[G.R. No. 121071.

December 11, 1998]

PHIL. FEDERATION OF CREDIT COOPERATIVES, INC. (PECCI) and FR.

BENEDICTO JAYOMA, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (First Division) and VICTORIA ABRIL, respondents.

DECISION
ROMERO, J.:

It is an elementary rule in the law on labor relations that a probationary employee who is
engaged to work beyond the probationary period of six months, as provided under Art. 281 of the
Labor Code, as amended, or for any length of time set forth by the employer, shall be considered
a regular employee.
Sometime in September 1982, private respondent Victoria Abril was employed by petitioner
Philippine Federation of Credit Cooperatives, Inc. (PFCCI), a corporation engaged in organizing
services to credit and cooperative entities, as Junior Auditor/Field Examiner and thereafter held
positions in different capacities, to wit: as office secretary in 1985 and as cashier-designate for
four (4) months ending in April 1988. Respondent, shortly after resuming her position as office
secretary, subsequently went on leave until she gave birth to a baby girl. Upon her return
sometime in November 1989, however, she discovered that a certain Vangie Santos had been
permanently appointed to her former position. She, nevertheless, accepted the position of
Regional Field Officer as evidenced by a contract which stipulated, among other things, that
respondents employment status shall be probationary for a period of six (6) months. Said period
having elapsed, respondent was allowed to work until PFCCI presented to her another
employment contract for a period of one year commencing on January 2, 1991 until December
31, 1991, after which period, her employment was terminated.
In a complaint for illegal dismissal filed by respondent against PFCCI on April 1, 1992,
Labor Arbiter Cornelio L. Linsangan rendered a decision on March 10, 1993 dismissing the same
for lack of merit but ordered PFCCI to reimburse her the amount of P2,500.00 which had been
deducted from her salary.
On appeal, however, the said decision was reversed by the National Labor Relations
Commission (NLRC), the dispositive portion of which reads:

WHEREFORE, the appealed decision is hereby set aside. The respondents are hereby directed to
reinstate complainant to her position last held, which is that of a Regional Field Officer, or to an
equivalent position if such is no longer feasible, with full backwages computed from January 1,
1992 until she is actually reinstated.

SO ORDERED.
 We find no merit in the petition.
Article 281 of the Labor Code, as amended, allows the employer to secure the services of an
employee on a probationary basis which allows him to terminate the latter for just cause or upon
failure to qualify in accordance with reasonable standards set forth by the employer at the time of
his engagement. As defined in the case of International Catholic Migration v. NLRC, [1] a
probationary employee is one who is on trial by an employer during which the employer
determines whether or not he is qualified for permanent employment. A probationary
employment is made to afford the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will become a proper and efficient
employee.
Probationary employees, notwithstanding their limited tenure, are also entitled to security of
tenure. Thus, except for just cause as provided by law,[2] or under the employment contract, a
probationary employee cannot be terminated.[3]
In the instant case, petitioner refutes the findings of the NLRC arguing that, after respondent
had allegedly abandoned her secretarial position for eight (8) months, she applied for the position
of Regional Field Officer for Region IV, which appointment, as petitioner would aptly put it, had
been fixed for a specific project or undertaking the completion or termination of which had been
determined at the time of the engagement of said private respondent and therefore considered as
a casual or contractual employment under Article 280 of the Labor Code.[4]
The contention that respondent could either be classified as a casual or contractual employee
is utterly misplaced; thus, it is imperative for the Court to elucidate on the kinds of employment
recognized in this jurisdiction. The pertinent provision of the Labor Code, as amended, states:

Art. 280. Regular and casual employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be 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, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.

This provision of law comprehends three kinds of employees: (a) regular employees or those
whose work is necessary or desirable to the usual business of the employer; (b) project
employees or those whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season; and (c) casual employees or those who are neither
regular nor project employees. With regard to contractual employees, the Court in the leading
case of Brent School, Inc. v. Zamora,[5] laid down the guidelines before a contract of
employment may be held as valid, to wit: stipulations in employment contracts providing for
term employment or fixed period employment are valid when the period were agreed upon
knowingly and voluntarily by the parties without force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former over the
latter.
Having expounded on the various types of employees, the Court is constrained to review the
contract of employment entered into between the party-litigants. The said contract reads:

That the employer hires the employee on contractual basis to the position of Regional Field
Officer of Region 4 under PFCCI/WOCCU/Aid Project No. 8175 and to do the function as
stipulated in the job description assigned to him (her): on probationary status effective February
17/90 for a period not to exceed six (6) months from said effectivity, subject to renewal of this
contract should the employees performance be satisfactory.

While the initial statements of the contract show that respondents employment was for a
fixed period, the succeeding provisions thereof contradicted the same when it provided that
respondent shall be under probationary status commencing on February 17, 1990 and ending six
(6) months thereafter. Petitioner manifested that respondents employment for a period of one
year, from January until December 1991, having been fixed for a specified period, could not
have converted her employment status to one of regular employment. Conversely, it likewise
insisted that respondent was employed to perform work related to a project funded by the World
Council of Credit Unions (WOCCU) and hence, her status is that of a project employee. The
Court is, thus, confronted with a situation under which the terms of the contract are so
ambiguous as to preclude a precise application of the pertinent labor laws.
Amidst the muddled assertions by petitioner, we adhere to the pronouncement stated in the
recent case of Villanueva v. NLRC,[6] where the Court ruled that where a contract of
employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be
construed strictly against the party who prepared it. Furthermore, Article 1702 of the Civil Code
provides that, in case of doubt, all labor contracts shall be construed in favor of the laborer. It
added:

We cannot allow the respondent company to construe otherwise what appears to be clear from
the wordings of the contract. The interpretation which the respondent company seeks to wiggle
out is wholly unacceptable, as it would result in a violation of petitioners right to security of
tenure guaranteed in Section 3 of Article XIII of the Constitution and in Articles 279 and 281 of
the Labor Code.

After a careful scrutiny of the subject contract, we arrive at the conclusion that there was no
grave abuse of discretion on the part of the NLRC and, thus, affirm the finding that respondent
has become a regular employee entitled to security of tenure guaranteed under the Constitution
and labor laws.
 Regardless of the designation petitioner may have conferred upon respondents employment
status, it is, however, uncontroverted that the latter, having completed the probationary period
and allowed to work thereafter, became a regular employee who may be dismissed only for just
or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended. Therefore,
the dismissal, premised on the alleged expiration of the contract, is illegal and entitles respondent
to the reliefs prayed for.
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the
decision of the National Labor Relations Commission dated November 28, 1994 is
AFFIRMED. No costs.
SO ORDERED.

[G.R. No. 113713. June 11, 1997]

ORIENT EXPRESS PLACEMENT PHILIPPINES, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION and ANTONIO F. FLORES, respondents.

DECISION
BELLOSILLO, J.:

