Eagle Clarc Shipping Philippines, Inc. v. NLRC

An employer who fails to adduce substantial evidence of a just or authorized cause and who does not satisfy the twin-notice and disciplinary-procedure requirements under the POEA-SEC is liable for illegal dismissal, and the monetary award for the unexpired portion of a seafarer's contract must include all benefits expressly guaranteed in the employment contract — not basic salary alone — together with full reimbursement of the placement fee with twelve percent interest per annum.

John P. Loyola was hired by Eagle Clarc Shipping Philippines, Inc. as an Able Seaman for and on behalf of its foreign principal, Mama Shipping Sarl, under an eight-month contract commencing November 12, 2015, supplemented by an Italian Collective Bargaining Agreement. Capt. Leopoldo Arcilla was the President and General Manager of Eagle Clarc. The contract stipulated a basic monthly salary of US$ 577.00 plus fixed overtime, leave pay, weekend compensation, and social benefits and bonus, aggregating US$ 1,280.00 per month. Section 33 of the POEA Standard Employment Contract and Article 297 of the Labor Code governed the grounds for termination, while Section 17 of the POEA-SEC prescribed the disciplinary procedures applicable to erring seafarers on board.

John P. Loyola was employed by Eagle Clarc Shipping Philippines, Inc., for and on behalf of its foreign principal, Mama Shipping Sarl, as an Able Seaman under an eight-month contract that began on November 12, 2015. His monthly compensation package consisted of a basic salary of US$ 577.00, fixed overtime pay of US$ 283.00 with US$ 4.04 in excess of seventy hours, leave pay of US$ 144.00, weekend compensation of US$ 150.00, and social benefits and bonus of US$ 126.00 — totalling US$ 1,280.00 per month. The contract was supplemented by an Italian Collective Bargaining Agreement. Loyola boarded the vessel MV Grande Luanda on November 26, 2015.

According to Loyola, on January 29, 2016, he was called by Capt. Palerom Guiseppe and referred to Chief Mate Rago Francesco, who showed him a document he refused to sign because he did not know its contents. Because of his refusal, he was advised that he was terminated and forced to disembark. He was neither informed of the offense he allegedly committed nor afforded due process prior to disembarkation. He disembarked on February 2, 2016, six months before the expiration of his contract.

Petitioners, for their part, averred that Loyola had difficulty performing his tasks and that the Ship Master served a first formal warning informing him of his breach of the Code of Conduct, incompetence, and inefficiency. A disciplinary hearing was set to investigate his alleged poor performance. They maintained that the dismissal was grounded on Section 33 of the POEA-SEC in relation to Article 297 of the Labor Code, and that Loyola's failure to comply with the company's Code of Conduct justified termination. They claimed he was afforded due process through two notices which he refused to receive. After the investigation, Loyola was notified that he did not pass the training or probation period as mentioned in the contract — notwithstanding that the contract he signed did not indicate any probationary period. Petitioners argued that no bad faith or malice attended the termination and that Loyola was not entitled to monetary claims or attorney's fees.

On October 19, 2016, Loyola filed a complaint for illegal dismissal and monetary claims against Eagle Clarc, Mama Shipping, and Capt. Arcilla. The Labor Arbiter dismissed the complaint for failure to sign the verification in the position paper, but the NLRC reversed and found illegal dismissal, noting that no evidence supported the allegation of incompetence or inefficiency, that Loyola was not given ample time to answer the charge, and that the notations of refusal to sign or receive the notices were insufficient proof of service. The CA affirmed, additionally observing that not a single affidavit from any co-worker or entries in the ship's official logbook were adduced to corroborate the claim of unsatisfactory performance, and that the notice of termination cited a ground — failure to pass a probation period — that was not indicated in the contract.

