VOL.

253, FEBRUARY 9, 1996

405

Western Shipping Agency, Inc. vs. NLRC

G.R. No. 109717. February 9, 1996.

WESTERN SHIPPING AGENCY, INC., YEH SHIPPING

CO. LTD. and PHIL. BRITISH ASSURANCE CO., INC.,
petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and ALEXANDER S. BAO, respondents.
Labor Law; National Labor Relations Commission; Judgment;
Finality of Findings of Facts; Findings of facts of the National Labor
Relations Commission affirming those of the Labor Arbiter, are
entitled to great weight and will not be disturbed if they are
supported by substantial evidence.We find the petition to be
without merit. To begin with, findings of facts of the NLRC,
affirming those of the Labor Arbiter, are entitled to great weight
and will not be disturbed by this Court if they are supported by
substantial evidence.
Ships and Shipping; Maritime Law; Western Shippings
authority, as manning agent, was only to hire seafarers for the ship.
Noimi Zabala denied in his affidavit that World Mariner was the
ship agent in Davao. His denial, however, cannot prevail over the
positive assertion by World Mariner that it was the shipowners
(Yeh Shipping Co.s) agent for the duration of the M/V Sea Wealths
call at Davao from December 23, 1988 to January 20, 1989. Indeed,
the shipowner, Yeh Shipping Co., never denied the claim of the
World Mariner. Western Shippings authority, as manning agent,
was only to hire seafarers for the ship.
Same; Same; Clearance issued by the Coast Guard is entitled to
much weight as it was issued by an agency of the government
charged with the seaworthiness of vessels.The clearance to sail
issued by the Coast Guard, after the vessel had been inspected by it
together with the Collector of Customs, establishes two points: first,
that the Coast Guard and the Collector of Customs approved the
application for the boarding of the additional passengers, and
second that the safety of the vessel was not endangered by the

presence of the additional passengers. This clearance is entitled to

much weight as it was issued by an agency of the government
charged with the seaworthiness of vessels.

_______________
*

SECOND DIVISION.

406

406

SUPREME COURT REPORTS ANNOTATED

Western Shipping Agency, Inc. vs. NLRC

Same; Same; The clearance to sail issued by the Coast Guard is

proof of compliance with the requirements of Section 1019 of the
Philippine Merchant Marine Rules and Regulations.Nor is there
any basis for petitioners allegation that the vessel did not have
lifesaving equipment for the additional passengers. It had two life
boats and two inflatable life rafts on board which could
accommodate 50 persons and 25 persons, respectively. With only 36
persons on board (21 are the vessels complement and 15
passengers), the vessel had adequate life-saving equipment.
Petitioners contend that the life boats and rafts were for the crew
and passengers under emergency, but there were none for the
additional passengers. But there were no passengers under
emergency during the vessels run from Davao to Manila, so that
the lifebuoys intended for the passengers under emergency could
have been used by the crews relatives on board if needed. The
clearance to sail issued by the Coast Guard is proof of compliance
with the requirements of 1019 of the Philippine Merchant Marine
Rules and Regulations.
Labor Law; Managerial Employee; Dismissal; Loss of
Confidence; Loss of confidence is a valid ground for dismissal of
managerial employee but the burden of proof is on the employer to
show grounds justifying the loss of confidence.Loss of confidence is
a valid ground for the dismissal of managerial employees like
petitioner herein, who was the master of a vessel. But even
managerial employees enjoy security of tenure, fair standards of
employment and protection of labor laws and, as such, they can only
be dismissed after cause is shown in an appropriate proceeding. The
loss of confidence must be substantiated by evidence. The burden of
proof is on the employer to show grounds justifying the loss of
confidence. Petitioners failed to discharge this burden, as the POEA

and the NLRC found.

SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
The facts are stated in the opinion of the Court.
Del Rosario & Del Rosario for petitioners.
V.C. Ramirez Law Office for private respondent.
MENDOZA, J.:
This is a petition for certiorari to annul the decision of the
National Labor Relations Commission (First Division) in
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VOL. 253, FEBRUARY 9, 1996

