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Hacienda Fatima v. National Federation Digest

Hacienda Fatima v. National Federation

The petitioner disfavored the fact that the private respondent employees have formed a union. When the
union became the collective bargaining representative in the certification election, the petitioner refused to
sit down to negotiate a CBA. Moreover, the respondents were not given work for a month amounting to
unjustified dismissal. As a result, the complainants staged a strike to protest but was settled through a
memorandum of agreement which contained a list of those considered as regular employees for the

The NLRC held that there was illegal dismissal and this was affirmed by the Court of Appeals.

Issue: W/N the employees are regular workers

RULING: Yes, they are regular and not seasonal employees. For them to be excluded as regulars, it is
not enough that they perform work that is seasonal in nature but they also are employed for the duration
of one season. The evidence only proved the first but not the second requirement.

The ruling in Mercado v. NLRC is not applicable since in that case, the workers were merely required to
perform phases of agricultural work for a definite period of time, after which, their services are available to
other employers. The management's sudden change of assignment reeks of bad faith, it is likewise guilty
of ULP.

Mercado v. NLRC Digest

Mercado v. NLRC

1. Petitioners were agricultural workers of the private respondent's sugar land who were dismissed. They
had worked in all agriculture phases for several years in the said sugar land. The respondent denied that
petitioners were regular employees alleging that their services were engaged through 'mandarols' or
supply workers to do a particular phase of the agricultural work.

2. As a result, the petitioners filed a complaint for illegal dismissal. The Labor Arbiter held that the
petitioners were not regular employees and the NLRC affirmed this ruling.

Issue: W/N the petitioners are regular and permanent farm workers

RULING: No, they are project/seasonal employees. A project employee is one whose employment has
been fixed for a specific project or undertaking, the completion has been determined at the time of
engagement, or where work or service is seasonal in nature and employment is for the duration of the

As such, the termination of employment cannot be considered as illegal dismissal. The petitioners are
free to contract their services to work for other farm owners.

G.R. No. 193493 : June 13, 2013




Jaime Fulo died of acute renal failure secondary to 1st degree burn 70% secondary electrocution while
doing repairs at the residence and business establishment of petitioner at Sorsogon.

Allegedly moved by his Christian faith, petitioner extended some financial assistance to private
respondent. The latter executed an Affidavit of Desistance stating that she was not holding them liable for
the death of her late husband, Jaime Fulo, and was thereby waiving her right and desisting from filing any
criminal or civil action against petitioner.

Both parties executed a compromise agreement, whereby 40,000 pesos was given to the surviving
spouse. Thereafter, private respondent filed a claim for social security benefits with the SSS. However, it
was discovered that the deceased was not a registered member of the SSS. Private respondent insisted
that her late husband had been employed by petitioner from January 1983 up to his untimely death on
November 4, 1997.

Consequently, SSS demanded that petitioner remit the social security contributions of the deceased.
Petitioner denied that the deceased was hs employee, SSS required private respondent to present
evidence to refute petitioners allegations.

Instead of presenting evidence, respondent filed a petition before the SSC. In her petition, she sough
social security coverage and payment of contributions in order to avail herself of the benefits accruing
from the death of her husband.

Petitioner claims that the deceased was not a former employee, but was an independent contractor
whose tasks were not subject to petitioners control and supervision. Hence, petitioner was under no
obligation to report the formers demise to the SSS.

SSS filed a petition- in- intervention before the SSC. SSC rendered a resolution finding Jaime Fulo to be
employed by respondent Gapayao and hereby ordering them to pay the unpaid SSS contributions on
behalf of deceased Jaime Fulo. SSS was also directed by the SSC to pay Rosario Fulo the death benefit.

Petitioner appealed to the CA who ruled in favor of private respondent and affirmed the previous decision.

ISSUE: Whether or not there exists an employer-employee relationship that would merit an award of

HELD: Court of Appeals decision is affirmed.


Farm workers generally fall under the definition of seasonal employees. We have consistently held that
seasonal employees may be considered as regular employees. Regular seasonal employees are those
called to work from time to time. The nature of their relationship with the employer is such that during the
off-season, they are temporarily laid off; but re-employed during the summer season or when their
services may be needed. They are in regular employment because of the nature of their job, and not
because of the length of time they have worked.

The rule, however, is not absolute. For regular employees to be considered as such, the primary standard
used is the reasonable connection between the particular activity they perform and the usual trade or
business of the employer.

The test is whether the former is usually necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the nature of the work performed and its
relation t the scheme of the particular business in its entirety. Also if the employee has been performing
the job for at least one year, even if the performance is not continuous or merely intermittent, the law
deems that repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered regular, but
only wit respect to such activity and while such activity exists.

A reading of the records reveals that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, starting January 1983 up until his death, the deceased has been
working on petitioners land by harvesting abaca and coconut, processing copra, and clearing weeds. His
employment was continuous in the sence that it was done for more than one harvesting season.
Moreover, no amount of reasoning could detract from the fact that these tasks were necessary in the
usual business of petitioner.

As found by the SSC, the deceased was a construction worker in the building and helper in the bakery,
grocery, hardware, and piggery- all owned by petitioner. This fact only proves that even during the off
season, the deceased was still in the employ of petitioner.

Petitioners further alleged that he was merely a pakyaw worker, but even so, they may still be considered
as employees as long as the employers exercise control over them. The power of the employer to control
the work of the employee is considered that most significant determinant of the existence of an employer-
employee relationship. This is the so-called control test. It is not essential that the employer actually
supervise the performance of duties by the employee. It is enough that the former has a right to wield the

We agree with the CA that petitioner wielded control over the deceased in the discharge of his functions.
Being the owner of the farm, petitioner necessarily had the right to review the quality of work produced by
his laborers. It matters not whether the deceased conducted his work inside petitioners farm or not

because petitioner retained the right to control him in his work, and in fact exercised it through his farm
manager Amado Gacelo. The latte himself testified that petitioner had hired the deceased as one of the
pakyaw workers whose salaries were derived from the gross proceeds of the harvest.

Petitioner entered into the agreement with full knowledge that he was described as the employer of the
deceased. This knowledge cannot simply be denied by a statement that petitioner was merely forced into
such an agreement.

The right of an employee to be covered by the Social Security Act is premised on the existence of an
employer-employee relationship.

G.R.No. 159343 September 28, 2007

RENE CABATE, Respondents.
FACTS: Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane
sugar milling business. Petitioners were employees.
At the start of their respective employments, they were made to sign a Contract of Employment for
Specific Project or Undertaking. Petitioners’ contracts were renewed from time to time, until May 1999
when they were informed that their contracts will not be renewed anymore.

Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay,
damages and attorney’s fees.

LABOR ARBITER: They were not regular employees

NLRC and CA: affirmed

ISSUE: WON they are regular employees

HELD: They are NOT regular employees
ART. 280. Regular and Casual Employees. – The provision 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 actually

The principal test for determining whether an employee is a project employee or a regular employee is
whether 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.

A true project employee should be assigned to a project which begins and ends at determined or
determinable times, and be informed thereof at the time of hiring.

The very nature of the terms and conditions of complainants’ hiring reveals that they were required to
perform phases of special projects for a definite period after, their services are available to other farm
owners. This is so because the planting of sugar does not entail a whole year operation, and utility works
are comparatively small during the off-milling season.

