Century Canning Corporation vs. Court of Appeals and Gloria C. Palad

Prior approval by the Technical Education and Skills Development Authority (TESDA) of an apprenticeship program is a condition sine qua non before an employer may validly enter into an apprenticeship agreement; an agreement executed before such approval is void, rendering the putative apprentice a regular employee entitled to security of tenure under Article 280 of the Labor Code.

The case involves the statutory framework governing apprenticeship agreements under the Labor Code and Republic Act No. 7796 (the TESDA Act). The law strictly regulates apprenticeship to ensure that only employers in highly technical industries may employ apprentices, and only in apprenticeable occupations approved by the competent authority. This regulatory oversight is intended to protect apprentices from exploitation and prevent employers from circumventing regular employment standards and minimum wage laws by disguising regular employment as training.

• On July 15, 1997, Century Canning Corporation hired Gloria C. Palad as a "fish cleaner" at its tuna and sardines factory.
• On July 17, 1997, Palad signed an apprenticeship agreement with the petitioner, which stated that the training period would start on the same date and end approximately in December 1997.
• Palad received a daily apprentice allowance of ₱138.75.
• On July 25, 1997, the petitioner submitted its apprenticeship program to the Technical Education and Skills Development Authority (TESDA) for approval.
• On September 26, 1997, TESDA approved the apprenticeship program.
• On November 15, 1997, the petitioner allegedly conducted a performance evaluation where Palad received a rating of "needs improvement" (27.75%) due to numerous instances of tardiness and absences.
• On November 22, 1997, the petitioner issued a termination notice to Palad, effective November 28, 1997, citing failure to meet company performance standards.
• Palad claimed she had no knowledge of the performance evaluation and was not given prior notice of the termination or an opportunity to be heard.
• Palad filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated 13th month pay for the year 1997.

• The apprenticeship agreement was valid and binding, and Palad was properly classified as an apprentice, not a regular employee.
• Palad was validly terminated for just causes, specifically habitual absenteeism and poor efficiency of performance, as evidenced by the performance evaluation conducted on November 15, 1997.
• The Court of Appeals committed reversible error in holding that Palad was not an apprentice and in finding that the petitioner failed to adequately prove the existence of a valid cause for termination.

• The apprenticeship agreement was void because it was executed on July 17, 1997, before the TESDA approved the apprenticeship program on September 26, 1997, violating the mandatory requirement of prior approval under Article 61 of the Labor Code and Republic Act No. 7796.
• Palad was actually a regular employee performing work necessary to the petitioner's business, not an apprentice, because the void agreement could not create an apprentice status.
• The dismissal was illegal because Palad was not afforded procedural due process (no notice and hearing), and the alleged just cause was not proven by substantial evidence, citing the doubtful authenticity of the performance evaluation and the lack of prior written warnings.

• Procedural: N/A
• Substantive Issues:
  • Whether the apprenticeship agreement was valid despite being executed prior to TESDA approval of the apprenticeship program.
  • Whether Palad was illegally dismissed from employment.

• Procedural: N/A
• Substantive:
  • The apprenticeship agreement is void for lack of prior TESDA approval. Under Article 61 of the Labor Code and Republic Act No. 7796, prior approval of the apprenticeship program is a condition sine qua non before an employer may hire apprentices. The agreement was executed on July 17, 1997, while TESDA approval was granted only on September 26, 1997.
  • Citing Nitto Enterprises v. National Labor Relations Commission, the Court held that the act of filing the program with TESDA is merely a preliminary step and does not instantaneously create a valid employer-apprentice relationship.
  • Since the agreement is void, Palad is deemed a regular employee under Article 280 of the Labor Code, as her work as a "fish cleaner" was necessary and desirable to the petitioner's business as a canning factory.
  • The dismissal was illegal because the petitioner failed to prove by substantial evidence the existence of a just cause. The performance evaluation was of doubtful authenticity, incomplete, and allegedly prepared belatedly after the complaint was filed. Moreover, Palad was never apprised of the performance standards nor given written warnings prior to termination.
  • The dismissal also violated procedural due process under Article 277(b) of the Labor Code, as Palad was not given a written notice stating the causes for termination and an opportunity to be heard and defend herself.

