G.R. No. 185829 - Aliling vs. Feliciano

Case Summary (G.R. No. 185829)

Petitioner

Armando Aliling — hired pursuant to a June 2, 2004 offer and a June 11, 2004 employment contract as an Account Executive (Seafreight Sales) with a six‑month probationary period, specified compensation package, and a clause that conversion to regular status would be determined on the basis of work performance.

Respondents

Wide Wide World Express Corporation (WWWEC) — employer that launched a new product (GX) and reassigned Aliling to GX sales; Manuel F. San Mateo III — Sales and Marketing Director who sent performance emails and allegedly issued a September 20, 2004 memorandum; Joseph R. Lariosa — Human Resources Manager who communicated with Aliling regarding alleged absences and issued the termination letter.

Key Dates

June 2, 2004: letter‑offer of employment.
June 11, 2004: employment contract signed.
June 18, 2004: GX product launch and reassignment.
July 16, 2004 (email): San Mateo’s performance expectations stated.
September 20, 2004: alleged memorandum directing explanation for performance.
September 25–27, 2004: HR letter and petitioner’s resignation tender.
October 4, 2004: petitioner filed complaint for illegal dismissal.
October 6, 2004: WWWEC issued termination letter effective that date.
April 25, 2006: Labor Arbiter decision declaring dismissal unjustified.
May 31 and August 31, 2007: NLRC resolutions affirming Labor Arbiter.
July 3, 2008 and December 15, 2008: Court of Appeals decisions (modified awards).
April 25, 2012: Supreme Court decision reviewed here.

Applicable Law and Constitutional Basis

The Court applied the 1987 Philippine Constitution’s protection of security of tenure in conjunction with statutory and regulatory provisions in the Labor Code and its implementing rules: Article 281 (probationary employment), Article 282 (just causes for termination), Article 279 (remedies for unjust dismissal), Section 6(d) of the Implementing Rules of Book VI, Rule VIII‑A (probationary employment standards), the two‑notice rule in Section 2(III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code (procedural due process), Article 111 (attorney’s fees in certain labor cases), and principles governing moral damages (Civil Code Article 2219) as discussed in the decision.

Facts

WWWEC’s June 2, 2004 offer and the June 11, 2004 employment contract set a six‑month probationary period with conversion subject to performance standards “to be jointly defined” with the immediate superior and review at the third and fifth months. Instead of the advertised Seafreight Sales assignment, Aliling was assigned to market the newly launched GX (ground express) product. San Mateo expressed performance expectations by email (including an 80% load‑factor target by a specific date). WWWEC alleges a September 20, 2004 memo directed Aliling to explain poor performance; Aliling denied receipt and produced timesheets to rebut absence allegations. On October 6, 2004 WWWEC terminated Aliling for “non‑satisfactory performance” during probation. Aliling filed for illegal dismissal and related claims.

Procedural History

The Labor Arbiter (April 25, 2006) declared the dismissal unjustified and awarded unpaid salaries and 13th month pay; the NLRC affirmed in resolutions dated May 31 and August 31, 2007. The Court of Appeals partly granted certiorari, affirmed the NLRC but modified and clarified the monetary award and granted separation pay in lieu of reinstatement. Aliling appealed to the Supreme Court, which reviewed the legal and factual determinations affirmed below.

Issues Presented

Aliling raised three principal issues: (A) whether the Court of Appeals erred in failing to order reinstatement after finding illegal dismissal; (B) whether the Court of Appeals erred in failing to award full backwages; and (C) whether moral and exemplary damages should have been awarded given the finding that the dismissal prevented acquisition of regular status.

Court’s Analysis — Employment Status (probationary vs. regular)

The Court held that Aliling became a regular employee from the date of the employment contract (June 11, 2004) because WWWEC failed to make known reasonable standards for regularization at the time of engagement as required by Article 281 and Section 6(d) of the Implementing Rules. The June 2 offer and the June 11 contract contemplated that objectives and standards were “to be jointly defined,” but WWWEC did not prove that such standards were in fact agreed upon at engagement. The subsequent email and other communications post‑dating engagement could not cure the statutory requirement that standards be made known at the time of hiring. The assignment change (from Seafreight to GX) further undercut any claim that Aliling had been properly informed of the GX performance standards at hiring. The Court deferred to the Labor Arbiter, NLRC, and CA factual findings, which were supported by the record.

