Article 64. Sponsoring of apprenticeship program.

Any of the
apprenticeship schemes recognized herein may be undertaken or sponsored by
a single employer or firm or by a group or association thereof or by a civic
organization. Actual training of apprentices may be undertaken:

In the premises of the sponsoring employer in the case of individual

apprenticeship programs;

In the premises of one or several designated firms in the case of programs

sponsored by a group or association of employers or by a civic organization; or

In a Department of Labor and Employment training center or other public

training institution.

Article 65. Investigation of violation of apprenticeship agreement.

Upon complaint of any interested person or upon its own initiative, the
appropriate agency of the Department of Labor and Employment or its authorized
representative shall investigate any violation of an apprenticeship agreement
pursuant to such rules and regulations as may be prescribed by the Secretary of
Labor and Employment.

Article 66. Appeal to the Secretary of Labor and Employment. The

decision of the authorized agency of the Department of Labor and Employment
may be appealed by any aggrieved person to the Secretary of Labor and
Employment within five (5) days from receipt of the decision. The decision of the
Secretary of Labor and Employment shall be final and executory.

Article 67. Exhaustion of administrative remedies. No person shall

institute any action for the enforcement of any apprenticeship agreement or
damages for breach of any such agreement, unless he has exhausted all
available administrative remedies.

Article 68. Aptitude testing of applicants. Consonant with the minimum

qualifications of apprentice-applicants required under this Chapter, employers or
entities with duly recognized apprenticeship programs shall have primary
responsibility for providing appropriate aptitude tests in the selection of
apprentices. If they do not have adequate facilities for the purpose, the
Department of Labor and Employment shall perform the service free of charge.

Article 69. Responsibility for theoretical instruction. Supplementary

theoretical instruction to apprentices in cases where the program is undertaken in
the plant may be done by the employer. If the latter is not prepared to assume
 the responsibility, the same may be delegated to an appropriate government
agency.

Article 70. Voluntary organization of apprenticeship programs;

exemptions.

The organization of apprenticeship program shall be primarily a voluntary

undertaking by employers;

When national security or particular requirements of economic

development so demand, the President of the Philippines may require
compulsory training of apprentices in certain trades, occupations, jobs or
employment levels where shortage of trained manpower is deemed critical as
determined by the Secretary of Labor and Employment. Appropriate rules in this
connection shall be promulgated by the Secretary of Labor and Employment as
the need arises; and

Where services of foreign technicians are utilized by private companies in

apprenticeable trades, said companies are required to set up appropriate
apprenticeship programs.

Article 71. Deductibility of training costs. An additional deduction from

taxable income of one-half (1/2) of the value of labor training expenses incurred
for developing the productivity and efficiency of apprentices shall be granted to
the person or enterprise organizing an apprenticeship program: Provided, That
such program is duly recognized by the Department of Labor and Employment:
Provided, further, That such deduction shall not exceed ten (10%) percent of
direct labor wage: and Provided, finally, That the person or enterprise who
wishes to avail himself or itself of this incentive should pay his apprentices the
minimum wage.

Century Canning v. CA, August 17, 2007

The Facts

On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad)
as "fish cleaner" at petitioner’s tuna and sardines factory. Palad signed on 17 July 1997
an apprenticeship agreement3 with petitioner. Palad received an apprentice allowance
of ₱138.75 daily. On 25 July 1997, petitioner submitted its apprenticeship program for
approval to the Technical Education and Skills Development Authority (TESDA) of the
Department of Labor and Employment (DOLE). On 26 September 1997, the TESDA
approved petitioner’s apprenticeship program. 4
According to petitioner, a performance evaluation was conducted on 15 November
1997, where petitioner gave Palad a rating of N.I. or "needs improvement" since she
scored only 27.75% based on a 100% performance indicator. Furthermore, according to
the performance evaluation, Palad incurred numerous tardiness and absences. As a
consequence, petitioner issued a termination notice 5 dated 22 November 1997 to Palad,
informing her of her termination effective at the close of business hours of 28 November
1997.

Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-
payment of pro-rated 13th month pay for the year 1997.

On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but
ordered petitioner to pay Palad her last salary and her pro-rated 13th month pay. The
dispositive portion of the Labor Arbiter’s decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the

complaint for illegal dismissal filed by the complainant against the respondents in the
above-entitled case should be, as it is hereby DISMISSED for lack of merit. However,
the respondents are hereby ordered to pay the complainant the amount of ONE
THOUSAND SIX HUNDRED THIRTY-TWO PESOS (₱1,632.00), representing her last
salary and the amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT
(₱7,228.00) PESOS representing her prorated 13th month pay.

All other issues are likewise dismissed.

SO ORDERED.6

On appeal, the National Labor Relations Commission (NLRC) affirmed with modification
the Labor Arbiter’s decision, thus:

WHEREFORE, premises considered, the decision of the Arbiter dated 25 February

1999 is hereby MODIFIED in that, in addition, respondents are ordered to pay
complainant’s backwages for two (2) months in the amount of ₱7,176.00 (₱138.75 x 26
x 2 mos.). All other dispositions of the Arbiter as appearing in the dispositive portion of
his decision are AFFIRMED.

SO ORDERED.7

Upon denial of Palad’s motion for reconsideration, Palad filed a special civil action for
certiorari with the Court of Appeals. On 12 November 2001, the Court of Appeals
rendered a decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby
SET ASIDE and a new one entered, to wit:

(a) finding the dismissal of petitioner to be illegal;

(b) ordering private respondent to pay petitioner her underpayment in wages;

(c) ordering private respondent to reinstate petitioner to her former position without loss
of seniority rights and to pay her full backwages computed from the time compensation
was withheld from her up to the time of her reinstatement;

(d) ordering private respondent to pay petitioner attorney’s fees equivalent to ten (10%)
per cent of the monetary award herein; and

(e) ordering private respondent to pay the costs of the suit.

SO ORDERED.8

The Ruling of the Court of Appeals

The Court of Appeals held that the apprenticeship agreement which Palad signed was
not valid and binding because it was executed more than two months before the TESDA
approved petitioner’s apprenticeship program. The Court of Appeals cited Nitto
Enterprises v. National Labor Relations Commission,9 where it was held that prior
approval by the DOLE of the proposed apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be validly entered into.

The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of
Appeals ruled that petitioner failed to show that Palad was properly apprised of the
required standard of performance. The Court of Appeals likewise held that Palad was
not afforded due process because petitioner did not comply with the twin requirements
of notice and hearing.

The Issues

Petitioner raises the following issues:

1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE; and

2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE
OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT. 10

The Ruling of the Court

The petition is without merit.

Registration and Approval by the TESDA of Apprenticeship Program Required

Before Hiring of Apprentices
The Labor Code defines an apprentice as a worker who is covered by a written
apprenticeship agreement with an employer. 11 One of the objectives of Title II (Training
and Employment of Special Workers) of the Labor Code is to establish apprenticeship
standards for the protection of apprentices. 12 In line with this objective, Articles 60 and
61 of the Labor Code provide:

ART. 60. Employment of apprentices. — Only employers in the highly technical

industries may employ apprentices and only in apprenticeable occupations
approved by the Minister of Labor and Employment. (Emphasis supplied)

ART. 61. Contents of apprenticeship agreements. — Apprenticeship agreements,

including the wage rates of apprentices, shall conform to the rules issued by the
Minister of Labor and Employment. The period of apprenticeship shall not exceed six
months. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship
programs duly approved by the Minister of Labor and Employment. The Ministry
shall develop standard model programs of apprenticeship. (Emphasis supplied)

In Nitto Enterprises v. National Labor Relations Commission,13 the Court cited Article 61
of the Labor Code and held that an apprenticeship program should first be approved by
the DOLE before an apprentice may be hired, otherwise the person hired will be
considered a regular employee. The Court held:

In the case at bench, the apprenticeship agreement between petitioner and private
respondent was executed on May 28, 1990 allegedly employing the latter as an
apprentice in the trade of "care maker/molder." On the same date, an apprenticeship
program was prepared by petitioner and submitted to the Department of Labor and
Employment. However, the apprenticeship agreement was filed only on June 7, 1990.
Notwithstanding the absence of approval by the Department of Labor and Employment,
the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the
law. It is mandated that apprenticeship agreements entered into by the employer
and apprentice shall be entered only in accordance with the apprenticeship
program duly approved by the Minister of Labor and Employment.

