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G.R. No.
April 13,

et al

Rule on Probationary Status and

Fixed Term Employment of

Facts of the Case

Petitioners were:

Yolanda M. Mercado

Charito S . De Leon

Diana R. Lachica

Margarito M. Alba, Jr.

Felix A. Tonog

Petitioners were faculty members of AMA Computer

College through the execution of individual Teachers
Contracts for each of the trimesters that they were
engaged to teach

Common stipulation that the teacher has agreed to

accept a non-tenured appointment for a fixed period or
for the duration of the last term that the teacher is
given a teaching load based on the assignment duly
approved by the Dean/SAVP-COO

Facts of the Case


the school year 2000-2001, AMA

implemented new faculty screening guidelines

Teachers were to be hired or maintained based on

extensive teaching experience, capability, potential,
high academic qualifications and research
The performance standards under the new screening
guidelines were also used to determine the present
faculty members entitlement to salary increases.


petitioners failed to obtain a passing

rating based on the performance standards;
hence AMA did not give them any salary

Facts of the Case

Facts of the Case


contended that the petitioners worked

under a contracted term under a non-tenured
appointment and were still within the 3-year
probationary period for teachers.


contracts were not renewed for

the following term because:

They failed to pass the Performance Appraisal

System for Teachers (PAST)
Others failed to comply with the other requirements
for regularization, promotion or increase in salary

Ruling Labor Arbiter


Labor Arbiter declared that the petitioners

had been illegally dismissed:
Art. 281 of the Labor Code on probationary
employment applied to the case
AMA allowed petitioners to teach for the 1st
semester of SY 2000-2001
AMA did not specify who among the petitioners
failed to pass the PAST and who among them did
not comply with the other requirements
Petitioners dismissal couldnt be sustained on
the basis of AMAs vague and general
allegations without substantial factual basis

Ruling - NLRC

denied AMAs appeal for lack of merit

Observed that the applicable law is Sec 92 of the Manual of

Regulations for Private Schools and not Art. 281 of the
Labor Code


affirmed the Labor Arbiters finding of

illegal dismissal since the petitioners were
terminated on the basis of standards that
were only introduced near the end of the
probationary period

Ruling Court of Appeals (CA)

Upon appeal of AMACC before the CA, the CA granted

AMACCs petition and dismissed petitioners-teachers
complaint for illegal dismissal.

Under the Manual for Regulation for Private Schools,

the petitioners were still within their probationary
period since their teaching stints only covered a period
of two (2) years and three (3) months when AMACC
decided not to renew their contracts on September

CA said, the petitioners were not actually dismissed;

their respective contracts merely expired and were no
longer renewed by AMACC because they failed to
satisfy the schools standards for the school year 20002001 that measured their fitness and aptitude.

Findings & Decision Supreme


The Supreme Court grated the petition of the


The existence of the term-to-term contracts covering

the petitioners-teachers employment is not disputed,
nor it is disputed that they were on probationary status
from the time they were employed on May 1998 and
until the expiration of their teaching contracts on
September 2000

The school apparently utilizes its fixed-term contracts

as a convenient arrangement dictated by the trimestral
system and not because the parties really intended to
limit the period of their relationship to any fixed term
and to finish this relationship at the end of that term.

Findings & Decision Supreme


AMA cannot forget that its system of fixed-term

contract is a system that operates during the
probationary period and for this reason, it is subject to
the terms of Article 281 of the Labor Code, which
requires that 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.

While AMA claimed that the petitioners failed to pass

the PAST and other requirements for regularization, the
exact terms of the standards were never introduced as
evidence; neither does the evidence show how these
standards were applied to petitioners

Inevitably, the termination of employment on

probationary status lacks the supporting finding of just
cause that the law requires and, hence, illegal.

G.R. No.
Jan. 26, 2011



Facts of the Case

Teodora C. Axalan is a regular faculty member holding

the position of Associate Professor II at the University of
the Immaculate Conception in Davao.

Azalan is also the elected president of the employees


From 18 November to 22 November 2002, Axalan

attended a seminar in Quezon City on website
development. Axalan then received a memorandum
from Dean Maria Rosa Celestial asking her to explain in
writing why she should not be dismissed for having
been absent without official leave.

Axalan claimed that she held online classes while

attending the seminar.She explained that she was
under the impression that faculty members would not
be marked absenteven if they were not physically

Facts of the Case

From 28 January to 3February 2003, Axalan attended

asecond seminar in Baguio City onadvancedparalegal
training on which dates Axalan was absent.