• Procedural Defect: Petitioners argued that Loyola's failure to personally file the complaint, attend mandatory hearings, and execute the verification and certification against non-forum shopping merited dismissal of his complaint before the Labor Arbiter.
• Just Cause for Dismissal: Petitioners maintained that Loyola's incompetence and inefficiency, grounded on Section 33 of the POEA-SEC in relation to Article 297 of the Labor Code, constituted sufficient justification for termination, his failure to pass the criteria set by the company in relation to his work being a valid ground.
• Compliance with Due Process: Petitioners claimed that the twin-notice requirements were satisfied — Loyola was notified of his poor performance through a formal warning, notified of the hearing schedule, and eventually notified of his termination, the notice of termination being signed by the Chief Mate, Bosun, and Master on board.
• Limitation of Monetary Award: Petitioners argued that in the remote event illegal dismissal was found, the award should be limited to Loyola's basic salary only, with no basis to award other allowances unproven by him.
• Denial of Damages and Attorney's Fees: Petitioners contended that the awards for attorney's fees and damages should be denied, as they could not be faulted for pursuing and defending against Loyola's unfounded claim, and that there was no bad faith or malice on their part.
• Personal Liability of Capt. Arcilla: Petitioners argued that Capt. Leopoldo Arcilla should not be held solidarily liable with the corporate petitioners.

• Substantial Compliance with Verification: Loyola asserted that the complaint affidavit was duly executed and signed under oath and that he substantially complied with procedural requirements by duly authorizing his counsel, through a Special Power of Attorney, to sign the verification and certification of non-forum shopping on his behalf.
• Illegal Dismissal: Loyola contended that the outright termination of his employment contract was a gross violation of Articles 297 and 298 of the Labor Code and the twin requirements of due process, as he was neither informed of the offense he allegedly committed nor afforded due process prior to disembarkation.
• Monetary Claims: Loyola sought payment of his salary for the unexpired portion of his contract and other benefits, plus damages.

• Verification and Certification: Whether Loyola's failure to personally sign the verification and certification against non-forum shopping warranted dismissal of his complaint.
• Validity of Dismissal: Whether Loyola's dismissal was for a just or authorized cause and whether the twin-notice and disciplinary-procedure requirements under the POEA-SEC were satisfied.
• Computation of Unexpired Contract Award: Whether the monetary award for the unexpired portion of the contract should include all benefits guaranteed in the employment contract or be limited to basic salary.
• Damages and Attorney's Fees: Whether moral and exemplary damages and attorney's fees were properly awarded.
• Solidary Liability of Corporate Officer: Whether Capt. Arcilla, as President and General Manager of Eagle Clarc, should be held solidarily liable with the corporate petitioners.

• Verification and Certification: No. Substantial compliance exists when the counsel who signed the certification was given a Special Power of Attorney by the client; procedural rules may be relaxed to avoid unjustly depriving a litigant of the opportunity to present a case on the merits.
• Validity of Dismissal: No. Petitioners failed to discharge the burden of proving a just or authorized cause, no substantial evidence of incompetence or inefficiency having been adduced, and the twin-notice and disciplinary-procedure requirements under Section 17 of the POEA-SEC were not satisfied.
• Computation of Unexpired Contract Award: The award must include all benefits expressly provided and guaranteed in the employment contract as part of the monthly salary and benefit package — US$ 1,280.00 per month for six months, or US$ 7,680.00 — not merely basic salary. In addition, full reimbursement of the placement fee with twelve percent interest per annum is mandated under Section 10 of R.A. No. 8042, as amended.
• Damages and Attorney's Fees: Yes. Moral and exemplary damages were properly awarded in view of the oppressive manner of dismissal and the lack of proof of due notification, and attorney's fees were warranted because Loyola was forced to litigate to protect his rights.
• Solidary Liability of Corporate Officer: Yes. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022, corporate officers of a recruitment or placement agency are jointly and solidarily liable with the corporation for claims and damages; Capt. Arcilla, as President and General Manager, cannot evade liability.

• Verification and Certification: The rule on verification is a formal, not jurisdictional, requirement. Non-compliance does not necessarily render a pleading fatally defective, as substantial compliance exists when the signatory has ample knowledge of the truth of the allegations and matters are made in good faith. While a certification not signed by a duly authorized person renders the petition subject to dismissal, the Court acts with leniency when the counsel who signed was given a Special Power of Attorney by the client. Loyola's counsel executed the verification and certification under a Special Power of Attorney from Loyola, constituting substantial compliance. Consistent with the Court's duty to dispense justice, procedural rules were relaxed so as not to unjustly deprive Loyola of the opportunity to present his case on the merits.

