THIRD DIVISION

[G.R. No. 227098. November 14, 2018.]

JULIUS Q. APELANIO , petitioner, vs. ARCANYS, INC. and CEO ALAN

DEBONNEVILLE , respondents.

DECISION

PERALTA , J : p

This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court
seeking the reversal of the Decision 2 dated November 19, 2015 and the Resolution 3
dated July 22, 2016 of the Court of Appeals in CA-G.R. SP No. 08340, reversing the
Decision 4 dated August 30, 2013 and the Resolution 5 dated December 19, 2013 of the
National Labor Relations Commission (NLRC) in NLRC Case No. VAC-06-000360-2013
(RAB Case No. VII-11-1700-12) which set aside the Decision 6 dated April 30, 2013 of
the Labor Arbiter.
The facts are as follows:
On April 10, 2012, petitioner Julius Q. Apelanio was hired by respondents
Arcanys, Inc. and Chief Executive O cer (CEO) Alan Debonneville as a Usability/Web
Design Expert. He was placed on a "probationary status" for a period of six months.
During the said period, respondent corporation evaluated his performance in terms of
his dependability, e ciency, initiative, cooperation, client responsiveness, judgment,
punctuality, quality and quantity of work, professionalism, and attitude towards
customers, colleagues, and respondent corporation as a whole. Although petitioner
was aware that he was undergoing evaluation, he was allegedly not informed of what
the passing grade was or what constituted as "reasonable standards of satisfactory
performance."
During his second (2nd) month evaluation on July 3, 2012, petitioner received a
rating of 3.06. On his fourth (4th) month evaluation, he received a rating of 2.99. On
October 3, 2012, his sixth (6th) month evaluation, he received a rating of 2.77.
Respondents then served petitioner a letter 7 informing him that they were not
converting his status into a regular employee since his performance fell short of the
stringent requirements and standards set by respondent corporation. Petitioner was
given his nal pay 8 and he signed a Waiver, Release and Quitclaim 9 in favor of
respondents. CAIHTE

Petitioner averred that when his probationary contract was terminated, he was
immediately offered a retainership agreement lasting from October 10, 2012 until
October 24, 2012, which involved a similar scope of work and responsibilities. He was
told that he did not meet the "reasonable standards of satisfactory performance," but
was nevertheless offered said retainership agreement with identical requirements on a
project basis, without security of tenure, with lesser pay, and without any labor standard
bene ts. Petitioner was confused with the arrangement, but agreed since he had a
family to support. He believed that he was still undergoing respondents' evaluation.
On October 26, 2012, after the lapse of the retainership agreement, petitioner
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 was offered another retainership agreement, from October 25, 2012 to November 12,
2012, again with an identical scope of work but at a reduced daily rate of P857.14,
down from the daily rate of P1,257.15 from the initial agreement.
As a result, petitioner became suspicious of the respondent corporation's
motives and consulted with a lawyer, who informed him that said practice was illegal.
He then refused to sign the second retainership agreement, and questioned why they
offered him another retainership agreement if he was deemed unquali ed for the
position. Petitioner alleged that respondents found him quali ed for the position, but
opted to hire his services on a per project basis, justifying the lesser pay and the lack of
security of tenure and labor standard benefits.
On the other hand, respondents stated that they hired petitioner as a web
designer and was made aware that he would be placed on probationary status, and that
his failure to meet the stringent requirements and standards set forth would terminate
his employment contract.
As a matter of fact, several days before the end of petitioner's probationary
contract on October 5, 2012, respondents requested petitioner to sign the termination
notice. Petitioner signed the termination notice; and respondents released and paid
petitioner his nal pay on October 23, 2012. Petitioner also executed a Waiver, Release,
and Quitclaim dated November 16, 2012 1 0 in favor of respondents, indicating therein
that he had no further claim whatsoever against the company and that he had received
his full pay. DETACa

Respondents also alleged that at the time petitioner's probationary employment

ended, respondent corporation experienced several hacking incidents that were
reported to the police authorities. The hacking incidents caused severe losses and
damage to respondents, and the management was determined to go after the
perpetrator.
Respondents claimed that petitioner took advantage of their predicament when
he personally approached respondent corporation's CEO and represented that he had
information about the hacking perpetrator. Petitioner allegedly dangled the information
to respondents in exchange for a retainership contract, and respondents were lured in.
The rst retainership agreement was prepared, but it was for the speci c purpose of
obtaining from petitioner information about the hacking incidents. Petitioner, however,
wanted a bigger salary and an extended duration; hence, a second agreement was
prepared. Ultimately, however, it dawned on respondents that petitioner did not actually
have information or leads about the hacking and that he just took advantage of their
situation.
When respondents stopped transacting with petitioner, he sued them before the
Labor Arbiter for unfair labor practice, illegal dismissal, and damages. Respondents
vehemently deny that they violated petitioner's right to organize; and that the charge of
unfair labor practice is baseless, misleading, and irrelevant.
The Labor Arbiter rendered a Decision 1 1 dismissing petitioner's illegal dismissal
complaint against respondents, the dispositive portion of which reads:
WHEREFORE , above premises considered, this Court hereby dismisses
the complaint of JULIUS APELANIO against respondents ARCANY's, INC.
and ALLAN DEBONNEVILLE on charges of illegal dismissal and other money
claims, for lack of merit.
SO ORDERED. 1 2 (Emphasis in the original.)
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 The Labor Arbiter held that the circumstances surrounding the present case
unequivocally show neither bad faith nor deceit on the part of respondents. Petitioner's
dismissal was an exercise of an employer's management prerogative to retain only
those it deems t. In addition, petitioner was aware that he failed to qualify when he
knowingly signed a quitclaim and waiver in favor of respondents after he received his
final pay. 1 3 aDSIHc

