3rd Wave Labor Cases

1. G.R. No.
188267, December 02, 2013

BAGUIO CENTRAL UNIVERSITY, Petitioners, v. IGNACIO GALLENTE, Respondent
We resolve in this petition for review on certiorari1 the challenge to the March 12, 2009 decision2 and
the May 26, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. Sp No. 104144. This CA decision
vacated the November 28, 2007 decision4 of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 050099-06 (NLRC CASE NO. RAB-CAR-12-0657-05) which, in turn, modified the June 30, 2006
decision5 of the Labor Arbiter (LA) declaring that respondent Ignacio Gallente had been illegally
dismissed.
The Factual Antecedents
In October 1991, petitioner Baguio Central University (BCU) hired Gallente as an instructor. The BCU
subsequently promoted and appointed Gallente as Dean of the BCU’s Colleges of Arts and Sciences and
Public Administration.
On February 5, 2005, Gallente, using the name “Genesis Gallente,” along with six other incorporators,
organized the GRC Review and Language Center, Inc. (GRC).6 The GRC’s Articles of Incorporation7 (AOI)
listed its primary purpose as “to conduct review classes for teachers, nursing, engineering and other
professional and technical for Board Licensure examinations and Civil Service Professional examination,”
and its secondary purpose as “to conduct tutorial and proficiency trainings for foreign languages.” This
AOI also listed the BCU as the GRC’s primary address.
The BCU’s President, Dr. Margarita Fernandez, subsequently called Gallente’s attention regarding the
establishment of the GRC and his use of the BCU as the GRC’s address and of the BCU’s resources. The
BCU’s officers conducted grievance meetings8 with Gallente to allow him to explain his side. On
September 30, 2005, Gallente tendered his resignation by letter.9
On December 8, 2005, Gallente filed before the LA a complaint for illegal (constructive) dismissal, non-
payment of vacation and sick leave pay for 2005, tax refund for the same year and attorney’s fees.
In the June 30, 2006 decision,10 the LA found that Gallente was illegally dismissed and ordered the BCU
and Fernandez to pay Gallente separation pay, backwages, 13th month pay, vacation and sick leave pay,
service incentive leave benefits, tax refund for the year 2005 and attorney’s fees. The LA essentially held
that, first Gallente’s resignation was not voluntary. The LA noted that while the BCU conducted
grievance meetings, the BCU had already decided to terminate Gallente’s employment and practically
coerced him to resign. Thus, to the LA, the BCU constructively dismissed Gallente.
And second, the BCU’s bases for the loss-of-trust-and-confidence charge did not sufficiently justify
Gallente’s dismissal. The LA pointed out that: (1) Gallente did not benefit from the GRC nor did the
GRC’s incorporation cause the BCU any damage or besmirch its reputation; (2) the claimed competition
between the BCU and the GRC was highly speculative; (3) Gallente’s position as Dean did not conflict
with his position as organizer of the GRC since his intention was to help the BCU alumni; and (4) the BCU
failed to show that Gallente’s performance of his duties as Dean suffered when he organized the GRC.
The NLRC’s Ruling

In its decision11 of November 28, 2007, the NLRC partially granted the BCU’s appeal. In contrast with
the LA’s ruling, the NLRC found justifiable grounds for the BCU’s loss of trust and confidence that
rendered Gallente’s dismissal valid. The NLRC noted that Fernandez permitted Gallente only to conduct
review classes for the Civil Service Examination, but not to organize the GRC or to conduct review
courses for other government regulated examinations (that the BCU also offered) nor to give tutorial
and proficiency trainings for foreign languages. The NLRC declared that by offering these other activities
that were clearly beyond what Fernandez permitted, Gallente betrayed the BCU’s trust and directly
competed with the latter. Thus, Gallente was guilty of conflict of interest and disloyalty.
Further, the NLRC pointed out that the absence of pecuniary loss on the BCU’s part or the GRC’s failure
to fully operate did not excuse Gallente from culpability for his acts. To the NLRC, actual damage or loss
is not necessary to render Gallente liable for willful breach of trust and confidence; as a Dean and as the
holder of a responsible and sensitive position, he owed utmost fidelity to his employer’s interests.
Accordingly, the NLRC reversed the LA’s illegal dismissal findings and deleted the award of backwages
and separation pay.
Gallente moved to reconsider12 this NLRC ruling, which the NLRC denied in its March 18, 2008
resolution.13
The CA’s Ruling
In its March 12, 2009 decision,14 the CA reversed the NLRC’s ruling and reinstated the LA’s June 30,
2006 decision. The CA significantly affirmed the LA’s findings on the insufficiency of the BCU’s bases for
the loss-of-trust charge. Additionally, the CA pointed out that at the time Gallente organized the GRC,
the BCU’s Review Center did not yet exist; also, the GRC did not successfully operate because it failed to
comply with certain legal requirements. The CA submitted that even if it were to assume that Gallente
committed a breach, this breach was ordinary and was not sufficient to warrant his dismissal; to be a
legally sufficient basis, the employee’s breach must be willful and intentional. Since the BCU failed to
prove willful breach of trust, the CA declared Gallente’s dismissal to be invalid.
The BCU filed the present petition after the CA denied its motion for reconsideration15 in the CA’s May
26, 2009 resolution.16chanroblesvirtualawlibrary
The Petition
The BCU argues that it validly dismissed Gallente for willful breach of trust and confidence.17 It points
out that as Dean and, therefore, as a managerial employee, Gallente owed utmost fidelity to it as an
educational institution and to its business interests. To the BCU, Gallente effectively competed with it
and breached the trust that his position held when he organized the GRC that offered review courses for
other government examinations, aside from the civil service examination and tutorial and proficiency
training in foreign languages that BCU similarly offers. The BCU also claims that Gallente created a
conflict of interest when he offered thesis dissertation courses in the GRC. Thesis dissertation was part
of its (the BCU’s) own graduate school program and Gallente, as Dean, sits as member of the judgment
panel during oral defenses of thesis dissertations. The BCU thus maintains that regardless of the
presence or absence of pecuniary benefit, it validly terminated Gallente’s employment as these acts,
alone, justified his dismissal.
The BCU adds that Gallente’s use of the BCU, as the GRC’s principal address in the AOI and his use of
BCU’s property when he posted the GRC’s streamer advertisement outside the BCU’s premises – both of
which were made without its permission – negate Gallente’s claim of good faith. The BCU argues that by
doing so, Gallente not only lied before the Securities and Exchange Commission (SEC) but also
represented to the public that BCU gave the GRC its imprimatur. Moreover, the BCU points out that
while it did not yet have a review center when Gallente organized the GRC, it had, at this time, already
been conducting review classes for the nursing examination and thesis dissertation. Although the GRC
failed to fully operate, the BCU insists that Gallente unquestionably engaged in a venture that directly
conflicted with its interests.
The BCU concludes that whether Gallente voluntarily resigned or was dismissed, the termination of
Gallente’s employment was valid for it was for a just cause, i.e., loss of trust and confidence.
Accordingly, since Gallente was validly dismissed, the BCU argues that Gallente is not entitled to the
awarded separation pay, backwages, allowances and other benefits.
The Case for the Respondent
In his comment,18 Gallente maintains that he was illegally dismissed as the ground on which the BCU
relied for his dismissal had no basis. He argues that the BCU failed to prove that he willfully breached its
trust and that he competed with it, intentionally or otherwise, when he organized the GRC. He points to
the following reasons.
First, he never offered any review course; the most that the BCU could have used as basis for its claim of
competition was the advertisement that he posted and handed out for the conduct of review courses
for the civil service examination. Even then, the competition actually took place, as the GRC failed to
fully operate.
Second, even if the civil service examination review course that he advertised pushed through, the BCU
was not yet offering similar review courses that could have directly competed with it.
Third, although the GRC’s AOI included programs or courses that the BCU had already been offering, he
did not intend the GRC to offer these courses; if he did, he would have otherwise included these
programs or courses in the advertisement.
Fourth, he merely included the review courses for other government examinations in the GRC’s AOI on
advice of the local SEC official.
Finally, the BCU did not yet have its own review center at the time he organized the GRC.
Procedurally, Gallente argues that the present petition’s issues and arguments are factual and are not
allowed in a Rule 45 petition. Moreover, the BCU’s arguments fail to show that the CA gravely abused its
discretion to warrant the CA decision’s reversal.
The Issues
In sum, the core issue is the presence or absence of loss of trust and confidence as basis. In the context
of the Rule 65 petition before the CA, the issue is whether the CA correctly found the NLRC in grave
abuse of discretion in ruling that the BCU validly dismissed Gallente on this ground.
The Court’s Ruling
We resolve to GRANT the petition.
Preliminary considerations; Nature of the issues; Montoya ruling and the factual-issue-bar rule
In this Rule 45 petition for review on certiorari, we review the CA’s decision rendered under Rule 65 of
the Rules of Court. Our power of review under the present petition is limited to legal errors that the CA
might have committed in issuing its assailed decision,19 in contrast with the review for jurisdictional
errors which we undertake in an original certiorari (Rule 65) action.20
In reviewing the legal correctness of the CA decision in a labor case taken under Rule 65, we examine
the CA decision based on how it determined the presence or absence of grave abuse of discretion in the
NLRC decision before it and not on the basis of whether the NLRC decision on the merits of the case was
correct.21 In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it.22
Moreover, the Court’s power in a Rule 45 petition limits us to a review of questions of law raised against
the assailed CA decision.23 A question of law arises when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts.24 In contrast, a question of fact exists when
a doubt or difference arises as to the truth or falsehood of facts.25
In this petition, the BCU essentially asks the question – whether, under the circumstances and the
presented evidence, the termination of Gallente’s employment was valid. As framed, therefore, the
question before us is a proscribed factual issue that we cannot generally consider in this Rule 45
petition, except to the extent necessary to determine whether the CA correctly found the NLRC in grave
abuse of its discretion in considering and appreciating this factual issue.26
All the same, we deem it proper to review the conflicting factual findings of the LA and the CA, on the
one hand, and the NLRC, on the other, as an exception to the Rule 45 requirement27 which allows us to
undertake a factual review, based on the record, when the factual findings of the tribunals below are in
conflict. This rule allows us to arrive at a complete resolution of this case’s merits.
On the issue of whether Gallente’s employment was validly terminated; Loss of trust and confidence as
ground for dismissal
Our Constitution, statutes and jurisprudence uniformly guarantee to every employee or worker tenurial
security. What this means is that an employer shall not dismiss an employee except for just or
authorized cause28 and only after due process is observed.29 Thus, for an employee’s dismissal to be
valid, the employer must meet these basic requirements of: (1) just or authorized cause (which
constitutes the substantive aspect of a valid dismissal); and (2) observance of due process (the
procedural aspect).
1. Substantive aspect; dismissal based on loss of trust and confidence
Loss of trust and confidence is a just cause for dismissal under Article 282(c) of the Labor Code.30 Article
282(c) provides that an employer may terminate an employment for “fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized representative.” However, in
order for the employer to properly invoke this ground, the employer must satisfy two conditions.
First, the employer must show that the employee concerned holds a position of trust and confidence.
Jurisprudence provides for two classes of positions of trust. The first class consists of managerial
employees, or those who by the nature of their position, are entrusted with confidential and delicate
matters and from whom greater fidelity to duty is correspondingly expected.31 Article 212(m) of the
Labor Code defines managerial employees as those who are “vested with powers or prerogatives to lay
down and execute management polices and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or to effectively recommend such managerial actions.” The second class
includes “cashiers, auditors, property custodians, or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of [the employer’s] money or property”32
Second, the employer must establish the existence of an act justifying the loss of trust and
confidence.33 To be a valid cause for dismissal, the act that betrays the employer’s trust must be real,
i.e., founded on clearly established facts,34 and the employee’s breach of the trust must be willful, i.e.,
it was done intentionally, knowingly and purposely, without justifiable excuse.35
In Lopez v. Keppel Bank Philippines, Inc.,36 the Court repeated the guidelines for the application of loss
of confidence as follows: (1) loss of confidence should not be simulated; (2) it should not be used as a
subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in
the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought
to justify an earlier action taken in bad faith.
As applied to the dismissal of managerial employees, employers – as a rule – enjoy wider latitude of
discretion.37 They are not required to present proof beyond reasonable doubt as the mere existence of
a basis for believing that such employee has breached the trust of the employer would suffice for the
dismissal.38 Thus, as long as the employer “has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded of his position,”39 the dismissal on this
ground is valid.
Applying these outlined legal parameters to the present case, we find sufficient basis to dismiss Gallente
for loss of trust and confidence. For greater clarity, we elaborate below on the application of the
parameters to the present case.
1.A. Gallente held a position of trust and confidence
The established facts reveal that Gallente was the Dean of two of the BCU’s departments. As Dean,
Gallente was tasked, among others, to assist the school head in all matters affecting the general policies
of the entire institution, to direct and advise the students in their programs of study, and to approve
their subject load and exercise educational leadership among his faculty.40 Undoubtedly, Gallente was a
managerial employee as these duties involved the exercise of powers and prerogatives equivalent to
managerial actions described above. Gallente, in short, clearly held a position of trust and confidence
consistent with the first legal requirement.
1.B. Gallente committed willful breach of trust sufficient to justify dismissal