It must be noted that there were intervals in petitioners’ respective employment contracts, and that their
work depended on the availability of such contracts or projects. Consequently, the employment of
URSUMCO’s work force was not permanent but co-terminous with the projects to which the employees
were assigned and from whose payrolls they were paid

The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular
employees. Their respective contracts with respondent show that there were intervals in their
employment. In petitioner Caseres’s case, while his employment lasted from August 1989 to May 1999,
the duration of his employment ranged from one day to several months at a time, and such successive

employments were not continuous. With regard to petitioner Pael, his employment never lasted for more
than a month at a time. These support the conclusion that they were indeed project employees, and since
their work depended on the availability of such contracts or projects, necessarily the employment of
respondent’s work force was not permanent but co-terminous with the projects to which they were
assigned and from whose payrolls they were paid.

Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as
regular employees, as length of service is not the controlling determinant of the employment tenure of a
project employee, but whether the employment has been fixed for a specific project or undertaking, its
completion has been determined at the time of the engagement of the employee. Further, the proviso in
Article 280, stating that an employee who has rendered service for at least one (1) year shall be
considered a regular employee, pertains to casual employees and not to project employees

Case Digest: Mylene Carvajal vs. Luzon Development Bank and/or Oscar Ramirez

G.R. No. 186169 01 August 2012


Carvajal was employed as a trainee-teller by Luzon Development Bank (Bank) under a six-month
probationary employment contract. Ramirez is the President and CEO of the Bank. A month into her
employment, she was send a Memorandum directing her to explain in writing why she should not be
subjected to disciplinary action for her eight tardiness on November 2003. A second Memorandum was
sent to her on January for her again chronic tardiness on December 2003. She submitted her written
explanations for both events and manifested her acceptance of the consequences of her actions. She
was terminated for three days effective 21 January 2004. However, on 22 January, her termination was
lifted but at the same time, her services were terminated. In the respondents’ position paper to the LA,
they explained that the reasons for her absence are chronic tardiness, absenteeism and failure to perform
satisfactorily as a probationary employee.

LA Decision: The petitioner was illegally dismissed because she was not afforded the notice in writing
informing her of what the Bank would like to bring out to her for the latter to answer in writing.

NLRC Decision: NLRC affirmed the decision of the LA.

CA Decision: The CA found that the petitioner was not entitled to backwages because she was rightfully
dismissed for failure to meet the employment standards.

ISSUE: Whether the petitioner can be considered a regular employee at the time of her dismissal.

HELD:No. Carvajal’s appointment letter reads that “Possible extension of this contract will depend on the
job requirements of the Bank and your overall performance. Performance review will be conducted
before possible renewal can take effect.” Therefore, petitioner knew, at the time of her engagement, that
she must comply with the standards set forth by respondent and perform satisfactorily in order to attain
regular status. Even the NLRC upheld the petitoner’s probationary status, stating that reinstatement is
not synonymous to regularization.

Although probationary employees also enjoy security of tenure, he may still be terminated because of just
and authorized causes of termination and the additional ground under Article 281 of the Labor Code, i.e.
the probationary employee may also be terminated for failure to qualify as a regular employee in
accordance to the reasonable standards set by the employer. Punctuality is a reasonable standard
imposed on every employee, whether in government or private sector. This, together with absenteeism,
underperformance and mistake in clearing a check are infractions that cannot be tantamount to
satisfactory standards.

In addition to the abovementioned, it has been previously held in PDI vs. Magtibay, Jr., that the second
requirement under Article 281 does not require notice and hearing. Due process of law for this second
ground consists of making the reasonable standards expected of the employee during his probationary
period known to him at the time of his engagement. By the very nature of probationary employment, the
employee knows from the very start that he will be under close observation and continuous scrutiny by his
supervisors. If termination is for cause, it may be done at anytime during the probation.

CASE DIGEST: Abbott Laboratories Phil. v. Pearlie Ann F. Alcaraz [G.R. No. 192571, July
23, 2013] Subject: Labor Law – Probationary employees – Standards to qualify as a regular employee
Decision (Perlas-Bernarbe, J.)
Dissent (Brion, J.)
On June 27, 2004, Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet
newspaper of its need for a Medical and Regulatory Affairs Manager who would: (a) be responsible for
drug safety surveillance operations, staffing, and budget; (b) lead the development and implementation of
standard operating procedures/policies for drug safety surveillance and vigilance; and (c) act as the
primary interface with internal and external customers regarding safety operations and queries.
Alcaraz – who was then a Regulatory Affairs and Information Manager at Aventis Pasteur
Philippines, Incorporated (another pharmaceutical company like Abbott) – showed interest and
submitted her application on October 4, 2004.
On December 7, 2004, Abbott formally offered Alcaraz the above-mentioned position which was an item
under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department.

In Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.
Later that day, she accepted the said offer and received an electronic mail (e-mail) from Abbott’s
Recruitment Officer, Teresita C. Bernardo (Bernardo), confirming the same. Attached to Bernardo’s e-
mail were Abbott’s organizational chart and a job description of Alcaraz’s work.
On February 12, 2005, Alcaraz signed an employment contract which stated that she was to be
placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005.
During Alcaraz’s pre-employment orientation, Allan G. Almazar, Hospira’s Country Transition
Manager, briefed her on her duties and responsibilities as Regulatory Affairs Manager:
(a) she will handle the staff of Hospira ALSU and will directly report to Almazar on matters regarding
Hopira’s local operations, operational budget, and performance evaluation of the Hospira ALSU Staff who
are on probationary status;

(b) she must implement Abbott’s Code of Good Corporate Conduct (Code of Conduct), office policies on
human resources and finance, and ensure that Abbott will hire people who are fit in the organizational

(c) Kelly Walsh, Manager of the Literature Drug Surveillance Drug Safety of Hospira, will be her
immediate supervisor;

(d) she should always coordinate with Abbott’s human resource officers in the management and discipline
of the staff;

(e) Hospira ALSU will spin off from Abbott in early 2006 and will be officially incorporated and known as
Hospira, Philippines; and

(f) the processing of information and/or raw material data subject of Hospira ALSU operations will be
strictly confined and controlled under the computer system and network being maintained and operated
from the United States. For this purpose, all those involved in Hospira ALSU are required to use two
identification cards: one, to identify them as Abbott’s employees and another, to identify them as Hospira

On March 3, 2005, Maria Olivia T. Yabut-Misa, Abbott’s Human Resources (HR) Director, sent
Alcaraz an e-mail which contained an explanation of the procedure for evaluating the performance
of probationary employees and further indicated that Abbott had only one evaluation system for
all of its employees. Alcaraz was also given copies of Abbott’s Code of Conduct and Probationary
Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules
(Performance Modules) which she had to apply in line with her task of evaluating the Hospira
ALSU staff.
Abbott’s PPSE procedure mandates that the job performance of a probationary employee should
be formally reviewed and discussed with the employee at least twice: first on the third month and
second on the fifth month from the date of employment. The necessary Performance Improvement
Plan should also be made during the third-month review in case of a gap between the employee’s
performance and the standards set. These performance standards should be discussed in detail
with the employee within the first two (2) weeks on the job. It was equally required that a signed
copy of the PPSE form must be submitted to Abbott’s Human Resources Department (HRD) and
shall serve as documentation of the employee’s performance during his/her probationary period.
This shall form the basis for recommending the confirmation or termination of the probationary
On April 20, 2005, Alcaraz had a meeting with Cecille Terrible, Abbott’s former HR Director, to
discuss certain issues regarding staff performance standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some staff members which
essentially contained queries regarding the former’s job performance. Alcaraz asked if Walsh’s
action was the normal process of evaluation. Terrible said that it was not.

