Fernandez v. Philippine Airlines, Inc.

FIRST DIVISION

[G.R. No. 221196. June 30, 2021.]

EPIFANIA B. FERNANDEZ, petitioner, vs.PHILIPPINE AIRLINES, INC. & CESAR B. LAMBERTE, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated June 30, 2021which reads as follows:

"G.R. No. 221196 (Epifania B. Fernandez, Petitioner, v. Philippine Airlines, Inc. & Cesar B. Lamberte, Respondents.) — This petition for review on certiorari1 seeks to modify the Decision 2 dated 30 January 2015 and Resolution 3 dated 16 October 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 125787, which affirmed with modification the National Labor Relations Commission (NLRC)'s decision ordering respondent Philippine Airlines (PAL) to pay petitioner Epifania B. Fernandez (petitioner) attorney's fees in addition to her physical disability benefit, but denied petitioner's claim for payment of accrued sick leave and vacation leave credits and other benefits.

Antecedents

On 18 May 1995, petitioner, then a flight stewardess/cabin attendant of PAL, 4 slipped and hit her head on the marble floor of the Ala Moana Hotel in Hawaii. She was confined overnight in a hospital in California and was able to join her crew's return flight to Manila. A year later, during a layover in California, she woke up, unable to move her neck, and other body parts, thus, necessitating her hospitalization for five (5) days. She returned to the country on 10 June 1996 and continued to perform her duties. However, her performance was poor, as she frequently experienced recurring headaches, moderate to severe muscle pains, bouts of depression, dizziness, numbness, and other symptoms for which she consulted various specialists. She later underwent cervical spine surgery. On 09 February 1999, the company neurologist observed that she was medically disabled with moderate right hemiparesis. 5 Eventually PAL disallowed her from resuming her in-flight duties, effective 16 March 1999. 6

On 20 September 1999, petitioner wrote PAL to claim her industrial, retirement, and disability benefits under the 1995-2000 Collective Bargaining Agreement (1995-2000 CBA) between PAL and Flight Attendants' & Stewards' Association of the Philippines (FASAP). 7 PAL, however, denied her claim for disability benefits since the 1995-2000 CBA took effect only on 22 November 1996 while petitioner's accident occurred on 18 May 1995. PAL offered petitioner Php500,000.00 which she refused, since she was entitled to Php750,000.00 under Section 66 8 of the 1995-2000 CBA.

Thus, on 14 December 1999, petitioner filed a Complaint 9 before the Labor Arbiter (LA) for permanent disability benefits, lifetime benefits (trip passes and reduced rates), payment of retirement benefits, vacation and sick leaves, 13th month pay, as well as damages and attorney's fees. She later filed, on 17 March 2000, an Amended Complaint 10 to include unpaid insurance benefits from Prudential Guarantee and Assurance, Inc. and United Coconut Planters Life Assurance Corp. in her claims.

PAL, for its part, filed a Motion to Dismiss 11 on the ground that jurisdiction over the subject matter lay with the Voluntary Arbitrator, not the LA, since the controversy arose from the interpretation and implementation of a collective bargaining agreement. The LA denied the motion. 12 This ruling was affirmed by both the NLRC and the CA, 13 thus, the case was remanded to the LA for further proceedings.

However, the proceedings were suspended when PAL was placed under corporate rehabilitation. 14 After PAL's request to exit from rehabilitation was granted by the Securities and Exchange Commission in 2007, 15 it filed a Manifestation and Motion before the LA for the resumption of the proceedings. 16 The proceedings of the case resumed thereafter.

Ruling of the Labor Arbiter

In a Decision 17 dated 28 March 2011, the LA found PAL liable to petitioner and ruled thus:

WHEREFORE, premises considered, respondent Philippine Airlines (PAL) is hereby ordered to pay complainant Epifania B. Fernandez the amount of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00) as and by way of physical disability benefits under the 1995-2000 PAL-FASAP Collective Bargaining Agreement.