In finding Gallente illegally dismissed, the LA essentially weighed the sufficiency of the claimed conflict-
of-interest acts in terms of the presence or, as the LA eventually concluded, the absence of damage
caused to the BCU and its interests. The NLRC, on the other hand, found these same acts legally
sufficient to support the loss-of-trust-and-confidence charge as it considered the presence/absence-of-
damage test to be irrelevant.
This reversal of the LA ruling made by the NLRC led the CA to conclude that grave abuse of discretion
intervened in the NLRC’s ruling. To the CA, this ruling was unsupported by established facts and contrary
to settled jurisprudence. In so ruling, the CA similarly put premium on the presence/absence-of-damage
test on which the LA relied upon. The CA likewise found Gallente’s good-faith claim to be significantly
persuasive.
We cannot support these CA’s reasons on several points.
First, that the BCU suffered no damage or, conversely, that Gallente obtained no pecuniary benefit were
clearly beside the point. The heart of the loss-of-trust charge is the employee’s betrayal of the
employer’s trust.41 “Damage aggravates the charge but its absence does not mitigate nor negate the
employee’s liability.”42 Thus, in assessing whether Gallente’s purported breach-of-trust acts warrants
dismissal, the LA, and the CA as it affirmed the LA, needed to consider only Gallente’s position as Dean
and the correlative fidelity that this position called for; whether Gallente was indeed responsible for the
alleged acts; and whether the nature of his participation rendered him unworthy of the vested trust.
To reiterate, as long as the act that breached the employer’s trust is founded on established facts, the
employee’s dismissal on this ground is justified. After all, the BCU could not be expected to wait until
Gallente has caused actual and irreparable material damage before it had taken steps to protect its
interests.
Second, that the GRC failed to fully operate or that the BCU did not yet have its own review center at
the time Gallente organized the GRC are factual considerations we likewise deem immaterial. Gallente
betrayed his owed fidelity the moment he engaged in a venture that required him to perform tasks and
make calculated decisions which his duty to the BCU would have equally required him to perform or
would have otherwise required him to oppose. In fact, we are convinced that actual conflict of interest
existed when Gallente sought to conduct review courses for nursing examination (as included in the
GRC’s primary purpose), knowing that the BCU was already offering similar class. We are likewise
convinced that, far from being voluntary, Gallente discontinued the GRC’s operation plainly because of
the legal and procedural obstacles.
Further, had Gallente really no intention of having the GRC offer review courses for the other
government examinations, he should not have included these in the GRC’s AOI, notwithstanding the
local SEC official’s advice. As matters then stood, he included them in the GRC’s AOI so that he could
have offered these other courses had the GRC continued in its operation. We are, therefore, inclined to
believe that he had every intention to pursue these other course offerings had it not been for the legal
and procedural obstacles that prevented the GRC from successfully operating.
Third, Gallente’s good intentions, assuming them to be true, were beside the point. Ultimately, the
determinant is his deliberate engagement in a venture that would have directly conflicted with the
BCU’s interests. If Gallente merely intended to help the BCU and its students in increasing their chances
of passing the Civil Service Examination, he could have just offered, as part of the BCU’s course
curriculum, review classes for the Civil Service Examination instead of altogether organizing a review
center that obviously will offer the course to everyone minded to enroll. Incorporating review classes in
the BCU’s course curriculum would have been easier – as he no longer had to go through the required
procedures for incorporation. It would also have been more effective in achieving the intended
assistance to the BCU students – as the review effort would obviously be focused on these students. It
would have also been the more appropriate course of action considering the nature of his position.
As Dean, Gallente was responsible for the over-all administration of his departments. This responsibility
includes ensuring that his departments’ curriculum and program of study, to be adopted by the BCU, are
up to date, relevant and reflective of the scholastic requirements for the respective fields. And, to say
the least, this curriculum and program of study should be sufficient so that students would pass the
requisite government examination, even without enrolling in any review course. This responsibility also
involves formulating the educational policies in his departments as well as enforcing the BCU’s policies,
rules and regulations on subject loads, subject sequence and subject pre-requisites and on admission
and registration of students. In short, as Dean, Gallente was duty-bound to uphold the BCU’s interest
above all.
Obviously, these duties will conflict with his responsibilities as organizer and President of the GRC. In
these latter positions, Gallente would have likewise been obligated to recommend or formulate the
GRC’s program of study as well as the hiring of reviewers and regulating their topical or subject
assignments. He would have also been compelled to secure the numerical sufficiency of the enrollees.
After all, the review center was still a business venture that required, for its guaranteed success,
enrollees as the source of its income. Most of all, he would have likewise been duty-bound to uphold
the GRC’s interests above all. Clearly, therefore, he could not have upheld the interest of either the
BCU’s or the GRC’s, above all, without sacrificing the interest of the other.
Last, Gallente appropriated for his and the GRC’s benefit the BCU’s property when he did not secure
prior authority in using the BCU as the GRC’s primary address in the AOI and in posting the GRC’s
streamer advertisement outside the BCU’s main gate. What is worse, by these acts, Gallente
represented to the public that the GRC is a BCU-sponsored venture, which clearly it was not. In our view,
these acts showed dishonesty and negates Gallente’s claim of good faith. While Gallente maintains that
he properly secured prior authority, yet he fatally failed to substantiate this allegation which he was
obligated to prove.
Under the prevailing factual circumstances, we find that Gallente’s acts rendered him unworthy of the
BCU’s trust and confidence. Hence, we find the BCU’s termination of his employment reasonable and
appropriate, and a valid exercise of management prerogative. An employer may not be compelled to
continue in its employ a person whose continuance in the service would patently be inimical to its
interests.43
Thus, from the perspective of this Rule 45 petition, the CA’s findings on the matter of the BCU’s loss-of-
trust charge clearly lacked factual and legal basis; hence the CA’s ruling must fall.
2. Procedural aspect
“The essence of due process is simply an opportunity to be heard or, as applied to administrative
proceedings, an opportunity to explain one’s side or x x x to seek a reconsideration of the action or
ruling complained of.”44 Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code, in
relation to Article 282 of the Labor Code, provides the due process requirements prior to the
termination of employment, namely: (1) a written notice specifying the ground or grounds for
termination; (2) a hearing or conference to give the employee concerned the opportunity to respond to
the charge; and (3) a written notice of termination.45
The LA, the NLRC and the CA in this case unanimously declared that Gallente did not voluntarily resign
and that the BCU failed to observe the due process requirements as outlined above. We agree and we
will not disturb their findings on this point. We, therefore, find proper the NLRC’s award of ?30,000.00
as nominal damages in accordance with this Court’s ruling in Agabon v. NLRC.46
In sum, we find the NLRC’s appreciation of the parties’ arguments and presented evidence in this case to
be proper, as its findings were supported by the established facts, the law and jurisprudence. The CA, on
the other hand, incorrectly found grave abuse of discretion in appreciating the NLRC’s rulings.
WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE and SET
ASIDE the decision dated March 12, 2009 and the resolution dated May 26, 2009 of the Court of Appeals
in CA-G.R. Sp No. 104144 and accordingly REINSTATE the decision dated November 28, 2007 of the
National Labor Relations Commission in NLRC NCR CA No. 050099-06 (NLRC CASE NO. RAB-CAR-12-
0657-05).chanRoblesvirtualLawlibrary
SO ORDERED.
2. G.R. No. 178184, January 29, 2014

GRAND ASIAN SHIPPING LINES, INC., EDUARDO P. FRANCISCO AND WILLIAM HOW, Petitioners, v.
WILFREDO GALVEZ, JOEL SALES, CRISTITO GRUTA, DANILO ARGUELLES, RENATO BATAYOLA, PATRICIO
FRESMILLO,* JOVY NOBLE, EMILIO DOMINICO, BENNY NILMAO, AND JOSE AUSTRAL, Respondents.
The employer has broader discretion in dismissing managerial employees on the ground of loss of trust
and confidence than those occupying ordinary ranks. While plain accusations are not sufficient to justify
the dismissal of rank and file employees, the mere existence of a basis for believing that managerial
employees have breached the trust reposed on them by their employer would suffice to justify their
dismissal.1
Before us is a Petition for Review on Certiorari2 assailing the September 12, 2006 Decision3 of the Court
of Appeals (CA) in CA–G.R. SP No. 82379, which annulled the September 10, 2003 Decision4 and January
14, 2004 Resolution5 of the National Labor Relations Commission (NLRC), thereby reinstating the August
30, 2001 Decision6 of the Labor Arbiter for having attained finality as a result of petitioners’ failure to
post the correct amount of bond in their appeal before the NLRC. Likewise assailed is the May 23, 2007
Resolution7 of the CA which denied petitioners’ Motion for Reconsideration.8cralawlawlibrary
Factual Antecedents
Petitioner Grand Asian Shipping Lines, Inc. (GASLI) is a domestic corporation engaged in transporting
liquified petroleum gas (LPG) from Petron Corporation’s refinery in Limay, Bataan to Petron’s Plant in
Ugong, Pasig and Petron’s Depot in Rosario, Cavite. Petitioners William How and Eduardo Francisco are
its President and General Manager, respectively. Respondents, on the other hand, are crewmembers of
one of GASLI’s vessels, M/T Dorothy Uno, with the following designations: Wilfredo Galvez (Galvez) as
Captain; Joel Sales (Sales) as Chief Mate; Cristito Gruta (Gruta) as Chief Engineer; Danilo Arguelles
(Arguelles) as Radio Operator; Renato Batayola (Batayola), Patricio Fresmillo (Fresmillo) and Jovy Noble
(Noble) as Able Seamen; Emilio Dominico (Dominico) and Benny Nilmao (Nilmao) as Oilers; and Jose
Austral (Austral) as 2nd Engineer.
Sometime in January 2000, one of the vessel’s Oilers, Richard Abis (Abis), reported to GASLI’s Office and
Crewing Manager, Elsa Montegrico (Montegrico), an alleged illegal activity being committed by
respondents aboard the vessel. Abis revealed that after about four to five voyages a week, a substantial
volume of fuel oil is unconsumed and stored in the vessel’s fuel tanks. However, Gruta would
misdeclare it as consumed fuel in the Engineer’s Voyage Reports. Then, the saved fuel oil is siphoned
and sold to other vessels out at sea usually at nighttime. Respondents would then divide among
themselves the proceeds of the sale. Abis added that he was hesitant at first to report respondents’
illegal activities for fear for his life.
An investigation on the alleged pilferage was conducted. After audit and examination of the Engineer’s
Voyage Reports, GASLI’s Internal Auditor, Roger de la Rama (De la Rama), issued a Certification of
Overstatement of Fuel Oil Consumption9 for M/T Dorothy Uno stating that for the period June 30, 1999
to February 15, 2000 fuel oil consumption was overstated by 6,954.3 liters amounting to P74,737.86.10
On February 11, 2000, a formal complaint11 for qualified theft was filed with the Criminal Investigation
and Detection Group (CIDG) at Camp Crame against respondents, with Montegrico’s Complaint–
Affidavit12 attached. On February 14, 2000, Abis submitted his Sinumpaang Salaysay,13 attesting to the
facts surrounding respondents’ pilferage of fuel oil while on board the vessel, which he alleged started
in August of 1999. On March 22, 2000, GASLI’s Port Captain, Genaro Bernabe (Bernabe), and De la Rama
submitted a Complaint–Joint Affidavit,14 stating that in Gruta’s Engineer’s Voyage Reports, particularly
for the period June 30, 1999 to February 15, 2000, he overstated the number of hours the vessel’s main
and auxiliary engines, as well as its generators, were used resulting in the exaggerated fuel
consumption. They also stated that according to independent surveyor Jade Sea–Land Inspection
Services, the normal diesel fuel consumption of M/T Dorothy Uno for Petron Ugong–Bataan Refinery–
Petron Ugong route averaged 1,021 liters only. Thus, comparing this with the declared amount of fuel
consumed by the vessel when manned by the respondents, Bernabe and De la Rama concluded that the
pilferage was considerable.15 In her Supplementary Complaint Affidavit,16 Montegrico implicated
respondents except Sales, in the illegal activity. Bernabe, in his Reply–Affidavit,17 further detailed their
analysis of the voyage reports vis–a–vis the report of Jade Sea–Land Inspection Services to strengthen
the accusations.
In their Joint Counter–Affidavit18 and Joint Rejoinder–Affidavit,19 respondents denied the charge. They
alleged that the complaint was based on conflicting and erroneous computation/estimates of fuel
consumption; that the complaint was fabricated as borne out by its failure to specify the exact time the
alleged pilferage took place; that the allegations that the pilferage has been going on since August 1999
and that Austral and Sales acted as lookouts are not true because both embarked on the vessel only on
December 28, 1999 and January of 2000, respectively; that four other officers who were on board the
vessel much longer than Austral and Sales were not included in the charge; and, that the complaint was
intended as a mere leverage.
In a letter20 dated April 14, 2000, the CIDG referred the case to the Office of the City Prosecutor of
Manila, which, after finding a prima facie case, filed the corresponding Information for Qualified Theft21
dated August 18, 2000 with the Regional Trial Court (RTC) of Manila.
Meanwhile, GASLI placed respondents under preventive suspension. After conducting administrative
hearings, petitioners decided to terminate respondents from employment. Respondents (except Sales)
were thus served with notices22 informing them of their termination for serious misconduct, willful
breach of trust, and commission of a crime or offense against their employer.
It appears that several other employees and crewmembers of GASLI’s two other vessels were likewise
suspended and terminated from employment. Nine seafarers of M/T Deborah Uno were charged and
terminated for insubordination, defying orders and refusal to take responsibility of cargo
products/fuel.23 For vessel M/T Coral Song, two crewmembers were dismissed for serious act of
sabotage and grave insubordination.24
Proceedings before the Labor Arbiter
Respondents and the other dismissed crewmembers of M/T Deborah Uno and M/T Coral Song
(complainants) filed with the NLRC separate complaints25 for illegal suspension and dismissal,
underpayment/non–payment of salaries/ wages, overtime pay, premium pay for holiday and rest day,
holiday pay, service incentive leave pay, hazard pay, tax refunds and indemnities for damages and
attorney’s fees against petitioners. The complaints, docketed as NLRC NCR Case Nos. 00–04–02026–00,
00–04–02062–00, 00–05–02620–00 and 00–07–03769–00, were consolidated.
On August 30, 2001, the Labor Arbiter rendered a Decision26 finding the dismissal of all 21 complainants
illegal. As regards the dismissal of herein respondents, the Labor Arbiter ruled that the filing of a
criminal case for qualified theft against them did not justify their termination from employment. The
Labor Arbiter found it abstruse that the specific date and time the alleged pilferage took place were not
specified and that some crewmembers who boarded the vessel during the same period the alleged
pilferage transpired were not included in the charge. With regard to the other complainants, petitioners
likewise failed to prove the legality of their dismissal.
The Labor Arbiter ordered petitioners to reinstate complainants with full backwages and to pay their
money claims for unpaid salary, overtime pay, premium pay for holidays and rest days, holiday and
service incentive leave pay, as indicated in the Computation of Money Claims. Complainants were
likewise awarded damages due to the attending bad faith in effecting their termination, double
indemnity prescribed by Republic Act (RA) No. 818827 in view of violation of the Minimum Wage Law, as
well as 10% attorney’s fee. With respect to the claim for tax refund, the same was referred to the
Bureau of Internal Revenue, while the claim for hazard pay was dismissed for lack of basis. The Labor
Arbiter modified and recomputed the money claims of respondents, as follows:
1. Wilfredo Galvez – (Dismissed in Mar. 2000)

Backwages from Mar. 2000 to
May 2001 (P8,658.74 x 14 mos.)
–––––––––––
P 121,225.16
13th Month Pay for the period

–––––––––––
8,658.94
Unpaid Salary from Feb 16 to 29, 2000
–––––––––––
3,985.38
Non–payment of Premium Pay for Holiday;

