Legal fees entitlement

Dear Atty. Kathy,

We informed a former employee that he may now get his final pay, which includes his separation pay for being dismissed on the ground of redundancy, but he refuses to get his final pay. According to the employee, he does not want to receive the final pay because he does not want to execute a quitclaim first. However, our Employee Manual clearly mentions that the quitclaim will only be submitted after the employee has claimed his/her final pay. Now, we received a DoLE complaint, where the employee is claiming attorney’s fees, in addition to his final pay, because he has not received his final pay. Is the employee really entitled to attorney’s fees?

Mary

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Dear Mary,

As ruled by the Supreme Court in the case of Gertrudes D. Mejila versus Wrigley Philippines Inc., et al. (G.R. No. 199469, 11 September 2019), there are two commonly accepted concepts of attorney’s fees: the ordinary and extraordinary.

In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed.

In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation. The power of the court to award attorney’s fees under Article 2208 demands factual, legal and equitable justification. The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where there is no sufficient showing of bad faith.

Article 111 of the Labor Code is another example of the extraordinary concept of attorney’s fees. The provision allows the recovery of attorney’s fees in cases of unlawful withholding of wages equivalent to ten percent of the amount of wages to be recovered. Unlike in 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. But there must still be an express finding of facts and law to prove the merit of the award.

Based solely on your narration, it appears that there was no unlawful withholding of the employee’s final pay because it was the employee who refused to get or receive it, based on the apparent mistaken belief that he has to execute a quitclaim first.

Therefore, subject to sufficient proof of bad faith on the part of the company, if any, the employee is not entitled to attorney’s fees.

Atty. Kathy Larios