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed
that she failed to meet the regularization standards for the position of Regulatory Affairs Manager.
Thereafter, Walsh and Terrible requested Alcaraz to tender her resignation, else they be forced to
terminate her services. She was also told that, regardless of her choice, she should no longer
report for work and was asked to surrender her office identification cards. She requested to be
given one week to decide on the same, but to no avail.
On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would
be on leave for that day. However, Gonzales told her that Walsh and Terrible already announced to
the whole Hospira ALSU staff that Alcaraz already resigned due to health reasons.
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that
her services had been terminated effective May 19, 2005. The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz:
(a) did not manage her time effectively;

(b) failed to gain the trust of her staff and to build an effective rapport with them;

(c) failed to train her staff effectively; and

(d) was not able to obtain the knowledge and ability to make sound judgments on case processing and
article review which were necessary for the proper performance of her duties.

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal
dismissal and damages against Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh,
Terrible, and Feist. She claimed that she should have already been considered as a regular and not a
probationary employee given Abbott’s failure to inform her of the reasonable standards for her
regularization upon her engagement as required under Article 295 of the Labor Code. In this
relation, she contended that while her employment contract stated that she was to be engaged on a
probationary status, the same did not indicate the standards on which her regularization would be
based. She further averred that the individual petitioners maliciously connived to illegally dismiss
her when:
(a) they threatened her with termination;

(b) she was ordered not to enter company premises even if she was still an employee thereof; and

(c) they publicly announced that she already resigned in order to humiliate her.

Abbott maintained that Alcaraz was validly terminated from her probationary employment given her failure
to satisfy the prescribed standards for her regularization which were made known to her at the time of her

The Labor Arbiter ruled in Abbott’s favor. The NLRC reversed, upholding Alcaraz’s allegations. The CA
affirmed the NLRC decision.

1) WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular
MAJORITY: YES. Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs
Manager prior to, during the time of her engagement, and the incipient stages of her employment. On this
score, the Court finds it apt to detail not only the incidents which point out to the efforts made by Abbott
but also those circumstances which would show that Alcaraz was well-apprised of her employer’s
expectations that would, in turn, determine her regularization:
(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a
Regulatory Affairs Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to
Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia,
that she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to
August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her (d) On the day Alcaraz
accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s organizational structure and
her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she had
to implement Abbott’s Code of Conduct and office policies on human resources and finance and that she
would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa who
explained to her the procedure for evaluating the performance of probationary employees; she was
further notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to
have an “extensive training and background” to acquire the necessary skills for her job.

Considering the totality of the above-stated circumstances, Alcaraz was well-aware that her regularization
would depend on her ability and capacity to fulfill the requirements of her position as Regulatory Affairs
Manager and that her failure to perform such would give Abbott a valid cause to terminate her
probationary employment. Verily, basic knowledge and common sense dictate that the adequate
performance of one’s duties is, by and of itself, an inherent and implied standard for a
probationary employee to be regularized; such is a regularization standard which need not be
literally spelled out or mapped into technical indicators in every case.

DISSENT (Brion, J.): NO. The Offer Sheet was designed to inform Alcaraz of the compensation and
benefits package offered to her by Abbott and can in no way be read as a statement of the
applicable probationary employment standard. It was communicated even prior to engagement when
the parties were negotiating, not at the point of engagement as the law requires.
The pre-employment orientation on Alcaraz’s duty to implement Abbott’s Code of Conduct, office
policies and training program likewise cannot be characterized as performance standards; they
simply related to activities aimed at acquainting and training Alcaraz on her duties and not for the
purpose of informing her of the performance standards applicable to her. What stands out is
that they do not pertain specifically to Alcaraz and the required performance standard applicable
for her qualification for regular employment; they related to the staff Alcaraz managed and
supervised. Additionally, these were all relayed prior to or after Alcaraz was engaged by Abbott.
An important distinction to remember at this point is that Alcaraz’s knowledge of the duties that her
work entailed, and her knowledge of the employer’s performance standard, are two distinct
matters separately requiring the presentation of independent proof.

MAJORITY: Keeping with [the Omnibus Rules Implementing the Labor Code], an employer is deemed
to have made known the standards that would qualify a probationary employee to be a regular
employee when it has exerted reasonable efforts to apprise the employee of what he is expected
to do to accomplish during the trial of probation.This goes without saying that the employee is
sufficiently made aware of his probationary status as well as the length of time of the probation.
The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the
case of maids, cooks, drivers, or messengers. Also in Aberdeen Court, Inc v. Agustin, it has been held
that the rule on notifying a probationary employee of the standards of regularization should not be
used to exculpate an employee in a manner contrary to basic knowledge and common sense in
regard to which there is no need to spell out a policy or standard to be met. In the same light, an
employee’s failure to perform the duties and responsibilities which have been clearly made known
to him constitutes a justifiable basis for a probationary employee’s non-regularization.

DISSENT (Brion, J.): Based on these premises, the ponencia then deftly argues that because the
duties and responsibilities of the position have been explained to Alcaraz, an experienced human
resource specialist, she should have known what was expected for her to attain regular
status. The ponencia’s reasoning, however, is badly flawed.
1st. The ponencia impliedly admits that no performance standards were expressly given but argues that
because Alcaraz had been informed of her duties and responsibilities (a fact that was and is not
disputed), she should be deemed to know what was expected of her for purposes of regularization. This
is a major flaw that the ponencia satisfies only via an assumption. The ponencia apparently
forgets that knowledge of duties and responsibilities is different from the measure of how these
duties and responsibilities should be delivered. They are separate elements and the latter element
is missing in the present case.
2nd. The ponencia glosses over the communication aspect. Not only must there be express performance
standards; there must be effective communication. If no standards were provided, what would be
3rd. The ponencia badly contradicts itself in claiming that actual communication of specific standards
might not be necessary “when the job is self-descriptive in nature, for instance, in the case of maids,
cooks, drivers, or messengers.” Alcaraz, in the first place, was never a maid, cook, driver or a
messenger and cannot be placed under this classification; she was hired and employed as a human
resources manager, in short, a managerial employee. Plain and common sense reasoning by one who
ever had been in an employment situation dictates that the job of a manager cannot be self-
explanatory, in the way the ponencia implied; the complexity of a managerial job must necessarily
require that the level of performance to be delivered must be specified and cannot simply be assumed
based on the communication of the manager’s duties and responsibilities.