Aggrieved, petitioner appealed the decision before the NLRC, questioning

whether or not he was: (a) illegally dismissed; and (b) entitled to his money claims.
On August 30, 2013, the NLRC rendered a Decision, 1 4 the dispositive portion of
which reads as follows:
WHEREFORE , premises considered, the Decision of Labor Arbiter Maria
Ada Aniceto-Veloso, dated 30 April 2013, is hereby REVERSED and SET ASIDE.
Complainant is a regular employee of respondent ARCANY'S, INC. In view of
complainant's illegal dismissal, ARCANY's, INC. is hereby ordered to pay
complainant the total amount of THREE HUNDRED TWENTY-SEVEN
THOUSAND THREE HUNDRED SIXTY PESOS & 00/100 (P327,360.00)
representing his backwages and to reinstate complainant to his former position
without loss of seniority rights and other privileges within ten (10) days from
receipt of this Decision. Individual respondent Allan Debonneville is absolved of
any personal civil liability.
SO ORDERED.
Cebu City, Philippines. 1 5
The NLRC rejected respondents' argument that the retainership agreements were
mere drafts that did not even contain petitioner's signature. On the contrary, the NLRC
agreed with petitioner that it is normal for an employee not to sign his own copy of the
agreement. The NLRC likewise held that, due to respondents' failure to deny the
authenticity of their Information Technology General Manager (GM) Jake Q. Bantug's
signature on the retainership agreements, petitioner was indeed rehired by respondent
corporation for the period of October 10 to 24, 2012. The NLRC was not convinced that
petitioner failed to meet respondents' reasonable standards of satisfactory
performance, and that they only wanted to prevent petitioner from acquiring a regular
status. ETHIDa

Respondents led a motion for reconsideration but the NLRC denied it. Thus, via
a petition for certiorari under Rule 65 of the Rules of Court, respondents went to the
Court of Appeals and sought that the Decision dated August 30, 2013 and the
Resolution dated December 19, 2013 of the NLRC be reversed and set aside.
In the assailed Decision 1 6 dated November 19, 2015, the Court of Appeals
granted the petition and reversed the NLRC's Decision and Resolution, and reinstated
the Decision dated April 30, 2013 of the Labor Arbiter dismissing petitioner's complaint
for illegal dismissal.
The Court of Appeals ruled that petitioner was properly terminated at the end of
the probationary period since he failed to qualify by the standards that were made
known to him at the commencement of his engagement.
Petitioner moved for reconsideration of the decision, but the Court of Appeals
denied the same in its Resolution 1 7 dated July 22, 2016.
Thus, via Rule 45 of the Rules of Court, before this Court, petitioner raised the
lone issue:
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 WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN REVERSING AND SETTING ASIDE THE WELL-REASONED DECISION
AND RESOLUTION OF PUBLIC RESPONDENT NLRC. 1 8
The petition is unmeritorious.
Petitioner maintains that the retainership agreements offered to him contained
GM Bantug's signature, and that said signature signi ed the validity of the subject
agreements. We disagree.
Jurisprudence is replete with circumstances stating that an employer may
unilaterally prepare an employment contract, stating the terms and conditions required
of a potential employee, and that a potential employee had only to adhere to it by
signing it. 1 9 Such contract is known as a contract of adhesion, which is allowed by law
albeit construed in favor of the employee in case of ambiguity. In Philippine
Commercial International Bank v. CA , 2 0 the Court de ned in detail the meaning of a
contract of adhesion, to wit:
A contract of adhesion is de ned as one in which one of the parties
imposes a ready-made form of contract, which the other party may accept or
reject, but which the latter cannot modify. One party prepares the stipulation in
the contract, while the other party merely a xes his signature or his "adhesion"
thereto, giving no room for negotiation and depriving the latter of the
opportunity to bargain on equal footing. Nevertheless, these types of contracts
have been declared as binding as ordinary contracts, the reason being that the
party who adheres to the contract is free to reject it entirely. 2 1 (Citations
omitted.) cSEDTC

