WILLFUL DISOBEDIENCE DOES NOT ARISE WHERE THE EMPLOYEE’S REFUSAL TO OBEY THE ORDER IS NOT CHARACTERIZED BY WRONGFUL OR PERVERSE ATTITUDE

Willful disobedience, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two requisites:

• The employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and
• The order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.

Thus, the Supreme Court held in the August 30, 2017 case, as follows:

Transglobal Maritime Agency, Inc., Goodwood Shipmanagement Pte., Ltd. vs. Vicente D. Chua, Jr.
G.R. No. 222430, August 30, 2017

Facts:

Transglobal and Goodwood (Transglobal Maritime Agency, et al.) hired respondent Vicente D. Chua, Jr. (Chua) as Able Seaman and boarded M.T. WAWASAN RUBY.

While at the port of Mailiao, Taiwan, Chua and his four (4) companions left the vessel for shore leave from 7:00 p.m. to 10:00 p.m. When they returned at around 11:40 p.m., the ship captain was infuriated.

The ship captain called Chua and the others, and were served with a written reprimand regarding the incident. They refused to sign and acknowledge receipt of the reprimand and, subsequently, the vessel’s logbook entry on the matter. Thereafter, Chua and the others disembarked and returned to the Philippines.

Chua filed a complaint for illegal dismissal, non-payment of salaries, withholding of documents, moral and exemplary damages and attorney’s fees against Transglobal Maritime Agency, et al.. Chua alleged that he and his companions returned later than their shore leave because of a problem with their contracted vehicle.

They immediately went to the ship’s office to return their passports and documents. However, the ship captain was furious and asked to explain their tardiness. Chua also alleged that they declined to sign the written reprimand for it contained falsehoods. They were repatriated without authorized and justifiable reason and without notice of termination.

Transglobal Maritime Agency, et al., on the other hand, maintained that Chua was dismissed for a just cause. His refusal to sign the written reprimand is a clear act of insubordination and disrespect towards superior officers. A General Report regarding the incident was entered in the vessel log, which Chua and the others also refused to sign. Transglobal Maritime Agency, et al. alleged that they agreed to be dismissed in the presence of the vessel’s master, Chief Officer and Chief Engineer.

LA Ruling:

The Labor Arbiter (LA) ruled that Chua was discharged for just cause, but was not served with the required notice of termination as he agreed to be dismissed.

The LA observed that Chua’s failure to return to the ship on time for whatever reason constitutes the offense of failure to observe regulations on the expiration of shore liberty under Section 33. C, No. 9 (h) of the 2010 Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC) which provides the penalty of reprimand for first offense.

However, his refusal to sign his receipt of the written reprimand and the vessel’s logbook despite being instructed by the vessel master or superior officers constitutes insubordination, an offense which carries the penalty of dismissal and payment of the cost of repatriation and replacement. While Chua and the others allegedly returned at 11:45 p.m. and not at 12 midnight as specified in the reprimand letter, the fact remains that he returned after the expiration of his shore leave. Since Transglobal Maritime Agency, et al. did not deny or respond to Chua’s other money claims, the LA granted the same for it is Transglobal Maritime Agency, et al.’ burden to prove their payment of salaries and benefits.

The complaint for illegal dismissal, damages, withholding of documents and other money claims were DISMISSED for lack of merit.

NLRC Ruling:

The National Labor Relations Commission (NLRC) affirmed the findings of the LA that Chua was legally dismissed, but awarded nominal damages for being dismissed without due process.

The NLRC held that Chua’s unreasonable refusal to receive the written reprimand was substantiated by the vessel’s logbook. The entries made in the logbook by the person in the performance of a duty required by law are prima facie evidence of facts stated therein. It considered Chua’s “arguing and misbehaving” after he returned from shore leave as insubordination which is punishable by dismissal under the POEA-SEC.

CA Ruling:

The CA granted the petition for certiorari filed by Chua, and reversed and set aside the decision of the NLRC.

The CA found that the NLRC overlooked pieces of evidence decisive of the controversy. It held that while the order to sign the receipt of written reprimand may be lawful or reasonable, the same, however, does not pertain to Chua’s duty which he had been engaged to discharge.

It ruled that Chua’s dismissal was disproportionate to the act complained of, that is his refusal to sign receipt of a written reprimand. Upon denial of its Motion for Reconsideration, Transglobal Maritime Agency, et al. elevated the case before the Supreme Court.