Axalan claimed that she asked permission from the

Vice President for Academics who denied giving the

After the conduct of hearings and receiving evidences,

the ad hoc grievance committee found that Axalan
incurred AWOL on both instances and recommended
that Axalan be suspended without pay for six months
on each AWOL charge.

The University President approved the committees

recommendation and wrote Axalan a letter informing
her of her absences and of her total penalty of oneyear suspension without pay for both AWOL charges

Facts of the Case

On 1 December 2003, Axalan filed a complaint against

the University for Illegal Suspension and constructive
dismissal with the Labor Arbiter.

The University moved to dismiss on the ground that the

Labor Arbiterhad no jurisdiction over the subject
matter of the complaint.

The university maintained that jurisdiction lays on the

voluntary arbitrator.


Respondent cannot be considered to have been

constructively dismissed by the petitioner during her
period of suspension.

Constructive dismissal occurs when there is cessation

of work because continued employment is rendered
impossible, unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an
employerbecomes unbearable to the employee leaving
the latter with no other option but to quit.


In this case, there was no cessation of employment

relations between the parties. It is not refuted that
respondent promptly resumed teaching at the
university right after the expiration of the suspension

In otherwords, respondent never quit. Hence, she

cannot claim to have been left with nochoice but to
quit, a crucial element in a finding of constructive

Significantly, at the time the Labor Arbiter rendered his

decision on 11 October 2004, Axalan had already
returned to her teaching job at the university on 1
October 2004. The Labor Arbiters Decision ordering
the reinstatement of Axalan is absurd.


The Court recognizes the right of employers to

discipline its employees for serious violations of
company rules after affording the latter due process
and if the evidence warrants.

The University, after affording Axalan due process and

finder her guilty of incurring AWOL on two separate
occasions, acted well within the bounds of labor laws in
imposing the penalty of 6-month suspension without
pay for each incidence of AWOL.

The law protects both the welfare of employees and the

prerogatives of management. Courts do not interfere
with prerogatives of management on disciplining
employees as long as they do not violate labor laws,
collective bargaining agreements if any, and general
principles of fairness and justice.

G.R. No.
July 13, 2013




Project Employee

Pasos vs PNCC - Facts

Petitioner Roy D. Pasos started working for respondent

PNCC (Philippine National Construction Corporation) on
26 April 1996 and worked on several projects as an
Accounting Clerk

Pasos was first assigned to the NAIA-II Project which

should end on 25 July 1996 but his employment did not
end on that date but instead was extended until August
1998, or for more than 2 years.

In November 1998, Pasos was rehired as Accounting

Clerk Reliever and was assigned to PCSO-QI Project.
His contract stated that his employment shall end on
February 1999. Said employment, instead, extended
until February 1999.

Pasos vs PNCC - Facts

On 23 February 1999, Pasos wasw again hired as

Accounting Clerk and was assigned to the SM Project.
When he was assigned to the SM-Project, no date was
specified as to when his employment would end but it
was stated therein that it would be co-terminus with
the completion of the project.

Said employment supposedly ended in 19 August 1999.

However, that said employment was extended as
petitioner was again appointed as an accounting clerk.
It appeared that such extension would eventually end
on 19 October 2000.

Despite the termination of this employment on 19

October 2000, Pasos claimed that his superior
instructed him to report for work the following day,
intimating to him that he will again be employed for the
succeeding SM projects.

Pasos vs PNCC Labor Arbiter


Labor Arbiter rendered a Decision in favor of Pasos


Ruled that petitioner attained regular employment

status with the repeated hiring and rehiring of his
services more so when the services he was made to
render were usual and necessary to PNCCs business.

Both PNCC and petitioner appealed the Labor Arbiters


PNCC insisted that petitioner was just a project employee

and his termination was brought about by the completion of
the contract and therefore was not illegally dismissed.

Petitioner argued that his reinstatement should have been

ordered by the arbiter.

Pasos vs PNCC NLRC & Court

of Appeals Decision

NLRC rendered its Decision granting PNCCs appeal but

dismissing that of petitioner.

Petitioner elevated the case to the Court of Appeals via

a petition for certiorari but the appellate court
dismissed the same for lack of merit

Pasos vs PNCC Supreme Court

Decision & Findings

Petitioner is a regular employee and not a mere project


In the instant case, the appointments issued to

petitioner indicated that he was hired for specific
projects. The court is however convinced that although
he started as a project employee, he eventually
became a regular employee of the respondent (PNCC).

Petitioner worked continuously for more than 2 years

after the supposed three-month duration of his project
employment for the NAIA II Project. While his
appointment for said project allowed extension, there
was no subsequent contract or appointment that
specified a particular duration for the extension.

