G.R. No. 193756 ; April 10, 2013
VENANCIO S. REYES, EDGARDO C. DABBAY, WALTER A. VIGILIA, NEMECIO M. CALANNO, ROGELIO A. SUPE, JR., ROLAND R. TRINIDAD, and AURELIO A. DULDULAO, Petitioners, vs. RP GUARDIANS SECURITY AGENCY, INC., Respondent.

FACTS

Petitioners were security guards hired by respondent RP Guardians Security Agency, Inc. and deployed to various clients, last of which were different branches of Banco Filipino Savings and Mortgage Bank. In September 2006, respondent’s security contract with Banco Filipino was terminated. Petitioners were informed of this termination and, via memoranda dated September 21 and 29, 2006, were directed to turnover their duties and were advised they would be placed on floating status while waiting for an available post. After several months passed without new assignments, petitioners filed a complaint for constructive dismissal on April 10, 2007. Respondent claimed there was no dismissal, constructive or otherwise, asserting termination was due to the expiration of the service contract which was coterminus with their employment. The Labor Arbiter ruled in favor of petitioners, ordering payment of separation pay, backwages, refund of trust fund, moral and exemplary damages, and attorney’s fees. The NLRC sustained the finding of constructive dismissal and the awards, but deleted moral and exemplary damages. The CA initially affirmed the NLRC but, upon motion for reconsideration, issued an Amended Decision modifying the awards. Citing Section 6.5(4) of DOLE Department Order No. 14, the CA reduced the separation pay computation from one month pay per year of service to one-half month pay per year, reduced the trust fund refund from ₱60.00 to ₱30.00, and deleted the awards of backwages and attorney’s fees. Petitioners elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in modifying the awards by: (1) deleting the grant of backwages; (2) reducing the separation pay from one month pay to one-half month pay per year of service; and (3) deleting the award of attorney’s fees.

RULING

The Supreme Court ruled in favor of the petitioners.
1. On Backwages and Separation Pay: The Court held that petitioners were illegally constructively dismissed, as their floating status lasted for more than the reasonable six-month period. The normal consequences of illegal dismissal are reinstatement and payment of backwages. Where reinstatement is no longer viable, as in this case where the respondent had ceased operations, separation pay equivalent to one month salary for every year of service is awarded as an alternative. This payment of separation pay is in addition to the payment of backwages. The CA erred in deleting the backwages and in reducing the separation pay. The provision of DOLE D.O. No. 14, Section 6.5(4), which grants one-half month pay per year of service, applies to termination for authorized causes (such as lack of service assignment for 6 months, requiring compliance with procedural notices for retrenchment). It does not apply to a case of illegal dismissal, where the reliefs are governed by Article 279 of the Labor Code and jurisprudence.
2. On Attorney’s Fees: The Court held that petitioners were compelled to litigate to recover their lawful wages and benefits, thus incurring expenses. They are entitled to attorney’s fees equivalent to ten percent (10%) of the total monetary award. The CA erred in deleting this award.
The Supreme Court reversed the Amended Decision of the Court of Appeals and reinstated the NLRC Decision with modification, awarding petitioners full backwages, separation pay of one month for every year of service, and attorney’s fees equivalent to 10% of the total monetary award. The refund for trust fund contributions was not specifically addressed in the provided ruling excerpt.