Grand Asian Shipping Lines v.

Galvez

FACTS: Petitioner Grand Asian Shipping Lines, Inc (GASLI) is a domestic corporation engaged in
transporting liquified petroleum gas (LPG) from Petron’s refinery in Bataan to Pasig and Cavite.
Respondents are crewmembers of one of GASLI’s vessels, M/T Dorothy Uno.

On January 2000, Richard Abis (vessel’s oiler) reported to GASLI an alleged illegal activity being
committed by respondent who would misdeclare the consume fuel in the Engineer’s Voyage
Reports and the save fuel oil were sold to other vessel out at sea (at nighttime). Profits would be
divided amongst themselves. After investigation, from the period of June 30, 1999 to Feb 15,
2000 the fuel it consumption was overrate by 6,954.3 liters amounting to 74,737.86. Acting upon
the anomaly, GASLI placed respondents under preventive suspension and after conducting
administrative hearings decided to terminate them for breach of trust, commission of crime
against employer. Respondents filed with the NLRC separate complaint for illegal suspension and
dismissal, underpayment/nonpayment of salaries/wages, overtime pay, premium pay for holiday
and rest day, service incentive pay, tax refunds and indemnities for damages and attorney’s fees
against petitioner.

On August 30, 2001, the Labor Arbiter rendered decision finding the dismissal of 21 complainants
to be illegal. Petitioner then filed a Notice of Appeal with Motion to Reduce Bond before the
NLRC citing economic depression, legality of termination, and compliance with labor standards.
NLRC denied petitioner’s motion to reduce bond and directed an additional bond. Despite
petitioner’s failure the pay the bond, NLRC found the appeal meritorious and ruled for
petitioners. Stating that the dismissal was valid with the exception of Sales.

NLRC struck down the monetary awards given by the Labor Arbiter as they were based on
computations made by respondents. On appeal to the CA, the court ruled in favor of respondent
stating that the NLRC’s decision had jurisdictional error since petitioner did not comply with the
additional bond.

ISSUE #1: Whether or not the CA erred in holding that respondents were illegally dismissed.

ISSUE #2: Whether or not the CA erred when it concluded petitioner were not able to perfect the
appeal of the Labor Arbitrer’s decision.

HELD #1: NO. The CA did not commit any error in finding that respondent’s were illegally
dismissed. According to the termination notice, respondents were dismissed based on the
grounds of (a) serious misconduct (b) engaging in pilferage wile navigating at sea (c) willful breach
of the trust reposed by the company (d) commission of a crime against their employer. After
examination of the evidence, the court finds that petitioners failed to substantiate the charges
of pilferage against respondents. The quantum of proof that should be presented is substantial
evidence. Mere filing of formal charge does not automatically make dismissal valid. The affidavit
executed simply contained accusations while allegations remained uncorroborated. Also there is
no sufficient evidence to show respondents participation in the commission of the crime.

Respondent’s termination due to loss of trust and confidence should have a distinction between
managerial and rank and file employees. Rank-and-file employees require proof of involvement
while managerial employees mere existence of a basis for belief is sufficient. Given that Galvez
and Gruta have managerial positions there is some basis for the loss of employer’s confidence—
regarding the overstatement of fuel consumption without any evidence to the contrary. While
the others, who are ordinary rank and file employees, were not proven to have any involvement
in the loss of the vessel’s fuel. Rendering their dismissals illegal. The employer bears the burden
of proof in illegal dismissal cases thus the employer must first establish by substantial evidence
the fact of dismissal.

HELD #2: YES. The CA erred in holding that there was no compliance on the part of petitioner
regarding the appeal bonds. According to Art. 223 of the Labor Code, the posting of a bond, either
in cash or surety, must be in the amount equivalent to them entry award.
Nonetheless, the court held that rules should not be applied in a very rigid and strict sense—the
same in labor cases were substantial merits serve the interest of justice. In this case, the
petitioner appeals from the awarding of 7,104,483.84 to respondents and only complied with
the posting of 500,000 PHP. We find this to be in substantial compliance with the Labor Code.