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith.

A review of the facts of the case does not reveal ample and satisfactory proof that respondent officers of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers cannot be held jointly and solidarily with it.  Hence, the ruling on the joint and solidary liability of individual respondents must be recalled.        

Aliling is entitled to Attorney’s Fees and Legal Interest

Petitioner Aliling is also entitled to attorney’s fees in the amount of ten percent (10%) of his total monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant to Article 111 of the Labor Code and following our ruling in Exodus International Construction Corporation v. Biscocho,[53] to wit:

In Rutaquio v. National Labor Relations Commission, this Court held that:
It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:

Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the other party.

While in Lambert Pawnbrokers and Jewelry Corporation,[54] the Court specifically ruled:

However, the award of attorney’s fee is warranted pursuant to Article 111 of the Labor Code. Ten (10%) percent of the total award is usually the reasonable amount of attorney’s fees awarded. It is settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of 6% per annum from October 6, 2004 (date of termination) until fully paid. 

x x x."

See - 


         -  versus  -

JOSE B. FELICIANO, MANUEL                                                              BERSAMIN, JJ.
LARIOSA, and WIDE WIDE                                                             Promulgated:

G.R. No. 185829


VELASCO, JR., J., Chairperson


April 25, 2012