All other claims are [DISMISSED] for lack of merit.

SO ORDERED.18

However, petitioner's claim for the commutation of her accrued sick leave credits to cash was denied. Her eighty-one (81) days of sick leave credits fell short of the 90-day minimum under the 1995-2000 CBA provision allowing the commutation of accrued sick leave credits to cash. Likewise, petitioner, who had rendered eighteen (18) years of service, was also deemed not entitled to a lifetime trip pass and reduced rates since these were granted only to those who had rendered twenty (20) years of continuous service. 19

Aggrieved, petitioner filed a Memorandum of Partial Appeal 20 with the NLRC.

Ruling of the NLRC

In its Decision 21 dated 30 September 2011, the NLRC modified the LA's decision by ordering PAL to pay petitioner attorney's fees of Php75,000.00, 22 in addition to her physical disability benefit, having been compelled to incur expenses to protect her interest. 23

Petitioner's claims for legal interest, moral damages, and exemplary damages were denied. The NLRC ruled that PAL should not be totally faulted for the delay in the resolution of petitioner's claims, as it took time for the hearing officer to resolve the issues raised in the complaint. It also held that PAL did not act in bad faith or deliberately caused the delay so as to warrant the imposition of legal interest, moral damages, and exemplary damages. 24

Dissatisfied with the findings of the NLRC, both parties filed their respective motions for reconsideration, 25 which the NLRC denied through its Resolution 26 dated 16 May 2012. Petitioner, thereafter, sought recourse to the CA by filing a petition for certiorari. 27

Ruling of the CA

The CA partly granted the petition in its 30 January 2015 Decision 28 the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Petition for Certiorari is PARTLY GRANTED. The assailed September 30, 2011 Decision of the NLRC is MODIFIED. Accordingly, Respondent Philippine Airlines, Inc. is ordered to pay Petitioner Epifania B. Fernandez:

1. Php750,000.00, as Physical Disability Benefit under Section 66, Article XVI, of the 1995-2000 CBA;

2. Trip Passes and Reduced Rates, in accordance with Paragraph (A), Section 153 29 of the 1995-2000 CBA. The 10-year period upon which these benefits may be availed shall be reckoned from the date of finality of this Decision;

3. Php75,000.00 as Attorney's Fees, which is equivalent to 10% of all monetary claims awarded.

SO ORDERED. 30

The CA explained that petitioner's separation from service was due to permanent physical disability caused by a work-related accident, not something of her own volition. Separation from service due to disability was essentially a retirement. 31 Thus, the CA held that to deny petitioner's claims for trip passes and reduced rates would be placing those who optionally or compulsorily retired in a better position than her. 32

However, the CA agreed with the NLRC that PAL was not liable to pay legal interest and moral and exemplary damages. The CA held that PAL did not act in bad faith and should not be solely faulted for the delay in the resolution of the case. In addition, there was no cause to award legal interest because the disability benefits due to petitioner was not the result of a breach of obligation, nor was it awarded by virtue of a judgment of the court awarding a sum of money which had become final and executory. 33

Both parties subsequently moved for reconsideration, 34 but the CA denied them in its Resolution 35 dated 16 October 2015. Hence, petitioner filed the instant petition before this Court.

Issue

The only issue in this case is whether or not petitioner is entitled to legal interest, and moral and exemplary damages.

Ruling of the Court

The petition is partly meritorious.

Petitioner is entitled to legal

Petitioner claims that she is entitled to legal interest on the award for permanent disability benefit because PAL failed to timely give her all the benefits due to her. She further claims that the award qualifies as a forbearance of money on which legal interest can be imposed.

To recall, sometime in 2000, PAL filed a motion to dismiss petitioner's complaint on the alleged lack of jurisdiction of the LA over the subject matter of the complaint, which was denied prompting it to file appeal to before the NLRC, and later, a petition for certiorari with the CA. It took four years for the case to be remanded to the LA for further proceedings.

