Malvar v. Kraft Food Phils

BERSAMIN, J.:

Although the practice of law is not a business, an attorney is entitled to be properly compensated for the professional services rendered for the client, who is bound by her express agreement to duly compensate the attorney. The client may not deny her attorney such just compensation. The Case The case initially concerned the execution of a final decision of the Court of Appeals (CA) in a labor litigation, but has mutated into a dispute over attorney's fees between the winning employee and her attorney after she entered into a compromise agreement with her employer under circumstances that the attorney has bewailed as designed to prevent the recovery of just professional fees.

Antecedents On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) hired Czarina Malvar (Malvar) as its Corporate Planning Manager. From then on, she gradually rose from the ranks, becoming in 1996 the Vice President for Finance in the Southeast Asia Region of Kraft Foods International (KFI),KFPI's mother company. On November 29, 1999, respondent Bienvenido S. Bautista, as Chairman of the Board of KFPI and concurrently the Vice President and Area Director for Southeast Asia of KFI, sent Malvar a memo directing her to explain why no administrative sanctions should be imposed on her for possible breach of trust and confidence and for willful violation of company rules and regulations.

Following the submission of her written explanation, an investigating body was formed. In due time, she was placed under preventive suspension with pay. Ultimately, on March 16, 2000, she was served a notice of termination.

Obviously aggrieved, Malvar filed a complaint for illegal suspension and illegal dismissal against KFPI and Bautista in the National Labor Relations Commission (NLRC). In a decision dated April 30, 2001,1 the Labor Arbiter found and declared her suspension and dismissal illegal, and ordered her reinstatement, and the payment of her full backwages, inclusive of allowances and other benefits, plus attorney's fees. On October 22, 2001, the NLRC affirmed the decision of the Labor Arbiter but additionally ruled that Malvar was entitled to "any and all stock options and bonuses she was entitled to or would have been entitled to had she not been illegally dismissed from her employment,"

as well as to moral and exemplary damages.2 KFPI and Bautista sought the reconsideration of the NLRC's decision, but the NLRC denied their motion to that effect.3 Undaunted, KFPI and Bautista assailed the adverse outcome before the CA on certiorari (CA-G.R. SP No. 69660), contending that the NLRC thereby committed grave abuse of discretion. However, the petition for certiorari was dismissed by the CA on December 22, 2004, but with the CA reversing the order of reinstatement and instead directing the payment of separation pay to Malvar, and also reducing the amounts awarded as moral and exemplary damages.4 After the judgment in her favor became final and executory on March14, 2006, Malvar moved for the issuance of a writ of execution.5 The Executive Labor Arbiter then referred the case to the Research and Computation Unit (RCU) of the NLRC for the computation of the monetary awards under the judgment.

The RCU's computation ultimately arrived at the total sum of ₱41,627,593.75.6 On November 9, 2006, however, Labor Arbiter Jaime M. Reyno issued an order,7 finding that the RCU's computation lacked legal basis for including the salary increases that the decision promulgated in CA-G.R. SP No. 69660 did not include. Hence, Labor Arbiter Reyno reduced Malvar's total monetary award to ₱27,786,378.11, viz:

WHEREFORE, premises considered, in so far as the computation of complainant's other benefits and allowances are concerned, the same are in order. However, insofar as the computation of her backwages and other monetary benefits (separation pay, unpaid salary for January 1 to 26, 2005,holiday pay, sick leave pay, vacation leave pay, 13th month pay), the same are hereby recomputed as follows: 1. Separation Pay 8/1/88-1/26/05 = 16 yrs ₱344,575.83 x 16 = 5,513,213.28 2. Unpaid Salary 1/1-26/05 = 87 mos. ₱344,575.83 x 87 = 299,780.97 3. Holiday Pay 4/1/00-1/26/05 = 55 holidays ₱4,134,910/12 mos/20.83 days x 55 days 909,825.77 4. Unpaid 13th month pay for Dec 2000 344,575.83 5. Sick Leave Pay Year 1999 to 2004 = 6 yrs ₱344,575.88/20.83 x 15 days x 6 = 1,488,805.79 Year 2005 ₱344,575.83/20.83 x 15/12 x 1 20,677.86 1,509,483.65 6. Vacation Leave Pay Year 1999 to 2004 = 6 years ₱344,575.88/20.83 x 22 days x 6 = 2,183,581.83 Year 2005 ₱344,575.83/20.83 x 22/12 x 1 30,327.55 2,213,909.36