In the case of Skyway O & M Corporation v. Wilfredo M. Reinante, the Supreme Court affirmed the illegality of Reinante’s dismissal during his probationary period. The court emphasized that while employers have the right to set performance standards for probationary employees, they must prove that the employee failed to meet these standards fairly and justly. This decision reinforces the protection afforded to probationary employees, ensuring that employers cannot use the probationary period as a means to circumvent labor laws and deny employees their right to security of tenure. The ruling serves as a reminder that probationary employees are entitled to due process and fair assessment, preventing arbitrary or malicious terminations.

Skyway’s Short Cut: Can a Probationary Employee Be Dismissed on Biased Performance Reviews?

Skyway O & M Corporation hired Wilfredo Reinante as an Intelligence Officer, initially on a fixed-term contract, and then as a probationary employee. During his probationary period, Skyway terminated Reinante’s employment, citing unsatisfactory performance based on an appraisal report. However, Reinante contested his dismissal, arguing that the performance evaluation was biased and that he was actually terminated for uncovering the hiring of unqualified security officers. The core legal question revolved around whether Skyway had sufficiently proven that Reinante’s performance genuinely failed to meet the company’s standards for a probationary employee, and whether the termination was motivated by his discovery of the unqualified hires.

The Labor Arbiter (LA), the National Labor Relations Commission (NLRC), and the Court of Appeals (CA) all found that Reinante’s dismissal was illegal. These bodies noted that Skyway failed to provide substantial evidence supporting the negative performance appraisal. The Supreme Court (SC) reiterated that while employers have the right to set performance standards, they must also demonstrate that these standards were fairly applied and that the employee genuinely failed to meet them. In this case, the courts found that the performance appraisal was not only unsubstantiated but also motivated by Reinante’s discovery of Skyway’s hiring practices.

Building on this principle, the SC underscored the importance of security of tenure, even for probationary employees. The court clarified that a probationary employee can only be dismissed for just cause, authorized cause, or failure to meet reasonable performance standards made known to the employee at the start of their employment. The burden of proof lies with the employer to demonstrate that the employee’s performance was indeed unsatisfactory and that the termination was not arbitrary. Here, Skyway failed to meet this burden, leading to the conclusion that Reinante’s dismissal was illegal.

Crucially, the Court considered the admission of Reinante’s supervisor, Augusto Alcantara, who confessed to providing an “unmeritorious rating” against Reinante. Alcantara stated in his affidavit:

x x x x
3. Due to my own volition, I rendered an unmeritorious rating against complainant Wilfredo M. Reinante which was made the basis of TSMSD of Skyway O & M Corporation leading to his untimely ouster from the company. Be that as it may, administrative and criminal cases were filed against me and my six co-employees, where in one case before the PNP-SOSIA, we were found to be disqualified as security officers;
4. That having reconciled with complainant Wilfredo M. Reinante for old time sake, I am admitting my unmeditated wrongdoing that I was one of the factors leading to his termination, where in truth and in fact, he should not have been dismissed and hereby likewise admit that I am not qualified as a security officer as ruled upon by the PNP-SOSIA in finality;
5. I am fully aware of the legal effects of this admission in the spirit of reconciliation, goodwill, humanitarian reasons and for old time sake; x x x

This admission significantly undermined Skyway’s defense, further solidifying the court’s finding of illegal dismissal. The SC also dismissed Skyway’s argument that a previous settlement agreement constituted a valid waiver by Reinante. The Court reiterated that waivers and quitclaims are viewed with disfavor, especially when there is a clear imbalance of power between the employer and employee. To be valid, a waiver must be executed voluntarily, with full understanding of its contents, and for reasonable consideration. Skyway failed to prove these elements, thus rendering the waiver invalid.

The Supreme Court’s decision underscored that the employer bears the burden of proving the validity of the waiver, stating:

Waivers or quitclaims are looked upon with disfavor, and are frowned upon for being contrary to public policy. Unless it can be shown that the person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and credible consideration, the same is not a valid and binding undertaking. The burden is with the employer to prove that the waiver or quitclaim was voluntarily executed.