Restday and Non–payment of Holiday Pay;
(limited to 3 years’ only = P7,372.90 x 3 yrs.)
–––––––––––
22,188.70
Non–payment of (5 days) Service Incentive

Leave Pay (for every year of service, but
Limited to 3 years only): = P1,423.35 x 3 yrs.)
–––––––––––
P 4,270.05
Actual Moral Exemplary & Compensatory

Damages
–––––––––––
P 100,000.00
(P260,258.23)
Ten (10%) Percent Attorney’s Fees

P 26,025.82
TOTAL
P 286,284.05
2. JOEL SALES – (Dismissed in Mar. 2000)

Backwages from Mar. 2000 to May 2001
(P8,274.14 x 14 mos.)
–––––––––––
P 115,840.76

–––––––––––
8,274.34
Actual, Moral, Exemplary &

Compensatory Damages
–––––––––––
P 100,000.00
(P224,115.10)

P 22,411.51
TOTAL
P 246,526.61
3. CRISTITO G. GRUTA – (Dismissed in Mar. 2000)

Backwages from Mar. 200[0] to May 2001
(P8,274.14 x 14 mos.)
–––––––––––
P 115,840.76

–––––––––––
8,274.34
Non–payment of Premium Pay for Holiday; Restday and
Non–payment of Holiday Pay: (P7,045.57 x 2 yrs.)
14,091.51
Non–payment of (5 days) Service Incentive Leave Pay
(for every year of service = P1,360.15 x 2 yrs.)
––––––––––
2,720.30

––––––––––
P 100,000.00
(P240,926.91)

––––––––––
P 24,092.69
TOTAL
P 265,019.60
4. DANILO ARGUELLES – (Dismissed in Feb. 2000)

(P7,340.62 x 15 mos.)
––––––––––
[P]110,109.30

––––––––––
7,340.62
Unpaid Salary from Feb. 16 to 29, 2000

(P225.00 x 14 days)
––––––––––
3,150.00
Underpayment/Non–payment of Salary/Wages:
A. From April 98 to Nov. 98 (7 mos.)
Minimum Wage – P198 x 391.5 [/] 12 =

P 6,459.75
Actual Basic Wage for the period

4,320.00
Difference
P 2,139.75
x 7 mos.
P 14,978.25
Double Indemnity prescribed by Rep. Act 8188, Sec. 4

P 29,956.50
B. From Dec. 98 to Mar. 2000 (16 mos.)
Minimum Wage – P225 391.5 [/] 12 =

P 7,340.62

6,240.00
Difference
P 1,100.62
x 16 mos
.
P 17,609.92

P 35,219.84
Underpayment/Non–payment of Overtime Pay:

A. From Apr. 98 to Nov. 98 (7 mos.)
30% of Minimum Wage –

(P6,459.75 x 30%)
P 1,937.92
30% of Salary Actually Paid –
(P4,320.00 x 30%)
1,872.00
Difference
P 641.92
x 7 mos.
P 4,493.44
P 4,493.44
B. From Dec. 98 to Mar. 2000 (16 mos.)
30% of Minimum Wage –

2,202.18
(P7,340.62 x 30%)

1,872.00
(P6,240.00 x 30%)
P 330.18
Difference
x 16 mos.
P 5,282.88
P 5,282.88
Non–payment of Premium Pay for Holiday; Restday and

P 11,655.00
Non–payment of Holiday Pay (P5,872.50 x 2 yrs.)
Non–payment of (5 days) Service Incentive Leave Pay
(for every year of service/but limited to 2 yrs. only):
2,250.00
= P 1,125.00 x 2 yrs.
P 100,000.00
(P309,457.58)

P 30,945.75
TOTAL
P 340,403.33
5. RENATO BATAYOLA
6. PATRICIO FRESNILLO
7. JOVY NOBLE
8. EMILIO DOMINICO
9. BENNY NILMAO – (All dismissed in Feb. 2001)

(P7,340.62 x 15 mos.)
P 110,109.30
––––––––––
7,340.62
P 3,150.00
(P225.00 x 14 days)
Underpayment/Non–payment of Salary/Wages:
A. From Apr. 97 to Jan. 98 ([9] mos.)
Minimum Wage – P185 x 391.5 [/] 12 =

P 6,035.62

4,098.24
Difference
P 1,932.58
x 9 mos.
P 17,436.42

P 34,872.84
B. From Feb. 98 to Nov. 98 (10 mos.)
Minimum Wage – P198 x 391.5 [/] 12 =

P 6,459.75

4,098.24
Difference
P 2,361.51
x 10 mos.
P 23,615.10
P 47,230.20
C. From Dec. 98 to Mar. 2000 (16 mos.)
Minimum Wage – P225 x 391.5 [/] 12 =

7,340.62

6,022.00
Difference
P 1,318.62
x 16 mos.
P 21,098.00

P 42,196.00
Underpayment/Non–payment of Overtime Pay:
A. From Apr. 97 to Jan. 98 (9 mos.)
30% Minimum Wage –

(P6,035.62 x 30%)
P 1,810.68

(P4,098.24 x 30%)
1,226.77
Difference
P 583.91
x 9 mos.
P 5,255.19
– P 5,255.19
B. From Feb. 98 to Nov. 98 (10 mos.)

(P6,459.75 x 30%)
P 1,937.92

(P4,098.24 x 30%)
1,226.72
Difference
P 711.15
x 10 mos.
P 7,111.70
– P 7,111.70
C. From Dec. 98 to Mar. 2000 (16 mos.)

P 2,202.18
(P7,340.62 x 30%)

P 1,806.75
(P6,022.50 x 30%)
P 395.43
Difference
x 16 mos.
P 6,326.97
– P 6,326.97
Non–Payment of Premium Pay for Holiday & Restday; and

Non–Payment of Holiday Pay: (P5,827.50 x 3 yrs.)
P 17,482.50
Non–Payment of (5 days) Service Incentive Leave Pay
(for every year of service/but limited to 3 years only)
= P1,125.00 x 3 yrs.)
3,375.00
––––––––––
100,000.00
(P384,450.12)

P 38, 445.01
TOTAL (each)
P 422,895.13
(Total for 5 above–named Complainants
P2,114,475.00)
10. JOSE AUSTRAL – (Dismissed in Feb. 2000)

(P8,900.00 x 15 mos.)
P 133.500.00
8,900.00
(P8,900.00 x 12 mos. / 365 days = (P292.60 x 14 days)
4,096.40
Actual, [M]oral, Exemplary &
––––––––––
P 100,000.00
(P246,496.40)

P 24,679.64
TOTAL
P 271, 146.0428
The dispositive portion of the Labor Arbiter’s Decision reads:
WHEREFORE, premises all considered, judgment is hereby rendered finding the dismissal of all 21
complainants herein as illegal and ordering respondents Grand Asian Shipping Lines, Inc., Eduardo P.
Franscisco and William How to pay, jointly and severally, each complainant the amounts, as follows, to
wit:
A)
1. Wilfredo Galvez
2. Joel Sales
3. Cristito G. Gruta
4. Danilo Arguelles
5. Renato Batayola
6. Patricio Fresnillo
7. Jovy Noble
8. Emilio Dominico
9. Benny Nilmao
10. Jose Austral
11. Nobelito Rivas
12. Elias Facto
13. Jeremias Bonlagua
14. Rannie Canon
15. Fernando Malia
16. Calixto Flores
17. Necito Llanzana
18. Ramie Barrido
19. Albert Faulan
20. Magno Tosalem
21. Rolando Dela Guardia
P 286,284.05
246,526.61
265,019.60
340,403.33
422,895.13
422,895.13
422,895.13
422,895.13
422,895.13
271,146.04
281,900.13
259,471.41
316,683.53
391,816.70
411,355.45
411,355.45
411,355.45
411,355.45
265,982.28
419,352.79
419,352.79
(Grand Total)
P 7,104,483.84
B)
The awards of P100,000.00 each, as indemnity for damages and ten percent (10%) of the total amount,
as attorney’s fees, are included in the above–individual amount so awarded.
C)
Respondents should immediately reinstate all the complainants to their former position without loss of
seniority [sic] and other benefits; and to pay them full backwages up to the time of their actual
reinstatement.
All other claims of complainants, not included in the above awards, are hereby ordered dismissed for
lack of merit.
SO ORDERED.29
Proceedings before the National Labor Relations Commission
Petitioners filed a Notice of Appeal With A Very Urgent Motion to Reduce Bond30 before the NLRC and
posted a cash bond in the amount of P500,000.00. In a Supplemental Motion to Reduce Bond,31
petitioners cited economic depression, legality of the employees’ termination, compliance with labor
standards, and wage increases as grounds for the reduction of appeal bond.
The NLRC issued an Order32 dated February 20, 2002 denying petitioners’ motion to reduce bond and
directing them to post an additional bond in the amount of P4,084,736.70 in cash or surety within an
unextendible period of 10 days; otherwise, their appeal would be dismissed. Petitioners failed to
comply with the Order. Thus, on February 3, 2003, complainants moved for the dismissal of the appeal
since petitioners had thus far posted only P1.5 million supersedeas bond and P500,000.00 cash bond,
short of the amount required by the NLRC.33
In a Decision34 dated September 10, 2003, the NLRC, despite its earlier Order denying petitioners’
motion for the reduction of bond, reduced the amount of appeal bond to P1.5 million and gave due
course to petitioners’ appeal. It also found the appeal meritorious and ruled that petitioners presented
sufficient evidence to show just causes for terminating complainants’ employment and compliance with
due process. Accordingly, complainants’ dismissal was valid, with the exception of Sales. The NLRC
adjudged petitioners to have illegally dismissed Sales as there was absence of any record that the latter
received any notice of suspension, administrative hearing, or termination.
The NLRC struck down the monetary awards given by the Labor Arbiter, which, it ruled, were based
merely on the computations unilaterally prepared by the complainants. It also ruled that Galvez, a ship
captain, is considered a managerial employee not entitled to premium pay for holiday and rest day,
holiday pay and service incentive leave pay. As for the other complainants, the award for premium pay,
holiday pay, rest day pay and overtime pay had no factual basis because no proof was adduced to show
that work was performed on a given holiday or rest day or beyond the eight hours normal work time.
Even then, the NLRC opined that these claims had already been given since complainants’ salaries were
paid on a 365–day basis. Likewise, service incentive leave pay, awards for damages and double
indemnity were deleted. Further, the NLRC sustained respondents’ contention that it is the Secretary of
Labor or the Regional Director who has jurisdiction to impose the penalty of double indemnity for
violations of the Minimum Wage Laws and not the Labor Arbiter. The NLRC disposed of the case as
follows:
WHEREFORE, premises considered, the assailed Decision is hereby reversed as to all complainants but
modified with respect to Joel Sales. Respondents are adjudged not guilty of illegal dismissal with respect
to all complainants except complainant Joel Sales. With the exception of Joel Sales, all the monetary
awards to all complainants are deleted from the decision.
Respondents are ordered to pay, jointly and severally complainant Joel Sales his backwages in the
amount of P124,115.10 as computed in the assailed decision plus ten (10%) thereof as attorney’s fees.
We also sustain the order to reinstate him to his former position without loss of seniority rights and
other benefits and to pay him backwages up to the time of his actual reinstatement.
SO ORDERED.35
Complainants filed Motions for Reconsideration while petitioners filed a Motion for Partial
Reconsideration. In a Resolution36 dated January 14, 2004, the NLRC reconsidered its ruling with
respect to Sales, absolving petitioners from the charge of illegally dismissing him as Sales was neither
placed under preventive suspension nor terminated from the service. The NLRC upheld petitioners’
claim that it was Sales who abandoned his work by failing to report back for re–assignment. The
dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the Motions for Reconsideration filed by complainants are denied
for lack of merit. The Motion for Partial Reconsideration filed by respondents is granted. The assailed
decision is reconsidered in that Respondents are likewise adjudged not guilty of illegal dismissal with
respect to complainant Joel Sales. The monetary awards in favor of complainant Joel Sales as well as the
reinstatement order are hereby deleted from the Decision.
SO ORDERED.37
Proceedings before the Court of Appeals
Respondents, excluding the other complainants, filed a Petition for Certiorari38 with the CA, attributing
grave abuse of discretion on the part of the NLRC in entertaining the appeal despite the insufficiency of
petitioners’ appeal bond. Respondents also assailed the NLRC’s ruling upholding the validity of their
dismissal. They posited that the charge of pilferage is not supported by clear, convincing and concrete
evidence. In fact, the RTC, Branch 15 of Manila already rendered a Decision39 on December 19, 2003
acquitting them of the crime of qualified theft lodged by the petitioners. Respondents further prayed
for the reinstatement of the Labor Arbiter’s monetary awards in their favor.
In a Decision40 dated September 12, 2006, the CA set aside the NLRC’s Decision and Resolution. It held
that the NLRC’s act of entertaining the appeal is a jurisdictional error since petitioners’ failure to post
additional bond rendered the Labor Arbiter’s Decision final, executory and immutable. The CA,
nonetheless, proceeded to discuss the merits of the case insofar as the illegal dismissal charge is
concerned. The CA conformed with the Labor Arbiter’s ruling that petitioners’ evidence was inadequate
to support the charge of pilferage and justify respondents’ termination. The CA ruled that Sales was also
illegally dismissed, stating that Sales’ active participation in the labor case against petitioners belies the
theory that he was not terminated from employment. The dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GRANTED and the assailed September 10, 2003 Decision and January 14,
2003 Resolution are, accordingly, ANNULLED and SET ASIDE. In lieu thereof, the Labor Arbiter’s August
30, 2001 Decision is ordered REINSTATED.
SO ORDERED.41
Petitioners filed a Motion for Reconsideration,42 questioning the CA in finding that respondents were
illegally dismissed, in reinstating the monetary awards granted by the Labor Arbiter without passing
upon the merits of these money claims and in ascribing grave abuse of discretion on the part of the
NLRC in taking cognizance of the appeal before it.
On May 23, 2007, the CA issued a Resolution43 denying petitioners’ Motion for Reconsideration. Hence,
the instant Petition.
Issues
Petitioners assign the following errors:
I.
THE HONORABLE COURT OF APPEALS RULED CONTRARY TO APPLICABLE JURISPRUDENCE WHEN IT