407

Western Shipping Agency, Inc. vs. NLRC

NLRC NCR CA No. 000650-90, affirming with modification
the decision of the Philippine Overseas Employment
Administration, and its resolution denying reconsideration
of its aforesaid decision.
The facts are as follows:
Petitioner Western Shipping Agency, Inc. is the manning
agent of petitioner Yeh Shipping Co., Ltd., the owner of the
vessel M/V Sea Wealth, while petitioner Philippine British
Assurance Company is the surety of Western Shipping
Agency, Inc.
Private respondent was master of the M/V Sea Wealth,
having been hired by Western Shipping in 1988 at a
monthly salary of US$1,323.00 with a fixed monthly
overtime pay of US$287.00. His contract was for one year,
starting April 21, 1988.
On January 14, 1989, private respondent
was notified of
1
his discharge. In the disembarkation order given to him on
January 17, 1989, Western Shipping justified the discharge
of private respondent on the following ground:
At this juncture, our offices would like to let you feel and
understand that they were unhappy about the way you conducted
and executed your official duties and responsibilities as Master of
the vessel, particularly when it was at the port of Davao and when
it arrived at (the) Port of Manila. As you have admitted thru the
telephone, you failed to notify or gave advice to our offices about
your actual arrival in Manila because you were busy coordinating

matters including your intention to take the Pilot Examinations in

Batangas. Had it not for our initiative when we tried to go to South
Harbor on MondayJanuary 9thand verified, we would have not
known that you were already in Manila.
Indeed, we understand your failure to communicate with us upon
your arrival in Manila, when we went on board the ship and
discovered that you allowed the accommodation and transport of
people who should not be on board during the vessels navigation
from Davao to Manila, without even trying to secure the necessary
_______________
1

Rollo, p. 88.

408

408

SUPREME COURT REPORTS ANNOTATED

Western Shipping Agency, Inc. vs. NLRC

approval from our offices, aware of the risks and knowing the
limited safety equipment and accommodation on board.

On March 1, 1989, private respondent filed a complaint

with the POEA alleging illegal dismissal, underpayment of
salary and fixed overtime pay and non-payment of wages
and other emoluments corresponding to the unexpired
portion of his employment contract.
Petitioners denied private respondents allegations. They
averred that the private respondent was dismissed because
of loss of trust and confidence for having allowed fifteen
(15) persons to sail with him from Davao to Manila without
authority and without regard to the safety of the
passengers and the cargo.
In their position paper petitioners claimed that, in
violation of company rules, private respondent failed to
notify them of the vessels arrival in Manila on January 8,
1989 and to provide life-saving equipment for the
passengers he had allowed to board, as required by Sec.
1019 of the Philippine Merchant Marine Rules and
Regulations.
Petitioners submitted the affidavit of Noimi Zabala,
president of Western Shipping, stating as further ground
for the employers loss of trust and confidence in private
respondent, the fact that the latter allegedly collected
US$7,000.00 in foreign currency from Western Shipping in

violation of a Central Bank regulation prohibiting manning

agencies from withdrawing foreign remittances in dollars
and falsely accused Western Shipping of underpayment.
Private respondent did not deny that he had taken
passengers on board the vessel on its trip from Davao to
Manila. He claimed, however, that Mr. Zabala had been
notified of this fact in a telephone conversation but he did
not object and that the additional passengers were wives
and children of the complement of the vessel. Private
respondent alleged that the shipowners agent in Davao,
the World Mariner Philippines, Inc., did not object to the
taking of additional passengers but on the contrary secured
permit from the Collector of Customs for them to board the
vessel. Lastly, it was alleged, the Coast
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409

Western Shipping Agency, Inc. vs. NLRC

Guard, after inspecting the vessel with the additional
passengers on board, issued a clearance for the vessel to
sail.
Private respondent denied that he did not notify
Western Shipping of the vessels arrival. He claimed he had
sent a telex message on January 5, 1989, informing
Western Shipping of the expected time of arrival of the
vessel on January 8, 1989, at 0600 Hrs, and that Western
Shipping sent a message, also by telex, welcoming the
arrival of the vessel. He alleged that the vessel was
equipped with two life boats and rafts which could
accommodate all persons aboard in case of emergency.
After hearing, the POEA rendered a decision, finding
private respondent to have been illegally dismissed and
accordingly ordering petitioners to pay private respondents
monetary claims, as follows:
WHEREFORE, in view of all the foregoing premises, judgment is
hereby rendered ordering respondent WESTERN SHIPPING
AGENCY INCORPORATED and its principal Yeh Shipping to pay
complainant the sum of FIVE THOUSAND SIX HUNDRED
FORTY THREE US DOLLARS (US$5,643.00) or its peso equivalent
at the time of payment representing complainants salary for the
unexpired portion of the contract including his salary differential,
the sum of SIX THOUSAND NINE HUNDRED TWENTY PESOS

& 01/100 (P6,920.01) representing the underpayment of family

allotment and the difference in peso dollar conversion plus ten
percent (10%) of the total judgment away by way of and as
attorneys fees.
SO ORDERED.