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 act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not
instantaneously give rise to an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national
apprenticeship program through the participation of employers, workers and
government and non-government agencies" and "to establish apprenticeship standards
for the protection of apprentices." To translate such objectives into existence, prior
approval of the DOLE to any apprenticeship program has to be secured as a condition
sine qua non before any such apprenticeship agreement can be fully enforced. The role
of the DOLE in apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private respondent
has no force and effect in the absence of a valid apprenticeship program duly approved
by the DOLE, private respondent’s assertion that he was hired not as an apprentice but
as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be
considered as a regular employee of petitioner as defined by Article 280 of the Labor
Code x x x. (Emphasis supplied)14

Republic Act No. 779615 (RA 7796), which created the TESDA, has transferred the
authority over apprenticeship programs from the Bureau of Local Employment of the
DOLE to the TESDA.16 RA 7796 emphasizes TESDA’s approval of the apprenticeship
program as a pre-requisite for the hiring of apprentices. Such intent is clear under
Section 4 of RA 7796:

SEC. 4. Definition of Terms. — As used in this Act:

xxx

j) "Apprenticeship" training within employment with compulsory related theoretical

instructions involving a contract between an apprentice and an employer on an
approved apprenticeable occupation;

k) "Apprentice" is a person undergoing training for an approved apprenticeable

occupation during an established period assured by an apprenticeship agreement;

l) "Apprentice Agreement" is a contract wherein a prospective employer binds himself

to train the apprentice who in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and responsibilities of
each party;

m) "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite

body and approved for apprenticeship by the Authority [TESDA]; (Emphasis
supplied)

In this case, the apprenticeship agreement was entered into between the parties before
petitioner filed its apprenticeship program with the TESDA for approval. Petitioner and
Palad executed the apprenticeship agreement on 17 July 1997 wherein it was stated
that the training would start on 17 July 1997 and would end approximately in December
1997.17 On 25 July 1997, petitioner submitted for approval its apprenticeship program,
which the TESDA subsequently approved on 26 September 1997. 18 Clearly, the
apprenticeship agreement was enforced even before the TESDA approved petitioner’s
apprenticeship program. Thus, the apprenticeship agreement is void because it lacked
prior approval from the TESDA.

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. 19 Thus, under RA 7796, employers can only
hire apprentices for apprenticeable occupations which must be officially endorsed by a
tripartite body and approved for apprenticeship by the TESDA.1avvphil 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.

The requisite TESDA approval of the apprenticeship program prior to the hiring of
apprentices was further emphasized by the DOLE with the issuance of Department
Order No. 68-04 on 18 August 2004. Department Order No. 68-04, which provides the
guidelines in the implementation of the Apprenticeship and Employment Program of the
government, specifically states that no enterprise shall be allowed to hire
apprentices unless its apprenticeship program is registered and approved by
TESDA.20

Since Palad is not considered an apprentice because the apprenticeship agreement

was enforced before the TESDA’s approval of petitioner’s apprenticeship program,
Palad is deemed a regular employee performing the job of a "fish cleaner." Clearly, the
job of a "fish cleaner" is necessary in petitioner’s business as a tuna and sardines
factory. Under Article 28021 of the Labor Code, an employment is deemed regular where
the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.

Illegal Termination of Palad

We shall now resolve whether petitioner illegally dismissed Palad.