CONCLUDED THAT RESPONDENTS WERE ILLEGALLY DISMISSED.
THIS HONORABLE COURT OF APPEAL[S] OF APPEALS [sic] DISREGARDED THE FACT THAT THE OFFICE OF
THE CITY PROSECUTOR OF MANILA DETERMINED THAT THERE WAS A PRIMA FACIE CASE FOR QUALIFIED
THEFT AGAINST PETITIONERS, CONTRARY TO DECISIONS THIS MOST HONORABLE COURT OF APPEAL[S]
HAS HELD WHERE SIMILAR FINDINGS OF THE INVESTIGATING PUBLIC PROSECUTOR HAD BEEN
CONSIDERED SUBSTANTIAL EVIDENCE TO JUSTIFY TERMINATION OF EMPLOYMENT BASED ON LOSS OF
TRUST AND CONFIDENCE.
THIS HONORABLE COURT OF APPEAL[S] GRIEVOUSLY ERRED IN DISCREDITING PRIVATE RESPONDENTS’

EVIDENCE ONE BY ONE WHEN, TAKEN TOGETHER, SUCH EVIDENCE PROVIDED ADEQUATE BASIS FOR
THE DISMISSAL OF PETITIONERS IN ACCORDANCE WITH RELEVANT SUPREME COURT OF APPEAL [sic]
DECISIONS.
IN SUM, PETITIONERS WERE NOT ILLEGALLY DISMISSED SINCE THE SUBSTANTIVE AND PROCEDURAL
REQUIREMENTS FOR THE TERMINATION OF THEIR EMPLOYMENT WERE SATISFIED IN THIS CASE.
THIS HONORABLE COURT OF APPEAL[S] GRIEVOUSLY ERRED IN RULING THAT PETITIONER JOEL SALES
WAS ILLEGALLY DISMISSED.
II.
THE HONORABLE COURT OF APPEALS RULED CONTRARY TO APPLICABLE JURISPRUDENCE WHEN IT

CONCLUDED THAT PETITIONERS WERE NOT ABLE TO VALIDLY PERFECT [THEIR] APPEAL OF THE LABOR
ARBITER’S DECISION.44
Petitioners claim that the NLRC properly took cognizance of their appeal and properly granted their
motion for reduction of the appeal bond, explaining that strict implementation of the rules may be
relaxed in certain cases so as to avoid a miscarriage of justice. Petitioners also claim that there was
adequate basis to render respondents’ dismissal from service valid, as correctly ruled by the NLRC.
Our Ruling
The assailed CA Decision must be vacated and set aside.
There was substantial compliance with

the rules on appeal bonds.
In order to perfect an appeal from the Decision of the Labor Arbiter granting monetary award, the Labor
Code requires the posting of a bond, either in cash or surety bond, in an amount equivalent to the
monetary award. Article 223 of the Labor Code provides:
ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. x x x
xxx
In case of a judgment involving a monetary award, an appeal by the employer [may] be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the judgment appealed from.
Nonetheless, we have consistently held that rules should not be applied in a very rigid and strict
sense.45 This is especially true in labor cases wherein the substantial merits of the case must
accordingly be decided upon to serve the interest of justice.46 When there has been substantial
compliance, relaxation of the Rules is warranted.47
In Mendoza v. HMS Credit Corporation,48 we held that the posting of an appeal bond in the amount of
P650,000.00 instead of P1,025,081.82 award stated in the Decision of the Labor Arbiter is substantial
compliance with the requirement under Article 223. Likewise, in Pasig Cylinder Mfg. Corp. v. Rollo,[49
we ruled that the filing of a reduced appeal bond of P100,000.00 is not fatal in an appeal from the labor
arbiter’s ruling awarding P3,132,335.57 to the dismissed employees. In Rosewood Processing, Inc. v.
National Labor Relations Commission,50 we allowed the filing of a reduced bond of P50,000.00,
accompanied with a motion, in an appeal from the Labor Arbiter’s award of P789,154.39.
In the case at bench, petitioners appealed from the Decision of the Labor Arbiter awarding to
crewmembers the amount of P7,104,483.84 by filing a Notice of Appeal with a Very Urgent Motion to
Reduce Bond and posting a cash bond in the amount of P500,000.00 and a supersedeas bond in the
amount of P1.5 million. We find this to be in substantial compliance with Article 223 of the Labor Code.
It is true that the NLRC initially denied the request for reduction of the appeal bond. However, it
eventually allowed its reduction and entertained petitioners’ appeal. We disagree with the CA in
holding that the NLRC acted with grave abuse of discretion as the granting of a motion to reduce appeal
bond lies within the sound discretion of the NLRC upon showing of the reasonableness of the bond
tendered and the merits of the grounds relied upon.51 Hence, the NLRC did not err or commit grave
abuse of discretion in taking cognizance of petitioners’ appeal before it.
Galvez and Gruta were validly dismissed

on the ground of loss of trust and
confidence; there were no valid grounds
for the dismissal of Arguelles, Batayola,
Fresnillo, Noble, Dominico, Nilmao and
Austral .
We do not, however, agree with the findings of the NLRC that all respondents were dismissed for just
causes. In termination disputes, the burden of proving that the dismissal is for a just or valid cause rests
on the employers. Failure on their part to discharge such burden will render the dismissal illegal.52
As specified in the termination notice, respondents were dismissed on the grounds of (i) serious
misconduct, particularly in engaging in pilferage while navigating at sea, (ii) willful breach of the trust
reposed by the company, and (iii) commission of a crime or offense against their employer. Petitioners
claim that based on the sworn statement of Abis, joint affidavit of Bernabe and De la Rama, letter of
petitioner Francisco requesting assistance from the CIDG, formal complaint sheet, complaint and
supplementary complaint affidavit of Montegrico, CIDG’s letter referring respondents’ case to the Office
of the City Prosecutor of Manila, resolution of the City Prosecutor finding a prima facie case of qualified
theft, and the Information for qualified theft, there is a reasonable ground to believe that respondents
were responsible for the pilferage of diesel fuel oil at M/T Dorothy Uno, which renders them unworthy
of the trust and confidence reposed on them.
After examination of the evidence presented, however, we find that petitioners failed to substantiate
adequately the charges of pilferage against respondents. “[T]he quantum of proof which the employer
must discharge is substantial evidence. x x x Substantial evidence is that amount of relevant evidence as
a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise.”53 Here, the mere filing of a formal charge, to our
mind, does not automatically make the dismissal valid. Evidence submitted to support the charge
should be evaluated to see if the degree of proof is met to justify respondents’ termination. The
affidavit executed by Montegrico simply contained the accusations of Abis that respondents committed
pilferage, which allegations remain uncorroborated. “Unsubstantiated suspicions, accusations, and
conclusions of employers do not provide for legal justification for dismissing employees.”54 The other
bits of evidence were also inadequate to support the charge of pilferage. The findings made by GASLI’s
port captain and internal auditor and the resulting certification executed by De la Rama merely showed
an overstatement of fuel consumption as revealed in the Engineer’s Voyage Reports. The report of Jade
Sea Land Inspection Services only declares the actual usage and amount of fuel consumed for a
particular voyage. There are no other sufficient evidence to show that respondents participated in the
commission of a serious misconduct or an offense against their employer.
As for the second ground for respondents’ termination, which is loss of trust and confidence, distinction
should be made between managerial and rank and file employees. “[W]ith respect to rank–and–file
personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in
the alleged events x x x [while for] managerial employees, the mere existence of a basis for believing
that such employee has breached the trust of his employer would suffice for his dismissal.”55
In the case before us, Galvez, as the ship captain, is considered a managerial employee since his duties
involve the governance, care and management of the vessel.56 Gruta, as chief engineer, is also a
managerial employee for he is tasked to take complete charge of the technical operations of the
vessel.57 As captain and as chief engineer, Galvez and Gruta perform functions vested with authority to
execute management policies and thereby hold positions of responsibility over the activities in the
vessel. Indeed, their position requires the full trust and confidence of their employer for they are
entrusted with the custody, handling and care of company property and exercise authority over it.
Thus, we find that there is some basis for the loss of confidence reposed on Galvez and Gruta. The
certification issued by De la Rama stated that there is an overstatement of fuel consumption. Notably,
while respondents made self–serving allegations that the computation made therein is erroneous, they
never questioned the competence of De la Rama to make such certification. Neither did they question
the authenticity and validity of the certification. Thus, the fact that there was an overstatement of fuel
consumption and that there was loss of a considerable amount of diesel fuel oil remained unrefuted.
Their failure to account for this loss of company property betrays the trust reposed and expected of
them. They had violated petitioners’ trust and for which their dismissal is justified on the ground of
breach of confidence.
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, proof of involvement in the
loss of the vessel’s fuel as well as their participation in the alleged theft is required for they are ordinary
rank and file employees. And as discussed above, no substantial evidence exists in the records that
would establish their participation in the offense charged. This renders their dismissal illegal, thus,
entitling them to reinstatement plus full backwages, inclusive of allowances and other benefits,
computed from the time of their dismissal up to the time of actual reinstatement.
No evidence of Sales’ dismissal from

employment.
The rule that the employer bears the burden of proof in illegal dismissal cases finds no application when
the employer denies having dismissed the employee.58 The employee must first establish by
substantial evidence the fact of dismissal59 before shifting to the employer the burden of proving the
validity of such dismissal.
We give credence to petitioners’ claim that Sales was not dismissed from employment. Unlike the other
respondents, we find no evidence in the records to show that Sales was preventively suspended, that he
was summoned and subjected to any administrative hearing and that he was given termination notice.
From the records, it appears Sales was not among those preventively suspended on February 26, 2000.
To bolster this fact, petitioners presented the Payroll Journal Register for the period March 1–15,
200060 showing that Sales was still included in the payroll and was not among those who were charged
with an offense to warrant suspension. In fact, Sales’ signature in the Semi–Monthly Attendance Report
for February 26, 2000 to March 10, 200061 proves that he continued to work as Chief Mate for the
vessel M/T Dorothy Uno along with a new set of crewmembers. It is likewise worth noting that in the
Supplemental Complaint Affidavit of Montegrico, Sales was not included in the list of those employees
who were accused of having knowledge of the alleged pilferage. This only shows that he was never
subjected to any accusation or investigation as a prelude to termination. Hence, it would be pointless to
determine the legality or illegality of his dismissal because, in the first place, he was not dismissed from
employment.
Respondents are not entitled to their

money claims except 13th month pay for
the period of their illegal dismissal,
unpaid salaries, salary differentials,
double indemnity for violation of the
Minimum Wage Law and attorney’s fees.
As for the money claims of respondents, we note that petitioners did not bring this issue before us or
assign it as error in this Petition. It was raised by the petitioners only in their Memorandum of Appeal
filed with the NLRC and in their Motion for Reconsideration of the CA’s Decision reinstating the Labor
Arbiter’s award. Nonetheless, in order to arrive at a complete adjudication of the case and avoid
piecemeal dispensation of justice, we deem it necessary to resolve the validity of respondents’ money
claims and to discuss the propriety of the Labor Arbiter’s award.
Galvez and Gruta, as managerial employees, are not entitled to their claims for holiday pay, service
incentive leave pay and premium pay for holiday and restday. Article 82 of the Labor Code specifically
excludes managerial employees from the coverage of the law regarding conditions of employment
which include hours of work, weekly rest periods, holidays, service incentive leaves and service
charges.62
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, we cannot sustain the
argument that they are classified as field personnel under Article 82 of the Labor Code who are likewise
excluded. Article 82 defines field personnel as referring to “non–agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty.” They are
those who perform functions which “cannot be effectively monitored by the employer or his
representative.”63 Here, respondents, during the entire course of their voyage, remain on board the
vessel. They are not field personnel inasmuch as they were constantly supervised and under the
effective control of the petitioners through the vessel’s ship captain.
Nevertheless, we cannot grant them their claims for holiday pay, premium pay for holiday and restday,
overtime pay and service incentive leave pay. Respondents do not dispute petitioners’ assertion that in
computing respondents’ salaries, petitioners use 365 days as divisor. In fact, this was the same divisor
respondents used in computing their money claims against petitioners. Hence, they are paid all the days
of the month, which already include the benefits they claim.64 As for overtime pay and premium pay
for holidays and restdays, no evidence was presented to prove that they rendered work in excess of the
regular eight working hours a day or worked during holidays and restdays. In the absence of such proof,
there could be no basis to award these benefits.65
For the claim of service incentive leave pay, respondents did not specify what year they were not paid
such benefit. In addition, records show that they were paid their vacation leave benefits.66 Thus, in
accordance with Article 95 of the Labor Code,67 respondents can no longer claim service incentive leave
pay.
On the other hand, for failure to effectively refute the awards for 13th month pay for the period that
respondents were illegally dismissed, unpaid salaries and salary differentials,68 we affirm the grant
thereof as computed by the Labor Arbiter. Petitioners’ evidence which consist of a mere tabulation69 of
the amount of actual benefits paid and given to respondents is self–serving as it does not bear the
signatures of the employees to prove that they had actually received the amounts stated therein.
Next, we come to the legitimacy of the Labor Arbiter’s authority to impose the penalty of double
indemnity for violations of the Minimum Wage Law. Petitioners argue that the authority to issue
compliance orders in relation to underpayment of wages is vested exclusively on the Secretary of Labor
or the Regional Director and that the Labor Arbiter has no jurisdiction thereover. They cite Section 12 of
RA 6727,70 as amended by RA 8188, which provides:
Sec. 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to
pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act
shall be punished by a fine [of] not less than Twenty–five thousand pesos (P25,000) nor more than One
hundred thousand pesos (P100,000) or imprisonment of not less than two (2) years nor more than four
(4) years or both such fine and imprisonment at the discretion of the court: Provided, That any person
convicted under this Act shall not be entitled to the benefits provided for under the Probation Law.
The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits
owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the
criminal liability under this Act.
If the violation is committed by a corporation, trust or firm, partnership, association or any other entity,
the penalty of imprisonment shall be imposed upon the entity’s responsible officers including but not
limited to, the president, vice president, chief executive officer, general manager, managing director or
partner.
Petitioners’ contention is untenable. First, there is no provision in RA 6727 or RA 8188 which precludes
the Labor Arbiter from imposing the penalty of double indemnity against employers. Second, Article
217 of the Labor Code gives the Labor Arbiter jurisdiction over cases of termination disputes and those
cases accompanied with a claim for reinstatement. Thus, in Bay Haven, Inc. v. Abuan71 the Court held
that an allegation of illegal dismissal deprives the Secretary of Labor of jurisdiction over claims to
enforce compliance with labor standards law. This was also pronounced in People’s Broadcasting
Service (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment,72 wherein
we stated that the Secretary of Labor has no jurisdiction in cases where employer–employee
relationship has been terminated. We thus sustain the Labor Arbiter’s award of double indemnity.
We also sustain the award of attorney’s fees since respondents were compelled to file a complaint for
the recovery of wages and were forced to litigate and incur expenses.73
The Labor Arbiter’s grant of actual/compensatory, moral and exemplary damages in the amount of
P100,000.00 is, however, incorrect. In order to recover actual or compensatory damages, it must be
capable of proof and must be necessarily proved with a reasonable degree of certainty.74 While moral
damages is given to a dismissed employee when the dismissal is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or
public policy. Exemplary damages, on the other hand, is given if the dismissal is effected in a wanton,
oppressive or malevolent manner.75 Here, the Labor Arbiter erred in awarding the damages by
lumping actual, moral and exemplary damages. Said damages rest on different jural foundations and,
hence, must be independently identified and justified.76 Also, there are no competent evidence of
actual expenses incurred that would justify the award of actual damages. Lastly, respondents were
terminated after being accused of the charge of pilferage of the vessel’s fuel oil after examination of the
report made by the vessel’s chief engineer which showed a considerable amount of fuel lost. Although
the dismissal of Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral is illegal, based on
the circumstances surrounding their dismissal, petitioners could not have been motivated by bad faith in
deciding to terminate their services.
Lastly, this Court exculpates petitioners Francisco and How from being jointly and severally liable with
GASLI for the illegal dismissal and payment of money claims of herein respondents. In order to hold
them liable, it must first be shown by competent proof that they have acted with malice and bad faith in
directing the corporate affairs.77 For want of such proof, Francisco and How should not be held liable
for the corporate obligations of GASLI.
WHEREFORE, the Court of Appeals’ Decision dated September 12, 2006 and the Resolution dated May
23, 2007 in CA–G.R. SP No. 82379 are ANNULLED and SET ASIDE. Respondents Wilfredo Galvez and
Cristito Gruta are hereby DECLARED dismissed from employment for just cause while respondent Joel
Sales was not dismissed from employment. Respondents Danilo Arguelles, Renato Batayola, Patricio
Fresmillo, Jovy Noble, Emilio Dominico, Benny Nilmao, and Jose Austral are DECLARED to have been
illegally dismissed; hence, petitioners are ordered to reinstate them to their former position or its
equivalent without loss of seniority rights and to pay them full backwages, inclusive of allowances and
other benefits, computed from the time of dismissal up to the time of actual reinstatement, as well as
13th month pay for the period of their illegal dismissal.
Petitioner Grand Asian Shipping Lines, Inc. is also ordered to pay respondents Wilfredo Galvez, Danilo
Arguelles, Renato Batayola, Patricio Fresnillo, Jovy Noble, Emilio Dominico, Benny Nilmao and Jose
Austral unpaid salaries from February 16 to 29, 2000, as computed by the Labor Arbiter; and to pay
respondents Danilo Arguelles, Renato Batayola, Patricio Fresmillo, Jovy Noble, Emilio Dominico and
Benny Nilmao salary differentials plus double indemnity, as computed by the Labor Arbiter. Ten percent
(10%) of the monetary award should be added as and by way of attorney’s fees. Interest at the rate of
six percent (6%) per annum shall be imposed on all monetary awards from date of finality of this
Decision until full payment pursuant to Nacar v. Gallery Frames.78
Petitioners Eduardo P. Francisco and William How are absolved from the liability adjudged against
petitioner Grand Asian Shipping Lines, Inc.ChanRoble
3. G.R. No. 105223 September 27, 1993