ANTONIO F. FLORES was hired as crane operator with a monthly salary of US$500.00
(SR1,400) for one (1) year, subject to a 3-month probationary period, by Orient Express
Placement Philippines (ORIENT EXPRESS) in behalf of its foreign principal Nadrico Saudi
Limited (NADRICO). However, after only one (1) month and five (5) days in Saudi Arabia,
Flores was repatriated to the Philippines. Consequently, he filed a complaint with the Philippine
Overseas Employment Administration (POEA) for having been terminated from work for no
validreason.[1] ORIENT EXPRESS and NADRICO countered that Flores was terminated for
poor job performance as shown in his Performance Evaluation Sheet dated 4 May 1991[2] and for
his uncooperative work attitude.[3]
On 14 July 1992 the POEA rendered a decision in favor of complainant holding that when
the ground invoked for the dismissal of an employee was incompetency or poor job performance
it must be shown that the reasonable standards of work prescribed by the employer were made
known to the employee and that the latter failed to conform to such standards.In the case of
respondent Flores, it was observed that neither ORIENT EXPRESS nor NADRICO pointed
out the reasonable standards of work required of Flores by which his incompetency was
adjudged; much less did they specify how the latter failed to live up to such reasonable
standards. Hence, his dismissal was unwarranted. As a consequence, ORIENT EXPRESS and
NADRICO were ordered jointly and severally to pay respondent Antonio F. Flores the sum
of US$5,416.66 or its peso equivalent representing salaries for the unexpired portion of the
contract.[4]
 The National Labor Relations Commission (NLRC) affirmed the POEA decision on
appeal. In addition, it ruled that the designation of Flores as floorman instead of crane operator
for which he was hired violated his employment contract. The NLRC concluded that since Flores
never worked as crane operator, his foreign employer could not have observed and assessed his
performance as such and then come up with a performance evaluation sheet, especially
considering his consistent claim that he was made to work as floorman instead.[5] A motion for
reconsideration filed by ORIENT EXPRESS and NADRICO was subsequently denied.[6]
ORIENT EXPRESS alone instituted this petition. It imputes grave abuse of discretion
against the NLRC in concluding that respondent Flores was never assigned as crane operator
andfor ruling that poor job performance and uncooperative work attitude did not justify his
dismissal.
With respect to the factual issue, we agree with petitioner that the POEA and the
NLRC overlooked the fact that private respondent admitted that he was able to work as crane
operatoras clearly and indubitably shown in his Affidavit of 1 August 1991.[7] Erroneous
conclusions of the NLRC cannot be upheld by this Court.[8] However, we disagree with
petitioner's conclusion that private respondent was validly dismissed for poor job performance
and uncooperative work attitude. Hence, we deny the petition.
Under Art. 281 of the Labor Code, the services of an employee hired on
a probationary basis may be terminated when he fails to qualify as a regular employee in
accordance withreasonable standards made
known by the employer to the employee at the time of his engagement. However, the Court
cannot sustain his dismissal on this ground because petitionerfailed to specify the reasonable
standards by which private respondent's alleged poor performance was evaluated, much less to
prove that such standards were made known to him at the time of his recruitment in
Manila. Neither private respondent's Agency-Worker Agreement[9] with ORIENT EXPRESS nor
his Employment Contract[10] with NADRICO ever mentioned that he must first take and pass a
Crane Operators' License Examination in Saudi Arabia before he would be allowed to
even touch a crane. Neither did he know that he would be assigned as floorman pending release
of the results of the examination or in the event that he failed; more importantly, that he would
be subjected to a performance evaluation by his superior one (1) month after his hiring to
determine whether the company was amenable to continuing with his employment. Hence,
respondent Flores could not be faulted for precisely harboring the impression that he was
hired as crane operator for a definite period of one (1) year to commence upon his arrival at
the work-site and to terminate at the end of one (1) year. No other condition was laid out except
that he was to be on probation for three (3) months.
As aforesaid, no standard whatsoever by which such probationary period could be hurdled
was specified and made known to him. Due process dictates that an employee be apprised
beforehand of the condition of his employment and of the terms of advancement
therein. Precisely, implicit in Art. 281 of the Code is the requirement that reasonable standards
be previously made known by the employer
to the probationary employee at the time of his engagement, as correctly suggested
by the POEA. Obviously, such an essential requirement was not met by petitioner, even
assuming that Flores' alleged unsatisfactory performance was true. Besides,
unsatisfactory performance is not one of the just causes for dismissal under the Labor Code.[11]
 Petitioner also cites private respondent's alleged uncooperative work attitude as another
compelling ground for his termination. It contends that private respondent was only willing to do
his specific job and refused to help out as floorman when asked to do so.
When it is purely a matter of "helping out" co-employees in urgent need of help,
uncooperative work attitude may be worth discussing as possible ground
for some kind of disciplinaryaction against the employee. However, such a discussion would be
essentially academic in the case at bench where private respondent was not asked merely to help
out. As borne out by private respondents allegations, which were not disputed by petitioner, from
the moment of his arrival at the work-site in Saudi Arabia he was immediately assigned
as floorman and not ascrane operator, which was his job specification, on the flimsy excuse that
a floorman, not a crane operator, was more needed at the work-site. It was only because private
respondent was bold enough to resist and insist on his proper designation that his foreign
supervisors grudgingly relented. However in obvious retaliation to such perceived uncooperative
work attitude,private respondent was assigned to work at unholy hours or the so-called graveyard
shift, i.e., from twelve oclock midnight to twelve oclock noon. He was not familiarized with nor
given helpful instructions in the operation of relatively modern cranes. Instead, after subjecting
him to a supposed performance evaluation wherein his performance and work attitude were
allegedly found wanting, private respondent was again designated as floorman, albeit with
the salary of a crane operator. A few days later he was dismissed and repatriated to the
Philippines. Obviously, this Court cannot accept as a justifiable ground for his termination his
alleged uncooperative work attitude. On the contrary, we are constrained to sustain the POEA
and the NLRC in their unanimous conclusion that private respondent was indeed dismissed
illegally.
WHEREFORE, the assailed Decision and Resolution of the National Labor Relations
Commission of 29 December 1992 and 26 April 1993, respectively, declaring that private
respondent Antonio F. Flores was illegally dismissed and awarding to him Five Thousand Four
Hundred Sixteen Dollars and Sixty-Six Cents (US$5,416.66) or its peso equivalent representing
salaries for the unexpired portion of his overseas employment contract, are AFFIRMED. Costs
against petitioner Orient Express Placement Philippines.
SO ORDERED.

[G.R. No. 143252. October 23, 2003]

CEBU MARINE BEACH RESORT, OFELIA PELAEZ AND TSUYOSHI

SASAKI, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
(FOURTH DIVISION), RIC RODRIGO RODRIGUEZ, MANULITO VILLEGAS
and LORNA G. IGOT, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:
 Probationary employees need strong protection from the exploitation of employers since
they are usually the lowliest of the lowly and the most vulnerable to abuses of management, who
would rather suffer in silence than risk losing their jobs.[1]
At bar is a petition for review on certiorari seeking to reverse and set aside the
Decision[2] dated November 5, 1999 and Resolution[3] dated April 18, 2000 of the Court of
Appeals in CA-G.R. SP No. 54548, entitled Cebu Marine Beach Resort, Ofelia Pelaez, and
Tsuyoshi Sasaki vs. The Honorable National Labor Relations Commission (Fourth Division),
Ric Rodrigo Rodriguez, Manulita Villegas, and Lorna G. Igot.
The facts as borne by the records are:
Cebu Marine Beach Resort (herein petitioner company), a single proprietorship owned by
Victor Dualan, commenced its operations sometime in January, 1990 with the recruitment of its
employees, including Ric Rodrigo Rodriguez, Manulita Villegas and Lorna G. Igot, respondents.
On the last week of March, 1990 when Japanese tourists began arriving at the resort,
petitioner company became fully operational.
Inasmuch as the beach resort was intended to cater principally to Japanese tourists,
respondents had to undergo a special training in Japanese customs, traditions, discipline as well
as hotel and resort services. This special training was supervised by Tsuyoshi Sasaki, also a
petitioner.
During a seminar conducted on May 24, 1990, petitioner Sasaki suddenly scolded
respondents and hurled brooms, floor maps, iron trays, fire hoses and other things at them. In
protest, respondents staged a walk-out and gathered in front of the resort.
Immediately, petitioner Sasaki reacted by shouting at them to go home and never to report
back to work. Heeding his directive, respondents left the premises. Eventually, they filed with
the Regional Arbitration Branch at Cebu City a complaint for illegal dismissal and other
monetary claims against petitioners.
On May 28, 1990, petitioner company, through its acting general manager, Ofelia Pelaez,
also a petitioner, sent letters to respondents requiring them to explain why they should not be
terminated from employment on the grounds of abandonment of work and failure to qualify with
the standards for probationary employees.
In due course, the Labor Arbiter rendered a Decision dated March 23, 1993 dismissing
respondents complaint but directing them to immediately report back to work.
On appeal, the National Labor Relations Commission (NLRC), in its Decision dated June
28, 1994, reversed the Labor Arbiters Decision, declaring that the respondents were dismissed
illegally and ordering their reinstatement with payment of full backwages from May 24, 1990 up
to their actual reinstatement or in lieu thereof, the payment of their respective separation pay
(equivalent to one month salary) from May 24, 1990 up to the date they were supposed to be
reinstated, as well as attorneys fees (equivalent to 10% of the total monetary award).
On February 28, 1995, the NLRC issued a Resolution declaring that the backwages shall
correspond only to the period from May 24, 1990 (the date of their dismissal) until March 23,
1993 (when they were ordered reinstated by the Labor Arbiter), subject to the deduction of their
earnings from other sources during the pendency of the appeal.
 On March 22, 1995, petitioners filed with this Court a petition for certiorari, prohibition and
injunction with prayer for the issuance of a temporary restraining order.
Pursuant to our ruling in St. Martins Funeral Home vs. NLRC,[4] we referred the petition to
the Court of Appeals for its appropriate action and disposition.
On November 5, 1999, the Court of Appeals rendered its Decision affirming with
modification the Decision and Resolution of the NLRC. The dispositive portion reads:

WHEREFORE, the Decision, dated June 28, 1994, and the Resolution dated February 28, 1995,
both issued by the public respondent, are hereby AFFIRMED with the following modifications:
the backwages should be computed from the date of the dismissal of private respondents until the
finality of this Decision without deduction from earnings during the pendency of the appeal and
the award of separation pay must be equivalent to one-half months salary for every year of
service commencing likewise on the date of the dismissal of private respondents until the finality
of this Decision. The petition is dismissed. Costs against petitioners.