As such, the Court holds that legal interest should be imposed because PAL's conduct contributed to the delay in the proceedings. 36 That the amount has greatly increased is a consequence of continually seeking recourses against the LA's resolution denying its motion to dismiss. 37

As correctly found by the CA, petitioner's separation from service is considered a disability retirement. As the Court explained in In re Gruba, 38 disability retirement is conditioned on the incapacity of the employee to continue his or her employment due to involuntary causes, such as illness or accident. The social justice principle behind retirement benefits also applies to those who are forced to cease from service due to disabilities beyond their control.

The Court has previously imposed legal interest on retirement benefits, 39 most notably in PNOC Development and Management Corp. (PDMC) v. Gloria V. Gomez40 (Gomez case). In that case, the Court noted that it took ten years from the inception to the termination of the case. Thus, it held:

Lastly, we do not object to the grant of attorney's fees to Gomez inasmuch as she was impelled to litigate her case to protect her rights and interests, and, indeed, for a protracted period of time. For this same consideration — and because Gomez has lived her years being deprived of the fruits of her labor and of her retirement for as long as this labor case has dragged on — we find to be in order the imposition of interest on all these money awards at the rate of 6% per annum, consistent with the complementary rulings in Eastern Shipping Lines, Inc. v. Court of Appeals and Nacar v. Gallery Frames. 41

As in Gomez, the Court is compelled to impose legal interest because of the unnecessarily long time during which petitioner was unable to enjoy the fruits of her labor and her retirement.

When the monetary obligation does not constitute a loan or forbearance of money, goods, or credits and there is no stipulation as to the payment of interest on the damages, a legal interest of six percent (6%) per annum under Article 2209 42 of the Civil Code shall be imposed. The imposition of such legal interest shall be reckoned from the date of extrajudicial or judicial demand and shall continue to run until full payment.

Therefore, the total monetary awards rendered in favor of petitioner shall earn legal interest at the rate of twelve percent (12%) per annum from the date of judicial demand, i.e., 14 December 1999, 43 until 30 June 2013, and thereafter at the legal rate of six percent (6%) per annum from 01 July 2013 until full payment.

Petitioner is not entitled to

Petitioner, however, is not entitled to moral damages and exemplary damages considering that she failed to prove PAL acted in bad faith. Moral damages may be awarded to an employee when the employer acted in bad faith or with fraud, or in a manner oppressive to labor, contrary to morals, good customs, or public policy. On the other hand, exemplary damages are imposed, by way of example or correction for the public good, in addition to moral, temperate, liquidate, or compensatory damages. In contracts and quasi contracts, exemplary damages may be awarded if the respondent acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 44 Since there is no finding that PAL committed the foregoing, there is no legal basis to award moral and exemplary damages.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. The Decision dated 30 January 2015 and Resolution dated 16 October 2015 of the Court of Appeals are hereby AFFIRMED with MODIFICATION. Philippine Airlines is ordered to pay legal interest on the total monetary awards to petitioner Epifania B. Fernandez at the rate of twelve percent (12%) per annum from 14 December 1999 to 30 June 2013, and thereafter, at the legal rate of six percent (6%) per annum from 01 July 2013 until full payment.

The petitioner's motion for early resolution of the instant case is NOTED.

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 9-30.

2.Id. at 32-53; penned by Associate Justice Ramon A. Cruz and concurred in by Associate Justices Rebecca de Guia-Salvador and Marlene Gonzales-Sison.

3.Id. at 55-56.

4.Id. at 128.

5.Id. at 108. Hemiparesis is weakness or inability to move on one side of the body, making it hard to perform everyday activities like eating or dressing. <https://www.stroke.org/en/about-stroke/effects-of-stroke/physical-effects-of-stroke/physical-impact/hemiparesis> Accessed on 04 August 2020.