Moreover, the Court elucidated the remedies available to an illegally dismissed employee. Reinante was entitled to backwages from the time of his illegal dismissal until the finality of the decision. Given the strained relations between the parties, the Court ordered the payment of separation pay in lieu of reinstatement. Additionally, the Court upheld the awards for moral and exemplary damages, recognizing that Skyway acted in bad faith by orchestrating Reinante’s dismissal as retaliation for his discovery of unqualified hires. Attorney’s fees were also awarded, as Reinante was compelled to litigate to protect his rights due to Skyway’s unjustified actions.

The Supreme Court, citing precedents, reiterated the standard for attorney’s fees in labor cases:

Attorney’s fees in labor cases are sanctioned when the employee is dismissed in bad faith and is compelled to litigate or incur expenses to protect his or her rights by reason of the unjustified acts of the employer.

This case serves as a reminder to employers to adhere strictly to the requirements of due process and fairness when assessing the performance of probationary employees. It also highlights the protective stance of the courts towards employees, ensuring that waivers are scrutinized carefully and that remedies are provided for illegal dismissals. In this legal landscape, transparency and fairness are not merely best practices but legal imperatives. By ensuring a fair assessment process, employers can create a more equitable work environment, fostering trust and productivity, and avoid the pitfalls of costly and reputationally damaging legal battles.

FAQs

What was the key issue in this case?	The key issue was whether Skyway illegally dismissed Wilfredo Reinante during his probationary employment by failing to provide substantial evidence of his unsatisfactory performance and acting in bad faith.
What is a probationary employee entitled to?	A probationary employee is entitled to security of tenure, meaning they can only be dismissed for just cause, authorized cause, or failure to meet reasonable performance standards made known to them at the start of employment.
What is the burden of proof in probationary employment termination cases?	The burden of proof lies with the employer to demonstrate that the probationary employee’s performance was genuinely unsatisfactory and that the termination was not arbitrary or discriminatory.
What makes a waiver or quitclaim valid?	A waiver or quitclaim must be executed voluntarily by the employee, with full understanding of its contents, and for reasonable consideration, to be considered valid and binding.
What remedies are available to an illegally dismissed probationary employee?	An illegally dismissed probationary employee is entitled to backwages, separation pay in lieu of reinstatement (if reinstatement is not feasible), moral and exemplary damages, and attorney’s fees.
What constitutes ‘bad faith’ in employee dismissal?	‘Bad faith’ in employee dismissal refers to situations where the employer acts maliciously, fraudulently, or oppressively in terminating the employee, often as a retaliatory measure or with intent to circumvent labor laws.
Why was the settlement agreement deemed invalid in this case?	The settlement agreement was deemed invalid because there was no clear meeting of the minds between the parties regarding the terms and conditions, and Skyway failed to prove that Reinante voluntarily executed the agreement with full understanding.
What role did the supervisor’s admission play in the court’s decision?	The supervisor’s admission that he provided an “unmeritorious rating” against Reinante significantly undermined Skyway’s defense and supported the court’s finding that the dismissal was unjust and retaliatory.
How does this case impact employer practices when assessing probationary employees?	This case emphasizes the need for employers to establish clear, reasonable performance standards, provide fair and unbiased assessments, and document the process thoroughly to avoid claims of illegal dismissal.

In conclusion, Skyway O & M Corporation v. Wilfredo M. Reinante reaffirms the importance of due process and fair assessment in probationary employment. Employers must provide substantial evidence to justify the termination of probationary employees, ensuring that performance standards are reasonable, consistently applied, and free from bad faith. The decision serves as a critical reminder that labor laws protect even probationary employees from arbitrary or retaliatory dismissals.

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: SKYWAY O & M CORPORATION VS. WILFREDO M. REINANTE, G.R. No. 222233, August 28, 2019