SO ORDERED.

From the said Decision, petitioners filed a motion for reconsideration, but was denied.
Hence, this petition for review on certiorari.
Petitioners contend that the Appellate Court committed a serious error when it unilaterally
extended the 6-month probationary employment contracts of the respondents by awarding them
full backwages, or in lieu of their reinstatement, when it ordered payment of their separation pay
computed from the time of their dismissal up to the finality of its Decision.
The sole legal issue for our Resolution is whether respondents were illegally dismissed from
employment by petitioner company.
We hold that the Court of Appeals did not err when it ruled that respondents were illegally
dismissed from the service.
It is settled that while probationary employees do not enjoy permanent status, they are
entitled to the constitutional protection of security of tenure. Their employment may only be
terminated for just cause or when they fail to qualify as regular employees in accordance
with reasonable standards made known to them by their employer at the time of
engagement, and after due process.[5]
Here, petitioners terminated respondents probationary employment on the grounds of
abandonment and failure to qualify for the positions for which they were employed.
On this point, we quote with approval the findings of the Court of Appeals, thus:

x x x. It is undisputed that Mr. Sasaki made an utterance to the effect that private respondents
should go home and never come back to work for the company again. Such utterance is
tantamount to a dismissal.Its meaning is also clear and unmistakable no matter which accent was
used by Mr. Sasaki. Considering further that Mr. Sasaki was in charge of the training of the
private respondents, his words carry authority and conviction. Even assuming for the sake of
argument that Mr. Sasaki was never vested with the power of dismissal, the petitioner company
ratified Mr. Sasakis acts. When petitioner company sent a strongly worded memorandum to
private respondents asking them to explain why their services should not be terminated for
failure to live up to the companys expectations, it showed intention to terminate. x x x:

xxx

The subsequent issuances of the memos were, as rightly interpreted by the public respondent,
merely an afterthought to escape the legal liability arising from the illegal termination of the
private respondents services. x x x:

xxx

The next three reasons adduced by the petitioners sought to prove the existence of a just cause
for the dismissal of private respondents, which is, abandonment. We are not convinced. The fact
that private respondents never came back to work despite the issuance of the memoranda by the
petitioner does not support the allegation of abandonment. x x x.

Indeed, we find no indication that respondents have shown by some overt acts their intention
to sever their employment in petitioner company. To constitute abandonment, there must be clear
proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly,
the operative factor is still the employers ultimate act of putting an end to his employment.
Here, respondents did not report back for work because they were warned by petitioner
Sasaki not to return. But immediately, they filed with the Labor Arbiters Office a complaint for
illegal dismissal. It is a settled doctrine that the filing of a complaint for illegal dismissal is
inconsistent with the charge of abandonment, for an employee who takes steps to protest his
dismissal cannot by logic be said to have abandoned his work.[6]
That respondents failed to qualify for their positions, suffice it to state that at the time they
were dismissed, they were still in a trial period or probationary period. Being in the nature of a
trial period, the essence of a probationary period of employment fundamentally lies in the
purpose or objective sought to be attained by both the employer and the employee during said
period. While the employer observes the fitness, propriety and efficiency of a probationer to
ascertain whether he is qualified for permanent employment, the probationer, on the other hand,
seeks to prove to the employer that he has the qualifications to meet the reasonable standards for
permanent employment which obviously were made known to him.[7] To reiterate, in the case at
bar, far from allowing the respondents to prove that they possessed the qualifications to meet the
reasonable standards for their permanent employment, petitioners peremptorily dismissed them
from the service.
On another tack, petitioners argument that the Appellate Courts award of full backwages and
separation pay in effect unilaterally extended respondents 6-month probationary employment is
bereft of merit.
In Philippine Manpower Services, Inc. vs. NLRC,[8] we held that absent the grounds for
termination of a probationary employee, he is entitled to continued employment even beyond the
probationary period.
On a similar note, our ruling in Lopez vs. Javier[9] is quite explicit, thus:
x x x, probationary employees who are unjustly dismissed from work during the probationary
period shall be entitled to reinstatement and payment of full backwages and other benefits and
privileges from the time they were dismissed up to their actual reinstatement, conformably
with Article 279 of the Labor Code, as amended by Section 34 of Republic Act No. 6715, which
took effect on March 21, 1989:

x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

Verily, respondents who were unjustly dismissed from work are actually entitled to
reinstatement without loss of seniority rights and other privileges as well as to their full
backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time their compensation was withheld from them up to the
time of their actual reinstatement.[10]
However, the circumstances obtaining in this case do not warrant the reinstatement of
respondents. Antagonism caused a severe strain in the relationship between them and petitioner
company. A more equitable disposition, as correctly held by the NLRC, would be an award of
separation pay[11] equivalent to at least one month pay, or one month pay for every year of
service, whichever is higher,[12] in addition to their full backwages, allowances and other
benefits.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated
November 5, 1999 and April 18, 2000 are hereby AFFIRMED WITH MODIFICATION in the
sense that, in lieu of reinstatement, respondents are awarded separation pay equivalent to at least
one month pay, or one month pay for every year of service, whichever is higher; and their full
backwages, other privileges and benefits, or their monetary equivalent during the period of their
dismissal up to their supposed actual reinstatement.
Costs against petitioners.
SO ORDERED.
THIRD DIVISION

[G.R. No. 149859. June 9, 2004]

RADIN C. ALCIRA, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK
THOMAS, XAVIER G. PEA and TRIFONA F.
MAMARADLO, respondents.
 DECISION
CORONA, J.:

Before us on appeal is the decision of the Court of Appeals dated June

[1] [2]

22, 2001 affirming the decision of the National Labor Relations

[3]

Commission dated March 23, 1999 which, in turn, affirmed the decision of
[4] [5]

labor arbiter Pedro Ramos dated May 19, 1998 dismissing petitioner Radin
Alciras complaint for illegal dismissal with prayer for reinstatement,
backwages, moral damages, exemplary damages and attorneys fees.
The facts follow.
Respondent Middleby Philippines Corporation (Middleby) hired petitioner
as engineering support services supervisor on a probationary basis for six
months. Apparently unhappy with petitioners performance, respondent
Middleby terminated petitioners services. The bone of contention centered on
whether the termination occurred before or after the six-month probationary
period of employment.
The parties, presenting their respective copies of Alciras appointment
paper, claimed conflicting starting dates of employment: May 20, 1996
according to petitioner and May 27, 1996 according to respondent. Both
documents indicated petitioners employment status as probationary (6 mos.)
and a remark that after five months (petitioners) performance shall be
evaluated and any adjustment in salary shall depend on (his) work
performance. [6]

Petitioner asserts that, on November 20, 1996, in the presence of his co-
workers and subordinates, a senior officer of respondent Middleby in bad faith
withheld his time card and did not allow him to work. Considering this as a
dismissal after the lapse of his probationary employment, petitioner filed on
November 21, 1996 a complaint in the National Labor Relations Commission
(NLRC) against respondent Middleby contending that he had already become
a regular employee as of the date he was illegally dismissed. Included as
respondents in the complaint were the following officers of respondent
Middleby: Frank Thomas (General Manager), Xavier Pea (Human Resources
Manager) and Trifona Mamaradlo (Engineering Manager).
In their defense, respondents claim that, during petitioners probationary
employment, he showed poor performance in his assigned tasks, incurred ten
absences, was late several times and violated company rules on the wearing
of uniform. Since he failed to meet company standards, petitioners application
to become a regular employee was disapproved and his employment was
terminated.
 On May 19, 1998, the labor arbiter dismissed the complaint on the ground
that: (1) respondents were able to prove that petitioner was apprised of the
standards for becoming a regular employee; (2) respondent Mamaradlos
affidavit showed that petitioner did not perform well in his assigned work and
his attitude was below par compared to the companys standard required of
him and (3) petitioners dismissal on November 20, 1996 was before his
regularization, considering that, counting from May 20, 1996, the six-month
probationary period ended on November 20, 1996. [7]

On March 23, 1999, the NLRC affirmed the decision of the labor arbiter.
On June 22, 2001, the Court of Appeals affirmed the judgment of the
NLRC. According to the appellate court:

Even assuming, arguendo, that petitioner was not informed of the reasonable standards
required of him by Middleby, the same is not crucial because there is no termination to
speak of but rather expiration of contract. Petitioner loses sight of the fact that his
employment was probationary, contractual in nature, and one with a definite period. At
the expiration of the period stipulated in the contract, his appointment was deemed
terminated and a notice or termination letter informing him of the non-renewal of his
contract was not necessary.