Court’s Analysis — Illegality of Dismissal and Failure of Employer to Prove Just Cause

WWWEC bore the burden to prove both a just cause for dismissal and observance of due process. The Court found that WWWEC failed to meet that burden. The alleged September 20 memorandum (the purported charge sheet) was not shown to have been served, and WWWEC presented inconsistent and insufficient evidence about the basis for dismissal. Even assuming failure to meet quotas, WWWEC failed to demonstrate that quotas were imposed in good faith and constituted reasonable productivity standards; internal communications described the GX activity as experimental and not readily quantifiable. Thus WWWEC could not justify the termination under Article 282 as gross neglect, gross inefficiency, or analogous cause.

Court’s Analysis — Procedural Due Process

The Court found procedural due process requirements were not met. There was no proof that the first written notice specifying grounds and affordance of a reasonable opportunity to explain was served; there was no record of a hearing or conference; and the termination notice did not set forth the detailed circumstances justifying dismissal. The two‑notice rule and associated requirements under the Omnibus Rules were therefore not substantially observed, rendering the dismissal procedurally defective.

Remedies — Reinstatement, Backwages, Separation Pay, Nominal Damages, Attorney’s Fees, Interest

Because reinstatement was deemed impractical owing to strained relations, the Court awarded monetary relief rather than reinstatement. The Court ordered:

Backwages: computed from October 6, 2004 (date of termination) until the finality of the Supreme Court decision, based on a monthly salary of Php 17,300.00, with legal interest at 6% per annum from October 6, 2004 until fully paid.
Separation pay in lieu of reinstatement: equivalent to one (1) month’s salary for every year of service from June 11, 2004 to the final

Case Syllabus (G.R. No. 185829)

Procedural Posture and Relief Sought

Petition for Review on Certiorari under Rule 45 filed before the Supreme Court assailing the Court of Appeals (CA) July 3, 2008 Decision and December 15, 2008 Resolution in CA-G.R. SP No. 101309 (Armando Aliling v. NLRC, Wide Wide World Express Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa).
The CA had modified and affirmed the NLRC Resolutions (May 31, 2007 and August 31, 2007) which in turn affirmed the Labor Arbiter’s Decision dated April 25, 2006.
Petitioner challenges the CA’s refusal to order reinstatement, the CA’s award of backwages (or lack of a full award when reinstatement was not ordered), and the CA’s denial of moral and exemplary damages despite finding illegal dismissal to prevent acquisition of regular status.
Respondents maintain that Aliling was a probationary employee and was validly dismissed prior to attaining regular status.

Facts — Offer, Contract, Assignment, and Employment Terms

On June 2, 2004, Wide Wide World Express Corporation (WWWEC) offered to employ Armando Aliling as an Account Executive (Seafreight Sales) with the following monthly compensation package: basic salary PhP 13,000; transportation allowance PhP 3,000; clothing allowance PhP 800; cost of living allowance PhP 500; and a 14th month pay depending on profitability and available resources. The offer included a six-month probation period and the caveat that performance during probation would be the basis for confirmation to regular status.
On June 11, 2004, Aliling and WWWEC executed an Employment Contract containing terms including: conversion to regular status to be determined on the basis of work performance; and that employment may be terminated for just cause or in accordance with standards defined at engagement.
A letter/letter of appointment signed June 11, 2004 (attached by WWWEC) provided that, upon effectivity of probation, petitioner and immediate superior would jointly define objectives compared with job requirements; performance would be reviewed on the 3rd month and the 5th month appraisal would be the basis for elevating/confirming status from Probationary to Regular; failure to meet job requirements during probation could lead to termination without prior notice and without separation pay.
Training began, but petitioner was reassigned from Seafreight Sales to handle Ground Express (GX), a new domestic cargo forwarding product launched June 18, 2004; marketing and obtaining daily contracts for GX became petitioner’s core assignment.
Management communications and events relevant to performance and attendance:
- A communication from Sales & Marketing Director Manuel F. San Mateo expressed dissatisfaction, stating expectations that GX shuttles be 80% full by the 3rd week (August 5) after launch (July 15), and expecting sales to be "pumping in" more than a month after petitioner started.
- On September 25, 2004, Joseph R. Lariosa (Human Resources) asked petitioner to report to HR to explain an alleged absence taken without leave on September 20, 2004. Petitioner replied on September 27, 2004, attaching a timesheet showing work from September 20 to 24, 2004, and questioned salary withholding for September 11–25, 2004.
- On September 27, 2004, petitioner tendered his resignation to San Mateo effective October 15, 2004, allegedly pursuant to San Mateo’s instruction on September 20. WWWEC took no action on that tender.
- On October 1, 2004 petitioner demanded reinstatement and a written apology, alleging San Mateo forced his resignation. Lariosa replied October 1 that petitioner’s case was under evaluation.
- On October 4, 2004, petitioner filed a Complaint for illegal dismissal due to forced resignation, nonpayment of salaries, and damages with the NLRC; appended was petitioner’s affidavit (dated November 12, 2004) alleging respondents did not make known the standards for regularization at engagement.
- On October 6, 2004, Lariosa wrote to advise termination effective that date due to "non-satisfactory performance" during the probationary period.
Payments made to petitioner for the period included: PhP 4,988.18 (September 25 payroll) and PhP 1,987.28 (4 days in October 2004), totaling PhP 6,975.46.
WWWEC’s position paper (Nov. 22, 2004) relied on the June 11 appointment letter (3rd and 5th month reviews) and attached a September 20, 2004 memo from San Mateo asking petitioner to explain failure to meet expected job performance, citing a GX load factor of 0.18% for July–September versus targeted 80% by August 5, 2004. Petitioner denied receipt of the September 20 memo in his December 13, 2004 reply-affidavit.