PHILIPPINE APPLIANCE CORPORATION, (PHILACOR), petitioner,
vs.THE HON. BIENVENIDO E. LAGUESMA, in his capacity as Undersecretary of Labor & Employment,
GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT & ALLIED INDUSTRIES,
(GLOWHRAIN) and THE HONORABLE BERNARDINO B. JULVE in his capacity as DIRECTOR IV, DOLE
REGIONAL OFFICE, NATIONAL CAPITAL REGION (NCR),
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to annul and set aside the
Order dated march 30, 1992 of respondent Bienvenido E. Laguesma, as Undersecretary of Labor and
Employment in NCR-OD-M-90-11-060, entitled "IN RE: PETITION FOR CERTIFICATION ELECTION OF ALL
SUPERVISORY EMPLOYEES OF THE PHILIPPINE APPLIANCE CORPORATION (PHILACOR). GENUINE LABOR
ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES (GLOWHRAIN),
petitioner." The order complained of, affirmed the Order dated August 14, 1991 of Med-Arbiter Rosadali
G. Abdullah, allowing certain employees to participate and cast their votes in the certification election.
On November 21, 1990, respondent the Genuine Organization of Workers in Hotel, Restaurant and
Allied Industries (GLOWHRAIN) failed with the Department of Labor and Employment (DOLE) a petition
for certification election among the supervisory employees of petitioner, docketed as Case
No. NCR-OD-M-90-11-060 (Annex "C", Rollo, p. 49).
On January 3, 1991, petitioner filed a "Qualified Opposition," opposing the petition on the ground that
the employees sought to be represented by respondent GLOWHRAIN are not supervisory employees, as
defined by the Labor Code as amended but are, in fact, managerial employees exercising one or more
managerial prerogatives and functions and that the genuine supervisory employees having the right to
join, assist or form a labor organization are its foremen and linemen who are already members of the
rank-and-file union (Annex "D", Rollo, p. 53).
On January 17, 1991, respondent GLOWHRAIN filed its "COMMENT and POSITION PAPER" attaching
therewith supporting documents to show that union members claimed by petitioner to be managerial
employees are supervisors with recommendatory powers (Rollo, p. 117).
On February 5, 1991, petitioner filed a "Supplement to Qualified Opposition," presenting specific
instances as evidenced by company memoranda whereby petitioning employees were shown to have
exercised managerial powers, functions and prerogatives whose decisions were instantly effective and
not merely recommendatory. In said supplemental opposition, petitioner also alleged that the issue of
whether petitioning employees are managerial employees constituted a prejudicial question, which
should be resolved before any further proceedings could continue (Annex "E", Rollo, p. 66).
On February 25, 1991 respondent GLOWHRAIN filed a "Reply" stating that no prejudicial question
existed.
On March 14, 1991, petitioner filed a "Rejoinder," explaining the nature of the documents attached to
respondent GLOWHRAIN's reply and describing petitioner's company structure, as well as the
corresponding tasks, duties and responsibilities of petitioning employees in such structure. It also
emphasized that as can be gleaned from the company structure and the actual functions being
performed by the petitioning employees, the supervisory employees of said company were the linemen
and foreman who were already members of the rank-and-file union (Annex "F", Rollo, p. 121).
On March 6, 1991, Med-Arbiter Rosadali C. Abdullah issued an order directing the holding of a
certification election among the supervisory employees of petitioner. The dispositive portion said order
reads:
WHEREFORE, on the foregoing consideration, let a certification election be conducted among the
supervisory employees of the Philippine Appliance Corporation (PHILACOR) within twenty (20) days
from receipt hereof, subject to the usual pre-election conference of the parties to thresh out the
mechanics of the election. The payroll of the company three (3) months prior to the filing of the petition
shall be used as the basis in determining the list of eligible voters.
The choices are:
(a) GLOWHRAIN - Philippine Appliance Corporation Supervisor's Association; and
(b) No union (Rollo, p. 177).
Pursuant to the aforestated order, petitioner was required to submit a list of all supervisory employees
of the company based on the payroll three months prior to the date of the petition.
On April 29, 1991, petitioner filed a "Compliance and Manifestation," (Annex "H", Rollo, p. 178),
attaching two separate lists of employees. The first list (Annex "1", Rollo, p. 208) contained the list of
employees designated as supervisors or equivalent rank. The second list (Annex "1-A", Rollo, p. 214)
contained the names of employees designated as foremen and linemen whom petitioner deemed as its
genuine supervisory employees.
On May 3, 1991, petitioner filed a "Motion to Exclude" those employees listed in Annex "1" alleging that
these employees though occupying positions designated as "Supervisor" are in reality, managerial
employees by virtue of their exercise of managerial functions and prerogatives which are not merely
recommendatory. Petitioner reiterated its claim that the true supervisors of the company falling within
the scope and definition of the Labor Code are the company foremen and linemen and some who are
occupying the title of "Supervisor" (Annex "I", Rollo, p. 187).
After respondent GLOWHRAIN and petitioner submitted their respective position papers, the Med-
Arbiter issued on August 14, 1991 an order, the dispositive portion of which reads:
WHEREFORE, premises considered, an Order is hereby issued, allowing the employees listed in Annex
"1" of the company's Motion to Exclude dated May 3, 1991, with Nos. 2, 3, 8, 9, 11, 12, 13, 14, 16, 17,
18, 19, 20, 23, 24, 26, 28, 29, 31, 33, 35, 36, 37, 39, 41, 43, 44, 45, 46, 48, 50, 51, 53, 56, 58, 59, 60, 61,
63, 64, 66, 67, 69, 72, 76, 78, 79, 80, 81, 82, 86, 87, 89, 90, 91, 92, 93, 94, 95, 98, 99, 100, 103, 104, 105,
106, 108, 110, 111, 112, 116, 117, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132,
133, 134, 136, 139, 140, 146, 149, 151, 154, 155, 157, 161, 162, 163, 164, 167, 170, 174, 176, 177, 178,
182, 184, 185, 187, 188, 192, and those listed in Annex "1-A" of the same motion with Nos. 2, 12, 13, 14,
31, 34, 36, 37, 38, 52, 57, 58, 71, 74, 76, 85, 87, to participate and cast their votes in the certification
election ordered in this case.
Let the record of this case be forwarded to the representation officer concerned and be guided
accordingly (Rollo, p. 224-225).
Petitioner assailed before the Office of the Secretary of Labor, the Med-Arbiter's decision allowing
petitioning employees to participate in the certification election.
It claimed that the true determination of the nature of the employment is based on the actual powers
and prerogative exercised by the employees and not the job titles or descriptions. It further questioned
the Med-Arbiter's decision as contradictory to his own express finding of fact that petitioning employees
exercise managerial prerogatives or functions (Annex "L", Rollo, p. 226).
On November 22, 1991, petitioner's appeal was denied for lack of merit and the Order of the Med-
Arbiter dated August 14, 1991 was affirmed (Annex "M", Rollo, p. 248).
On December 6, 1991, petitioner filed a motion for reconsideration (Annex "N", Rollo, p. 249). In said
motion, petitioner attached for the first time the job descriptions of its Production Supervisor (Annex
"A", Rollo, pp. 259-261), Superintendent (Production) (Annex "B", Rollo, pp. 262-264) and Manager
(Production) (Annex "C", Rollo, p. 265-267).
In its Resolution dated December 23, 1991, PHILACOR's Motion for Reconsideration modified the
Resolution dated November 22, 1991 by finding that the employees occupying the job titles of
"Production Supervisor," "Superintendent Production" and "Production Manager" are managerial
employees imbued with managerial prerogatives, and therefore are ineligible to participate in the
certification election among the supervisory employees (Annex "O", Rollo, pp. 269-270).
Respondent GLOWHRAIN filed a motion for reconsideration, to which petitioner filed an "Opposition
and Comment.
In its motion for reconsideration, respondent GLOWHRAIN challenged the authenticity of the job
descriptions submitted by petitioner, alleging that the same are irregular having been issued only for the
purpose of buttressing petitioner's motion for reconsideration.
On March 30, 1992, an order was issued granting GLOWHRAIN's motion for reconsideration and with
the following dispositive portion:
WHEREFORE, the Motion for Reconsideration of petitioner Genuine Labor Organization of Workers in
Hotel, Restaurant and Allied Industries (GLOWHRAIN) is hereby granted and the Order dated
23 December 1991 is hereby SET ASIDE. In lieu thereof, our Resolution dated 22 November 1991 is
hereby REINSTATED and AFFIRMED in toto.
No further motion of similar nature shall hereinafter be entertained (Annex "A", Rollo, pp. 43-44).
In his order, respondent Undersecretary of Labor found that the job descriptions submitted by petitioner
were not issued in the regular course of the business and neither were the concerned employees
furnished copies for them to countersign as an affirmation that the job descriptions are reflective of
their true and actual function, duties and responsibilities. Furthermore, the respondent Undersecretary
of Labor said that there was nothing on record to show that the job descriptions are the actual functions
currently being performed by the concerned employees. Hence, he concluded that the job descriptions
submitted by petitioner were considered belated issuances and a mere afterthought (Rollo, pp. 37-44).
On April 23, 1992, petitioner filed a "Manifestation and Motion (for Reconsideration)" of the Order
dated March 30, 1992, which was denied in an Order dated April 24, 1992.
On May 21, 1992, petitioner filed this petition for certiorari, with prayer for "a restraining order and/or a
writ of preliminary injunction" to restrain or enjoin the holding of the certification election (Rollo, pp. 2-
36).
On June 29, 1992, the Third Division of this Court resolved "to issue a Temporary Restraining Order
effective as of this date and continuing until otherwise ordered by this Court" (Rollo, p. 327).
The main issue to be resolved is whether the petitioning employees are supervisory employees eligible
to form a supervisory union.
Under the old Industrial Peace Act (Republic Act No. 875), the term "supervisor" was denied as follows:
Sec. 2 Definitions - As used in this Act -
xxx xxx xxx
(k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer,
suspend, lay-off, recall, discharge, assign, recommend, or discipline, other employees, or responsibly to
direct them, and to adjust their grievances, or effectively to recommend such acts if, in connection with
the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires
the use of independent judgment.
With the enactment of Presidential Decree No. 442 as amended, otherwise known as the Labor Code of
the Philippines, the term "supervisor" was replaced by the term "managerial employee."
The Labor Code was further amended by Republic Act No. 6715. Section 4 of the said Republic Act,
amended Article 212 (m), which now contains separate definitions for managerial and supervisory
employees, to wit:
Art. 212. Definitions.
xxx xxx xxx
(m) Managerial employee is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or clerical
in nature but requires the use of independent judgment. . . . (emphasis supplied)
The test of "supervisory" or "managerial status" depends on whether a person possesses authority to
act in the interest of his employer in the manner specified in Article 212 (m) of the Labor Code and Rule
1(o) of Book V of its Implementing Rules and whether such authority is not merely routinary or clerical in
nature, but requires the use of independent judgment. Thus, where such recommendatory powers as in
the case before us, are subject to evaluation, review and final action by the department heads and other
higher executives of the company, the same, although present, are not effective and not an exercise of
independent judgment as required by law (Franklin Baker Company of the Philippines. v. Trajano, 157
SCRA 416 [1988] citing National Warehouse Corp. v. CIR, 7 SCRA 602-603 [1963]).
A careful analysis of the record discloses that in the exercise of the above enumerated managerial
powers, petitioning employees are "given policies to executed and standard policies to observe, thus
having little freedom of action" (National Waterworks and Sewerage Authority v. NWSA Consolidated,
11 SCRA 766 [1964]).
Furthermore, it will be noted that petitioning employees merely recommend the implementation of
management policies or the discipline or dismissal of subordinates, as may be gleaned from the
following:
In the filing/charging of overtime, petitioning employees are guided by Standard Procedure on