While probationary employees enjoy security of tenure such that they cannot be
removed except for just cause as provided by law, such protection extends only during
the period of probation. Once that period expired, the constitutional protection could no
longer be invoked. Legally speaking, petitioner was not illegally dismissed. His contract
merely expired.[8]

Hence, this petition for review based on the following assignment of errors:
I

THE COURT OF APPEALS GRAVELY ERRED, BLATANTLY DISREGARDED THE

LAW AND ESTABLISHED JURISPRUDENCE, IN UPHOLDING THE DECISION OF
THE NATIONAL LABOR RELATIONS COMMISSION.

II

THE COURT OF APPEALS GRAVELY ERRED AND BLATANTLY DISREGARDED

THE LAW IN HOLDING THAT PROBATIONARY EMPLOYMENT IS EMPLOYMENT
FOR A DEFINITE PERIOD.

III

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT AN EMPLOYER

CAN BE PRESUMED TO HAVE COMPLIED WITH ITS DUTY TO INFORM THE
PROBATIONARY EMPLOYEE OF THE STANDARDS TO MAKE HIM A REGULAR
EMPLOYEE.

IV

THE COURT OF APPEALS GRAVELY ERRED AND FAILED TO AFFORD

PROTECTION TO LABOR IN NOT APPLYING TO THE INSTANT CASE THE
DOCTRINE LAID DOWN BY THIS HONORABLE COURT IN SERRANO VS. NLRC,
ET. AL., G.R. NO. 117040, JANUARY 27, 2000.[9]

Central to the matter at hand is Article 281 of the Labor Code which
provides that:

ART. 281. PROBATIONARY EMPLOYMENT. Probationary employment shall not

exceed six (6) months from the date the employee started working, unless it is covered
by an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement.
An employee who is allowed to work after a probationary period shall be considered a
regular employee.

The first issue we must resolve is whether petitioner was allowed to work
beyond his probationary period and was therefore already a regular employee
at the time of his alleged dismissal. We rule in the negative.
Petitioner claims that under the terms of his contract, his probationary
employment was only for five months as indicated by the remark Please be
informed that after five months, your performance shall be evaluated and any
adjustment in salary shall depend on your work performance. The argument
lacks merit. As correctly held by the labor arbiter, the appointment contract
also stated in another part thereof that petitioners employment status was
probationary (6 mos.). The five-month period referred to the evaluation of his
work.[10]

Petitioner insists that he already attained the status of a regular employee

when he was dismissed on November 20, 1996 because, having started work
on May 20, 1996, the six-month probationary period ended on November 16,
1996. According to petitioners computation, since Article 13 of the Civil Code
provides that one month is composed of thirty days, six months total one
hundred eighty days. As the appointment provided that petitioners status was
probationary (6 mos.) without any specific date of termination, the 180thday fell
on November 16, 1996. Thus, when he was dismissed on November 20,
1996, he was already a regular employee.
 Petitioners contention is incorrect. In CALS Poultry Supply Corporation, et.
al. vs. Roco, et. al., this Court dealt with the same issue of whether an
[11]

employment contract from May 16, 1995 to November 15, 1995 was within or
outside the six-month probationary period. We ruled that November 15, 1995
was still within the six-month probationary period. We reiterate our ruling
in CALS Poultry Supply:

(O)ur computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following.(italics supplied)

In short, since the number of days in each particular month was irrelevant,
petitioner was still a probationary employee when respondent Middleby opted
not to regularize him on November 20, 1996.
The second issue is whether respondent Middleby informed petitioner of
the standards for regularization at the start of his employment.
Section 6 (d) of Rule 1 of the Implementing Rules of Book VI of the Labor
Code (Department Order No. 10, Series of 1997) provides that:

xxx xxx xxx

(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the time of
his engagement. Where no standards are made known to the employee at that time, he
shall be deemed a regular employee.

xxx xxx xxx

We hold that respondent Middleby substantially notified petitioner of the

standards to qualify as a regular employee when it apprised him, at the start
of his employment, that it would evaluate his supervisory skills after five
months. In Orient Express Placement Philippines vs. National Labor Relations
Commission, we ruled that an employer failed to inform an employee of the
[12]

reasonable standards for becoming a regular employee:

Neither private respondent's Agency-Worker Agreement with ORIENT EXPRESS nor

his Employment Contract with NADRICO ever mentioned that he must first take and
pass a Crane Operator's License Examination in Saudi Arabia before he would be
allowed to even touch a crane. Neither did he know that he would be assigned as
floorman pending release of the results of the examination or in the event that he
failed; more importantly, that he would be subjected to a performance evaluation by his
superior one (1) month after his hiring to determine whether the company was
amenable to continuing with his employment. Hence, respondent Flores could not be
faulted for precisely harboring the impression that he was hired as crane operator for a
definite period of one (1) year to commence upon his arrival at the work-site and to
terminate at the end of one (1) year. No other condition was laid out except that he was
to be on probation for three (3) months.(emphasis supplied)

Conversely, an employer is deemed to substantially comply with the rule

on notification of standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date after his hiring. We
agree with the labor arbiter when he ruled that:

In the instant case, petitioner cannot successfully say that he was never informed by
private respondent of the standards that he must satisfy in order to be converted into
regular status. This rans (sic) counter to the agreement between the parties that after
five months of service the petitioners performance would be evaluated. It is only but
natural that the evaluation should be made vis--vis the performance standards for the
job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit
referring to the fact that petitioner did not perform well in his assigned work and his
attitude was below par compared to the companys standard required of him. [13]

The third issue for resolution is whether petitioner was illegally dismissed
when respondent Middleby opted not to renew his contract on the last day of
his probationary employment.
It is settled that even if probationary employees do not enjoy permanent
status, they are accorded the constitutional protection of security of
tenure. This means they may only be terminated for just cause or when they
otherwise fail to qualify as regular employees in accordance with reasonable
standards made known to them by the employer at the time of their
engagement. [14]

But we have also ruled in Manlimos, et. al. vs. National Labor Relations
Commission that this constitutional protection ends on the expiration of the
[15]

probationary period. On that date, the parties are free to either renew or
terminate their contract of employment. Manlimos concluded that (t)his
development has rendered moot the question of whether there was a just
cause for the dismissal of the petitioners xxx. In the case at bar, respondent
[16]

Middleby exercised its option not to renew the contract when it informed
petitioner on the last day of his probationary employment that it did not intend
to grant him a regular status.
Although we can regard petitioners severance from work as dismissal, the
same cannot be deemed illegal. As found by the labor arbiter, the NLRC and
the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy
several times (3) failed to wear the proper uniform many times and (4) showed
inferior supervisory skills. Petitioner failed to satisfactorily refute these
substantiated allegations. Taking all this in its entirety, respondent Middleby
was clearly justified to end its employment relationship with petitioner.
WHEREFORE, the petition is hereby DENIED.
No costs.
SO ORDERED.

[G.R. No. 107320. January 19, 2000]

A PRIME SECURITY SERVICES, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION (SECOND DIVISION), HON. ARBITER
VALENTIN GUANIO, and OTHELLO MORENO, respondents.

DECISION

PURISIMA, J.: 

This special civil action for certiorari seeks to annul the decision[1] of the Second Division of the
National Labor Relations Commission ("NLRC"), dated April 20, 1992, which affirmed with
modification the decision of Labor Arbiter Valentin C. Guanio in NLRC-NCR Case No. 00-02-
01038-89.

The facts that matter are as follows:

On February 23, 1989, private respondent Othello C. Moreno filed a complaint with the
Department of Labor and Employment, Arbitration Branch, National Capital Region, against the
petitioner, A Prime Security Agency, Inc., for illegal dismissal, illegal deduction and
underpayment of wages. Docketed as NLRC-NCR Case No. 00-02-01038-89, the complaint was
assigned to Labor Arbiter Valentin C. Guanio ("LA Guanio").

The complaint alleged, among others, that complainant (private respondent herein) had been
working as a security guard for a year with the Sugarland Security Services, Inc., a sister
company of petitioner; that he was rehired as a security guard on January 30, 1988 by the
petitioner and assigned to the same post at the U.S. Embassy Building along Roxas Boulevard,
Manila; that he was among those absorbed by the petitioner when it took over the security
contracts of its sister company, Sugarland Security Services, Inc., with the U.S. Embassy; that he
was forced by petitioner to sign new probationary contracts of employment for six (6) months;
that on August 1, 1988, his employment was terminated; that during his employment, the amount
of P20.00 per month was deducted from his salary allegedly for withholding tax, although no
withholding tax receipt was given to him, and the salary he was receiving was only P2,187.00 a
month, which was way below the P2,410.17 stipulated in the PADPAO memorandum of
agreement.