Petitioners appealed to the NLRC which, on March 20,

1992, rendered a decision modifying the decision of the
POEA and ordering petitioners, as follows:
WHEREFORE, the decision appealed from is hereby MODIFIED in
that the award of P6,920.01 representing the alleged salary
differentials caused by the erroneous conversion of complainants
shipboard pay and allotments is hereby SET ASIDE.
The award of US$5,643.00 or its equivalent in Philippine
currency at the time of payment representing the salaries
corresponding to the unexpired portion of complainants contract
plus ten per410

410

SUPREME COURT REPORTS ANNOTATED

Western Shipping Agency, Inc. vs. NLRC

cent (10%) thereof as attorneys fees is hereby AFFIRMED with the

qualification that: (1) Respondents Western Shipping Agency, Inc.
and Yeh Shipping Co. Ltd. are jointly and severally liable therefor,
and (2) respondent British Assurance Co., Inc. is likewise liable
therefor in its capacity as the bonding company.
SO ORDERED.

Petitioners moved for a reconsideration but their motion

was denied by the NLRC in its resolution of March 30,
1993 for lack of merit.
Hence this petition. Petitioners allege that the NLRC
gravely abused its discretion in affirming the decision of
the POEA, finding private respondent to have been
illegally dismissed and awarding US$5,643.00 to him as
salaries corresponding to the unexpired portion of private
respondents contract.
We find the petition to be without merit. To begin with,
findings of facts of the NLRC, affirming those of the Labor
Arbiter, are entitled to great weight and will not be
disturbed by this Court if they are supported by substantial
evidence.
In this case, both the Labor Arbiter and the POEA found

that private respondent had taken on board the vessel the

fifteen passengers with the knowledge of Noimi Zabala, the
president of Western Shipping. Zabala had been told so by
telephone by private respondent but Zabala did not object
and only said, Mabuti ka pa pare, pinahihintulutan
mo
2
ang mga iyan na makasama sa biyahe.
As both the NLRC and the POEA also found, the
shipowners agent, World Mariner Phils. Inc., knew of the
presence on board the vessel of the passengers who were
actually the crews relatives. World Mariner in fact secured
a permit for them from the Collector of Customs and the
Coast Guard
as part of its duty to represent the vessel in
3
that port.
Noimi Zabala denied in his affidavit that World Mariner
was the ship agent in Davao. His denial, however, cannot
pre_______________
2

Private Respondents Comment, p. 12, Rollo, p. 190.

See Code of Commerce, Art. 586.

411

VOL. 253, FEBRUARY 9, 1996

411

Western Shipping Agency, Inc. vs. NLRC

vail over the positive assertion by World Mariner that it
was the shipowners (Yeh Shipping Co.s) agent for the
duration of the M/V Sea Wealths call at4 Davao from
December 23, 1988 to January 20, 1989. Indeed, the
shipowner, Yeh Shipping Co., never denied the claim of the
World Mariner. Western Shippings authority, as manning
agent, was only to hire seafarers for the ship.
The clearance to sail issued by the Coast Guard, after
the vessel had been inspected by it together with the
Collector of Customs, establishes two points: first, that the
Coast Guard and the Collector of Customs approved the
application for the boarding of the additional passengers,
and second that the safety of the vessel was not
endangered by the presence of the additional passengers.
This clearance is entitled to much weight as it was issued
by an agency of the 5 government charged with the
seaworthiness of vessels.
Nor is there any basis for petitioners allegation that the

vessel did not have life-saving equipment for the additional

passengers. It had two life boats and two inflatable life
rafts on board which could
accommodate 50 persons and 25
6
persons, respectively. With only 36 persons on board (21
are the vessels complement and 15 passengers), the vessel
had adequate life-saving equipment. Petitioners contend
that the life boats and rafts were for the crew and
passengers under emergency,
but there were none for the
7
additional passengers. But there were no passengers
under emergency during the vessels run from Davao to
Manila, so that the lifebuoys intended for the passengers
under emergency could have been used by the crews
relatives on board if needed. The clearance to sail issued by
the Coast Guard is proof of compliance with the
requirements of 1019 of the Philippine Merchant Marine
Rules and Regulations.
_______________
4

Certification, Rollo, p. 63.