• Validity of Dismissal: Factual findings of quasi-judicial bodies such as labor tribunals are accorded much respect, especially when supported by substantial evidence. In labor cases, the burden of proving that termination was for a just or authorized cause lies with the employer; failure to meet this burden renders the dismissal illegal. For a valid dismissal, the employer must show through substantial evidence that the dismissal was for a just or authorized cause and that the employee was afforded due process. Petitioners invoked incompetence and inefficiency, which contemplates failure to attain work goals or quotas or the production of unsatisfactory results. Apart from bare allegations that Loyola "failed to pass the criteria set by petitioners," no evidence was presented to substantiate the claim — no affidavit from any co-worker, no entries in the ship's official logbook showing performance assessment. Uncorroborated and self-serving statements of employers are inadequate to discharge the burden. As for procedural due process, Section 17 of the POEA-SEC requires the Master to furnish the seafarer a written notice of the grounds and the date, time, and place of investigation, to conduct the hearing with opportunity to explain, and to issue a written notice of penalty. The notations that Loyola "refused to sign or receive" were insufficient proof of service, and he was not given ample time to answer the charge, having been directed to attend the hearing on the same day he purportedly received the notice. No detail was provided as to what transpired during the alleged investigation.

• Computation of Unexpired Contract Award: Prevailing jurisprudence provides that where the employment contract of an illegally dismissed seafarer is for less than one year, the seafarer should be paid salaries for the unexpired portion, including all monthly vacation leave pay and other bonuses expressly provided and guaranteed in the employment contract as part of the monthly salary and benefit package. Loyola's contract guaranteed US$ 1,280.00 per month inclusive of basic salary, overtime, leave pay, weekend compensation, and social benefits and bonus. The NLRC's computation of US$ 1,280.00 multiplied by six months — US$ 7,680.00 — was therefore correct, and the CA's reduction to basic salary alone was erroneous. Additionally, the fifth paragraph of Section 10 of R.A. No. 8042, as amended, mandates full reimbursement of the placement fee with twelve percent interest per annum in cases of termination without just, valid, or authorized cause.

• Damages and Attorney's Fees: Moral damages are proper where the dismissal was tainted with bad faith or fraud or constituted an act oppressive to labor, contrary to morals, good customs, or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton, oppressive, or malevolent manner. The Ship Master's manner of dismissing Loyola, coupled with the lack of proof of due notification of charges and the disciplinary hearing, justified the awards. Attorney's fees were likewise proper because Loyola was forced to litigate and incur expenses to protect his rights and interest.

• Solidary Liability of Corporate Officer: Section 10 of R.A. No. 8042, as amended by R.A. No. 10022, provides that if the recruitment or placement agency is a juridical being, its corporate officers, directors, and partners shall be jointly and solidarily liable with the corporation for claims and damages. Capt. Arcilla, as President and General Manager of Eagle Clarc, fell squarely within this provision and could not evade liability.

• Burden of Proof in Illegal Dismissal — In labor cases, the burden of proving that the termination of an employee was for a just or authorized cause lies with the employer. If the employer fails to meet this burden, the conclusion is that the dismissal was unjustified and therefore illegal. Applied here: petitioners adduced no substantial evidence — no co-worker affidavits, no logbook entries — to corroborate their claim of incompetence and inefficiency, and their uncorroborated self-serving statements were insufficient.

• Two-Notice Rule in Termination — For dismissal to be valid, the employer must furnish the employee with two written notices: the first apprising the employee of the specific acts or omissions for which dismissal is sought, and the second informing the employee of the employer's decision to dismiss. Applied here: the notations that Loyola "refused to sign or receive" the notices were insufficient proof of service, and he was not given ample time to answer the charge.

• Substantial Compliance with Verification and Certification Against Forum Shopping — Verification is a formal, not jurisdictional, requirement; substantial compliance exists when the signatory has ample knowledge of the truth of the allegations and matters are made in good faith. When counsel who signed the certification was given a Special Power of Attorney by the client, there is substantial compliance with the rules on verification and certification against forum shopping.

• Incompetence or Inefficiency as Ground for Dismissal — Incompetence or inefficiency contemplates the failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period or by producing unsatisfactory results. Applied here: petitioners failed to present any evidence showing that Loyola failed to attain work goals or produced unsatisfactory results.

• Monetary Award for Unexpired Portion of Seafarer's Contract — Where the employment contract of an illegally dismissed seafarer is for less than one year, the seafarer should be paid salaries for the unexpired portion, including all monthly vacation leave pay and other bonuses expressly provided and guaranteed in the employment contract as part of the monthly salary and benefit package.

