Title
Grand Asian Shipping Lines, Inc. vs. Galvez
Case
G.R. No. 178184
Decision Date
Jan 29, 2014
Crewmembers accused of fuel pilferage; some dismissed validly due to loss of trust, others illegally due to insufficient evidence. Reinstatement and backwages ordered for some, while corporate officers absolved of liability.

Case Summary (G.R. No. 178184)

Key Dates and Applicable Law

Decision reviewed: Supreme Court decision rendered January 29, 2014 (use 1987 Philippine Constitution as governing constitution). Applicable statutes and rules invoked include the Labor Code (Articles 82, 95, 217, 223), Republic Act No. 8188 (amending RA 6727 on wage penalties/double indemnity), and procedural rules on appeals and appeal bonds before labor bodies.

Factual Allegations and Internal Investigation

Beginning August 1999 (per accuser), Abis reported that after multiple voyages a week substantial fuel oil remained unconsumed and was misdeclared as consumed in Engineers’ Voyage Reports; the saved oil was allegedly siphoned and sold at sea with proceeds shared among crewmembers. Internal audit by GASLI’s auditor produced a Certification of Overstatement of Fuel Oil Consumption showing an alleged overstatement totaling 6,954.3 liters (P74,737.86). A formal CIDG complaint and City Prosecutor referral followed; a criminal Information for qualified theft was filed in the RTC.

Administrative Action by Employer

GASLI placed respondents under preventive suspension, conducted administrative hearings, and terminated employment of several crewmembers (notably excluding, at that stage, Sales from some accusations). Termination notices cited serious misconduct (pilferage), willful breach of trust, and commission of a crime against the employer.

Proceedings Before the Labor Arbiter — Findings and Relief

Complainants (dismissed crewmembers) filed consolidated complaints for illegal suspension/dismissal and various money claims before the NLRC/Labor Arbiter. On August 30, 2001, the Labor Arbiter found the dismissals illegal and ordered reinstatement with full backwages and payment of detailed monetary awards (including 13th month, unpaid salary differentials, some statutory claims under RA 8188, P100,000 each in actual/moral/exemplary damages, and 10% attorney’s fees). The Labor Arbiter emphasized insufficiency of employer proof and the absence of particularized allegations (specific dates/times) and inclusion of all potentially implicated crew.

Appeal Bond Issue and NLRC Proceedings

GASLI appealed and initially posted a cash bond of P500,000 and a supersedeas bond of P1.5 million, filing a motion to reduce the required bond. The NLRC ordered deposit of an additional P4,084,736.70, which petitioners did not post; later the NLRC nonetheless reduced the bond to P1.5 million, took cognizance of the appeal, and, on the merits, found the dismissals valid except for Sales (and later absolved employers vis-à-vis Sales in a reconsideration), deleted the Labor Arbiter’s monetary awards, and sustained that some claims lacked factual basis.

Court of Appeals Review

Respondents (except others) petitioned the Court of Appeals, arguing the NLRC had no jurisdiction to entertain the appeal because petitioners failed to post the correct bond, and contending the NLRC erred in upholding the validity of the dismissals. The Court of Appeals annulled the NLRC’s decisions on jurisdictional grounds (appeal bond shortfall) and reinstated the Labor Arbiter’s August 30, 2001 Decision, finding petitioners’ evidence inadequate to prove pilferage and treating Sales as illegally dismissed.

Issues Presented to the Supreme Court

Principal issues raised by petitioners before the Supreme Court: (1) whether the Court of Appeals erred in concluding respondents were illegally dismissed, given the City Prosecutor’s finding of a prima facie case and aggregated employer evidence; and (2) whether the NLRC properly took cognizance of the appeal despite the alleged insufficiency of the appeal bond.

Supreme Court — Rule on Appeal Bond and Jurisdictional Discretion

The Supreme Court held that petitioners substantially complied with Article 223 of the Labor Code regarding the posting of an appeal bond and that the NLRC did not commit grave abuse of discretion in ultimately reducing the bond and entertaining the appeal. The Court applied the settled principle that technical rules on appeal bonds may be relaxed in labor cases where substantial compliance is shown and substantial merits should be decided to serve justice. Precedents allowing reduced bonds under analogous circumstances were cited to justify the NLRC’s exercise of discretion.

Supreme Court — Burden of Proof on Just Cause Dismissal

The Court reiterated that in termination disputes the employer bears the burden to prove just cause for dismissal by substantial evidence. For rank-and-file employees, proof of their actual involvement in the alleged misconduct is required for loss of trust and confidence to justify dismissal; for managerial employees, the employer need only show that there is a reasonable basis to believe the employee breached the trust reposed in them.

Supreme Court Findings on Individual Respondents — Galvez and Gruta

The Court found that Captain Wilfredo Galvez and Chief Engineer Cristito Gruta are managerial employees entrusted with custody and care of company property and management authority aboard the vessel. The Court concluded there was some basis to believe the trust reposed in them had been breached: the internal auditor’s certification of overstatement went unrefuted as to authenticity or the auditor’s competence, and respondents failed to account for the loss of fuel. Accordingly, their dismissals were upheld as valid for loss of trust and confidence.

Supreme Court Findings on Individual Respondents — Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao, and Austral

For the remaining rank-and-file crewmembers (Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao, and Austral), the Court found the employer’s evidence insufficient to establish their personal involvement in pilferage or theft. The Court therefore declared their dismissals illegal and ordered reinstatement with full backwages (inclusive of allowances and benefits) computed from dismissal to actual reinstatement, as well as 13th month pay for the dismissal period, and other monetary awards as specified in the Labor Arbiter’s computations.

Supreme Court Finding on Joel Sales — No Dismissal Proven

The Court concluded that Sales was not dismissed. The employer denied dismissing him; the record contained no evidence of preventive suspension, administrative hearing, or termination notice as to Sales. Payroll and attendance records showed his continued presence and signing during relevant periods; Montegrico’s supplemental affidavit did not include him among accused personnel. Because the initial fact of dismissal was not established by the employee, the employer’s burden to justify dismissal did not arise and no illegal dismissal finding could stand as to Sales.

Rulings on Specific Money Claims and Statutory Entitlements

The Court addressed monetary claims in detail: managerial employees (Galvez and Gruta) are excluded from statutory benefits covering hours of work, rest periods, holidays, and service incentive leave under Article 82 and thus are not entitled to holiday pay, rest day premium, or service incentive leave pay. The Court found that other respondents were not field personnel under Article 82 and therefore are generally covered; nevertheless, claims for overtime, holiday and rest day premium pay, and service incentive leave failed for lack of proof that work was performed on holidays/rest days or beyond regular hours, and because salaries were computed on a 365-day basis (which the parties had accepted and which, the Court found, encompassed those benefits). The Court affirmed awards for unpaid salaries, 13th month pay for the dismissal period, salary differentials, and double indemnity wher

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