Attorney’s Fees

Summary

▪ Attorney’s fees are awarded to employees in certain cases.

▪ Complainant-employee may be entitled to attorney’s fees despite being represented by the Public Attorney’s Office (PAO)

1. Concept

Attorney’s fees are awarded to employees who win a labor case in certain cases; however, it is not all of the time.

There are two commonly accepted concepts of attorney’s fees:

1) The ordinary concept; and,

2) The extraordinary concept. (Alva v. High Capacity Security Force, Inc., G.R. No. 203328, 08 November 2017)

a. Ordinary concept

In its ordinary concept, an attorney’s fee is the reasonable compensation paid by the client to his lawyer in exchange for the legal services rendered by the latter. The compensation is paid for the cost and/or results of the legal services, as agreed upon by the parties or as may be assessed by the courts. (Ibid.)

b. Extraordinary concept

As an extraordinary concept, an attorney’s fee is deemed an indemnity for damages ordered by the court to be paid by the losing party to the winning party. (Ibid.)

In labor cases, attorney’s fees partake of the nature of an extraordinary award granted to the victorious party as an indemnity for damages. As a general rule, it is payable to the client, not to his counsel, unless the former agreed to give the amount to the latter as an addition to, or part of the counsel’s compensation. (Ibid.)

1) Labor Code

Notably, Article 111 of the Labor Code sanctions the award of attorney’s fees in cases of the unlawful withholding of wages, wherein the culpable party may be assessed attorney’s fees equivalent to ten percent (10%) of the amount of wages recovered. The amount of attorney’s fees shall not exceed ten percent (10%) of the total monetary award, and the fees may be deducted from the amount due the winning party. (Ibid.)

2) Civil Code

In addition, Article 2208 of the Civil Code allows the award of attorney’s fees in the following instances (Ibid.). Thus:

1) When exemplary damages are awarded (Article 2208 [1], R.A. 386, Civil Code);

2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest (Article 2208 [2], Ibid.);

3) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim (Article 2208 [3], Ibid.);

4) In actions for the recovery of wages of household helpers, laborers and skilled workers (Article 2208 [7], Ibid.);

5) In actions for indemnity under workmen’s compensation and employer’s liability laws (Article 2208 [8], Ibid.);

6) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. (Article 2208 [11], Ibid.) (Ibid.)

3) Summary

To recapitulate, both the Labor Code and the Civil Code provide that attorney’s fees may be recovered in the following instances, namely:

1) In cases involving the unlawful withholding of wages;

2) Where the defendant’s act or omission has compelled the plaintiff to litigate with third persons or the plaintiff incurred expenses to protect his interest;

3) In actions for the recovery of wages of household helpers, laborers and skilled workers;

4) In actions for indemnity under workmen’s compensation and employer’s liability laws; and,

5) In cases where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. (Alva v. High Capacity Security Force, Inc., supra.)

In a catena of cases, the Court awarded attorney’s fees in favor of illegally dismissed employees who were compelled to file an action for the recovery of their lawful wages, which were withheld by the employer without any valid and legal basis. A plain showing that the lawful wages were not paid without justification was sufficient to warrant an award of attorney’s fees. (Ibid.)

Moreover, “Article 111 [of the Labor Code] is an exception to the declared policy of strict construction in the award of attorney’s fees.” In fact, the general rule that attorney’s fees may only be awarded upon proof of bad faith takes a different turn when it comes to labor cases. The established rule in labor law is that the withholding of wages need not be coupled with malice or bad faith to warrant the grant of attorney’s fees under Article 111 of the Labor Code. All that is required is that the lawful wages were not paid without justification, thereby compelling the employee to litigate. (Ibid.)

2. Public Attorney’s Office (PAO)

The laborer’s availment of the free legal services offered by the Public Attorney’s Office (PAO) does not prevent the award of attorney’s fees upon the successful conclusion of the litigation. (Alva v. High Capacity Security Force, Inc., G.R. No. 203328, 08 November 2017)

In addition to the fact that attorney’s fees partake of an indemnity for damages awarded to the employee, there is nothing that prevents a complainant-employee and the PAO from entering into an agreement assigning attorney’s fees in favor of the latter. It must be noted that in 2007, Congress passed R.A. No. 9406 inserting new sections in Chapter 5, Title III, Book IV of Executive Order No. 292 (E.O. 292), or the Administrative Code of 1987. R.A. No. 9406 sanctions the receipt by the PAO of attorney’s fees, and provides that such fees shall constitute a trust fund to be used for the special allowances of their officials and lawyers. (Ibid.)

References

▪ Republic Act No. 386, a.k.a. Civil Code of the Philippines

▪ Presidential Decree No. 442, a.k.a. Labor Code of the Philippines