Petitioner, for its part, alleged that the private respondent was hired on January 30, 1988, on a
probationary basis, and he signed an authority to deduct from his salary any reimbursement for
any loss or damage caused to properties of the client; that he was given a copy of petitioners
rules and regulations which provide that sleeping on post is punishable by warning, suspension
and dismissal and he was caught sleeping on post on March 17, 1988, for which he was sent a
memorandum giving him a last warning; that on March 25, 1988, he figured in a quarrel with
another security guard, which resulted in a near shootout; that at the end of his probationary
employment, he was given a psychological test and on the basis of the foregoing, petitioner told
him that his probationary employment had come to an end as he did not pass the company
standard and therefore, he could not be hired as a regular employee.

On November 28, 1989, LA Guanio handed down the decision[2] disposing as follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering

the respondent to reinstate the complainant to his former position and accord to
him the status of a regular employee. The respondent is further ordered to pay the
complainant his backwages from the time he was unlawfully dismissed until he is
finally reinstated; and to refund to the complainant the deduction it had made
from his salary in the amount of P20.00 per month.

The claim of the complainant for underpayment of wages is dismissed for lack of
merit.

SO ORDERED."

Petitioner appealed to the National Labor Relations Commission which affirmed the decision of
LA Guanio with a slight modification, holding thus:

"WHEREFORE, premises considered, the appealed decision is hereby, Modified

as aforediscussed. The order for the refund of the deductions made by respondent
from complainants salaries in the amount of P20.00 per month is hereby, Vacated
and Set Aside.

Moreover, the backwages due complainant should in no case exceed the period of
three (3) years.

In all other respects, the decision appealed from, stands."[3]

Petitioner presented a motion for reconsideration[4]of the aforesaid decision but to no avail. The
same was denied by the respondent NLRC for lack of merit.[5]

Undaunted, petitioner found its way to this Court via the present petition, contending that:

"I

BASIC PUBLIC RESPONDENTS HAVE COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION AND/OR IN
EXCESS OF JURISDICTION WHEN THEY UNDULY PRONOUNCED
PRIVATE RESPONDENTS EMPLOYMENT WITH THE PETITIONER AS A
CONTINUANCE OF ITS (sic) PREVIOUS EMPLOYMENT WITH
ITS (sic)OLD EMPLOYER, THE SUGARLAND SECURITY SERVICES, INC.,
WITHOUT ANY SHRED OF EVIDENCE LINKING THE TWO COMPANIES,
EMPLOYERS WHICH ARE DISTINCT AND DIFFERENT PERSONALITIES,
AS PROVEN BY THE RECORDS OF THE CASE, RESULTING IN SERIOUS
PREJUDICE OF THE PETITIONER WHICH, LIKE LABOR, ALSO
DESERVES PROTECTION OF THE LAW.

II

BOTH PUBLIC RESPONDENT (sic) HAVE COMMITTED GRAVE ABUSE

OF DISCRETION WHEN THEY CHARGED AND FOUND PETITIONER
GUILTY OF ILLEGAL DISMISSAL AND THUS FAILED TO CONSIDER
THAT THE TERMINATION OF THE PROBATIONARY CONTRACT BY
THE PETITIONER IS A LEGITIMATE EXERCISE OF DISCRETION IN
ANTICIPATION OF WHAT IT PERCEIVED OF AN EMPLOYEE, IN THE
PERSON OF THE PRIVATE RESPONDENT, WHICH (sic) WILL NOT MAKE
A GOOD - (sic) ASSET OF THE COMPANY AND INSTEAD IS A LIABILITY
AS IT POSSES (sic) DANGERS NOT ONLY ON THE PETITIONER BUT ON
ITS VERY CLIENT, THE U.S. EMBASSY, WITH WHOM PRIVATE
RESPONDENT IS DIRECTLY SERVING WITH (sic), DUE TO ITS (sic)
INEFFICIENCY, ENEPTNESS (sic) AND MORE THAN (sic) BELOW BAR
PERFORMANCE BY (sic) THE PRIVATE RESPONDENT DURING ITS (sic)
SIX MONTH PROBATIONARY PERIOD;

III

THE PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF

DISCRETION WHEN THEY ORDERED PETITIONER FOR THE PAYMENT
 OF (sic) PRIVATE RESPONDENTS BACK WAGES (sic) AND FOR ITS (sic)
REINSTATEMENT."

For resolution can be simplified into the following issues, to wit:

1. Whether private respondents employment with A Prime Security Services, Inc.

was just a continuation of his employment with Sugarland Security Services, Inc.;

2. Whether private respondent is a regular or probationary employee of petitioner;

and

3. Whether private respondents dismissal is illegal.

After a careful study, the Court finds the imputation of grave abuse of discretion on the part of
the respondents, NLRC and "LA Guanio", barren of any sustainable basis.

Anent the first issue, records show that the allegations of the private respondent that Sugarland
Security Services, Inc. ("Sugarland") is a sister company of A Prime Security Services, Inc. ("A
Prime") and that the latter absorbed the security contracts and security guards of Sugarland with
the U.S. Embassy were neither denied nor controverted by the petitioner before the Labor
Arbiter. Under Section 1, Rule 9 of the Rules of Court,[6] in relation to Section 3, Rule I of the
Rules of the NLRC,[7] material averments in the Complaint are deemed admitted when not
specifically denied.

In the petition under scrutiny, it is contended belatedly that A Prime and Sugarland are two
separate and distinct juridical entities. However, aside from such a bare allegation, petitioner
presented no supporting evidence and the Court cannot, of course, act thereupon without any
legal basis.

The Court cannot uphold and give weight to private respondents resignation letter (Annex "D"[8])
which appears to have been written and submitted at the instance of petitioner. Its form is of the
companys and its wordings are more of a waiver and quitclaim. Moreover, the supposed
resignation was not acknowledged before a notary public. Petitioners failure to deny that
Sugarland is its sister company and that petitioner absorbed Sugarlands security contract and
security personnel assumes overriding significance over the resignation theorized upon, evincing
petitioners design to ignore or violate labor laws through the use of the veil of corporate
personality. The Court cannot sanction the practice of some companies which, shortly after a
worker has become a regular employee, effects the transfer of the same employee to another
entity whose owners are the same, or identical, in order to deprive subject employee of the
benefits and protection he is entitled to under the law.
On the issue as to whether the private respondent is a probationary or regular employee, the
Court holds that the latter became a regular employee upon completion of his six-month period
of probation. Private respondent started working on January 30, 1988 and completed the said
period of probation on July 27, 1988. Thus, at the time private respondent was dismissed on
August 1, 1988, he was already a regular employee with a security of tenure. He could only be
dismissed for a just and authorized cause.

There is no basis for subjecting private respondent to a new probationary or temporary

employment on January 30, 1988, considering that he was already a regular employee when he
was absorbed by A Prime from Sugarland, its sister company.

On the issue of whether the dismissal of private respondent was unjust and illegal, the Court
rules in the affirmative. Subject letter of August 1, 1988 for the dismissal of private respondent
from his employment stated:

"x x x

Dear Mr. Moreno,

You were hired by this agency as security guard on a six -month probationary
appointment on 30 January 1988.

Much as we would like to retain you, it is unfortunate that you were not able to
live up with the standard expected of you as a security guard.

In line with this and pursuant to paragraph 6 of said Probationary

Appointment,[9] which you have signed on 30 January 1988, we are constrained to
terminate your services with us for cause effective this date.

We hope you understand our position on this regard.

Very truly
yours,........................

(SGD.) REYNALDO
M. ARDINA
President"[10]

The dismissal of private respondent was presumably based on the results of his behavioral and
neuropsychological tests and on his violation of a company rule on sleeping on post. With
respect to the behavioral and neuropsychological tests, the Court agrees with NLRCs assessment,
to wit:
 "Complainants result of his behavioral research and neuropsychological test to
our mind, is of no moment, considering that the said test appeared to have been
conveniently contrived to be conducted, and the result produced on the very day
of his dismissal, in question. Were respondent-appellant really sincere in its
motive of fully screening its employees before they could be regularized it should
have done so, prior to complainants hiring or even after the commission of
complainants infractions of the company rules adverted to by appellant way back
in March 1988, when complainant was only about two (2) months on probation.
But that is not the case herein.

Moreover, We have observed a discrepancy in the results of the test for while in
the first page of the Evaluation Report, in question, complainant was ruled as:

Steadiness and Endurance under pressure - Average

the summary on page thereof, by way of interpretation of such rating, states:

Under pressure, he needs emotional support.

It would not be farfetched for us therefore to surmise that the evaluators mind was
already preconditioned towards buttressing respondents intent of terminating
complainants employment, considering that the same, to reiterate, was issued on
the very day of the dismissal, in question."