Overtime/Charging (Annex "1-A", Rollo, p. 93; Annex "1-B", Rollo, p. 94). The accomplishment of the
"Overtime Work Authority" is the duty of the supervisor who must affix his signature therein and
forward the same to the manager who will likewise sign the same. After which, it will be sent back to the
supervisor concerned. In the formulation and issuance of this Management Guide, petitioner admits
that petitioning employees did not participate therein (Annex "F", Rollo, p. 131).
With regard to the procedure in the hiring of rank-and-file employees, the immediate supervisor files a
notice in writing with the Personnel Administration asking the latter to find qualified applicants for a
position or job where there is vacancy. The Personnel Department proceeds with the recruitment of
qualified applicants, using as basis the applicable set of general standards and the job requirements. All
applicants who are considered by the Personnel Department to have met both the general and specific
requirements of the job are referred to a panel of four or five supervisors for interview and
determination who among said applicants should be hired for the particular job. The interview
conducted by the panel after the Personnel Department has already recruited qualified applicants
cannot be said to vest in the supervisors the power to hire. The said interview merely involves the
accomplishment of an Interview Rating Form, which rates the interviewee according to his general
appearance, manner of speaking, alertness, physical condition, confidence, ability to get along with
others, ability to present ideas, maturity judgment and technical competence (Annex "4" & "5", Rollo,
pp. 112-113). The ultimate power to hire still rest with the Manager of the Personnel Administration
(Annex "4", Rollo, p. 111).
No evidence was presented by petitioner to bolster its claim that petitioning employees exercised the
power to shorten employees' probationary period and the power to change the status of or dismiss a
casual employee.
As to the power to discipline, suspend and discharge employees, we find that the petitioning employees
merely enforce the company rules and regulations against erring employees. While it is true that the
petitioning employees are the ones who request for a formal investigation against an erring employee, it
is the Corporate Legal Service which actually conducts the formal investigation and on the basis of the
result of the investigation, the Assistant Vice-President - Human Resource Management - General
Services is the one who imposes the corresponding penalty. The supervisor is merely furnished a copy of
the result of the investigation (Annex "9", Rollo, p. 368; Annex "9-A", Rollo, p. 369).
As to the power to assign or transfer employees, the petitioning employees merely execute the shifting
rotation made by the Plant Manager (Annex "8", "8-B", "8-D", "8-E", "8-F", "9-G" "8-H", Rollo, p. 359-
367).
Even if petitioner considers petitioning employees as managers, the fact remains that they do not lay
down and execute management policies nor have the power to hire, but merely recommend such
management actions. As such, petitioning employees will still be considered as supervisors.
PHILACOR belatedly presented the job descriptions of the Production Supervisor, Superintendent
(Production) and Manager (Production) to show that indeed petitioning employees are exercising
managerial powers and prerogatives. As admitted by PHILACOR, the aforestated job descriptions were
relatively new and were documented only on or about August 1991 after the Med-Arbiter had already
ordered the certification election of the petitioning employees.
We held in the case of Pagkakaisa ng mga Manggagawa sa Triumph International - United Lumber and
General Workers of the Philippines. v. Ferrer-Calleja, 181 SCRA 119 [1990] that "the fact that their work
descriptions are either managers or supervisors is of no moment considering that it is the nature of their
functions and not the said nomenclatures of titles of their jobs which determines their statuses.
WHEREFORE, the Order dated March 30, 1992 of respondent Undersecretary of Labor and Employment
is AFFIRMED. The Temporary Restraining Order issued by this Court is LIFTED.
4. G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO
LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and
DOMINGO SAGUIT, petitioners,
vs.NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET TAILORING and/or
RODOLFO ZAPANTA,
A basic factor underlying the exercise of rights and the filing of claims for benefits under the Labor Code
and other presidential issuances or labor legislations is the status and nature of one's employment.
Whether an employer-employee relationship exist and whether such employment is managerial in
character or that of a rank and file employee are primordial considerations before extending labor
benefits. Thus, petitioners in this case seek a definitive ruling on the status and nature of their
employment with Broad Street Tailoring and pray for the nullification of the resolution dated May 12,
1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV- 21558-78-T affirming the
decision of Labor Arbiter Ernilo V. Peñalosa dated May 28, 1979, which held eleven of them as
independent contractors and the remaining one as employee but of managerial rank.
The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring shop
owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw
Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a
monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the
chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant
manager would be absent. He saw to it that their work conformed with the pattern he had prepared and
if not, he had them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for
every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task.
Petitioners did not fill up any time record since they did not observe regular or fixed hours of work. They
were allowed to perform their work at home especially when the volume of work, which depended on
the number of job orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not
properly notifying his employer, he was considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor, Villuga
claimed that he was refused admittance when he reported for work after his absence, allegedly due to
his active participation in the union organized by private respondent's tailors. He further claimed that he
was not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service
incentive leave pay and 13th month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that they were
dismissed from their employment because they joined the Philippine Social Security Labor Union
(PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita
Cabaneg and Domingo Saguit claimed that they stopped working because private respondents gave
them few pieces of work to do after learning of their membership with PSSLU. All the petitioners laid
claims under the different labor standard laws which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Peñalosa rendered a decision ordering the dismissal of the
complaint for unfair labor practices, illegal dismissal and other money claims except petitioner Villuga's
claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the decision
states as follows:
WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or Rodolfo Zapanta are
hereby ordered to pay complainant Elias Villuga the sum of ONE THOUSAND TWO HUNDRED FORTY-
EIGHT PESOS AND SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for the years 1976,
1977 and 1978. His other claims in this case are hereby denied for lack of merit.
The complaint insofar as the other eleven (11) complainants are concerned should be, as it is hereby
dismissed for want of jurisdiction.1
On appeal, the National Labor Relations Commission affirmed the questioned decision in a resolution
dated May 12, 1986, the dispositive portion of which states as follows:
WHEREFORE, premises considered, the decision appealed from is, as it is hereby AFFIRMED, and the
appeal dismissed. 2
Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner Gabriel
M. Gatchalian rendered a dissenting opinion which states as follows:
I am for upholding employer-employee relationship as argued by the complainants before the Labor
Arbiter and on appeal. The further fact that the proposed decision recognizes complainant's status as
piece-rate worker all the more crystallizes employer-employee relationship the benefits prayed for must
be granted. 3
Hence, petitioners filed this instant certiorari case on the following grounds:
1. That the respondent National Labor Relations Commission abused its discretion when it ruled that
petitioner/complainant, Elias Villuga falls within the category of a managerial employee;
2. . . . when it ruled that the herein petitioners were not dismissed by reason of their union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia, Marcelo Aguilan,
David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit were not employees of
private respondents but were contractors.
4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and services for Sundays
and Legal Holidays; and
5. . . . when it failed to grant petitioners their respective claims under the provisions of P.D. Nos. 925,
1123 and 851.4
Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member of a
managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty
consists of the performance of work directly related to management policies; (2) that he customarily
and regularly exercises discretion and independent judgment in the performance of his functions; (3)
that he regularly and directly assists in the management of the establishment; and (4) that he does not
devote his twenty per cent of his time to work other than those described above.
Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary work or
duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any of the
management policies, as there is a manager and an assistant manager who perform said functions. It is
true that in the absence of the manager the assistant manager, he distributes and assigns work to
employees but such duty, though involving discretion, is occasional and not regular or customary. He
had also the authority to order the repair or resewing of defective item but such authority is part and
parcel of his function as cutter to see to it that the items cut are sewn correctly lest the defective nature
of the workmanship be attributed to his "poor cutting." Elias Villuga does not participate in policy-
making. Rather, the functions of his position involve execution of approved and established policies. In
Franklin Baker Company of the Philippines v. Trajano, 5 it was held that employees who do not
participate in policy-making but are given ready policies to execute and standard practices to observe
are not managerial employees. The test of "supervisory or managerial status" depends on whether a
person possesses authority that is not merely routinary or clerical in nature but one that requires use of
independent judgment. In other words, the functions of the position are not managerial in nature if they
only execute approved and established policies leaving little or no discretion at all whether to
implement said policies or not. 6
Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and
premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive
leave pay) of the Labor Code, on the ground that he is a managerial employee is unwarranted. He is
definitely a rank and file employee hired to perform the work of the cutter and not hired to perform
supervisory or managerial functions. The fact that he is uniformly paid by the month does not exclude
him from the benefits of holiday pay as held in the case of Insular Bank of America Employees Union v.
Inciong.7 He should therefore be paid in addition to the 13th month pay, his overtime pay, holiday pay,
premium pay for holiday and rest day, and service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of private respondent consisting of
termination of employment of petitioners and acts of discrimination against members of the labor
union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was aware
of petitioners' alleged union membership on February 22, 1978 as the notice of union existence in the
establishment with proposal for recognition and collective bargaining negotiation was received by
management only an March 3, 1978. Indeed, self-serving allegations without concrete proof that the
private respondent knew of their membership in the union and accordingly reacted against their
membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal
of the employee to resume his employment. Mere absence is not sufficient, it must be accompanied by
overt acts unerringly pointing to the fact that the employee simply does not want to work anymore.8 At
any rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly
established by the presentation of a medical certificate is not justified.9 In the case at bar, however,
considering that petitioner Villuga absented himself for four (4) days without leave and without
submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified,
but surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of
reinstatement, petitioner Villuga should be paid separation pay where reinstatement can no longer be
effected in view of the long passage of time or because of the realities of the situation. 10 But petitioner
should not be granted backwages in addition to reinstatement as the same is not just and equitable
under the circumstances considering that he was not entirely free from blame. 11
As to the other eleven petitioners, there is no clear showing that they were dismissed because the
circumstances surrounding their dismissal were not even alleged. However, we disagree with the finding
of respondent Commission that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are generally considered: "(1)
the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's
conduct." 12
Noting that the herein petitioners were oftentimes allowed to perform their work at home and were
paid wages on a piece-rate basis, the respondent Commission apparently found the second and fourth
elements lacking and ruled that "there is no employer-employee relationship, for it is clear that
respondents are interested only in the result and not in the means and manner and how the result is
obtained."
Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is no
argument that herein petitioners were not employees. The term "wage" has been broadly defined in
Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a method of compensation
and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not likewise imply
absence of control and supervision. The control test calls merely for the existence of a right to control
the manner of doing the work, not the actual exercise of the right. 14
In determining whether the relationship is that of employer and employee or one of an independent
contractor, "each case must be determined on its own facts and all the features of the relationship are
to be considered." 15 Considering that petitioners who are either sewers, repairmen or ironer, have
been in the employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering
services which are desirable or necessary for the business of private respondent, and observing
management's approved standards set for their respective lines of work as well as the customers'
specifications, petitioners should be considered employees, not independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a piece of
work according to their own methods and without being subjected to control of their employer except
as to the result of their work. By the nature of the different phases of work in a tailoring shop where the
customers' specifications must be followed to the letter, it is inconceivable that the workers therein
would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring
department, although paid weekly wages on piece work basis, are employees not independent
contractors. Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not entitled to
overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim
for separation pay should also be defined for lack of evidence that they were in fact dismissed by private
respondent. They should be paid, however, their 13th month pay under P.D. 851, since they are
employees not independent contractors.
WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National Labor
Relations Commission is hereby MODIFIED by awarding —
(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest day,
service incentive leave pay and separation pay, in addition to his 13th month pay; and
(b) in favor of the rest of the petitioners, their respective 13th month pay.
The case is hereby REMANDED to the National Labor Relations Commission for the computation of the
claims herein-above mentioned.
SO ORDERED.
5. G.R. No. 187320 January 26, 2011