4th. The ponencia also forgets that what these “performance standards” or measures cannot simply
be assumed because they are critically important in this case, or for that matter, in any case
involving jobs whose duties and responsibilities are not simple or self-descriptive. If Alcaraz had
been evaluated or assessed in the manner that the company’s internal rules require, these standards
would have been the basis for her performance or lack of it. Last but not the least, Alcaraz’s services
were terminated on the basis of the performance standards that, by law, the employer set or prescribed at
the time of the employee’s engagement. If none had been prescribed in the first place, under what
basis could the employee then be assessed for purposes of termination or regularization?
2) WON Alcaraz was validly terminated from her employment

MAJORITY: NO. Abbott failed to follow the above-stated procedure in evaluating Alcaraz. For one, there
lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the HRD. It was not
even shown that a PPSE form was completed to formally assess her performance. Neither was the
performance evaluation discussed with her during the third and fifth months of her employment. Nor did
Abbott come up with the necessary Performance Improvement Plan to properly gauge Alcaraz’s
performance with the set company standards.
The Court modified Agabon v. NLRC in the case of Jaka Food Processing Corporation v. Pacot where it
created a distinction between procedurally defective dismissals due to a just cause, on one hand, and
those due to an authorized cause, on the other.
If the dismissal is based on a just cause under Article 296 of the Labor Code but the employer failed
to comply with the notice requirement, the sanction to be imposed upon him should be tempered
because the dismissal process was, in effect, initiated by an act imputable to the employee
If the dismissal is based on an authorized cause under Article 297 but the employer failed to comply
with the notice requirement, the sanction should be stiffer because the dismissal process was
initiated by the employer’s exercise of his management prerogative.
Alcaraz’s dismissal proceeded from her failure to comply with the standards required for her
regularization. As such, it is undeniable that the dismissal process was, in effect, initiated by an
act imputable to the employee, akin to dismissals due to just causesunder Article 296 of the Labor
Code. Therefore, the Court deems it appropriate to fix the amount of nominal damages at the amount of
P30,000.00, consistent with its rulings in both Agabon and Jaka.

DISSENT (Brion, J.): YES. Alcaraz was dismissed as she “failed to qualify as regular employee in
accordance with the prescribed standards set by the Company.” Even granting for the sake of argument
that Abbott had apprised Alcaraz of an applicable performance standard, the evidence failed to show
that Alcaraz did not meet this standard in a manner and to the extent equivalent to the “just
cause” that the law requires.
In defense of Abbott’s failure to observe the two-notice requirement, the ponencia argues that a different
procedure applies when terminating a probationary employee; the usual two-notice requirement does not
govern, citing for this purpose Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code.
The ponencia, however, forgets that the single notice rule applies only if the employee is validly on
probationary basis; it does not apply where the employee is deemed a regular employee for the
company’s failure to provide and to communicate a prescribed performance standard applicable
to the probationary employee.
3) WON the individual petitioners herein are liable
MAJORITY: NO. Other than her unfounded assertions on the matter, there is no evidence to support the
fact that the individual petitioners herein, in their capacity as Abbott’s officers and employees, acted in
bad faith or were motivated by ill will in terminating Alcaraz’s services. The fact that Alcaraz was made to
resign and not allowed to enter the workplace does not necessarily indicate bad faith on Abbott’s part
since a sufficient ground existed for the latter to actually proceed with her termination. On the alleged loss
of her personal belongings, records are bereft of any showing that the same could be attributed to Abbott
or any of its officers.
DISSENT (Brion, J.): YES. The NLRC exhaustively discussed Abbott’s bad faith, as demonstrated by the
actions of the individual petitioners:
First, Alcaraz was pressured to resign:

(1) she was threatened with termination, which will surely damage her reputation in the pharmaceutical

(2) she was asked to evacuate her Commission and ordered not to enter the Company’s premises even if
she was still an Abbott employee; and

(3) Terrible and Walsh made a public announcement to the staff that Alcaraz already resigned even if in
reality she did not.

The CA also described in detail the abrupt and oppressive manner in which Alcaraz’s employment was
dismissed by Abbott:

On May 23, 2005, Alcaraz still reported for work since Abbott had not yet handed the termination notice to
her. However, the security guard did not allow her to enter the Hospira ALSU office pursuant to
Walsh[’s] instruction. She requested Walsh that she be allowed to enter the company premises to
retrieve her last remaining things in her office which are mostly her personal belongings. She was allowed
to enter. However, she was surprised to see her drawers already unlocked and, when she opened

the same, she discovered that her small brown envelope x x x, white pouch containing the
duplicate keys, and the staff’s final evaluation sheets were missing.Alcaraz informed Bernardo about
the incident. The latter responded by saying she was no longer an employee of the company since
May 19, 2005.
Alcaraz reported the matter to the Pasig Police Station and asked for help regarding the theft of her
properties. The Pasig Police incident report stated as follows:
x x x x When confronted by the suspect, in the presence of one SOCO officer and staff, named Christian
Perez, Kelly Walsh allegedly admitted that she was the one who opened the drawer and got the green
folders containing the staff evaluations. The Reportee was told by Kelly Walsh that her Rolex wristwatch
will be returned to her provided that she will immediately vacate her office.

On the same date, Alcaraz’s termination letter dated May 19, 2005 was handed to her by Walsh, Almazar
and Bernardo.

Republic of the Philippines

Baguio City


- versus - VELASCO, JR., J., Chairperson

LARIOSA, and WIDE WIDE Promulgated:
Respondents. Promulgated:

April 25, 2012




The Case

This Petition for Review on Certiorari under Rule 45 assails and seeks to set aside the July 3,
2008 Decision[1] and December 15, 2008 Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No.
101309, entitled Armando Aliling v. National Labor Relations Commission, Wide Wide World Express
Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed issuances
modified the Resolutions dated May 31, 2007[3] and August 31, 2007[4] rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004, affirming the Decision dated
April 25, 2006[5] of the Labor Arbiter.
The Facts
Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express Corporation (WWWEC) offered
to employ petitioner Armando Aliling (Aliling) as Account Executive (Seafreight Sales), with the following
compensation package: a monthly salary of PhP 13,000, transportation allowance of PhP 3,000, clothing
allowance of PhP 800, cost of living allowance of PhP 500, each payable on a per month basis and a
14th month pay depending on the profitability and availability of financial resources of the company. The
offer came with a six (6)-month probation period condition with this express caveat: Performance during
[sic] probationary period shall be made as basis for confirmation to Regular or Permanent Status.

On June 11, 2004, Aliling and WWWEC inked an Employment Contract[7] under the following terms,
among others:

Conversion to regular status shall be determined on the basis of work performance; and

Employment services may, at any time, be terminated for just cause or in accordance with
the standards defined at the time of engagement.[8]

Training then started. However, instead of a Seafreight Sale assignment, WWWEC asked Aliling
to handle Ground Express (GX), a new company product launched on June 18, 2004 involving domestic
cargo forwarding service for Luzon. Marketing this product and finding daily contracts for it formed the
core of Alilings new assignment.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing
Director, emailed Aliling[9] to express dissatisfaction with the latters performance, thus:


My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week (August 5)
after launch (July 15). Pls. make that happen. It has been more than a month since you
came in. I am expecting sales to be pumping in by now. Thanks.


Thereafter, in a letter of September 25, 2004, [10] Joseph R. Lariosa (Lariosa), Human Resources Manager
of WWWEC, asked Aliling to report to the Human Resources Department to explain his absence taken
without leave from September 20, 2004.