So also, private respondents alleged violations of sleeping on post, and quarrelling with a co-
worker, may not be proper grounds for dismissal, as the same were first infractions. Circular No.
I dated March 16, 1983 of A Prime Security Services, Inc.,[11] governing discipline, suspension
and separation from the service of security guards, provides:

"SECTION VIII - SLEEPING ON POST

Any Security/Lady guard who is found sleeping while on post shall be punished
as follows:

1st Offense........- Warning

2nd Offense.......- 30 days suspension without pay
3rd Offense........- Dismissal

SECTION IX - CHALLENGING A POSTED SECURITY/LADY GUARD AND

SUPERIORS
 Any Security/Lady guard who challenges, assaults, provokes and insults an
officially posted Security/Lady guard shall be punished:

1st Offense - One (1) month suspension

2nd Offense - Dismissal" 

As the infractions of Sections VIII and IX of Circular No. 1 by private respondent were first
offenses, they were not punishable by dismissal. They were not valid grounds for terminating the
employment of private respondent.

What is more, as found by the NLRC, the private respondent was not given a chance to contest
his dismissal. He was deprived of an opportunity to be heard.

Premises studiedly viewed in correct perspective, the Court is of the irresistible finding and
conclusion that the dismissal of private respondent, a regular employee, was sans any just, legal
and valid basis.

WHEREFORE, the petition is DISMISSED; and the Decision, dated April 20, 1992, and
Resolution, dated June 25, 1992, of the National Labor Relations Commission in NLRC NCR
Case No. 00-02-01038-89, AFFIRMED. No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION

MITSUBISHI G.R. No. 148738

MOTORS PHILIPPINES CORPORATION,

Petitioner,

Present:

PUNO, J., Chairman,

 QUISUMBING,

MARTINEZ,*

- versus - CALLEJO, SR., and

TINGA, JJ.

CHRYSLER PHILIPPINESLABOR UNION Promulgated:

and

NELSON PARAS,

Respondents.
June 29, 2004

X--------------------------------------------------X

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision [1] of the Court of Appeals
in CA-GR SP No. 46030 and the Resolution denying the motion for
reconsideration filed by petitioner Mitsubishi Motors Philippines Corporation.

The Antecedents

Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation

engaged in the assembly and distribution of Mitsubishi motor vehicles. Chrysler
Philippines Labor Union (CPLU) is a legitimate labor organization and the duly
certified bargaining agent of the hourly-paid regular rank and file employees of
MMPC. Nelson Paras was a member of CPLU. His wife, Cecille Paras, was the
President of the Chrysler Philippines Salaried Employees Union (CPSU).

Nelson Paras was first employed by MMPC as a shuttle bus driver on March
19, 1976. He resigned on June 16, 1982.He applied for and was hired as a diesel
mechanic and heavy equipment operator in Saudi Arabia from 1982 to 1993. When
he returned to the Philippines, he was re-hired as a welder-fabricator at the MMPC
tooling shop from October 3, 1994 to October 31, 1994.[2] On October 29, 1994,
his contract was renewed from November 1, 1994 up to March 3, 1995.[3]

Sometime in May of 1996, Paras was re-hired on a probationary basis as a

manufacturing trainee at the Plant Engineering Maintenance Department. He and
the new and re-hired employees were given an orientation on May 15, 1996 [4]by
Emma P. Aninipot, respecting the companys history, corporate philosophy,
organizational structure, and company rules and regulations, including the
company standards for regularization, code of conduct and company-provided
benefits.[5]
 Paras started reporting for work on May 27, 1996. He was assigned at the
paint ovens, air make-up and conveyors. As part of the MMPCs policy, Paras was
evaluated by his immediate supervisors Lito R. Lacambacal[6] and Wilfredo J.
Lopez[7]after six (6) months, and received an average rating. Later, Lacambacal
informed Paras that based on his performance rating, he would be regularized.[8]

However, the Department and Division Managers, A.C. Velando and H.T.
Victoria,[9] including Mr. Dante Ong,[10]reviewed the performance evaluation made
on Paras. They unanimously agreed, along with Paras immediate supervisors, that
the performance of Paras was unsatisfactory.[11] As a consequence, Paras was not
considered for regularization. On November 26, 1996, he received a Notice of
Termination dated November 25, 1996, informing him that his services were
terminated effective the said date since he failed to meet the required company
standards for regularization.[12]

Utilizing the grievance machinery in the collective bargaining agreement,

the CPLU demanded the settlement of the dispute which arose from Paras
termination.[13] The dispute was thereafter submitted for voluntary arbitration, as
the parties were unable to agree on a mutually acceptable solution. CPLU posited
that Paras was dismissed on his one hundred eighty third (183 rd) day of
employment, or three (3) days after the expiration of the probationary period of six
(6) months. It was contended that Paras was already a regular employee on the date
of the termination of his probationary employment.

According to CPLU and Paras, the latters dismissal was an offshoot of the
heated argument during the CBA negotiations between MMPC Labor Relations
Manager, Atty. Carlos S. Cao, on the one hand, and Cecille Paras, the President of
the Chrysler Philippines Salaried Employees Union (CPSU) and Paras wife, on the
other.

On November 3, 1997, the Voluntary Arbitrator (VA) rendered a decision

finding the dismissal of Paras valid for his failure to pass the probationary
standards of MMPC. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered

finding the termination of Mr. Paras was valid for cause his failure to pass the
probationary period.[14]

The VA declared that hiring an employee on a probationary basis to

determine his or her fitness for regular employment was in accord with the
MMPCs exercise of its management prerogative. The VA pointed out that MMPC
had complied with the requirement of apprising Paras of the standards of
performance evaluation and regularization at the inception of his probationary

employment. The VA agreed with the MMPC that the termination of Paras
employment was effected prior to the expiration of the six-month probationary
period. As to Paras contention that he was already a regular employee before he

was dismissed in 1994 considering that he had an accumulated service of eleven

(11) months, the VA ruled that Paras delay in filing a complaint for regularization
only in 1996, for services rendered in October 1994 to March 1995, militated
against him. The VA stated that Paras dismissal was based on the unsatisfactory
performance rating given to him by his direct supervisors Lito Lacambacal and

Wilfredo Lopez. The VA also found that the alleged heated argument between
Atty. Carlos S. Cao, the Labor Relations Manager of MMPC, and Cecille Paras,
the President of CPSU, was irrelevant in the termination of Paras services.[15]

The Case Before the Court of Appeals

Aggrieved, Paras and CPLU filed a petition for review under Rule 43 of the
Rules of Court before the Court of Appeals, docketed as C.A.-G.R. SP No.
46030. They assigned the following errors:

THE VOLUNTARY ARBITRATOR COMMITTED A SERIOUS ERROR OF

LAW IN FAILING TO HOLD THAT THE NOTICE OF TERMINATION WAS
SERVED UPON PETITIONER NELSON PARAS AFTER HE HAS ALREADY
BECOME A REGULAR EMPLOYEE, HIS PERIOD FOR PROBATION
HAVING EXPIRED.

II

THE VOLUNTARY ARBITRATOR SERIOUSLY ERRED AND GRAVELY

ABUSED HIS DISCRETION IN HOLDING THAT PETITIONER NELSON
PARAS SUPPOSED DELAY IN FILING THE ILLEGAL DISMISSAL CASE
WORKED AGAINST HIM.

III
 THE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF
DISCRETION AND COMMITTED SERIOUS ERRORS OF FACT AND LAW
IN NOT HOLDING THAT THE PERFORMANCE OF NELSON PARAS WAS
SATISFACTORY AND THAT HIS DISMISSAL WAS POLITICALLY
MOTIVATED.[16]

Therein, Paras and CPLU asserted that pursuant to Article 13 of the New Civil
Code, the period of May 27, 1996 to November 26, 1996 consisted of one hundred
eighty-three (183) days. They asserted that the maximum of the probationary
period is six (6) months, which is equivalent to 180 days; as such, Paras, who
continued to be employed even after the 180thday, had become a regular employee
as provided for in Article 282 of the Labor Code. They averred that as a regular
employee, Paras employment could be terminated only for just or authorized
causes as provided for under the Labor Code, and after due notice. They posited
that in the Letter of Termination dated November 25, 1996, the ground for Paras
termination was not among those sanctioned by the Labor Code; hence, his
dismissal was illegal.

Paras and CPLU also stressed that he had already been in the employ of MMPC
from October 3, 1994 to March 3, 1995 as a welder-fabricator in the production of

jigs and fixtures, a function necessary and desirable to the usual business of
MMPC.Such period, in addition to the six-month probationary period, amounted to
eleven (11) months of service, which is sufficient for him to be considered as a
regular employee.