• Condition Sine Qua Non in Apprenticeship — Prior approval by the TESDA (formerly the DOLE) of the apprenticeship program is an indispensable requirement before an apprenticeship agreement can be validly entered into. An agreement executed prior to such approval is void and unenforceable, and the worker is considered a regular employee.
• Regular Employment by Operation of Law — Where an apprenticeship agreement is void due to lack of prior regulatory approval, the worker is deemed a regular employee under Article 280 of the Labor Code if engaged to perform activities usually necessary or desirable in the employer's usual business or trade.
• Twin Requirements for Valid Dismissal — To constitute valid dismissal, two requisites must concur: (1) the dismissal must be for a just or authorized cause under Articles 282 or 283 of the Labor Code (substantive due process); and (2) the employee must be afforded procedural due process, consisting of a written notice of the charges and an opportunity to be heard and defend herself.
• Burden of Proof in Illegal Dismissal Cases — The employer bears the burden of proving that the termination was for a valid or authorized cause; failure to discharge this burden results in a finding of illegal dismissal.

• "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 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."
• "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."
• "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."
• "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."

• Nitto Enterprises v. National Labor Relations Commission, G.R. No. 114337, 29 September 1995 — Controlling precedent establishing that prior approval by the DOLE (now TESDA) of the apprenticeship program is a condition sine qua non before an apprenticeship agreement can be validly entered into; followed and applied in the instant case.
• Skippers United Pacific, Inc. v. Maguad, G.R. No. 166363, 15 August 2006 — Cited for the principle that valid dismissal requires both substantive and procedural due process.
• Manly Express, Inc. v. Payong, Jr., G.R. No. 167462, 25 October 2005 — Cited for the rule that the burden of proving that the termination was for a valid or authorized cause rests on the employer.
• Philippine National Bank v. Cabansag, G.R. No. 157010, 21 June 2005 — Cited for the principle that when the valid cause for termination is not clearly proven, the dismissal is illegal.
• Manila Electric Company (MERALCO) v. National Labor Relations Commission, G.R. No. 153180, 2 September 2005 — Cited in support of the burden of proof rule in termination cases.

• Article 57 of the Labor Code — States the State's policy to establish a national apprenticeship program and apprenticeship standards for the protection of apprentices.
• Article 58(b) of the Labor Code — Defines an apprentice as a worker covered by a written apprenticeship agreement with an employer.
• Article 60 of the Labor Code — Limits the employment of apprentices to highly technical industries and apprenticeable occupations approved by the Minister of Labor and Employment (now TESDA).
• Article 61 of the Labor Code — Requires apprenticeship agreements to conform to rules issued by the Ministry of Labor and mandates that agreements providing for wage rates below the minimum may be entered into only in accordance with apprenticeship programs duly approved by the Minister (now TESDA).
• Article 277(b) of the Labor Code — Requires the employer to furnish a written notice stating the causes for termination and to afford the employee ample opportunity to be heard and defend himself; places the burden of proof on the employer.
• Article 279 of the Labor Code — Guarantees security of tenure, allowing termination only for just or authorized cause.
• Article 280 of the Labor Code — Defines regular employment where the employee performs activities usually necessary or desirable in the usual business or trade of the employer.
• Article 282 of the Labor Code — Enumerates just causes for termination by the employer.
• Article 283 of the Labor Code — Enumerates authorized causes for termination (closure, retrenchment, etc.).
• Republic Act No. 7796 (TESDA Act of 1994), Sections 4(j), (k), (l), (m), 5, and 18 — Transferred authority over apprenticeship programs from DOLE to TESDA and defined apprenticeship, apprentice, and apprenticeable occupation as requiring TESDA approval.
• DOLE Department Order No. 68-04 — Guidelines implementing the Apprenticeship and Employment Program, specifically stating that no enterprise shall be allowed to hire apprentices unless its apprenticeship program is registered and approved by TESDA.