P.D. No. 601, 5(b).

POEA Decision, Annex C, petition, Rollo, p. 41.

Petition, p. 14, Rollo, p. 15.

412

412

SUPREME COURT REPORTS ANNOTATED

Western Shipping Agency, Inc. vs. NLRC

Private respondent may be presumed to be as much

concerned with the safety of those on board as were
petitioners. After all the additional passengers were not
ordinary passengers but the wives and children of the
vessels complement, including private respondents own
wife. If the presence of these relatives endangered the
safety of the vessel as a whole, private respondent, who had
15 years of maritime experience behind him, would in all
likelihood have been the first one to disallow them.
The fact is that when the M/V Sea Wealth was in
Lhokseumawe, Indonesia, it was loaded with 17,171.443
metric tons of urea. When it reached Davao, it unloaded
8,021.713 metric tons of its cargo, so that on its voyage to
Manila, the vessels load was much lighter. The boarding of
the complements family did not make the vessels load
heavier than when it left Indonesia. If the vessel was

seaworthy then, with more reason it was seaworthy when

it sailed from Davao with a lighter load. It appears that of
the fifteen additional passengers,8 12 were adults, two were
teenagers and one was an infant.
Petitioners further contend that private respondent did
not notify Western Shipping of the actual arrival of the
vessel in Manila despite the fact that the vessel was
equipped with communication facilities which made it
possible for private respondent to contract any telephone
on shore. It appears that private respondent did inform
petitioners of the vessels Expected Time of Arrival (ETA)
in Manila. If he failed to confirm its arrival later, it was
because the vessel arrived in Manila on January 8, 1989,
which was a Sunday, when offices were closed. Petitioners
claim that it is engaged in maritime business and that it
operates on a 24-hour a day basis. Petitioners might be in
operation 24 hours a day plying their vessels. But there is
no evidence to show that its offices were open 24 hours a
day, seven days a week, so that even if the vessel arrived on
a Sunday, there were employees of Western Shipping who
could have attended to the vessel upon its arrival.
_______________
8

Respondents Comment, pp. 5-6, Rollo, pp. 183-184.

413

VOL. 253, FEBRUARY 9, 1996

413

Western Shipping Agency, Inc. vs. NLRC

Furthermore, the vessel arrived only an hour behind its
ETA as given to petitioners, but petitioners agents were
not on hand to meet it when the vessel arrived. Private
respondent had reason to believe that the Western
Shipping knew that vessel was arriving on January 8, 1989
because the latter had in fact issued a telex message
welcoming the arrival of the vessel.
Indeed, had it been private respondents intention to
hide the presence of the 15 passengers on board the vessel,
as petitioners claim, private respondent could have asked
the passengers to disembark from the vessel immediately
after its arrival on January 8, 1989 instead of allowing
them to stay until the next morning when officers of
Western Shipping came.

Loss of confidence is a valid ground for the dismissal of

managerial employees like petitioner herein, who was the
master of a vessel. But even managerial employees enjoy
security of tenure, fair9 standards of employment and
protection of labor laws and, as such, they can only be
dismissed 10after cause is shown in an appropriate
proceeding. The loss of confidence must be substantiated
by evidence. The burden of proof is on the employer to show
grounds justifying the loss of confidence. Petitioners failed
to discharge this burden, as the POEA and the NLRC
found.
As private respondent was illegally dismissed, he is
entitled to the payment of salary corresponding
to the
11
unexpired portion of his contract of employment.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Regalado (Chairman), Romero and Puno, JJ.,
concur.
Petition dismissed.
_______________
9

Cruz v. Medina, 177 SCRA 565 (1989).

10

Inter-Orient Maritime Enterprises v. NLRC, 235 SCRA 268 (1994);

Lawrence v. NLRC, 205 SCRA 737 (1992).

11

Anderson v. NLRC, G.R. No. 111212, January 22, 1996.

414

414

SUPREME COURT REPORTS ANNOTATED

Development Bank of the Philippines vs. Court of Appeals

Notes.The captain of a vessel is a confidential and
managerial employee within the meaning of the above
doctrine. (Inter-Orient Maritime Enterprises, Inc. vs.
National Labor Relations Commission, 235 SCRA 268
[1994])
Managerial employee is one who is vested with power or
prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. (Golden Farms, Inc. vs.
National Labor Relations Commission, 234 SCRA 517
[1994])

o0o

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