Paras and CPLU averred that the filing of an illegal dismissal complaint only after
his termination in 1996 did not make Paras claim for regularization specious, since

an illegally dismissed employee, like him, has four (4) years within which to file a
complaint.[17]

They emphasized that Paras performance evaluation was changed to unsatisfactory

as an off-shoot of the arguments between the latters wife, the President of the
CPSU, and Atty. Carlos S. Cao, one of MMPCs negotiators, over the provisions in
the CBA.[18]

The MMPC, for its part, averred that under Article 13 of the New Civil Code,
Paras probationary employment which commenced on May 27, 1996 would expire
on November 27, 1996. Since he received the notice of termination of his
employment on November 25, 1996, the same should be considered to have been
served within the six-month probationary period.

The MMPC asserted that the VA acted correctly in not considering the five-
month period of Paras contractual employment as a welder-fabricator to qualify
him for regularization. It argued that his rating showed that his immediate
supervisors, in tandem with his department head, found his performance
unsatisfactory. Thus, his failure to meet a satisfactory performance rating justified
the termination of his probationary employment.

For its part, the Office of the Solicitor General (OSG), in representation of
Voluntary Arbitrator Danilo Lorredo, agreed that Paras
and CPLUs allegation, that the notice of termination was served on Paras
183rd day, was erroneous. The OSG opined that the six-month probationary period
was to expire on November 27, 1996 and since Paras was served such notice on
November 25, 1996, his employment was deemed terminated within the six-month

probationary period. It posited that the failure of Paras to get a satisfactory

performance rating justified the termination of his probationary employment, and
that the inclusion of his five-month contractual employment as welder-fabricator

did not qualify him for regular employment.

Finally, the OSG contended that the appointment of a probationary

employee to a regular status is voluntary and discretionary on the part of the

employer.

In a Decision promulgated on September 13, 2000, the CA reversed the

ruling of the Voluntary Arbitrator, the dispositive portion of which is herein
quoted:
 WHEREFORE, the petition is GRANTED. The Decision of public
respondent, dated November 3, 1997, is REVERSED and SET ASIDE. In lieu
thereof, judgment is hereby entered declaring Mitsubishi Motors Phils.
Corporations dismissal of Nelson Paras as ILLEGAL and ORDERING the former
to reinstate Paras to his former position without loss of seniority rights and other
privileges.Conformably with the latest pronouncement of the Supreme Court on
backwages, supra, Mitsubishi Motors Phils. Corporation is further ORDERED to
pay Paras full backwages (without qualifications or deductions), inclusive of
allowances, and his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement. Petitioners claims for attorneys fees, moral and exemplary damages
are, nevertheless, DENIED for lack of sufficient basis. No costs.[19]

The CA agreed with Paras and CPLUs interpretation that six (6) months is
equivalent to one hundred eighty (180 days) and that computed from May 27,

1996, such period expired on November 23, 1996. Thus,

when Paras received the letter of termination on November 26, 1996, the same was
served on the 183rd day or after the expiration of the six-month probationary
period. The CA stated that since he was allowed to work beyond the probationary
period, Paras became a regular employee. Hence, his dismissal must be based on
the just and authorized causes under the Labor Code, and in accordance with the

two-notice requirement provided for in the implementing rules. The appellate court
concluded that for MMPCs failure to show that Paras was duly notified of the
cause of his dismissal, the latter was illegally dismissed; hence, his actual
reinstatement without loss of seniority rights and the payment of backwages up to
the time of his reinstatement were in order.
 Dissatisfied, the MMPC filed a motion for reconsideration of the decision,
alleging that the CA erred in holding that the six-month probationary period which
commenced on May 27, 1996, expired on November 23, 1996.

The MMPC contended that the reinstatement of Paras to his former position
had become moot and academic because it had retrenched approximately seven
hundred (700) employees as a result of its financial losses in 1997. It posited that

the payment of full backwages should only be computed up to February 1998, the
date when MMPC effected the first phase of its retrenchment program.

The CA denied the motion in a Resolution dated June 18, 2001.[20]

The Present Petition

Undaunted, the MMPC, now the petitioner, filed this instant petition,

alleging as follows:
A.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

REVERSING THE 3 NOVEMBER 1997 DECISION OF THE HONORABLE
VA DANILO LORREDO, AND IN FINDING THAT RESPONDENT PARAS
(WAS) ILLEGALLY DISMISSED AND ORDERING HIS REINSTATEMENT.
 B.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

ORDERING THE REINSTATEMENT OF PARAS WITH FULL
BACKWAGES DESPITE THE CHANGE IN THE FINANCIAL
CIRCUMSTANCES OF THE COMPANY.

C.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT THE SIX-MONTH PROBATIONARY PERIOD OF PARAS WHICH
STARTED ON 27 MAY 1996 HAD EXPIRED 23 NOVEMBER 1996.[21]

The petitioner asserts that the CA erred in ruling that respondent Paras was
already a regular employee when he was served the notice of termination. Citing
Article 13 of the New Civil Code, the petitioner argued that the six-month
probationary period should be computed as follows:

May 27-31 = 4 days

Jun(e) 1-30 = 1 month (30 days)

July 1-31 = 1 month (30 days)

Aug(.) 1-31 = 1 month (30 days)

Sept(.) 1-30 = 1 month (30 days)

Oct(.) 1-31 = 1 month (30 days)

Nov(.) 1-26 = 26 days[22]

 Hence, according to the petitioner, when the termination letter was served on

November 26, 1996, Paras was still a probationary employee.

Considering that he did not qualify for regularization, his services were legally
terminated. As such, the CA erred in ordering his reinstatement and the payment of
his backwages.

According to the petitioner, even assuming that respondent Paras was a

regular employee when he was dismissed, his reinstatement had already become

moot and academic because of the retrenchment program effected as a result of the
business losses it had suffered in the year 1997. Respondent Paras, who was
employed only in May 27, 1996, would have been included in the first batch of
employees retrenched in February of 1998, in accordance with the last in first out
policy embedded in the CBA. The petitioner further contends that Paras backwages
should be computed only up to February of 1998.

In their comment on the petition, the respondents argue that the CA was
correct in concluding that the termination letter was served on respondent Paras
one hundred eighty third (183rd) day of employment with the petitioner, asserting
that six (6) months is equivalent to one hundred eighty (180) days. Since
respondent Paras was employed on May 27, 1996, the 180 th day fell on November
23, 1996. Thus, respondent Paras was already a regular employee when the
termination letter was served on him. Consequently, his dismissal should be based

on the just or authorized causes provided for by the Labor Code, and after proper
notice.

The respondents, likewise, contend that the petitioner cannot raise new and
unsubstantiated allegations in its petition at bar.

The Issues

The issues for resolution are the following: (a) whether or not respondent
Paras was already a regular employee on November 26, 1996; (b) whether or not

he was legally dismissed; (c) if so, whether or not his reinstatement had been
rendered moot and academic; and, (d) whether or not his backwages should be
computed only up to February of 1998.

The Courts Ruling

 The petition is partially granted.

At the outset, we must stress that only errors of law are generally reviewed

by this Court in petitions for review on certiorari of CA decisions.[23] Questions of

fact are not entertained.[24] This Court is not a trier of facts and, in labor cases, this

doctrine applies with greater force. Factual questions are for labor tribunals to

resolve.[25] The findings of fact of quasi-judicial bodies like the National Labor

Relations Commission (NLRC), are accorded with respect, even finality, if

supported by substantial evidence.

Particularly when passed upon and upheld by the Court of Appeals, such findings

are binding and conclusive upon the Supreme Court and will not normally be

disturbed.[26]

However, when the findings of the NLRC and the Court of Appeals are

inconsistent with each other, there is a need to review the records to determine

which of them should be preferred as more conformable to the evidentiary

facts.[27]Considering that the CAs findings of fact clash with those of the Voluntary

Arbitrator, this Court is compelled to go over the records of the case, as well as the

submissions of the parties.[28]

Regularization of

Employment

Indeed, an employer, in the exercise of its management prerogative, may

hire an employee on a probationary basis in order to determine his fitness to
perform work.[29] Under Article 281 of the Labor Code, the employer must inform
the employee of the standards for which his employment may be considered for

regularization. Such probationary period, unless covered by an apprenticeship

agreement, shall not exceed six (6) months from the date the employee started
working. The employees services may be terminated for just cause or for his
failure to qualify as a regular employee based on reasonable standards made
known to him.[30]
Respondent Paras was employed as a management trainee on a probationary basis.

During the orientation conducted on May 15, 1996, he was apprised of the
standards upon which his regularization would be based. He reported for work on
May 27, 1996. As per the companys policy, the

probationary period was from three (3) months to a maximum of six (6) months.