ATLANTA INDUSTRIES, INC. and/or ROBERT CHAN, Petitioners,
vs. APRILITO R. SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, and JOSEPH S. SAGUN
The facts are summarized below.
In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V. Costales, Alvin V.
Almoite, Joseph S. Sagun, Agosto D. ZaÃ±o, Domingo S. Alegria, Jr., Ronie Ramos, Edgar Villagomez,
Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino M.
Mabanag filed several complaints for illegal dismissal, regularization, underpayment, nonpayment of
wages and other money claims, as well as claims for moral and exemplary damages and attorney's fees
against the petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating Officer
Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but were later
transferred to Labor Arbiter Dominador B. Medroso, Jr.
The complainants alleged that they had attained regular status as they were allowed to work with
Atlanta for more than six (6) months from the start of a purported apprenticeship agreement between
them and the company. They claimed that they were illegally dismissed when the apprenticeship
agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to their
money claims because they were engaged as apprentices under a government-approved apprenticeship
program. The company offered to hire them as regular employees in the event vacancies for regular
positions occur in the section of the plant where they had trained. They also claimed that their names
did not appear in the list of employees (Master List)[5] prior to their engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, ZaÃ±o and Chiong executed a Pagtalikod at Pagwawalang Saysay
before Labor Arbiter Cajilig.
The Compulsory Arbitration Rulings
On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz, Magalang,
ZaÃ±o and Chiong, but found the termination of service of the remaining nine to be illegal.[6]
Consequently, the arbiter awarded the dismissed workers backwages, wage differentials, holiday pay
and service incentive leave pay amounting to P1,389,044.57 in the aggregate.
Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime, or on October
10, 2006, Ramos, Alegria, Villagomez, Costales and Almoite allegedly entered into a compromise
agreement with Atlanta.[7] The agreement provided that except for Ramos, Atlanta agreed to pay the
workers a specified amount as settlement, and to acknowledge them at the same time as regular
employees.
On December 29, 2006,[8] the NLRC rendered a decision, on appeal, modifying the ruling of the labor
arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect to Sagun, Mabanag,
Sebolino and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, ZaÃ±o, Magalang and
Chiong; (3) approving the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite
and Alegria, and (4) denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision, but the NLRC
denied the motion in its March 30, 2007[9] resolution. The four then sought relief from the CA through a
petition for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC committed grave
abuse of discretion in: (1) failing to recognize their prior employment with Atlanta; (2) declaring the
second apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino and
Melvin Pedregoza is legal; and (4) upholding the compromise agreement involving Costales, Ramos,
Villagomez, Almoite and Alegria.
The CA Decision
The CA granted the petition based on the following findings:[10]
1. The respondents were already employees of the company before they entered into the first and
second apprenticeship agreements - Almoite and Costales were employed as early as December 2003
and, subsequently, entered into a first apprenticeship agreement from May 13, 2004 to October 12,
2004; before this first agreement expired, a second apprenticeship agreement, from October 9, 2004 to
March 8, 2005 was executed. The same is true with Sebolino and Sagun, who were employed by Atlanta
as early as March 3, 2004. Sebolino entered into his first apprenticeship agreement with the company
from March 20, 2004 to August 19, 2004, and his second apprenticeship agreement from August 20,
2004 to January 19, 2005. Sagun, on the other hand, entered into his first agreement from May 28, 2004
to October 8, 2004, and the second agreement from October 9, 2004 to March 8, 2005.
2. The first and second apprenticeship agreements were defective as they were executed in violation of
the law and the rules.[11] The agreements did not indicate the trade or occupation in which the
apprentice would be trained; neither was the apprenticeship program approved by the Technical
Education and Skills Development Authority (TESDA).
3. The positions occupied by the respondents - machine operator, extruder operator and scaleman - are
usually necessary and desirable in the manufacture of plastic building materials, the company's main
business. Costales, Almoite, Sebolino and Sagun were, therefore, regular employees whose dismissals
were illegal for lack of a just or authorized cause and notice.
4. The compromise agreement entered into by Costales and Almoite, together with Ramos, Villagomez
and Alegria, was not binding on Costales and Almoite because they did not sign the agreement.
The petitioners themselves admitted that Costales and Almoite were initially planned to be a part of the
compromise agreement, but their employment has been regularized as early as January 11, 2006;
hence, the company did not pursue their inclusion in the compromise agreement.[12]
The CA faulted the NLRC for failing to appreciate the evidence regarding the respondents' prior
employment with Atlanta. The NLRC recognized the prior employment of Costales and Almoite on
Atlanta's monthly report for December 2003 for the CPS Department/Section dated January 6, 2004.[13]
This record shows that Costales and Almoite were assigned to the company's first shift from 7:00 a.m. to
3:00 p.m. The NLRC ignored Sebolino and Sagun's prior employment under the company's Production
and Work Schedule for March 7 to 12, 2005 dated March 3, 2004,[14] as they had been Atlanta's
employees as early as March 3, 2004, with Sebolino scheduled to work on March 7-12, 2005 at 7:00 a.m.
to 7:00 p.m., while Sagun was scheduled to work for the same period but from 7:00 p.m. to 7:00 a.m.
The CA noted that Atlanta failed to challenge the authenticity of the two documents before it and the
labor authorities.
Atlanta and Chan moved for reconsideration, but the CA denied the motion in a resolution rendered on
March 25, 2009.[15] Hence, the present petition.
The Petition
Atlanta seeks a reversal of the CA decision, contending that the appellate court erred in (1) concluding
that Costales, Almoite, Sebolino and Sagun were employed by Atlanta before they were engaged as
apprentices; (2) ruling that a second apprenticeship agreement is invalid; (3) declaring that the
respondents were illegally dismissed; and (4) disregarding the compromise agreement executed by
Costales and Almoite. It submits the following arguments:
First. The CA's conclusion that the respondent workers were company employees before they were
engaged as apprentices was primarily based on the Monthly Report[16] and the Production and Work
Schedule for March 7-12, 2005,[17] in total disregard of the Master List[18] prepared by the company
accountant, Emelita M. Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as
employees in the Master List which "contained the names of all the persons who were employed by and
at petitioner."[19]
Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly Report which
were not sworn to, and in disregarding the Master List whose veracity was sworn to by Bernardo and by
Alex Go who headed the company's accounting division. It maintains that the CA should have given
more credence to the Master List.
Second. In declaring invalid the apprenticeship agreements it entered into with the respondent workers,
the CA failed to recognize the rationale behind the law on apprenticeship. It submits that under the law,
[20] apprenticeship agreements are valid, provided they do not exceed six (6) months and the
apprentices are paid the appropriate wages of at least 75% of the applicable minimum wage.
The respondents initially executed a five-month apprenticeship program with Atlanta, at the end of
which, they "voluntarily and willingly entered into another apprenticeship agreement with the
petitioner for the training of a second skill"[21] for five months; thus, the petitioners committed no
violation of the apprenticeship period laid down by the law.
Further, the apprenticeship agreements, entered into by the parties, complied with the requisites under
Article 62 of the Labor Code; the company's authorized representative and the respondents signed the
agreements and these were ratified by the company's apprenticeship committee. The apprenticeship
program itself was approved and certified by the TESDA.[22] The CA, thus, erred in overturning the
NLRC's finding that the apprenticeship agreements were valid.
Third. There was no illegal dismissal as the respondent workers' tenure ended with the expiration of the
apprenticeship agreement they entered into. There was, therefore, no regular employer-employee
relationship between Atlanta and the respondent workers.
The Case for Costales, Almoite, Sebolino and Sagun
In a Comment filed on August 6, 2009,[23] Costales, Almoite, Sebolino and Sagun pray for a denial of the
petition for being procedurally defective and for lack of merit.
The respondent workers contend that the petition failed to comply with Section 4, Rule 45 of the Rules
of Court which requires that the petition be accompanied by supporting material portions of the
records. The petitioners failed to attach to the petition a copy of the Production and Work Schedule
despite their submission that the CA relied heavily on the document in finding the respondent workers'
prior employment with Atlanta. They also did not attach a copy of the compromise agreement
purportedly executed by Costales and Almoite. For this reason, the respondent workers submit that the
petition should be dismissed.
The respondents posit that the CA committed no error in holding that they were already Atlanta's
employees before they were engaged as apprentices, as confirmed by the company's Production and
Work Schedule.[24] They maintain that the Production and Work Schedule meets the requirement of
substantial evidence as the petitioners failed to question its authenticity. They point out that the
schedule was prepared by Rose A. Quirit and approved by Adolfo R. Lope, head of the company's
PE/Spiral Section. They argue that it was highly unlikely that the head of a production section of the
company would prepare and assign work to the complainants if the latter had not been company
employees.
The respondent workers reiterate their mistrust of the Master List[25] as evidence that they were not
employees of the company at the time they became apprentices. They label the Master List as "self-
serving, dubious and even if considered as authentic, its content contradicts a lot of petitioner's claim
and allegations,"[26] thus -
1. Aside from the fact that the Master List is not legible, it contains only the names of inactive
employees. Even those found by the NLRC to have been employed in the company (such as Almoite,
Costales and Sagun) do not appear in the list. If Costales and Almoite had been employed with Atlanta
since January 11, 2006, as the company claimed,[27] their names would have been in the list,
considering that the Master List accounts for all employees "as of May 2006" - the notation carried on
top of each page of the document.
2. There were no entries of employees hired or resigned in the years 2005 and 2006 despite the "as of
May 2006" notation; several pages making up the Master List contain names of employees for the years
1999 - 2004.
3. The fact that Atlanta presented the purported Master List instead of the payroll raised serious doubts
on the authenticity of the list.
In sum, the respondent workers posit that the presentation of the Master List revealed the "intention of
the herein petitioner[s] to perpetually hide the fact of [their] prior employment."[28]
On the supposed apprenticeship agreements they entered into, Costales, Almoite, Sebolino and Sagun
refuse to accept the agreements' validity, contending that the company's apprenticeship program is
merely a ploy "to continually deprive [them] of their rightful wages and benefits which are due them as
regular employees."[29] They submit the following "indubitable facts and ratiocinations:"[30]
1. The apprenticeship agreements were submitted to TESDA only in 2005 (with dates of receipt on
"1/4/05" & "2/22/05"[31]), when the agreements were supposed to have been executed in April or May
2004. Thus, the submission was made long after the starting date of the workers' apprenticeship or even
beyond the agreement's completion/termination date, in violation of Section 23, Rule VI, Book II of the
Labor Code.
2. The respondent workers were made to undergo apprenticeship for occupations different from those
allegedly approved by TESDA. TESDA approved Atlanta's apprenticeship program on "Plastic Molder"[32]
and not for extrusion molding process, engineering, pelletizing process and mixing process.
3. The respondents were already skilled workers prior to the apprenticeship program as they had been
employed and made to work in the different job positions where they had undergone training. Sagun
and Sebolino, together with Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and Alegria were even
given production assignments and work schedule at the PE/Spiral Section from May 11, 2004 to March
23, 2005, and some of them were even assigned to the 3:00 p.m. - 11:00 p.m. and graveyard shifts
(11:00 p.m. - 7:00 a.m.) during the period.[33]
4. The respondent workers were required to continue as apprentices beyond six months. The TESDA
certificate of completion indicates that the workers' apprenticeship had been completed after six
months. Yet, they were suffered to work as apprentices beyond that period.
Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally dismissed, as the
reason for the termination of their employment - notice of the completion of the second apprenticeship
agreement - did not constitute either a just or authorized cause under Articles 282 and 283 of the Labor
Code.
Finally, Costales and Almoite refuse to be bound by the compromise agreement[34] that Atlanta
presented to defeat the two workers' cause of action. They claim that the supposed agreement is invalid
as against them, principally because they did not sign it.
The Court's Ruling
The procedural issue
The respondent workers ask that the petition be dismissed outright for the petitioners' failure to attach
to the petition a copy of the Production and Work Schedule and a copy of the compromise agreement
Costales and Almoite allegedly entered into -- material portions of the record that should accompany
and support the petition, pursuant to Section 4, Rule 45 of the Rules of Court.
In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena[35] where the Court
addressed essentially the same issue arising from Section 2(d), Rule 42 of the Rules of Court,[36] we held
that the phrase "of the pleadings and other material portions of the record xxx as would support the
allegation of the petition clearly contemplates the exercise of discretion on the part of the petitioner in
the selection of documents that are deemed to be relevant to the petition. The crucial issue to consider
then is whether or not the documents accompanying the petition sufficiently supported the allegations
therein."[37]
As in Mariners, we find that the documents attached to the petition sufficiently support the petitioners'
allegations. The accompanying CA decision[38] and resolution,[39] as well as those of the labor
arbiter[40] and the NLRC,[41] referred to the parties' position papers and even to their replies and
rejoinders. Significantly, the CA decision narrates the factual antecedents, defines the complainants'
cause of action, and cites the arguments, including the evidence the parties adduced. If any, the defect
in the petition lies in the petitioners' failure to provide legible copies of some of the material documents
mentioned, especially several pages in the decisions of the labor arbiter and of the NLRC. This defect,
however, is not fatal as the challenged CA decision clearly summarized the labor tribunal's rulings. We,
thus, find no procedural obstacle in resolving the petition on the merits.
The merits of the case
We find no merit in the petition. The CA committed no reversible error in nullifying the NLRC
decision[42] and in affirming the labor arbiter's ruling,[43] as it applies to Costales, Almoite, Sebolino
and Sagun. Specifically, the CA correctly ruled that the four were illegally dismissed because (1) they
were already employees when they were required to undergo apprenticeship and (2) apprenticeship
agreements were invalid.
The following considerations support the CA ruling.
First. Based on company operations at the time material to the case, Costales, Almoite, Sebolino and
Sagun were already rendering service to the company as employees before they were made to undergo
apprenticeship. The company itself recognized the respondents' status through relevant operational
records - in the case of Costales and Almoite, the CPS monthly report for December 2003[44] which the
NLRC relied upon and, for Sebolino and Sagun, the production and work schedule for March 7 to 12,
2005[45] cited by the CA.
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift (7:00 a.m. to 3:00
p.m.) of the Section's work. The Production and Work Schedules, in addition to the one noted by the CA,
showed that Sebolino and Sagun were scheduled on different shifts vis-Ã -vis the production and work of
the company's PE/Spiral Section for the periods July 5-10, 2004;[46] October 25-31, 2004;[47] November
8-14, 2004;[48] November 16-22, 2004;[49] January 3-9, 2005;[50] January 10-15, 2005;[51] March 7-12,
2005[52] and March 17-23, 2005.[53]
We stress that the CA correctly recognized the authenticity of the operational documents, for the
failure of Atlanta to raise a challenge against these documents before the labor arbiter, the NLRC and
the CA itself. The appellate court, thus, found the said documents sufficient to establish the
employment of the respondents before their engagement as apprentices.
Second. The Master List[54] (of employees) that the petitioners heavily rely upon as proof of their
position that the respondents were not Atlanta's employees, at the time they were engaged as
apprentices, is unreliable and does not inspire belief.
The list, consisting of several pages, is hardly legible. It requires extreme effort to sort out the names of
the employees listed, as well as the other data contained in the list. For this reason alone, the list
deserves little or no consideration. As the respondents also pointed out, the list itself contradicts a lot of
Atlanta's claims and allegations, thus: it lists only the names of inactive employees; even the names of
those the NLRC found to have been employed by Atlanta, like Costales and Almoite, and those who even
Atlanta claims attained regular status on January 11, 2006,[55] do not appear in the list when it was
supposed to account for all employees "as of May 6, 2006." Despite the "May 6, 2006" cut off date, the
list contains no entries of employees who were hired or who resigned in 2005 and 2006. We note that
the list contains the names of employees from 1999 to 2004.
We cannot fault the CA for ignoring the Master List even if Bernardo, its head office accountant, swore
to its correctness and authenticity.[56] Its substantive unreliability gives it very minimal probative value.
Atlanta would have been better served, in terms of reliable evidence, if true copies of the payroll (on
which the list was based, among others, as Bernardo claimed in her affidavit) were presented instead.
Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering service to the
company when they were made to undergo apprenticeship (as established by the evidence) renders the
apprenticeship agreements irrelevant as far as the four are concerned. This reality is highlighted by the
CA finding that the respondents occupied positions such as machine operator, scaleman and extruder
operator - tasks that are usually necessary and desirable in Atlanta's usual business or trade as
manufacturer of plastic building materials.[57] These tasks and their nature characterized the four as
regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or
authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal
under the law.[58]
Even if we recognize the company's need to train its employees through apprenticeship, we can only
consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement
and the retention of the employees, Atlanta had, to all intents and purposes, recognized the completion
of their training and their acquisition of a regular employee status. To foist upon them the second
apprenticeship agreement for a second skill which was not even mentioned in the agreement itself,[59]
is a violation of the Labor Code's implementing rules[60] and is an act manifestly unfair to the
employees, to say the least. This we cannot allow.
Fourth. The compromise agreement[61] allegedly entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, purportedly in settlement of the case before the NLRC, is not binding on
Costales and Almoite because they did not sign it. The company itself admitted[62] that while Costales
and Almoite were initially intended to be a part of the agreement, it did not pursue their inclusion "due
to their regularization as early as January 11, 2006."[63]cralaw
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The assailed decision
and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner Atlanta Industries,
Inc.
SO ORDERED.
6. G.R. No. 152894 August 17, 2007

