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.

G.R. No. 178184, 29 January 2014

Complainants Wilfredo Galvez, Joel Sales, Cristito Gruta, Danilo Arguelles, Renato Batayola, Patricio Fesmillo, Jovy Noble, Emilio Dominico, Benny Nilmao, and Jose Austral, filed a labor complaint for illegal dismissal and monetary claims against their employer defendant Grand Asian Shipping Lines, Inc. (GASLI), and its President Eduardo P. Francisco, and General Manager William How.

GASLI is engaged in transporting liquefied 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. Complainants “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.”

Some time afterwards, “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.”

After an audit and investigation, GASLI’s internal auditor issued a Certification of Overstatement of Fuel Oil Consumption for M/T Dorothy stating that fuel oil consumption was overstated by 6,954.3 liters amounting to P74,737.86 from 30 June 1999 to 15 February 2000. Thus, a criminal complaint for qualified theft was filed against complainants. It was subsequently filed in court. Throughout, GASLI placed complainants in preventive suspension. After conducting administrative hearings, defendants terminated the employment of complainants.

HELD: The defendants were liable for certain causes of action. “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.”

Here, defendants failed to substantiate adequately the charges of pilferage against [complainants]. “[T]he quantum of proof which the employer must discharge is substantial evidence… [which] 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.” Consequently, “the mere filing of a formal charge… 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 [complainants] committed pilferage, which allegations remain uncorroborated.” Thus, “[u]nsubstantiated suspicious, accusations, and conclusions of employers do not provide for legal justification for dismissing employees.”

Further, the other pieces 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.”

With respect to the second ground for termination covering 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… [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.”

In the case at bar, “Galvez, as the ship captain, is considered a managerial employee since his duties involve the governance, care and management of the vessel. Gruta, as chief engineer, is also a managerial employee for he is tasked to take complete charge of the technical operations of the vessel. 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.

As such, “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.”

However, the same cannot be said for the others. “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.”

The well established rule “that the employer bears the burden of proof in illegal dismissal cases finds no application when the employer denies having dismissed the employee. The employee must first establish by substantial evidence the fact of dismissal before shifting to the employer the burden of proving the validity of such dismissal.”

Sales was not dismissed from employment as claimed by defendant. Unlike the rest, there is “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, 2000 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, 2000 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.”

As for their monetary claims, “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.”

With respect to Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, they are not entitled to their claims for holiday pay, premium pay and restday, overtime pay and service incentive leave pay. It is not disputed that in computing their salaries, defendants use 365 days as divisor. The same divisor was even used by complainants in making their own computations. “Hence, they are paid all the days of the month, which already include the benefits they claim. 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.”

Regarding the claim of service incentive leave pay, complainants were notable to specify the year that they were not paid. However, records show that they were paid their vacation leave benefits. “Thus, in accordance with Article 95 of the Labor Code, [complainants] can no longer claim service incentive leave pay.”

The award for 13th month pay for the period the complainants were illegally dismissed, unpaid salaries, and salary differentials were proper. “[Defendants’] evidence which consist of a mere tabulation 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.”

Moreover, the Labor Arbiter is authorized to impose the penalty of double indemnity for violations of the Minimum Wage Law for two reasons. “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.”

The grant of attorney’s fees is proper since complainants “were compelled to file a complaint for the recovery of wages and were forced to litigate and incur expenses.”

However, the grant of actual/compensatory, moral and exemplary damages in the amount of P100,000.00 is 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. 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. 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. 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, defendants Francisco and How are exculpated from being jointly and severally liable with GASLI for the illegal dismissal and payment of money claims of herein [complainants]. 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. For want of such proof, Francisco and How should not be held liable for the corporate obligations of GASLI.”