Applying Article 13 of the Civil Code,[31] the probationary period of six (6)
months consists of one hundred eighty (180) days.[32] This is in conformity with
paragraph one, Article 13 of the Civil Code, which provides that the months which
are not designated by their names shall be understood as consisting of thirty (30)
days each. The number of months in the probationary period, six (6), should then
be multiplied by the number of days within a month, thirty (30); hence, the period
of one hundred eighty (180) days.

As clearly provided for in the last paragraph of Article 13, in computing a

period, the first day shall be excluded and the last day included. Thus, the one
hundred eighty (180) days commenced on May 27, 1996, and ended on November
23, 1996.The termination letter dated November 25, 1996 was served on
respondent Paras only at 3:00 a.m. of
November 26, 1996. He was, by then, already a regular employee of the petitioner
under Article 281 of the Labor Code.

The Legality of

The Dismissal

An employee cannot be dismissed except for just or authorized cause as found

in the Labor Code and after due process.[33] The following grounds would justify
the dismissal of an employee:

(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of the employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or of any immediate member of his family or his duly authorized
representative; and
 (e) Other causes analogous to the foregoing.[34]

The basis for which respondent Paras services were terminated was his

alleged unsatisfactory rating arising from poor performance. It is a settled doctrine

that the employer has the burden of proving the lawfulness of his employees
dismissal.The validity of the charge must be clearly established in a manner

consistent with due process.[35]

Under Article 282 of the Labor Code, an unsatisfactory rating can be a just

cause for dismissal only if it amounts to gross and habitual neglect of duties. Gross
negligence has been defined to be the want or absence of even slight care or
diligence as to amount to a reckless disregard of the safety of person or property. It

evinces a thoughtless disregard of consequences without exerting any effort to

avoid them.[36] A careful perusal of the records of this case does not show that
respondent Paras was grossly negligent in the performance of his duties.

The company policy provides the following rule in performance evaluation:

The performance rating sheet must be accomplished by the immediate supervisor,

then reviewed by the Department Head, and concurred by the Division Head. The
Personnel Manager likewise must note all submitted performance sheets.

Once the rating sheet has gone through this standard procedure, the immediate
supervisor shall discuss the results of the performance rating with the
employee. The discussion/conference may be done in the presence of the
 Department Head. This is to emphasize the point that the employee is given due
importance especially in matters pertaining to his development as a person and
employee.[37]

In the present case, the immediate supervisor of respondent Paras gave him an

average performance rating and found him fit for regularization.[38] Thereafter, his
immediate supervisor and the department head reviewed the said rating, which was
duly noted by the personnel manager. However, in a complete turn around, the
petitioner made it appear that after the performance evaluation of respondent Paras
was reviewed by the department and division heads, it was unanimously agreed
that the
respondents performance rating was unsatisfactory, making him unfit for
regularization.

There is no showing that respondent Paras was informed of the basis for the volte

face of the management group tasked to review his

performance rating. His immediate supervisor even told him that he had garnered a
satisfactory rating and was qualified for regularization, only to later receive a letter

notifying him that his employment was being terminated.

Considering that respondent Paras was not dismissed for a just or authorized
cause, his dismissal from employment was illegal. Furthermore, the petitioners
failure to inform him of any charges against him deprived him of due process.
Clearly, the termination of his employment based on his alleged unsatisfactory

performance rating was effected merely to cover up and deodorize the illegality of
his dismissal.

Reinstatement and

Backwages

The normal consequences of illegal dismissal are reinstatement without loss

of seniority rights and the payment of backwages computed from the time the
employees compensation was withheld from him.[39] Since respondent Paras

dismissal from employment is illegal, he is entitled to

reinstatement and to be paid backwages from the time of his dismissal up to the
time of his actual reinstatement.

The petitioner asserts that assuming respondent Paras was illegally

dismissed, his reinstatement had become moot and academic because of its
retrenchment program which was effected beginning February 1998. The petitioner
posits that even if respondent Paras had become a regular employee by November
26, 1996, he would have been included in the first phase of its retrenchment
program, pursuant to the last in first out policy embedded in the CBA. Hence, the
petitioner concludes, the payment of backwages should be computed up to
February of 1998.

The respondents, for their part, aver that the petitioner is proscribed from
alleging new circumstances and allegations of fact, particularly on financial
reverses, before the Court of Appeals and the Voluntary Arbitrator.

We do not agree with the respondents.

A cursory examination of the records shows that the petitioner could not
raise its retrenchment program as an issue before the VA, because it was

implemented only in February 1998, when the case was already in the
CA. However, we note that the petitioner did not raise the same in its comment to
the petition. The petitioner asserted the matter only in its October 20, 2000 motion
for reconsideration of the decision of the CA, where it alleged that the
retrenchment program was effected to arrest the continuing business losses
resulting from the financial reverses it experienced in 1997.

Nevertheless, it is not denied that because of the petitioners losses, it

retrenched seven hundred (700) employees.Business reverses or losses are
recognized by law as an authorized cause for termination of employment. Still, it is
an essential requirement that alleged losses in business operations must be proven
convincingly. Otherwise, such ground for termination would be susceptible to

abuse by scheming employers, who might be merely feigning business losses or

reverses in their business ventures to ease out employees.[40] Retrenchment is an
authorized cause for termination of employment which the law accords an

employer who is not making good in its operations in order to cut back on
expenses for salaries and wages by laying off some employees. The purpose of
retrenchment is to save a financially ailing business establishment from eventually
collapsing.[41]

In this case, the petitioner submitted in the CA its financial statements for
1996, 1997 and 1998[42] as well as its application for retrenchment. In its

Statements of Income and Unappropriated Retained Earning, it was shown that in

1996, the parent company of the petitioner had a net income of P467,744,285. In
1997, it had a net loss of P29,253,511.[43] In 1998, its net loss, after effecting

retrenchment and closing several plants, was arrested and dropped

to P8,156,585.[44] This shows that even after the retrenchment, the petitioner
MMPC still suffered net losses.

In 1996, the petitioners current assets amounted to P5,381,743,576; it

increased to P8,033,932,745[45] in 1997, while in 1998, it was reduced
to P5,053,874,359.[46] This shows that the petitioners assets acquired in 1997
diminished in 1998. The figures for Current Liabilities are consistent with the
movement of current assets for 1997 and 1998.

In 1996, the petitioner incurred current liabilities of P1,966,445,401 which

increased to P5,088,990,117[47] in 1997 and decreased to P2,880,259,811[48] in
1998. To reduce its losses, the petitioner had to dispose of some of its current
assets to cover the increased liability incurred in 1997, and had to resort to
borrowings in 1998. The continuity of losses which started in 1997 is further
illustrated in the figures on retained earnings for 1996, 1997 and 1998. In 1996,

retained earnings stood at P1,838,098,175,[49] which decreased

to P994,942,628[50] in 1997 and further decreased to P592,614,548[51] in 1998.

The petitioners losses in 1997 and 1998 are not insignificant. It is beyond
cavil then, that the serious and actual business reverses suffered by the petitioner
justified its resort to retrenchment of seven hundred (700) of its employees.

The records show that the petitioner informed the Department of Labor and

Employment of its plight and intention to retrench employees as a result of the

shutdown of its plants.[52] The termination of the five hundred thirty-one (531)
affected employees were made effective a month from receipt of the termination
letter mailed on February 25, 1998.[53]
 In accordance with the CBA between MMPC and CPLU, employees who
were recently hired were the ones retrenched.Considering that respondent Paras

had just been regularized on November 24, 1996, he would have been included
among those who had been retrenched had he not been dismissed.

The unfavorable financial conditions of the petitioner may not justify

reinstatement. However, it is not a sufficient ground to deny backwages to
respondent Paras who was illegally dismissed.[54] Considering that notices of
retrenchment were mailed on February 25, 1998 and made effective one month

therefrom, respondent Paras should be paid full backwages from the date of his
illegal dismissal up to March 25, 1998. Pursuant to Article 283 of the Labor Code,
he should be paid separation pay equivalent to one (1) month salary, or to at least

one-half month pay for every year of service, whichever is higher, a fraction of at
least six months to be considered as one (1) year.[55]

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY

GRANTED. The September 13, 2000 Decision of the Court of Appeals in CAGR
SP No. 46030 is hereby AFFIRMED WITH MODIFICATIONS. The petitioner

is ORDERED to pay respondent Nelson Paras separation pay equivalent to one (1)
month, or to at least one-half (1/2) month pay for every year of service, whichever
is higher, a fraction of at least six (6) months to be considered as one year; and to

pay full backwages, computed from the time of his dismissal up to March 25,
1998. That portion of the decision of the Court of Appeals directing the
reinstatement of the respondent Paras is DELETED.

No costs.

SO ORDERED.