6.Id. at 110.

7.Id. at 111-112.

8. Section 66. Industrial. —

A. The Company agrees to defray all expenses for the proper medical, surgical, and hospital services to cover accidents or illness of its Cabin Attendants arising out of and in the course of their employment and in connection therewith, or directly caused by such employment, resulting in temporary, partial, or total disability or loss of life. x x x If after the twelve (12)-month period, the Cabin Attendant is still unable to continue his employment, or if at any time before the expiration of the twelve (12)-month period, the Cabin Attendant should die or the Medical Director shall certify that the Cabin Attendant's condition is such that he/she will not be able to resume flying even after the expiration of the twelve (12)-month period, the Company shall have the right to terminate the Cabin Attendant's service due to physical disability.

To cover death or total and permanent disability of a Cabin Attendant due to a flight accident in connection with the performance of his flight duties, the Cabin Attendant shall be entitled to flight insurance coverage therefor in the sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (PHP750,000.00).

xxx xxx xxx

Insurance benefits under this Section shall be in addition to whatever benefits he/she may be entitled to under the Philippine Airlines Cabin Attendants Retirement Plan. (Rollo, pp. 90-91).

9.Rollo, pp. 113-114.

10.Id. at 118-119.

11.Id. at 120-122.

12.Id. at 124-126.

13.Id. at 160-162 and 177-183.

14.Id. at 226.

15.Id. at 228-233.

16.Id. at 35.

17.Id. at 279-291; penned by Executive Labor Arbiter Fatima Jambaro-Franco.

18.Id. at 291.

19.Id. at 290.

20.Id. at 292-322.

21.Id. at 324-340.

22.Id. at 340.

23.Id. at 339.

24.Id. at 339.

25.Id. at 341-350 and 351-364.

26.Id. at 366-368.

27.Id. at 369-398.

28.Id. at 32-53.

29. Section 153. Trip Pass and Reduced Rate. —

Any Cabin Attendant who compulsorily retires and any Cabin Attendant who retires at his option shall be entitled to the following trip passes:

A. Cabin Attendants who are compulsorily retired with at least fifteen (15) years of continuous service:

1. Domestic or Regional — Six (6) trip passes for the Cabin attendant and six (6) for each qualified member of his immediate family usable ten (10) years from date of retirement.

2. US or other international points — Six (6) trip passes for the Cabin Attendant and six (6) for each qualified member of his immediate family usable within ten (10) years from date of retirement. (Rollo, p. 102)

30.Rollo, p. 49.

31.Id. at 45-46.

32.Id. at 46.

33.Id. at 47-49.

34.Id. at 55.

35.Id. at 55-56.

36.Limlingan v. Asian Institute of Management, Inc., 781 Phil. 255 (2016), G.R. Nos. 220481 & 220503, 17 February 2016 [Per J. Leonen].

37.See Gonzales v. Solid Cement Corporation, 697 Phil. 619 (2012), G.R. No. 198423 (Resolution), 23 October 2012 [Per J. Brion].

38. 721 Phil. 330 (2013), A.M. No. 14155-Ret, 19 November 2013 [Per J. Leonen].

39.Beltran v. AMA Computer College-Biñan, G.R. No. 223795, 03 April 2019 [Per J. Caguioa]; Pulong v. Super Manufacturing, Inc., G.R. No. 247819, 14 October 2019 [Per J. Lazaro-Javier]; Barroga v. Quezon Colleges of the North, G.R. No. 235572, 05 December 2018 [Per J. Perlas-Bernabe].

40. G.R. Nos. 220526-27, 29 July 2019 [Per J. J.C. Reyes, Jr.].

41. Citations omitted.

42. Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six [percent] per annum.

43.Rollo, p. 114.

44.Beltran v. AMA Computer College-Biñan, G.R. No. 223795, 03 April 2019 [per J. Caguioa].