Issue/s:

Whether or not the refusal of employee to sign the logbook containing incident which he claimed to be falsity constitutes willful disobedience

Whether or not the legal rate of interest on judgment award of 6% should be applied retroactive or prior to July 1, 2013

SC Ruling:

The SC found the petition partly meritorious.

The SC reiterated that the LA found that Chua was guilty of insubordination based on his unjust refusal to obey an order from his superior officers to sign the receipt of written reprimand and the ship logbook entry. It was never established in the LA ruling that Chua was found arguing and misbehaving upon his late return from shore leave. Subsequently, the CA declared that Chua’s refusal to sign the said documents does not constitute insubordination or willful disobedience since it does not pertain to his duty to which he had been engaged to discharge.

The vessel’s logbook is the official repository of the day-to-day transactions and occurrences on board the vessel. It is where the captain records the decisions he has adopted, a summary of the performance of the vessel, and other daily events.

The SC further observed that a perusal of the General Reporting on the ship’s logbook reveals that Chua was penalized with a written reprimand for his arrival after the expiration of shore leave. It was also indicated that he refused to sign the receipt of the written reprimand, and that he was warned of immediate dismissal if he refused to sign the logbook entry.

From the foregoing, the SC concluded that Chua’s dismissal was contemplated only after his refusal to sign the logbook entry. Any supporting evidence regarding the allegation of “arguing and misbehaving” of Chua that night was never specified in the statement, as well as in the logbook. The logbook entry is self-serving and uncorroborated.

Transglobal Maritime Agency, et al. should have presented the logbook entry of the incident to substantiate any allegations of Chua’s misbehavior when he and the others returned from their shore leave. It is apparent that what was established was that Chua was warned of immediate dismissal if he refused to sign the ship logbook entry, and that his refusal to sign the written reprimand and the logbook entry prompted his dismissal.

Chua’s arguing and misbehaving when he returned after his shore leave was not sufficiently established. Insubordination or willful disobedience, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two requisites:

1. the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and
2. the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.

How to Validly Dismiss Employees for Willful Disobedience: Guide to Valid Dismissal of Employees

Moreover, a willful or intentional disobedience of such rule, order or instruction justifies dismissal only where such rule, order or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties which the employee has been engaged to discharge.

By virtue of the POEA-SEC, Chua is indeed bound to obey the lawful commands of the captain of the ship, but only as long as these pertain to his duties. There is no relevance to the order to sign the documents in Chua’ s performance of his duty as a seaman.

The pieces of evidence presented are insufficient to establish that Chua’s refusal was characterized by a wrongful and perverse mental attitude rendering his act inconsistent with proper subordination. Chua had explained that he refused to sign the written reprimand for he maintained that the same contained falsehoods. Based on the statement of witnesses, it was someone else who started arguing and misbehaving before the Master when asked for a reason for not signing the written reprimand.

Assuming arguendo that the commands of the ship captain to sign the receipt of the written reprimand and to sign the ship’s logbook are lawful commands supposed to be obeyed by the complement of a ship, Chua’s refusal to do the same does not warrant the supreme penalty of dismissal.

The SC found that dismissal is too harsh a penalty to be imposed due to Chua’s supposed disobedience. Transglobal Maritime Agency, et al. failed to establish that Chua’s disobedience was characterized by a wrongful and perverse mental attitude given that he believed the written reprimand and logbook contained falsities for he maintained that he had an explanation for his late arrival.

No hearing was conducted respecting Chua’s alleged insubordination. The pieces of evidence presented were also silent about whether Chua was given the opportunity to explain or defend himself. There was also no showing of imminent danger to the crew or the vessel, so that the required notice may be dispensed with.

As to the correct rate of imposable interest, Transglobal Maritime Agency, et al. argue that the interest of total monetary awards is pegged at six percent (6%) interest per annum pursuant to the ruling in the case of Nacar vs. Gallery Frames.

The actual base for the computation of legal interest of the total monetary awards shall be on the amount finally adjudged. The six percent (6%) legal interest shall be applied prospectively, thus, the twelve percent (12%) legal interest shall continue to be applied on judgments that have become final and executory prior to July 1, 2013.

The CA erred in imposing twelve percent (12%) interest on the total monetary awards computed from the date of illegal dismissal, or on February 2, 2012, until the finality of judgment. Since the instant case has not attained finality before July 1, 2013, the correct imposable interest for the total awards is six percent (6%) from the finality of this judgment until their full satisfaction based on the prevailing jurisprudence.