A.C. No. 11219 - Spouses Tan vs. Vallejo

Petitioner Evic Human Resources Inc. (EVIC), representing its foreign principal Free Bulkers S.A., hired respondent Rogelio Panahon as Chief Mate on board M/V Free Lady for a period of six (6) months.
The employment contract provided a basic monthly salary of US$1,088.00.
Respondent boarded the vessel on August 28, 2010, but was repatriated on September 24, 2010 without completing the contracted period.

Respondent, an experienced seafarer with 31 years in the profession (and 21 years as Chief Mate), claimed to have performed his duties diligently without prior disciplinary issues.
During the voyage, tension allegedly arose with the vessel’s Captain, Edgar A. Buton, who later developed a hostile attitude toward respondent.
On September 7, 2010, respondent admitted to taking a small sip of whisky provided by a stevedore, after which he was reportedly woken up by Captain Buton who had him report on damages allegedly caused by the stevedores.
Following the report, Captain Buton noted a faint odor of alcohol and recommended respondent’s immediate replacement in the vessel’s logbook.

Petitioners contended that respondent’s dismissal was justified based on the evidence of gross negligence and intoxication.
The Free Lady Crew Behavior Report, dated September 8, 2010 and prepared by Captain Buton, served as the primary evidence.

The report detailed incidents of failure to observe safety precautions during mooring and unmooring operations, alleged negligence, and a display of arrogance towards fellow crew members.
It also recorded an instance of intoxication as the respondent was found drinking after his duty, thereby violating company policies and contractual stipulations under the POEA-SEC.

Petitioners relied solely on the uncorroborated Crew Behavior Report, which was signed by the captain and four crew members, to justify the dismissal on grounds of inefficiency, incompetence, and gross negligence.

Respondent filed a Complaint for illegal dismissal on September 28, 2010, claiming moral and exemplary damages, in addition to attorney’s fees.
The Labor Arbiter (LA) initially dismissed the complaint for lack of merit, finding that the petitioners had discharged their burden by proving just cause through the Crew Behavior Report.
Respondent escalated the issue to the National Labor Relations Commission (NLRC) which, on September 15, 2011, reaffirmed the existence of just cause but held the petitioners liable for failure to observe due process—specifically, not affording the requisite notice and hearing—awarding nominal damages of ₱50,000.00.

On January 31, 2013, the CA set aside the NLRC decision by ruling that the unnotarized Crew Behavior Report was insufficient and uncorroborated, thereby failing to support a finding of just cause.
The CA noted:

The report was based solely on acts witnessed by Captain Buton, with no further supporting evidence or affidavits from the injured seaman or agents.
The allegations of negligence were isolated and did not meet the threshold of habitual and gross neglect.
The intoxication incident occurred while respondent was off duty and thus did not satisfy the requirements under Section 33(6) of the POEA Standard Employment Contract.

The CA ordered petitioners to pay the unexpired portion of the employment contract and attorney’s fees of 10% of the award, while dismissing claims for moral and exemplary damages.
A subsequent Motion for Reconsideration by petitioners was denied on April 22, 2013.

Whether the CA erred in ruling that there was no just cause for respondent’s dismissal.

Consideration of the sufficiency and credibility of evidence (primarily the Crew Behavior Report) submitted by petitioners.
Evaluation of whether the isolated incident of alleged negligence and off-duty intoxication could warrant a dismissal for just cause.

Analysis of the appropriateness of awarding attorney’s fees under Article 111 of the Labor Code in light of the established facts and procedural lapses.