Under Article 27922 of the Labor Code, an employer may terminate the services of an
employee for just causes23 or for authorized causes. 24 Furthermore, under Article
277(b)25 of the Labor Code, the employer must send the employee who is about to be
terminated, a written notice stating the causes for termination and must give the
employee the opportunity to be heard and to defend himself. Thus, 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.26

In this case, the Labor Arbiter held that petitioner terminated Palad for habitual
absenteeism and poor efficiency of performance. Under Section 25, Rule VI, Book II of
the Implementing Rules of the Labor Code, habitual absenteeism and poor efficiency of
performance are among the valid causes for which the employer may terminate the
apprenticeship agreement after the probationary period.

However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality
of Palad’s termination:

As to the validity of complainant’s dismissal in her status as an apprentice, suffice to

state that the findings of the Arbiter that complainant was dismissed due to failure to
meet the standards is nebulous. What clearly appears is that complainant already
passed the probationary status of the apprenticeship agreement of 200 hours at the
time she was terminated on 28 November 1997 which was already the fourth month of
the apprenticeship period of 1000 hours. As such, under the Code, she can only be
dismissed for cause, in this case, for poor efficiency of performance on the job or in the
classroom for a prolonged period despite warnings duly given to the apprentice.

We noted that no clear and sufficient evidence exist to warrant her dismissal as
an apprentice during the agreed period. Besides the absence of any written
warnings given to complainant reminding her of "poor performance,"
respondents’ evidence in this respect consisted of an indecipherable or
unauthenticated xerox of the performance evaluation allegedly conducted on
complainant. This is of doubtful authenticity and/or credibility, being not only
incomplete in the sense that appearing thereon is a signature (not that of
complainant) side by side with a date indicated as "1/16/98". From the looks of it,
this signature is close to and appertains to the typewritten position of
"Division/Department Head", which is below the signature of complainant’s
immediate superior who made the evaluation indicated as "11-15-97."

The only conclusion We can infer is that this evaluation was made belatedly,
specifically, after the filing of the case and during the progress thereof in the
Arbitral level, as shown that nothing thereon indicate that complainant was
notified of the results. Its authenticity therefor, is a big question mark, and hence
lacks any credibility. Evidence, to be admissible in administrative proceedings,
must at least have a modicum of authenticity. This, respondents failed to comply
with. As such, complainant is entitled to the payment of her wages for the remaining two
(2) months of her apprenticeship agreement. 27 (Emphasis supplied)

Indeed, it appears that the Labor Arbiter’s conclusion that petitioner validly terminated
Palad was based mainly on the performance evaluation allegedly conducted by
petitioner. However, Palad alleges that she had no knowledge of the performance
evaluation conducted and that she was not even informed of the result of the alleged
performance evaluation. Palad also claims she did not receive a notice of dismissal, nor
was she given the chance to explain. According to petitioner, Palad did not receive the
termination notice because Palad allegedly stopped reporting for work after being
informed of the result of the evaluation.
Under Article 227 of the Labor Code, the employer has the burden of proving that the
termination was for a valid or authorized cause. 28 Petitioner failed to substantiate its
claim that Palad was terminated for valid reasons. In fact, the NLRC found that
petitioner failed to prove the authenticity of the performance evaluation which petitioner
claims to have conducted on Palad, where Palad received a performance rating of only
27.75%. Petitioner merely relies on the performance evaluation to prove Palad’s
inefficiency. It was likewise not shown that petitioner ever apprised Palad of the
performance standards set by the company. 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.29

Furthermore, Palad was not accorded due process. Even if petitioner did conduct a
performance evaluation on Palad, petitioner failed to warn Palad of her alleged poor
performance. In fact, Palad denies any knowledge of the performance evaluation
conducted and of the result thereof. Petitioner likewise admits that Palad did not receive
the notice of termination30 because Palad allegedly stopped reporting for work. The
records are bereft of evidence to show that petitioner ever gave Palad the opportunity to
explain and defend herself. Clearly, the two requisites for a valid dismissal are lacking in
this case.

WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution
dated 5 April 2002 of the Court of Appeals in CA-G.R. SP No. 60379. SO ORDERED.