Pasos vs PNCC Supreme Court

Decision & Findings

His services were just extended indefinitely until

Personnel Action Form Project Employment dated 7
July 1998 was issued to him which provided that his
employment will end a few weeks later or on 4 August

While petitioner can be considered as project employee

for the 1st three months, when his services were
extended without any specification of as to the
duration, made him a regular employee of respondent.

Verily, failure of PNCC to file termination reports after

every project completion proves that employee is not a
project employee.

Pasos vs PNCC Supreme Court

Decision & Findings

His services were just extended indefinitely until

Personnel Action Form Project Employment dated 7
July 1998 was issued to him which provided that his
employment will end a few weeks later or on 4 August

While petitioner can be considered as project employee

for the 1st three months, when his services were
extended without any specification of as to the
duration, made him a regular employee of respondent.

Verily, failure of PNCC to file termination reports after

every project completion proves that employee is not a
project employee.

DMCC vs Bello Facts

DMCC employed Bello as a mason for a project based

work. However, due to the constant projects of the
construction company, the mason was employed with it
for an uninterrupted period of over 7 years.

Unfortunately, on his 7th year, he was diagnosed with

Pulmonary Tuberculosis and begat to miss work

When Bello was finally able to return to work, DMCC

handed a termination paper which was for the
purpose of extending his sick leave.

Despite not fully understanding the document, he

signed the paper anyway and just discovered that he
was being terminated.

DMCC vs Bello Facts

A complaint for illegal dismissal was filed by Bello

against DMCC.

DMCC retorted that due to health reasons, the mason

tendered a voluntary resignation letter before his
employment contract expired.

DMCC vs Bello Labor Arbiter &

NLRC Decision

The Labor Arbiter found DMCC guilty of illegal dismissal

and was ordered to reinstate the employee

On appeal to the NLRC, the Labor Arbiters order was

set aside on the ground that the employee was a
project employee and resigned voluntary records do
show that complainant executed a voluntary
resignation. And while there may indeed be a slight
difference in the signature and handwriting, this do not
readily mean that complainant did not execute the
same as was the inclination of the Labor Arbiter.

DMCC vs Bello Court of

Appeals Decision

The Court of Appeals (CA) held that Bello had already

acquired the status of a regular employee because his
repeated re-hiring and the continuing need for his
services over a long span of time had undeniably made
him a regular employee.

As a regular employee, his removal was not one of the

authorized causes found under the Labor Code.

Moreover, Bellos supposedly voluntary resignation was

not given merit since records showed that the Labor
Arbiter concluded that the handwriting in the
supposed resignation letter was undeniably different
from that of complainant and the construction
company failed to rebut the discrepancy in the

DMCC vs Bello Supreme Court


The Supreme Court agreed with the ruling of the CA

explaining that the CAs reliance on the LAs findings
were warranted

The CAs reliance on the conclusion and finding by LA

Panganiban-Ortiguerra was warranted. Her observation
that the handwriting in the resignation letter was
undeniably different from that of Bello could not be
ignored or shunted aside simply because she had no
expertise to make such a determination.

Yet, even had the letter been actually signed by him,

the voluntariness of the resignation could not be
assumed from such fact alone.

DMCC vs Bello Supreme Court


His claim that he had been led to believe that the letter
would serve only as the means of extending his sick
leave from work should have alerted DMCI to the task
of proving the voluntariness of the resignation.

It was obvious that, if his claim was true, then he did

not fully comprehend the import of the letter, rendering
the resignation farcical.

Under the circumstances, DMCI became burdened with

the obligation to prove the due execution and
genuineness of the document as a letter of resignation.

G.R. No.
Feb. 1,

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Andres G.
Ariola et al

Fixed Contract

Facts of the Case

Lynvil Fishing Enterprises, Inc. is a company engaged in

deep-sea fishing, operating along the shores of
Palawan and other outlying islands of the Philippines.

Lynvil received a report from Romanito Clarido, one of

its employees, that he witnessed that while on board
the company vessel Analyn VIII, Lynvil employees,
namely: Andres G. Ariola, Chief Mate Jessie D.
Alcovedas, Chief Engineer Jimmy B. Calinao, Cook
Ismael G. Nubla, Oiler Elorde Banez, Bodegero
Leopoldo D. Sebullen conspired with one another and
stole eight (8) pampano and tangigue fishes and
delivered them to another vessel, to the prejudice of of

Said employees were engaged on a per trip basis or

por viaje which terminates at the end of each trip.