Aliling responded two days later. He denied being absent on the days in question, attaching to his reply-
letter[11] a copy of his timesheet[12] which showed that he worked from September 20 to 24, 2004. Alilings
explanation came with a query regarding the withholding of his salary corresponding to September 11 to
25, 2004.

In a separate letter dated September 27, 2004,[13] Aliling wrote San Mateo stating: Pursuant to your
instruction on September 20, 2004, I hereby tender my resignation effective October 15, 2004. While
WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and a written
apology, claiming in a subsequent letter dated October 1, 2004[14] to management that San Mateo had
forced him to resign.

Lariosas response-letter of October 1, 2004,[15] informed Aliling that his case was still in the process of
being evaluated. On October 6, 2004,[16] Lariosa again wrote, this time to advise Aliling of the termination
of his services effective as of that date owing to his non-satisfactory performance during his probationary
period. Records show that Aliling, for the period indicated, was paid his outstanding salary which
consisted of:

PhP 4,988.18 (salary for the September 25, 2004 payroll)

1,987.28 (salary for 4 days in October 2004)
PhP 6,975.46 Total

Earlier, however, or on October 4, 2004, Aliling filed a Complaint[17] for illegal dismissal due to forced
resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended to
the complaint was Alilings Affidavit dated November 12, 2004,[18] in which he stated: 5. At the time of my
engagement, respondents did not make known to me the standards under which I will qualify as a regular
Refuting Alilings basic posture, WWWEC stated in its Position Paper dated November 22,
2004[19] that, in addition to the letter-offer and employment contract adverted to, WWWEC and Aliling
have signed a letter of appointment[20] on June 11, 2004 containing the following terms of engagement:

Additionally, upon the effectivity of your probation, you and your immediate
superior are required to jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess your competence and work attitude.
The 5th month Performance Appraisal shall be the basis in elevating or confirming
your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your services
may be terminated without prior notice and without recourse to separation pay.

WWWEC also attached to its Position Paper a memo dated September 20, 2004 [21] in which San Mateo
asked Aliling to explain why he should not be terminated for failure to meet the expected job performance,
considering that the load factor for the GX Shuttles for the period July to September was only 0.18% as
opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004. According to WWWEC,
Aliling, instead of explaining himself, simply submitted a resignation letter.

In a Reply-Affidavit dated December 13, 2004,[22] Aliling denied having received a copy of San Mateos
September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 2006[23] a Decision declaring Alilings
termination as unjustified. In its pertinent parts, the decision reads:

The grounds upon which complainants dismissal was based did not conform not only the
standard but also the compliance required under Article 281 of the Labor Code,
Necessarily, complainants termination is not justified for failure to comply with the
mandate the law requires. Respondents should be ordered to pay salaries
corresponding to the unexpired portion of the contract of employment and all other
benefits amounting to a total of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN
PESOS (P35,811.00) covering the period from October 6 to December 7, 2004,
computed as follows:

Unexpired Portion of the Contract:

Basic Salary P13,000.00

Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00

Complainants 13th month pay proportionately for 2004 was not shown to have been paid
to complainant, respondent be made liable to him therefore computed at SIX

For engaging the services of counsel to protect his interest, complainant is likewise
entitled to a 10% attorneys fees of the judgment amount. Such other claims for lack of
basis sufficient to support for their grant are unwarranted.

WHEREFORE, judgment is hereby rendered ordering respondent company to pay

complainant Armando Aliling the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his salaries and other benefits as discussed

Respondent company is likewise ordered to pay said complainant the amount of TEN
representing his proportionate 13th month pay for 2004 plus 10% of the total judgment as
and by way of attorneys fees.

Other claims are hereby denied for lack of merit. (Emphasis supplied.)

The labor arbiter gave credence to Alilings allegation about not receiving and, therefore, not bound
by, San Mateos purported September 20, 2004 memo. The memo, to reiterate, supposedly apprised
Aliling of the sales quota he was, but failed, to meet. Pushing the point, the labor arbiter explained that
Aliling cannot be validly terminated for non-compliance with the quota threshold absent a prior advisory of
the reasonable standards upon which his performance would be evaluated.

Both parties appealed the above decision to the NLRC, which affirmed the Decision in toto in its
Resolution dated May 31, 2007. The separate motions for reconsideration were also denied by the NLRC
in its Resolution dated August 31, 2007.

Therefrom, Aliling went on certiorari to the CA, which eventually rendered the assailed Decision, the
dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor Relations Commission are AFFIRMED, with
the following MODIFICATION/CLARIFICATION: Respondents Wide Wide World Express
Corp. and its officers, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa,
are jointly and severally liable to pay petitioner Armando Aliling: (A) the sum of Forty
Two Thousand Three Hundred Thirty Three & 50/100 (P42,333.50) as the total money
judgment, (B) the sum of Four Thousand Two Hundred Thirty Three & 35/100
(P4,233.35) as attorneys fees, and (C) the additional sum equivalent to one-half (1/2)
month of petitioners salary as separation pay.

SO ORDERED.[24] (Emphasis supplied.)

The CA anchored its assailed action on the strength of the following premises: (a) respondents failed to
prove that Alilings dismal performance constituted gross and habitual neglect necessary to justify his
dismissal; (b) not having been informed at the time of his engagement of the reasonable standards under
which he will qualify as a regular employee, Aliling was deemed to have been hired from day one as a
regular employee; and (c) the strained relationship existing between the parties argues against the
propriety of reinstatement.

Alilings motion for reconsideration was rejected by the CA through the assailed Resolution dated
December 15, 2008.

Hence, the instant petition.

The Issues
Aliling raises the following issues for consideration:

A. The failure of the Court of Appeals to order reinstatement (despite its finding
that petitioner was illegally dismissed from employment) is contrary to law and applicable

B. The failure of the Court of Appeals to award backwages (even if it did not
order reinstatement) is contrary to law and applicable jurisprudence.
C. The failure of the Court of Appeals to award moral and exemplary damages
(despite its finding that petitioner was dismissed to prevent the acquisition of his regular
status) is contrary to law and applicable jurisprudence. [25]

In their Comment,[26] respondents reiterated their position that WWWEC hired petitioner on a
probationary basis and fired him before he became a regular employee.

The Courts Ruling

The petition is partly meritorious.

Petitioner is a regular employee


On a procedural matter, petitioner Aliling argues that WWWEC, not having appealed from the
judgment of CA which declared Aliling as a regular employee from the time he signed the employment
contract, is now precluded from questioning the appellate courts determination as to the nature of his

Petitioner errs. The Court has, when a case is on appeal, the authority to review matters not
specifically raised or assigned as error if their consideration is necessary in reaching a just conclusion of
the case. We said as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,[27] It is
axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that
this Court has the authority to review matters not specifically raised or assigned as error by the parties, if
their consideration is necessary in arriving at a just resolution of the case.

The issue of whether or not petitioner was, during the period material, a probationary or regular
employee is of pivotal import. Its resolution is doubtless necessary at arriving at a fair and just disposition
of the controversy.

