In Armando Aliling vs. Jose B. Feliciano, et al., the Supreme Court ruled that an employee is deemed a regular employee from the start of their employment if the employer fails to inform them of the reasonable standards for regularization at the time of their engagement. This decision underscores the importance of clear communication between employers and probationary employees, ensuring that employees are fully aware of the criteria they must meet to achieve regular status. This requirement protects employees from arbitrary terminations and promotes fairness in employment practices, aligning with the Labor Code’s mandate for security of tenure.

From Probation to Regular: When Silence Equals Security in Employment Contracts

This case revolves around Armando Aliling’s employment with Wide Wide World Express Corporation (WWWEC) as an Account Executive. Hired on a probationary basis, Aliling later claimed illegal dismissal, arguing that he was never informed of the standards for regularization. The Supreme Court had to determine whether Aliling was indeed a probationary employee and whether his termination was lawful.

The pivotal issue rests on Article 281 of the Labor Code, which governs probationary employment. This article stipulates that an employee may be terminated for just cause or failure to qualify as a regular employee, provided that:

ART. 281. Probationary employment. – … The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

The Implementing Rules of Book VI, Rule VIII-A, Section 6(d) of the Labor Code further emphasizes this point, stating that if no standards are communicated at the time of engagement, the employee “shall be deemed a regular employee.”

In Aliling’s case, WWWEC contended that Aliling was informed that his performance would be evaluated on the 3rd and 5th months of his probationary employment. However, the Supreme Court found that WWWEC failed to prove that Aliling was informed of the specific standards by which his performance would be judged at the time of his engagement. The Court emphasized that the letter-offer itself stated that the regularization standards were to be jointly defined by Aliling and his supervisor, and WWWEC failed to demonstrate that such an agreement was ever reached.

The Supreme Court also addressed the procedural aspect of Aliling’s dismissal. It emphasized that to justify the dismissal of an employee, the employer must prove both a just cause and adherence to due process. Citing the two-notice rule, the Court found that WWWEC failed to properly observe this requirement. The first notice, informing the employee of the grounds for termination, was not proven to have been received by Aliling. Moreover, there was no evidence of a hearing or conference where Aliling could respond to the charges against him.

Because of these violations, the Supreme Court declared Aliling’s dismissal illegal. As such, the Court addressed the appropriate remedies. It held that Aliling was entitled to backwages from the time of his illegal dismissal until the finality of the decision, and separation pay in lieu of reinstatement due to the strained relationship between the parties. This is rooted in the principle articulated in Javellana v. Belen:

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.

In addition to backwages and separation pay, the Court awarded Aliling nominal damages for the violation of his right to due process. However, it denied his claim for moral and exemplary damages, finding insufficient evidence of bad faith on the part of WWWEC. Furthermore, the Court reversed the Court of Appeals’ ruling holding the officers of WWWEC jointly and severally liable, clarifying that corporate officers are only solidarily liable when they act in bad faith or with malice.

The Court in Sagales v. Rustan’s Commercial Corporation held that computation of separation pay in lieu of reinstatement includes the period for which backwages were awarded:

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.

This case underscores the necessity for employers to clearly communicate regularization standards to probationary employees at the outset of their employment. Failure to do so can result in the employee being deemed a regular employee from day one, with all the associated rights and protections. It also serves as a reminder that even for regular employees, terminations must be based on just cause and carried out with due process, lest the employer face significant financial repercussions.

The Aliling case also highlights the importance of understanding the nuances of probationary employment. While employers have the right to assess an employee’s suitability for regular employment, they must do so within the bounds of the Labor Code. Specifically, it must adhere to the two-notice rule to effect a legal dismissal. It also serves as a cautionary tale for employers, emphasizing that any attempt to circumvent labor laws or act in bad faith can result in significant legal and financial liabilities.

FAQs

What was the key issue in this case?	The key issue was whether Armando Aliling was illegally dismissed from his employment at Wide Wide World Express Corporation, focusing on his status as a probationary or regular employee and the company’s adherence to due process.
What are the requirements for terminating a probationary employee?	A probationary employee can be terminated for just cause or when they fail to meet reasonable standards made known to them at the time of their engagement. Additionally, the termination must adhere to procedural due process, including the two-notice rule.
What happens if an employer doesn’t inform a probationary employee of the standards for regularization?	If an employer fails to inform a probationary employee of the standards for regularization at the time of their engagement, the employee is deemed a regular employee from the start of their employment.
What is the “two-notice rule” in employment termination?	The two-notice rule requires the employer to provide a written notice specifying the grounds for termination and giving the employee an opportunity to explain their side, followed by a written notice of termination indicating that all circumstances have been considered.
What is the difference between backwages and separation pay?	Backwages are compensation that should have been earned but were not collected due to unjust dismissal, while separation pay is granted when reinstatement is no longer advisable due to strained relations between the employer and employee.
When are corporate officers jointly and severally liable with the company in labor disputes?	Corporate officers are generally not held jointly and severally liable with the company unless they act in bad faith, with malice, or vote for or assent to patently unlawful acts of the corporation.
What are nominal damages, and when are they awarded in illegal dismissal cases?	Nominal damages are awarded when there is a violation of due process, even if no actual damages are proven. They serve to recognize and vindicate the employee’s right to due process.
What is the effect of strained relations between the employer and employee in illegal dismissal cases?	When strained relations exist, reinstatement may no longer be a viable option. In such cases, separation pay is awarded as an alternative to reinstatement.

In conclusion, the Aliling v. Feliciano case reinforces the importance of transparency and due process in employment relationships. Employers must ensure that probationary employees are fully informed of the standards for regularization and that terminations are carried out fairly and in accordance with the law. Employers must understand the repercussions for failure to abide with the Labor Code and must act accordingly.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Armando Aliling, vs. Jose B. Feliciano, G.R. No. 185829, April 25, 2012