CENTURY CANNING CORPORATION, Petitioner,
vs. COURT OF APPEALS and GLORIA C. PALAD, Respondents.
This is a Petition for Review 1 of the Decision2 dated 12 November 2001 and the Resolution dated 5
April 2002 of the Court of Appeals in CA-G.R. SP No. 60379.
The Facts
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as "fish cleaner"
at petitioner's tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement3
with petitioner. Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner
submitted its apprenticeship program for approval to the Technical Education and Skills Development
Authority (TESDA) of the Department of Labor and Employment (DOLE). On 26 September 1997, the
TESDA approved petitioner's apprenticeship program.4
According to petitioner, a performance evaluation was conducted on 15 November 1997, where

petitioner gave Palad a rating of N.I. or "needs improvement" since she scored only 27.75% based on a
100% performance indicator. Furthermore, according to the performance evaluation, Palad incurred
numerous tardiness and absences. As a consequence, petitioner issued a termination notice5 dated 22
November 1997 to Palad, informing her of her termination effective at the close of business hours of 28
November 1997.
Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated
13th month pay for the year 1997.
On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but ordered petitioner
to pay Palad her last salary and her pro-rated 13th month pay. The dispositive portion of the Labor
Arbiter's decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the complaint for illegal
dismissal filed by the complainant against the respondents in the above-entitled case should be, as it is
hereby DISMISSED for lack of merit. However, the respondents are hereby ordered to pay the
complainant the amount of ONE THOUSAND SIX HUNDRED THIRTY-TWO PESOS (P1,632.00),
representing her last salary and the amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT
(P7,228.00) PESOS representing her prorated 13th month pay.
All other issues are likewise dismissed.
SO ORDERED.6
On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the Labor
Arbiter's decision, thus:
WHEREFORE, premises considered, the decision of the Arbiter dated 25 February 1999 is hereby
MODIFIED in that, in addition, respondents are ordered to pay complainant's backwages for two (2)
months in the amount of P7,176.00 (P138.75 x 26 x 2 mos.). All other dispositions of the Arbiter as
appearing in the dispositive portion of his decision are AFFIRMED.
SO ORDERED.7
Upon denial of Palad's motion for reconsideration, Palad filed a special civil action for certiorari with the
Court of Appeals. On 12 November 2001, the Court of Appeals rendered a decision, the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby SET ASIDE and a
new one entered, to wit:
(a) finding the dismissal of petitioner to be illegal;
(b) ordering private respondent to pay petitioner her underpayment in wages;
(c) ordering private respondent to reinstate petitioner to her former position without loss of seniority
rights and to pay her full backwages computed from the time compensation was withheld from her up
to the time of her reinstatement;
(d) ordering private respondent to pay petitioner attorney's fees equivalent to ten (10%) per cent of the
monetary award herein;
(e) ordering private respondent to pay the costs of the suit.
SO ORDERED.8
The Ruling of the Court of Appeals
The Court of Appeals held that the apprenticeship agreement which Palad signed was not valid and
binding because it was executed more than two months before the TESDA approved petitioner's
apprenticeship program. The Court of Appeals cited Nitto Enterprises v. National Labor Relations
Commission,9 where it was held that prior approval by the DOLE of the proposed apprenticeship
program is a condition sine qua non before an apprenticeship agreement can be validly entered into.
The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of Appeals ruled that
petitioner failed to show that Palad was properly apprised of the required standard of performance. The
Court of Appeals likewise held that Palad was not afforded due process because petitioner did not
comply with the twin requirements of notice and hearing.
The Issues
Petitioner raises the following issues:
1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PRIVATE
RESPONDENT WAS NOT AN APPRENTICE;
2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER
HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF
PRIVATE RESPONDENT.10
The Ruling of the Court
The petition is without merit.
Registration and Approval by the TESDA of Apprenticeship Program Required Before Hiring of
Apprentices
The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship
agreement with an employer.11 One of the objectives of Title II (Training and Employment of Special
Workers) of the Labor Code is to establish apprenticeship standards for the protection of apprentices.12
In line with this objective, Articles 60 and 61 of the Labor Code provide:
ART. 60. Employment of apprentices. - Only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the Minister of Labor and Employment.
(Emphasis supplied)
ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements, including the wage rates
of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period
of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship programs duly approved
by the Minister of Labor and Employment. The Ministry shall develop standard model programs of
apprenticeship. (Emphasis supplied)
In Nitto Enterprises v. National Labor Relations Commission,13 the Court cited Article 61 of the Labor
Code and held that an apprenticeship program should first be approved by the DOLE before an
apprentice may be hired, otherwise the person hired will be considered a regular employee. The Court
held:
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and
submitted to the Department of Labor and Employment. However, the apprenticeship agreement was
filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and
Employment, the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and
Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and Employment is
a preliminary step towards its final approval and does not instantaneously give rise to an employer-
apprentice relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship
program through the participation of employers, workers and government and non-government
agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be
secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced.
The role of the DOLE in apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force and
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's
assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante")
deserves credence. He should rightly be considered as a regular employee of petitioner as defined by
Article 280 of the Labor Code x x x. (Emphasis supplied)14
Republic Act No. 779615 (RA 7796), which created the TESDA, has transferred the authority over
apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA.16 RA 7796
emphasizes TESDA's approval of the apprenticeship program as a pre-requisite for the hiring of
apprentices. Such intent is clear under Section 4 of RA 7796:
SEC. 4. Definition of Terms. - As used in this Act:
xxx
j) "Apprenticeship" training within employment with compulsory related theoretical instructions

involving a contract between an apprentice and an employer on an approved apprenticeable
occupation;
k) "Apprentice" is a person undergoing training for an approved apprenticeable occupation during an

established period assured by an apprenticeship agreement;
l) "Apprentice Agreement" is a contract wherein a prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of each party;
m) "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and approved

for apprenticeship by the Authority [TESDA]; (Emphasis supplied)cralawlibrary
In this case, the apprenticeship agreement was entered into between the parties before petitioner filed
its apprenticeship program with the TESDA for approval. Petitioner and Palad executed the
apprenticeship agreement on 17 July 1997 wherein it was stated that the training would start on 17 July
1997 and would end approximately in December 1997.17 On 25 July 1997, petitioner submitted for
approval its apprenticeship program, which the TESDA subsequently approved on 26 September
1997.18 Clearly, the apprenticeship agreement was enforced even before the TESDA approved
petitioner's apprenticeship program. Thus, the apprenticeship agreement is void because it lacked prior
approval from the TESDA.
The TESDA's approval of the employer's apprenticeship program is required before the employer is
allowed to hire apprentices. Prior approval from the TESDA is necessary to ensure that only employers in
the highly technical industries may employ apprentices and only in apprenticeable occupations.19 Thus,
under RA 7796, employers can only hire apprentices for apprenticeable occupations which must be
officially endorsed by a tripartite body and approved for apprenticeship by the
TESDA.Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
This is to ensure the protection of apprentices and to obviate possible abuses by prospective employers
who may want to take advantage of the lower wage rates for apprentices and circumvent the right of
the employees to be secure in their employment.
The requisite TESDA approval of the apprenticeship program prior to the hiring of apprentices was
further emphasized by the DOLE with the issuance of Department Order No. 68-04 on 18 August 2004.
Department Order No. 68-04, which provides the guidelines in the implementation of the
Apprenticeship and Employment Program of the government, specifically states that no enterprise shall
be allowed to hire apprentices unless its apprenticeship program is registered and approved by
TESDA.20
Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before
the TESDA's approval of petitioner's apprenticeship program, Palad is deemed a regular employee
performing the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioner's
business as a tuna and sardines factory. Under Article 28021 of the Labor Code, an employment is
deemed regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.
Illegal Termination of Palad
We shall now resolve whether petitioner illegally dismissed Palad.
Under Article 27922 of the Labor Code, an employer may terminate the services of an employee for just
causes23 or for authorized causes.24 Furthermore, under Article 277(b)25 of the Labor Code, the
employer must send the employee who is about to be terminated, a written notice stating the causes for
termination and must give the employee the opportunity to be heard and to defend himself. Thus, to
constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a
just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to
defend himself.26
In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor
efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor
Code, habitual absenteeism and poor efficiency of performance are among the valid causes for which
the employer may terminate the apprenticeship agreement after the probationary period.
However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palad's
termination:
As to the validity of complainant's dismissal in her status as an apprentice, suffice to state that the
findings of the Arbiter that complainant was dismissed due to failure to meet the standards is nebulous.
What clearly appears is that complainant already passed the probationary status of the apprenticeship
agreement of 200 hours at the time she was terminated on 28 November 1997 which was already the
fourth month of the apprenticeship period of 1000 hours. As such, under the Code, she can only be
dismissed for cause, in this case, for poor efficiency of performance on the job or in the classroom for a
prolonged period despite warnings duly given to the apprentice.
We noted that no clear and sufficient evidence exist to warrant her dismissal as an apprentice during the
agreed period. Besides the absence of any written warnings given to complainant reminding her of
"poor performance," respondents' evidence in this respect consisted of an indecipherable or
unauthenticated xerox of the performance evaluation allegedly conducted on complainant. This is of
doubtful authenticity and/or credibility, being not only incomplete in the sense that appearing thereon
is a signature (not that of complainant) side by side with a date indicated as "1/16/98". From the looks
of it, this signature is close to and appertains to the typewritten position of "Division/Department
Head", which is below the signature of complainant's immediate superior who made the evaluation
indicated as "11-15-97."
The only conclusion We can infer is that this evaluation was made belatedly, specifically, after the filing
of the case and during the progress thereof in the Arbitral level, as shown that nothing thereon indicate
that complainant was notified of the results. Its authenticity therefor, is a big question mark, and hence
lacks any credibility. Evidence, to be admissible in administrative proceedings, must at least have a
modicum of authenticity. This, respondents failed to comply with. As such, complainant is entitled to the
payment of her wages for the remaining two (2) months of her apprenticeship agreement.27 (Emphasis
supplied)cralawlibrary
Indeed, it appears that the Labor Arbiter's conclusion that petitioner validly terminated Palad was based
mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that
she had no knowledge of the performance evaluation conducted and that she was not even informed of
the result of the alleged performance evaluation. Palad also claims she did not receive a notice of
dismissal, nor was she given the chance to explain. According to petitioner, Palad did not receive the
termination notice because Palad allegedly stopped reporting for work after being informed of the result
of the evaluation.
Under Article 227 of the Labor Code, the employer has the burden of proving that the termination was
for a valid or authorized cause.28 Petitioner failed to substantiate its claim that Palad was terminated
for valid reasons. In fact, the NLRC found that petitioner failed to prove the authenticity of the
performance evaluation which petitioner claims to have conducted on Palad, where Palad received a
performance rating of only 27.75%. Petitioner merely relies on the performance evaluation to prove
Palad's inefficiency. It was likewise not shown that petitioner ever apprised Palad of the performance
standards set by the company. When the alleged valid cause for the termination of employment is not
clearly proven, as in this case, the law considers the matter a case of illegal dismissal.29
Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance
evaluation on Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad
denies any knowledge of the performance evaluation conducted and of the result thereof. Petitioner
likewise admits that Palad did not receive the notice of termination30 because Palad allegedly stopped
reporting for work. The records are bereft of evidence to show that petitioner ever gave Palad the
opportunity to explain and defend herself. Clearly, the two requisites for a valid dismissal are lacking in
this case.
WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution dated 5 April 2002
of the Court of Appeals in CA-G.R. SP No. 60379.

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1. G.R. No.

188267, December 02, 2013

The Factual Antecedents

The NLRC’s Ruling

The CA’s Ruling

The Case for the Respondent

We resolve to GRANT the petition.

1. Substantive aspect; dismissal based on loss of trust and confidence

1.A. Gallente held a position of trust and confidence

1.B. Gallente committed willful breach of trust sufficient to justify dismissal

We cannot support these CA’s reasons on several points.

2. G.R. No. 178184, January 29, 2014

Proceedings before the Labor Arbiter

1. Wilfredo Galvez – (Dismissed in Mar. 2000)

13th Month Pay for the period

Non–payment of Premium Pay for Holiday;

Non–payment of (5 days) Service Incentive

Actual Moral Exemplary & Compensatory

Ten (10%) Percent Attorney’s Fees

2. JOEL SALES – (Dismissed in Mar. 2000)

13th Month Pay for the period

Actual, Moral, Exemplary &

Ten (10%) Percent Attorney’s Fees

3. CRISTITO G. GRUTA – (Dismissed in Mar. 2000)

13th Month Pay for the period

Non–payment of Holiday Pay: (P7,045.57 x 2 yrs.)

Actual, Moral, Exemplary &

Ten (10%) Percent Attorney’s Fees

4. DANILO ARGUELLES – (Dismissed in Feb. 2000)

13th Month Pay for the period

Unpaid Salary from Feb. 16 to 29, 2000

Minimum Wage – P198 x 391.5 [/] 12 =

Actual Basic Wage for the period

Double Indemnity prescribed by Rep. Act 8188, Sec. 4

Minimum Wage – P225 391.5 [/] 12 =

Actual Basic Wage for the period

Double Indemnity prescribed by Rep. Act 8188, Sec. 4

Underpayment/Non–payment of Overtime Pay:

30% of Minimum Wage –

B. From Dec. 98 to Mar. 2000 (16 mos.)

30% of Minimum Wage –

30% of Salary Actually Paid –

Non–payment of Premium Pay for Holiday; Restday and

Ten (10%) Percent Attorney’s Fees

Backwages from Mar. 2000 to May 2001

Minimum Wage – P185 x 391.5 [/] 12 =

Actual Basic Wage for the period

Double Indemnity prescribed by Rep. Act 8188, Sec. 4

Minimum Wage – P198 x 391.5 [/] 12 =

Actual Basic Wage for the period

Minimum Wage – P225 x 391.5 [/] 12 =

Actual Basic Wage for the period

Double Indemnity prescribed by Rep. Act 8188, Sec. 4

30% Minimum Wage –

30% of Salary Actually Paid –

B. From Feb. 98 to Nov. 98 (10 mos.)

30% Minimum Wage –