The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:

Be that as it may, there appears no showing that indeed the said September 20,
2004 Memorandum addressed to complainant was received by him. Moreover,
complainants tasked where he was assigned was a new developed service. In this
regard, it is noted:

Due process dictates that an employee be apprised beforehand of the

conditions of his employment and of the terms of advancement therein.
Precisely, implicit in Article 281 of the Labor Code is the requirement that
reasonable standards be previously made known by the employer to the
employee at the time of his engagement (Ibid, citing Sameer Overseas
Placement Agency, Inc. vs. NLRC, G.R. No. 132564, October 20, 1999).[28]

From our review, it appears that the labor arbiter, and later the NLRC, considered Aliling a
probationary employee despite finding that he was not informed of the reasonable standards by which his
probationary employment was to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations Commission,[29] ruled that
petitioner was a regular employee from the outset inasmuch as he was not informed of the standards by
which his probationary employment would be measured. The CA wrote:

Petitioner was regularized from the time of the execution of the employment
contract on June 11, 2004, although respondent company had arbitrarily shortened his
tenure. As pointed out, respondent company did not make known the reasonable
standards under which he will qualify as a regular employee at the time of his
engagement. Hence, he was deemed to have been hired from day one as a regular
employee.[30] (Emphasis supplied.)

WWWEC, however, excepts on the argument that it put Aliling on notice that he would be
evaluated on the 3rd and 5th months of his probationary employment. To WWWEC, its efforts translate to
sufficient compliance with the requirement that a probationary worker be apprised of the reasonable
standards for his regularization. WWWEC invokes the ensuing holding in Alcira v. National Labor
Relations Commission[31] to support its case:

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.
(Emphasis supplied.)

WWWECs contention is untenable.

Alcira is cast under a different factual setting. There, the labor arbiter, the NLRC, the CA, and
even finally this Court were one in their findings that the employee concerned knew, having been duly
informed during his engagement, of the standards for becoming a regular employee. This is in stark
contrast to the instant case where the element of being informed of the regularizing standards does not
obtain. As such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the regularization standards or the
performance norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC
has failed to prove that an agreement as regards thereto has been reached. Clearly then, there were
actually no performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX
trucking sales, an activity entirely different to the Seafreight Sales he was originally hired and trained for.
Thus, at the time of his engagement, the standards relative to his assignment with GX sales could not
have plausibly been communicated to him as he was under Seafreight Sales. Even for this reason alone,
the conclusion reached in Alcira is of little relevant to the instant case.

Based on the facts established in this case in light of extant jurisprudence, the CAs holding as to
the kind of employment petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of that of the
labor arbiter. In the final analysis, one common thread runs through the holding of the labor arbiter, the
NLRC and the CA, i.e., petitioner Aliling, albeit hired from managements standpoint as a probationary
employee, was deemed a regular employee by force of the following self-explanatory provisions:

Article 281 of the Labor Code

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. (Emphasis supplied.)

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6. Probationary employment. There is probationary employment where the

employee, upon his engagement, is made to undergo a trial period where the employee
determines his fitness to qualify for regular employment, based on reasonable standards
made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:


(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. (Emphasis

To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of documentary evidence
adduced, that respondent WWWEC did not inform petitioner Aliling of the reasonable standards by which
his probation would be measured against at the time of his engagement. The Court is loathed to interfere
with this factual determination. As We have held:

Settled is the rule that the findings of the Labor Arbiter, when affirmed by
the NLRC and the Court of Appeals, are binding on the Supreme Court, unless
patently erroneous.It is not the function of the Supreme Court to analyze or weigh all
over again the evidence already considered in the proceedings below. The jurisdiction of
this Court in a petition for review on certiorari is limited to reviewing only errors of law, not
of fact, unless the factual findings being assailed are not supported by evidence on
record or the impugned judgment is based on a misapprehension of facts. [32]

The more recent Peafrancia Tours and Travel Transport, Inc., v. Sarmiento [33] has reaffirmed the
above ruling, to wit:

Finally, the CA affirmed the ruling of the NLRC and adopted as its own the latter's
factual findings. Long-established is the doctrine that findings of fact of quasi-judicial
bodies x x x are accorded respect, even finality, if supported by substantial evidence.
When passed upon and upheld by the CA, they are binding and conclusive upon this
Court and will not normally be disturbed. Though this doctrine is not without exceptions,
the Court finds that none are applicable to the present case.

WWWEC also cannot validly argue that the factual findings being assailed are not supported
by evidence on record or the impugned judgment is based on a misapprehension of facts. Its very
own letter-offer of employment argues against its above posture. Excerpts of the letter-offer:

Additionally, upon the effectivity of your probation, you and your immediate
superior are required to jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess your competence and work attitude. The
5th month Performance Appraisal shall be the basis in elevating or confirming your
employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your
services may be terminated without prior notice and without recourse to separation pay.
(Emphasis supplied.)

Respondents further allege that San Mateos email dated July 16, 2004 shows that the standards
for his regularization were made known to petitioner Aliling at the time of his engagement. To recall, in
that email message, San Mateo reminded Aliling of the sales quota he ought to meet as a condition for
his continued employment, i.e., that the GX trucks should already be 80% full by August 5, 2004.
Contrary to respondents contention, San Mateos email cannot support their allegation on Aliling being
informed of the standards for his continued employment, such as the sales quota, at the time of his
engagement. As it were, the email message was sent to Aliling more than a month after he signed his
employment contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of Book VI,
Rule VIII-A of the Code specifically requires the employer to inform the probationary employee of such
reasonable standards at the time of his engagement, not at any time later; else, the latter shall be
considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code,
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his
employment contract.

Petitioner was illegally dismissed

To justify fully the dismissal of an employee, the employer must, as a rule, prove that the
dismissal was for a just cause and that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.[34]

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly show that the issue of petitioners
alleged failure to achieve his quota, as a ground for terminating employment, strikes the Court as a mere
afterthought on the part of WWWEC. Consider: Lariosas letter of September 25, 2004 already betrayed
managements intention to dismiss the petitioner for alleged unauthorized absences. Aliling was in fact
made to explain and he did so satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its
plan to dismiss the petitioner for non-satisfactory performance, although the corresponding termination
letter dated October 6, 2004 did not even specifically state Alilings non-satisfactory performance, or that
Alilings termination was by reason of his failure to achieve his set quota.

What WWWEC considered as the evidence purportedly showing it gave Aliling the chance to
explain his inability to reach his quota was a purported September 20, 2004 memo of San
Mateo addressed to the latter. However, Aliling denies having received such letter and WWWEC has
failed to refute his contention of non-receipt. In net effect, WWWEC was at a loss to explain the exact just
reason for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed failed to achieve his sales quota,
his termination from employment on that ground would still be unjustified.

Article 282 of the Labor Code considers any of the following acts or omission on the part of the
employee as just cause or ground for terminating employment:

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

orders of his 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 any immediate member of his family or his duly authorized representatives;

(e) Other causes analogous to the foregoing. (Emphasis supplied)

In Lim v. National Labor Relations Commission,[35] the Court considered inefficiency as an

analogous just cause for termination of employment under Article 282 of the Labor Code:

We cannot but agree with PEPSI that gross inefficiency falls within the
purview of other causes analogous to the foregoing, this constitutes, therefore,
just cause to terminate an employee under Article 282 of the Labor Code. One is
analogous to another if it is susceptible of comparison with the latter either in general or
in some specific detail; or has a close relationship with the latter. Gross inefficiency is
closely related to gross neglect, for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his business. In Buiser vs.
Leogardo, this Court ruled that failure to observed prescribed standards to inefficiency
may constitute just cause for dismissal. (Emphasis supplied.)