Facts of the Case

By reason of the report and after intial investigation,

Lynvils General Manager terminated their

Employees then filed with the Arbitration Branch of the

NLRC-NCR a complaint for illegal dismissal with claims
of backwages, salary differential reinstatement, service
incentive leave, holiday pay and its premium and 13 th
month pay.

Decision Labor Arbiter, NLRC

& Court of Appeals

Labor Arbiter found merit in complainants charge of

illegal dismissal.

On appeal, NLRC reversed ands set aside the Decision

of the Labor Arbiter

The respondents filed a Petition for Certiorari before

the Court of Appeals alleging grave abuse of discretion
of the part of NLRC.

The Court of Appeals found merit in the petition and

reinstated the Decision of the Labor Arbiter

Findings & Decision Supreme


Having found that respondents are regular employees

who may be dismissed for cause, there is a need to
look into the procedural requirement of due process in
the Labor Code. It is required that the employer furnish
the employee with 2 written notices:

(1) written notice specifying grounds for termination and

giving reasonable opportunity to explain his side

(2) written notice of termination

Based on records, only 1 written notice was given

which was for them to explain in five days why they
should not be dismissed from service,

Findings & Decision Supreme


Alcovendas was the only one who signed the receipt of

the notice. Lynvil claimed that the others refused to
sign but the other employees argue that no notice was
given to them

It is clear that no final written notices of termination

were sent to the employees

Petitioners were granted a monetary award of

Php50,000 as nominal damages due to the failure of
Lynvil in following the 2 notice rule.

G.R. No.
Aug. 20,

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Retirement Benefits
& Illegal Dismissal


Filipinas was employed by petitioner Grace Christian

High School (GCHS) as a highschool teacher sine June
1977 with monthly salary of Php18,662 as of May 31,

On 30 August 2001, Filipinas filed a complaint for illegal

(constructive) dismissal, non-payment of service
incentive leave (SIL) pay, separation pay, service
allowance, damages, and attorneys fees against GCHS
and/or its principal, Dr. James Tan.

Allegedly, on 11 May 2011, she was informed that her

services were to be terminated effective 31 May 2001,
pursuant to GCHS retirement plan which gives the
school the option to retire teacher who has rendered at
least 20 years of service, regardless of age, with a
retirement pay of month for every year of service.


Filipinas was only 58 years old at that time and still

physically fit to work.

She pleaded with GCHS to allow her to continue

teaching but her services were terminated contrary to
the provisions of the Retirement Pay Law.

GCHS denied that they illegally dismissed Filipinas.

They asserted that Filipinas was considered retired on
31 May 1997 after having rendered 20 years of service
pursuant to GCHS retirement plan and that she was
duly advised that her retirement benefits in the amount
of Php136,210 based on her salary at the time of
requirement had been deposited to the trustee-bank in
her name.

Nonetheless, her services were retained on a yearly

basis until 11 May 2001 when she was informed that
her contract would no longer be renewed.

Decision Labor Arbiter

Labor Arbiter dismissed the illegal dismissal complaint

for lack of merit.

Labor Arbiter ruled that Filipinas was not terminated

but was considered retired

Labor Arbiter denied Filipinas claims for service

allowance, salary increase, and damages for lack of
sufficient bases but awarded her attorneys fees.

Decision - NLRC

NLRC set aside the Labor Arbiters award, and ruled

that Filipinas retirement pay should be computed
based on her monthly salary at the time of her

NLRC awarded Filipinas retirement pay differential

consisting of 1/12 of the 13th month pay and SIL pay
based on her salary at the time of her retirement
multiplied by 20 years.

NLRC deleted the award of attorneys fees for failure of

Filipinas to show that GCHS had unreasonably and in
bad faith refused to pay her retirement benefits.

Decision Court of Appeals

CA affirmed with modification the NLRCs Decision

CA further imposed legal interest at the rate of 6% per

annum on the award reckoned from the date of filing of
the illegal dismissal complaint until actual payment

Decision Supreme Court

GCHS has a retirement plan for its faculty and nonfaculty members which gives it the option to retire a
teacher who has rendered at least 20 years of service,
regardless of age, with retirement pay of month for
every year of service.

Considering, however, that GCHS computer Filipinas

retirement pay without including 1/12 of her 13th month
pay and the cash equivalent of her 5 days SIL, both
NLRC and the CA correctly ruled that Filipinas
retirement benefits should be computed in accordance
with Art 287`of the Labor Code as amended by RA
7641, being the more beneficent retirement scheme.

GCHS argument that the 5 days SIL should be likewise

pro-rated to their 1/12 equivalent must fail.