• Solidary Liability of Corporate Officers of Manning Agencies — Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022, if the recruitment or placement agency is a juridical being, its corporate officers, directors, and partners are jointly and solidarily liable with the corporation for claims and damages against it.

• "In labor cases, the burden of proving that the termination of an employee was for a just or authorized cause lies with the employer. If the employer fails to meet this burden, the conclusion is that the dismissal was unjustified and, therefore, illegal." — States the controlling allocation of burden in illegal dismissal cases and the automatic consequence of the employer's failure to discharge it.

• "Incompetence or inefficiency as a ground for dismissal contemplates the failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results." — Defines the doctrinal scope of incompetence or inefficiency as a just cause, distinguishing it from bare allegations of poor performance.

• "The Court has consistently held that uncorroborated and self-serving statements of employers are sorely inadequate in meeting the required quantum of proof to discharge their burden." — Articulates the evidentiary standard applicable to employer assertions in termination cases, frequently cited in subsequent labor jurisprudence.

• "This amount includes all the seafarer's monthly vacation leave pay and other bonuses which are expressly provided and guaranteed in his employment contract as part of his monthly salary and benefit package." — Defines the scope of the unexpired-contract award for illegally dismissed seafarers, establishing that the computation encompasses the full contractual benefit package, not basic salary alone.

• Steamship Mutual Underwriting Association (Bermuda) Limited vs. Sulpicio Lines, Inc., 818 Phil. 464–524 (2017) — Cited for the rule that verification is a formal, not jurisdictional, requirement and that substantial compliance suffices when the signatory has knowledge of the truth of the allegations.

• Victoriano vs. Dominguez, G.R. No. 214794, July 23, 2018 — Cited for the proposition that the Court will relax procedural rules when needed to avoid unjustly depriving a litigant of the opportunity to present a case on the merits.

• Magat vs. Inter Orient Maritime Enterprises, Inc., G.R. No. 232892, April 4, 2018 — Cited for the doctrine that factual findings of quasi-judicial bodies are accorded much respect, especially when supported by substantial evidence.

• Maersk-Filipinas Crewing, Inc. vs. Avestruz, 754 Phil. 307–322 (2015) — Cited for the rule that the burden of proving just or authorized cause for termination lies with the employer.

• Evic Human Resource Management, Inc. vs. Panahon, 814 Phil. 1040–1055 (2017) — Cited for the two-part test for valid dismissal (just/authorized cause plus due process) and for the definition of incompetence or inefficiency as a ground for dismissal.

• Meco Manning & Crewing Services, Inc. vs. Cuyos, G.R. No. 222939, July 3, 2019 — Cited for the twin-notice rule, the scope of the unexpired-contract monetary award for seafarers, the standards for moral and exemplary damages in illegal dismissal, the propriety of attorney's fees, and the solidary liability of corporate officers under R.A. No. 8042, as amended.

• Tangga-an vs. Philippine Transmarine Carriers, Inc., G.R. No. 180636, March 13, 2013 — Cited for the rule that the unexpired-contract award includes all benefits expressly guaranteed in the employment contract.

• Section 33, POEA Standard Employment Contract — Invoked by petitioners as the ground for termination based on incompetence and inefficiency; the Court found that petitioners failed to adduce substantial evidence to support the invocation of this provision.

• Section 17, POEA-SEC — Prescribes the disciplinary procedures against erring seafarers, requiring the Master to furnish a written notice of grounds and hearing schedule, conduct an investigation with opportunity to explain, enter the investigation in the ship's logbook, and issue a written notice of penalty. The Court found that these procedures were not complied with.

• Article 297, Labor Code — Relates to just causes for termination of employment; cited by petitioners in conjunction with Section 33 of the POEA-SEC, but the Court found the employer's burden unmet.

• Section 10, Republic Act No. 8042 (Migrant Workers Act), as amended by R.A. No. 10022 — Provides that in case of termination of overseas employment without just, valid, or authorized cause, the worker is entitled to full reimbursement of the placement fee with twelve percent interest per annum plus salaries for the unexpired portion of the contract. Also provides for the solidary liability of corporate officers of recruitment or placement agencies. Applied to award placement-fee reimbursement with interest and to hold Capt. Arcilla solidarily liable.

Peralta, C.J. (Chairperson), Caguioa (Working Chairperson), Lazaro-Javier, and Lopez, JJ., concurred.