It did so anew in Leonardo v. National Labor Relations Commission[36] on the following rationale:
An employer is entitled to impose productivity standards for its workers, and in fact,
non-compliance may be visited with a penalty even more severe than demotion. Thus,

[t]he practice of a company in laying off workers because they failed to

make the work quota has been recognized in this jurisdiction. (Philippine
American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634,
639). In the case at bar, the petitioners' failure to meet the sales quota assigned
to each of them constitute a just cause of their dismissal, regardless of the
permanent or probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean failure to attain work goals or
work quotas, either by failing to complete the same within the allotted reasonable
period, or by producing unsatisfactory results. This management prerogative of
requiring standards may be availed of so long as they are exercised
in good faith for the advancement of the employer's interest. (Emphasis

In fine, an employees failure to meet sales or work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under
Article 282 of the Code. However, in order for the quota imposed to be considered a valid productivity
standard and thereby validate a dismissal, managements prerogative of fixing the quota must be
exercised in good faith for the advancement of its interest. The duty to prove good faith, however, rests
with WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC must show
that such quota was imposed in good faith. This WWWEC failed to do, perceptibly because it could not.
The fact of the matter is that the alleged imposition of the quota was a desperate attempt to lend a
semblance of validity to Alilings illegal dismissal. It must be stressed that even WWWECs sales manager,
Eve Amador (Amador), in an internal e-mail to San Mateo, hedged on whether petitioner performed below
or above expectation:

Could not quantify level of performance as he as was tasked to handle a new product
(GX). Revenue report is not yet administered by IT on a month-to-month basis. Moreover,
this in a way is an experimental activity. Practically you have a close monitoring with
Armand with regards to his performance. Your assessment of him would be more

Being an experimental activity and having been launched for the first time, the sales of GX
services could not be reasonably quantified. This would explain why Amador implied in her email that
other bases besides sales figures will be used to determine Alilings performance. And yet, despite such a
neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event, WWWEC
failed to demonstrate the reasonableness and the bona fides on the quota imposition.

Employees must be reminded that while probationary employees do not enjoy permanent status,
they enjoy the constitutional protection of security of tenure. They can only be terminated for cause or
when they otherwise fail to meet the reasonable standards made known to them by the employer at the
time of their engagement.[37] Respondent WWWEC miserably failed to prove the termination of petitioner
was for a just cause nor was there substantial evidence to demonstrate the standards were made known
to the latter at the time of his engagement. Hence, petitioners right to security of tenure was breached.

Alilings right to procedural due process was violated

As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground
therefor, but also that procedural due process has properly been observed. When the Labor Code speaks

of procedural due process, the reference is usually to the two (2)-written notice rule envisaged in Section
2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which provides:

Section 2. Standard of due process: requirements of notice. In all cases of

termination of employment, the following standards of due process shall be substantially

I. For termination of employment based on just causes as defined in Article 282

of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;

(b) A hearing or conference during which the employee concerned, with

the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him; and

(c) A written notice [of] termination served on the employee indicating

that upon due consideration of all the circumstance, grounds have been
established to justify his termination.

In case of termination, the foregoing notices shall be served on the employees

last known address.

MGG Marine Services, Inc. v. NLRC[38] tersely described the mechanics of what may be
considered a two-part due process requirement which includes the two-notice rule, x x x one, of the
intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the
decision to dismiss; and an opportunity to answer and rebut the charges against him, in between such

King of Kings Transport, Inc. v. Mamac[39] expounded on this procedural requirement in this manner:

(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. Reasonable opportunity under the Omnibus Rules means every kind
of assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five
calendar days from receipt of the notice xxxx Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the charge
against the employees. A general description of the charge will not suffice. Lastly, the
notice should specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 288 [of the Labor Code] is being charged against the

(2) After serving the first notice, the employees should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to (1)
explain and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to
defend themselves personally, with the assistance of a representative or counsel of their
choice x x x.

(3) After determining that termination is justified, the employer shall serve the
employees a written notice of termination indicating that: (1) all the circumstances
involving the charge against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment. (Emphasis in the original.)

Here, the first and second notice requirements have not been properly observed, thus tainting
petitioners dismissal with illegality.

The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling of the
likelihood of his termination and directing him to account for his failure to meet the expected job
performance would have had constituted the charge sheet, sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by him. In
fact, in his December 13, 2004 Complainants Reply Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not adduce proof to show that a copy of the letter was
duly served upon Aliling. Clearly enough, WWWEC did not comply with the first notice requirement.

Neither was there compliance with the imperatives of a hearing or conference. The Court need
not dwell at length on this particular breach of the due procedural requirement. Suffice it to point out that
the record is devoid of any showing of a hearing or conference having been conducted. On the contrary,
in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the notice of termination,
WWWEC acknowledged that it was still evaluating his case. And the written notice of termination itself did
not indicate all the circumstances involving the charge to justify severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement

As may be noted, the CA found Alilings dismissal as having been illegally effected, but
nonetheless concluded that his employment ceased at the end of the probationary period. Thus, the
appellate court merely affirmed the monetary award made by the NLRC, which consisted of the payment
of that amount corresponding to the unserved portion of the contract of employment.

The case disposition on the award is erroneous.

As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee.

Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization as
a regular employee of the company without a fixed term of employment. Thus, he is entitled to
backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP 17,300.00
monthly salary, until the finality of this Decision. This disposition hews with the Courts ensuing holding
in Javellana v. Belen:[40]

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715

Art. 279. Security of Tenure. - In cases of regular employment, the

employer shall not terminate the services of an employee except for a just cause
or when authorized by this Title. 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. (Emphasis supplied)

Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiters decision until the dismissed employee is
actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court
has consistently ruled that backwages shall be computed from the time of illegal
dismissal until the date the decisionbecomes final. (Emphasis supplied.)

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained

In Golden Ace Builders v. Talde,[41] the Court ruled:


The basis for the payment of backwages is different from that for the award of
separation pay. Separation pay is granted where reinstatement is no longer advisable
because of strained relations between the employee and the employer. Backwages
represent compensation that should have been earned but were not collected because of
the unjust dismissal. The basis for computing backwages is usually the length of the
employee's service while that for separation pay is the actual period when the employee
was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial

Gases Philippines instructs:

[T]he award of separation pay is inconsistent with a finding that there

was no illegal dismissal, for under Article 279 of the Labor Code and as held in a
catena of cases, an employee who is dismissed without just cause and without
due process is entitled to backwages and reinstatement or payment of separation
pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two

reliefs: backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and
the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents illegal dismissal, then,

are reinstatement without loss of seniority rights, and payment of
backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable
as an option, separation pay equivalent to one (1) month salary for every
year of service should be awarded as an alternative. The payment of
separation pay is in addition to payment of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best interest of the
parties. Separation pay in lieu of reinstatement may likewise be awarded if the
employee decides not to be reinstated. (emphasis in the original; italics supplied)

Under the doctrine of strained relations, the payment of separation pay is

considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. On one hand, such payment liberates the employee from
what could be a highly oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its employ a worker it
could no longer trust.