Issues Presented by Petitioner

Issue A: Whether the CA erred in not ordering reinstatement despite finding illegal dismissal.
Issue B: Whether the CA erred in failing to award full backwages where reinstatement was not ordered.
Issue C: Whether the CA erred in denying moral and exemplary damages despite finding the dismissal intended to prevent petitioner’s acquisition of regular status.

Labor Arbiter Decision (April 25, 2006)

The Labor Arbiter declared petitioner’s termination unjustified.
Rationale: Respondents failed to comply with Article 281’s requirement that reasonable standards be made known at engagement; petitioner was not shown to have received the September 20 memo and, given the newness of the assigned service, standards could not be presumed known.
Monetary awards:
- Unexpired portion of contract (Oct. 6, 2004 – Dec. 7, 2004): computed at PhP 17,300/month × 2.7 months = PhP 35,811.00 (basic salary plus allowances).
- Proportionate 13th month pay for 2004: PhP 6,532.50.
- Attorney’s fees: 10% of the judgment amount.
- Labor Arbiter ordered respondent to pay PhP 35,811.00 and PhP 10,766.85 (representing proportionate 13th month pay plus 10% attorney’s fees), and denied other claims for lack of basis.

NLRC Proceedings and Rulings

The National Labor Relations Commission affirmed the Labor Arbiter’s Decision in toto in its Resolution dated May 31, 2007.
Separate motions for reconsideration by the parties were denied by the NLRC in its Resolution dated August 31, 2007.

Court of Appeals Decision and Rationale (July 3, 2008; RC denial Dec. 15, 2008)

CA disposition: petition partly granted; affirmed NLRC Resolutions with modification/clarification:
- Ordered WWWEC and officers Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa jointly and severally liable to pay petitioner: (A) PhP 42,333.50 as total money judgment; (B) PhP 4,233.35 as attorney’s fees; and (C) additional sum equivalent to one-half (1/2) month of petitioner’s salary as separation pay.
CA’s premises supporting its modification:
- Respondents failed to prove gross and habitual neglect required to justify dismissal.
- Because petitioner was not informed at engagement of reasonable standards for regularization, he was deemed a regular employee from day one (citing Cielo v. NLRC).
- Strained relationship between parties made reinstatement inappropriate.
CA denied petitioner’s motion for reconsideration on December 15, 2008.

Supreme Court — Authority to Review and Standard of Review

The Supreme Court stated it has authority to review matters not specifically assigned as error when necessary for a just conclusion of the case (citing Sociedad Europea de Financiacion, SA v. CA).
The Court emphasized the rule that findings of fact of Labor Arbiters, when affirmed by NLRC and CA, are binding on the Supreme Court unless patently erroneous. The Court will not reweigh evidence absent lack of substantial evidence or misapprehension of facts.

Supreme Court Holding — Employment Status (Probationary vs. Regular)

Central legal text applied: Article 281 of the Labor Code (Probationary employment) and Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A (probationary empl