It bears emphasis that in contracts of adhesion, "[o]ne party prepares the

stipulation in the contract, while the other party merely a xes his signature or his
'adhesion' thereto[.]" 2 2 Besides, "[t]he one who adheres to the contract is in reality free
to reject it entirely; if he adheres, he gives his consent." 2 3 In this case, however, it
cannot be denied that in the retainership agreements provided by petitioner, his
signature or "adherence" is notably absent. As a result, said retainership agreements
remain ineffectual and cannot be used as evidence against respondents.
Notably, the Court of Appeals correctly pointed out the signi cance of
petitioner's failure to sign said agreements, viz.:
The rst agreement, which supposedly re-hired [petitioner] for the same
position, did not bear his signature. This fact alone stirs doubt on whether the
aforementioned agreement really got nalized. The NLRC gave full credence to
[petitioner]'s proposition that it is normal for an employee not to sign his copy
and that if [petitioner] really wanted to, he could have signed his copy before
submitting it as evidence.
Unfortunately, We cannot align Our view with that of the NLRC
considering that x x x the absence of [petitioner]'s signature in the rst
agreement was also coupled with other indicators that support the conclusion
that such agreement was never really carried out.
First, the draft of the second agreement, which [petitioner] claimed to be
another extension of the rst, indicated that such agreement was entered into,
and supposed to be signed by the parties on the 10th of October 2012. Second,
the Skype conversation between [petitioner] and [respondents'] representative on
October 24, 2012 x x x showed that they were discussing possible
compensation at P18,000.00, which was the remuneration indicated in the rst
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 agreement. If the rst agreement got nalized and was already implemented,
then why would the draft of the second one still indicate the 10th of October
2012 as the date of execution and signing of the rst agreement? Although it
may be argued that the dates were merely clerical errors or unreplaced entries
resulting to oversight, the Skype conversation between [petitioner] and
[respondents'] representative on October 24, 2012, confirmed the non-conclusion
of the rst agreement; for it would be illogical for the parties to still discuss the
remuneration indicated in the rst agreement if the same had already been
implemented, and, in fact, was about to end on the day that the conversation
took place. 2 4 SDAaTC

Furthermore, a review of the retainership agreements indicates that petitioner

was merely engaged as a consultant, in relation to the hacking incidents endured by
respondents. Petitioner merely alleged that he was hired as an employee under said
retainership agreements, but has yet to provide evidence to support such claim. "It is a
basic rule in evidence that each party must prove his a rmative allegations." 2 5
Therefore, Article 281 of the Labor Code nds no application in this case, absent any
evidence to prove that petitioner worked beyond his probationary employment.
Thus, the Court of Appeals suitably found grave abuse of discretion on the part
of the NLRC in ordering respondents to pay petitioner the total amount of THREE
HUNDRED TWENTY-SEVEN THOUSAND THREE HUNDRED SIXTY PESOS (P327,360.00)
when he was validly terminated at the end of his probationary employment. "To
sanction such action would not only be unjust, but oppressive on the part of the
employer as emphasized in Pampanga Bus Co., Inc. v. Pambusco Employer Union, Inc.
(68 Phil. 541 [1939] )." 2 6
WHEREFORE , in view of the foregoing, the instant petition for review on
certiorari is DENIED . The Decision of the Court of Appeals in CA-G.R. SP No. 08340,
which reversed the Decision dated August 30, 2013 and the Resolution dated
December 19, 2013 of the National Labor Relations Commission, is AFFIRMED in toto.
SO ORDERED .
Leonen and J.C. Reyes, Jr., JJ., concur.
Gesmundo * and Hernando, * JJ., are on wellness leave.

Footnotes
* On wellness leave.
1. Rollo, pp. 8-21.

2. Id. at 25-31. Penned by Associate Justice Edward B. Contreras, and concurred in by Associate
Justices Edgardo L. Delos Santos and Germano Francisco D. Legaspi.

3. Id. at 22-23.
4. Id. at 96-105.

5. Id. at 109-110.
6. Id. at 72-82.
7. CA rollo, p. 84.

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 8. Id. at 83.

9. Id. at 84.
10. Id.
11. Supra note 6.

12. Id. at 82.

13. Id. at 81-82.

14. Supra note 4.

15. Id. at 104-105.
16. Supra note 2.
17. Supra note 3.

18. Rollo, p. 15.

19. Villanueva v. NLRC, 356 Phil. 638 (1998).
20. 325 Phil. 588 (1996).
21. Id. at 597.

22. Polotan, Sr. v. CA (Eleventh Div.) , 357 Phil. 250, 257 (1998).
23. Rizal Commercial Banking Corp. v. CA, 364 Phil. 947, 953-954 (1999).
24. Supra note 2, at 29.
25. Jimenez v. NLRC, et al., 326 Phil. 89, 95 (1996).
26. International Catholic Migration Commission v. NLRC, 251 Phil. 560, 569 (1989).

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