Strained relations must be demonstrated as a fact, however, to be

adequately supported by evidence substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary consequence
of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed
between petitioner Azul and respondent as a result of the filing of the illegal
dismissal case. Such finding, especially when affirmed by the appellate court as in
the case at bar, is binding upon the Court, consistent with the prevailing rules that
this Court will not try facts anew and that findings of facts of quasi-judicial bodies
are accorded great respect, even finality. (Emphasis supplied.)

As the CA correctly observed, To reinstate petitioner [Aliling] would only create an atmosphere of
antagonism and distrust, more so that he had only a short stint with respondent company. [42] The Court
need not belabor the fact that the patent animosity that had developed between employer and employee
generated what may be considered as the arbitrary dismissal of the petitioner.

Following the pronouncements of this Court Sagales v. Rustans Commercial Corporation,[43] the
computation of separation pay in lieu of reinstatement includes the period for which backwages were

Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay

computed at one-month salary for every year of service, a fraction of at least six (6)

months considered as one whole year. In the computation of separation pay, the
period where backwages are awarded must be included. (Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the
amount of one (1) months salary for every year of service, that is, from June 11, 2004 (date of
employment contract) until the finality of this decision with a fraction of a year of at least six (6) months to
be considered as one (1) whole year. As determined by the labor arbiter, the basis for the computation of
backwages and separation pay will be Alilings monthly salary at PhP 17,300.

Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in consonance with
prevailing jurisprudence[44] for violation of due process.

Petitioner is not entitled to moral and exemplary damages

In Nazareno v. City of Dumaguete,[45] the Court expounded on the requisite elements for a
litigants entitlement to moral damages, thus:

Moral damages are awarded if the following elements exist in the case: (1) an
injury clearly sustained by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the defendant as the proximate cause of
the injury sustained by the claimant; and (4) the award of damages predicated on any of
the cases stated Article 2219 of the Civil Code. In addition, the person claiming moral
damages must prove the existence of bad faith by clear and convincing evidence for the
law always presumes good faith. It is not enough that one merely suffered sleepless
nights, mental anguish, and serious anxiety as the result of the actuations of the other
party. Invariably such action must be shown to have been willfully done in bad faith or
with ill motive. Bad faith, under the law, does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through some motive or interest or ill
will that partakes of the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence in
support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.:[46]

According to jurisprudence, basic is the principle that good faith is presumed and
he who alleges bad faith has the duty to prove the same. By imputing bad faith to the
actuations of ETPI, Culili has the burden of proof to present substantial evidence to
support the allegation of unfair labor practice. Culili failed to discharge this burden and his
bare allegations deserve no credit.

This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification
Administration (NEA),[47] in this wise:

It must be noted that the burden of proving bad faith rests on the one alleging it.
As the Court ruled in Culili v. Eastern Telecommunications, Inc., According to
jurisprudence, basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of bad faith and fraud must be proved by clear
and convincing evidence.

Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC.
Aliling has not presented any clear and convincing evidence to show bad faith. The fact that he was
illegally dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that [t]here was no
sufficient showing of bad faith or abuse of management prerogatives in the personal action taken against
petitioner.[48] In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,[49] the Court ruled:

A dismissal may be contrary to law but by itself alone, it does not establish bad
faith to entitle the dismissed employee to moral damages. The award of moral and

exemplary damages cannot be justified solely upon the premise that the employer
dismissed his employee without authorized cause and due process.

The officers of WWWEC cannot be held

jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and
severally liable for the monetary awards of Aliling on the ground that the officers are considered
employers acting in the interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission[50] in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.[51]

Such ruling has been reversed by the Court in Alba v. Yupangco,[52] where the Court ruled:

By Order of September 5, 2007, the Labor Arbiter denied respondents motion to

quash the 3rd alias writ. Brushing aside respondents contention that his liability is merely
joint, the Labor Arbiter ruled:

Such issue regarding the personal liability of the officers of a corporation for the
payment of wages and money claims to its employees, as in the instant case, has long
been resolved by the Supreme Court in a long list of cases [A.C. Ransom Labor Union-
CLU vs. NLRC (142 SCRA 269) and reiterated in the cases of Chua vs. NLRC (182
SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the aforementioned cases, the
Supreme Court has expressly held that the irresponsible officer of the corporation (e.g.
President) is liable for the corporations obligations to its workers. Thus, respondent
Yupangco, being the president of the respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the defendant corporations for the labor claims of
Complainants Alba and De Guzman. x x x


As reflected above, the Labor Arbiter held that respondents liability is solidary.

There is solidary liability when the obligation expressly so states, when the law
so provides, or when the nature of the obligation so requires. MAM Realty Development
Corporation v. NLRC, on solidary liability of corporate officers in labor disputes,

x x x A corporation being a juridical entity, may act only through its

directors, officers and employees. Obligations incurred by them, acting as such
corporate agents are not theirs but the direct accountabilities of the corporation
they represent. True solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the

officers of a corporation:

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the

corporate affairs;


In labor cases, for instance, the Court has held corporate directors and officers
solidarily liable with the corporation for the termination of employment of employees done
with malice or in bad faith.

A review of the facts of the case does not reveal ample and satisfactory proof that respondent
officers of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on the joint and solidary liability of individual
respondents must be recalled.

Aliling is entitled to Attorneys Fees and Legal Interest

Petitioner Aliling is also entitled to attorneys fees in the amount of ten percent (10%) of his total
monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant to
Article 111 of the Labor Code and following our ruling in Exodus International Construction Corporation v.
Biscocho,[53] to wit:

In Rutaquio v. National Labor Relations Commission, this Court held that:

It is settled that in actions for recovery of wages or where an employee was
forced to litigate and, thus, incur expenses to protect his rights and interest, the
award of attorneys fees is legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:

Attorneys fees may be awarded when a party is compelled to litigate or to incur

expenses to protect his interest by reason of an unjustified act of the other party.

While in Lambert Pawnbrokers and Jewelry Corporation,[54] the Court specifically ruled:

However, the award of attorneys fee is warranted pursuant to Article 111 of the
Labor Code. Ten (10%) percent of the total award is usually the reasonable amount of
attorneys fees awarded. It is settled that where an employee was forced to litigate and,
thus, incur expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of 6%
per annum from October 6, 2004 (date of termination) until fully paid.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 101309 is hereby MODIFIED to read:

WHEREFORE, the petition is PARTIALLY

GRANTED. The assailed Resolutions of respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with the
following MODIFICATION/CLARIFICATION: Respondent Wide Wide World Express
Corp. is liable to pay Armando Aliling the following: (a) backwages reckoned from
October 6, 2004 up to the finality of this Decision based on a salary of PhP 17,300 a
month, with interest at 6% per annum on the principal amount from October 6, 2004 until
fully paid; (b) the additional sum equivalent to one (1) month salary for every year of
service, with a fraction of at least six (6) months considered as one whole year based on
the period from June 11, 2004 (date of employment contract) until the finality of this
Decision, as separation pay; (c) PhP 30,000 as nominal damages; and (d) Attorneys
Fees equivalent to 10% of the total award.