University of the Philippines College of Law

J00D – E2023
L. Employee Classification - Probationary Employee – Extension of Contract

MARIA CARMELA P. UMALI, Petitioner,

Case Name v.
HOBBYWING SOLUTIONS, INC., Respondent.
DN | Date G.R. No. 221356 | March 14, 2018
Ponente REYES, JR., J. :
Petitioner/s Maria Carmela Umali – Pitboss Supervisor for respondent

Respondent/s Hobbywing Solutions – employer of Umali. Ran an online casino.

Umali worked as a Pitboss Supervisor for Hobbywing. She was initially a probationary
employee. However, was permitted to work after her probationary period. She was
later made to sign two employment contracts, covering the time period for which
she worked. She was later dismissed. Hobbywing claimed that the dismissal was
Case
due to the lapse of her probationary period and its extension.
Summary
Umali filed for illegal dismissal. SC ruled in her favor, finding that she was allowed to
work beyond the (6) month period allowed for probationary employees. Absent
valid explanation by Hobbywing, she was already a regular employee entitled to
security of tenure.
General Rule – any worker allowed to work beyond the (6) month probationary period
is considered as a regular employee.
Exemption – Where the parties to an employment contract agrees otherwise, such as
when it is established by company policy or when the extension is required by the
nature of the work to be performed by the employee.
Doctrine Example of valid extension – Mariwasa v. Leogarda – where the SC allowed the
extension of probationary period for an additional (3) months, in order to give the
employee a chance to improve performance and qualify for regular employment.
This was after finding that both parties agreed to the extension. In that case,
employee was terminated after the extension as they failed to live up to work
standards

RELEVANT FACTS
1. June 19 2012 - Petitioner, Umali began work as a Pitboss Supervisor for the respondent, who ran
an online casino gaming establishment. She never signed an employment contract before the
commencement of her service but received regular monthly salary. She supervised online casino
dealers and the operations of the gaming area/studio for the company.
2. Jan 2013 – (7) months after initial employment, she was asked to sign two employment contracts.
The first, from June 19 2012 to Nov 19 2012 and the second, from Nov 19 2012 to Feb 18 2013.
3. Feb 18 2013 – Umali was informed by the respondent that her employment contract had already
ended, she was told to wait on their decision to rehire or regularize her. She was required to sign
an exit clearance. Thereafter, she was no longer allowed to work.
4. Umali filed a complaint for illegal dismissal against respondent.
a. Hobbywing Defense - Admitted that Umali began work on a probationary basis, beginning
June 19 2012 – Nov. 18 2012. The probationary period was extended for another (3)
months, form Nov. 19 2012 to Feb 18 2013. That Umali voluntarily chose not to become
a regular employee after the end of her probationary period because her best friend/co-
worker was not going to be retained.
5. Procedural History
a. Labor Arbiter – dismissed the complaint.
b. NLRC – reversed LA, found that there was illegal dismissal.
i. Basis – Umali was a regular employee by operation of law, as she was allowed to
work beyond the probationary period of employment.
c. CA – reversed the NLRC, affirmed the LA.
i. Basis – Umali failed to prove the fact of her dismissal, mere bare allegations
insufficient for a claim of illegal dismissal.
6. Led to current appeal.
Issue/s Ratio Decidendi
1. W/N • Propriety of appeal (Pedro Angeles v. Estelita Pascual)
Umali was o Generally, SC does not entertain questions of fact on appeal. However,
illegally this case falls under several of the exemptions, namely (1) When the
dismissed? judgment is based on a misapprehension of facts and; (2) When the CA
– YES manifestly overlooked certain facts not disputed by the parties which,
when entertained would justify a different conclusion.
o CA ruled that Umali failed to present evidence to establish the fact of
her dismissal. SC says that the respondent employed a scheme to
obscure the fact of her dismissal, but facts and records of the case show
that there was dismissal.
• Umali’s Employment – Umali claims that prior to her being made to sign the
two employment contracts on Jan 2013, there was no employment contract.
Respondent company claims that there was a contract of probationary
employment, one signed at the beginning of Umali’s service and another signed
Nov. 18 2013.
o SC – Umali stated that she signed both employment contracts on the
same date. She noted the date she signed next to her signatures. In both
contracts, the signatures had the date 01.19.13 beside her signature.
This substantiates her claim that both documents were signed on the
same day.
 o Next, while the first employment contract was undated, the
probationary extension letter was dated Jan 10 2013. This was way
beyond the supposed end of Umali’s probationary period (Nov. 18
2012).
o Absent explanation of the respondent as to this disparity in dates +
signature SC concludes that Hobbywing only made up the contracts to
create a semblance of legality over Umali’s employment.
• Probationary Employee – Under Art. 281 of the Labor Code, probationary
employment shall not exceed (6) months, beginning from the date the
employee started working unless, it is covered by an apprenticeship stipulating
a longer period. An employee who is allowed to work beyond this term is
considered a regular employee. i
o Here, Umali began work on June 19 2012, she was terminated on Feb
18 2013. Thus, already a regular employee entitled to security of tenure.
• General Rule – any worker allowed to work beyond the (6) month probationary
period is considered as a regular employee.
• Exemption – Where the parties to an employment contract agrees otherwise,
such as when it is established by company policy or when the extension is
required by the nature of the work to be performed by the employee.
o Because this is the exemption, the employer has the burden of proving
that the extension is warranted. Without a valid ground, any extension
of the probationary period is taken against the employer, as it negatively
impacts the worker by preventing them from obtaining security of
tenure.
• Doctrine in Mariwasa v. Leogardo – CA cites the case of Mariwasa v. Leogardo
where the SC allowed the extension of probationary period for an additional
(3) months, in order to give the employee a chance to improve performance
and qualify for regular employment. This was after finding that both parties
agreed to the extension. In that case, employee was terminated after the
extension as they failed to live up to work standards.
o Applicability – The case is not applicable. Because:
 (1) There was no evaluation upon the expiration of the
probationary employment period. – Umali was only evaluated
on Feb 1 2013, where she obtained a satisfactory performance
rating (88.3%).
 (2) The supposed extension of the probationary period was
made after the lapse of the original probationary period agreed
upon by the parties – extension was dated Jan 2013, whereas
probation period lapsed on Nov. 2012.
 o At the time of the evaluation and later extension, the original period
for probationary employment had already lapsed. Similarly, no reason
to extend the period as she was already a satisfactory employee based
on the evaluation. Thus, Umali had already become a regular employee.
• Rights as Regular Employee – Following the ruling in Peak Ventures Co. v. Heirs
of Villareal, under LC 279 ii an employee who is illegally dismissed is entitled to
(1) Reinstatement without loss of privileges; (2) Full backwages, inclusive of
allowances and to other benefits or their monetary equivalent. Computed from
the time the compensation was withheld up to actual reinstatement.
• SC reinstates NLRC decision. Illegal dismissal, reinstatement and backwages
owed to Umali.

RULING

WHEREFORE, the Decision dated May 29, 2015 and Resolution dated November 4, 2015 of the Court of Appeals
(CA) in CA-G.R. SP No. 136194 are REVERSED and SET ASIDE. The Decision dated January 15, 2014 of the
National Labor Relations Commission in NLRC NCR Case No. 04-06101-13 is REINSTATED.

SO ORDERED.
Notes

i
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.
ii
Under Article 279 of the Labor Code, as amended by Republic Act No. 6715, an employee who is unjustly
dismissed shall be entitled to (1) reinstatement without loss of seniority rights and other privileges; and, (2) full
backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time
his compensation was withheld up to the time of actual reinstatement. If reinstatement is no longer viable,
separation pay is granted