ARMANDO ALILING, 

Petitioner, 
vs.
JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. LARIOSA, and WIDE
WIDE WORLD EXPRESS CORPORATION, Respondents.

Facts: Respondent Wide Wide World Express Corporation (WWWEC) offered to employ
petitioner Armando Aliling (Aliling) as "Account Executive (Seafreight Sales)," with the
following compensation package: a monthly salary of PhP 13,000, transportation
allowance of PhP 3,000, clothing allowance of PhP 800, cost of living allowance of PhP
500, each payable on a per month basis and a 14th month pay depending on the
profitability and availability of financial resources of the company. The offer came with a six
(6)-month probation period conditioned that his regularization shall be based on his
performance on the said period.

On June 11, 2004, Aliling and WWWEC inked an Employment Contract7 under the
following terms, among others:

 Conversion to regular status shall be determined on the basis of work performance;

and
 Employment services may, at any time, be terminated for just cause or in
accordance with the standards defined at the time of engagement.8

However, instead of a Seafreight Sale assignment, WWWEC asked Aliling to handle

Ground Express (GX), a new company product involving domestic cargo forwarding
service for Luzon. Marketing this product and finding daily contracts for it formed the core
of Aliling’s new assignment.

Barely a month after, WWWEC emailed Aliling to express dissatisfaction with the latter’s
performance, failing in his expectation of 80% sales.

Thereafter, WWWEC asked Aliling to report to the Human Resources Department to

explain his absence taken without leave from September 20, 2004.

Aliling responded two days later. He denied being absent on the days in question,
attaching to his reply-letter a copy of his timesheet which showed that he worked from
September 20 to 24, 2004. Aliling’s explanation came with a query regarding the
withholding of his salary corresponding to September 11 to 25, 2004.

In a separate letter, Aliling wrote WWEC tendering his resignation pursuant to the alleged
instruction of WWEC. While WWWEC took no action on his tender, Aliling nonetheless
demanded reinstatement and a written apology, claiming in a subsequent letter dated
October 1, 2004  to management that San Mateo had forced him to resign.

WWEC’s response-letter informed Aliling that his case was still in the process of being
evaluated. WWEC again wrote, this time to advise Aliling of the termination of his
services effective as of that date owing to his "non-satisfactory performance" during
his probationary period.

Earlier, however, Aliling filed a Complaint for illegal dismissal due to forced
resignation, nonpayment of salaries as well as damages with the NLRC against
WWWEC. Appended to the complaint was Aliling’s Affidavit in which he stated that at the
time of his engagement, respondents did not make known to me the standards under
which I will qualify as a regular employee."

WWWEC argued that it and Aliling have signed a letter of appointment stating that on the
pre-agreed objectives, his performance shall be reviewed on the 3rd month to assess your
competence and work attitude. And that failure to meet the job requirements during the
probation stage means that Ailing’s services may be terminated without prior notice and
without recourse to separation pay.

Aliling denied having received a copy of WWEC’s letter.

The Labor Arbiter declared that Aliling’s termination was unjustified. It gave credence to
Aliling’s allegation about not receiving and, therefore, not bound by, San Mateo’s purported
September 20, 2004 memo. The memo, to reiterate, supposedly apprised Aliling of the
sales quota he was, but failed, to meet. Thus, Aliling cannot be validly terminated for non-
compliance with the quota threshold absent a prior advisory of the reasonable standards
upon which his performance would be evaluated.

The NLRC affirmed the Decision in toto. The CA AFFIRMED. The CA anchored its
assailed action on the strength of the following premises: (a) respondents failed to prove
that Aliling’s dismal performance constituted gross and habitual neglect necessary to justify
his dismissal; (b) not having been informed at the time of his engagement of the
reasonable standards under which he will qualify as a regular employee, Aliling was
deemed to have been hired from day one as a regular employee; and (c) the strained
relationship existing between the parties argues against the propriety of reinstatement.

Hence, the instant petition.

Issues:

1. Whether or not Aliling was a regular employee.

2. Whether or not Aliling was illegally dismissed.
3. Whether or not Aliling’s right to procedural due process was violated.

Ruling:

1. Petitioner is a regular employee.

To note, WWEC’s letter-offer itself states that the regularization standards or the
performance norms to be used are still to be agreed upon by Aliling and his supervisor.
WWWEC has failed to prove that an agreement as regards thereto has been reached.
Clearly then, there were actually no performance standards to speak of. And lest it be
overlooked, Aliling was assigned to GX trucking sales, an activity entirely different to
the Seafreight Sales he was originally hired and trained for. Thus, at the time of his
engagement, the standards relative to his assignment with GX sales could not have
plausibly been communicated to him as he was under Seafreight Sales.

Petitioner Aliling, albeit hired from management’s standpoint as a probationary employee,

was deemed a regular employee by force of the following self-explanatory provisions:

Article 281 of the Labor Code

 ART. 281. Probationary employment. - Probationary employment shall not exceed
six (6) months from the date the employee started working, unless it is covered by
an apprenticeship agreement stipulating a longer period. 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.

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6. Probationary employment. – There is probationary employment where the

employee, upon his engagement, is made to undergo a trial period where the
employee determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

xxxx

(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee.

On the basis of documentary evidence, WWWEC did not inform Aliling of the reasonable
standards by which his probation would be measured against at the time of his
engagement. Thus, settled is the rule that the findings of the Labor Arbiter, when affirmed
by the NLRC and the Court of Appeals, are binding on the Supreme Court, unless patently
erroneous.

2. Petitioner was illegally dismissed.

To justify fully the dismissal of an employee, the employer must, as a rule, prove that the
dismissal was for a just cause and that the employee was afforded due process prior to
dismissal. As a complementary principle, the employer has the onus of proving with clear,
accurate, consistent, and convincing evidence the validity of the dismissal.

WWWEC had failed to discharge its twin burden in the instant case.

First off, the issue of petitioner’s alleged failure to achieve his quota, as a ground for
terminating employment, strikes the Court as a mere afterthought on the part of WWWEC,
who, in its letter already betrayed management’s intention to dismiss the petitioner for
alleged unauthorized absences. Aliling was in fact made to explain and he did so
satisfactorily. But WWWEC nonetheless proceeded with its plan to dismiss the petitioner
for non-satisfactory performance, although the termination letter did not even specifically
state Aliling’s "non-satisfactory performance," or that Aliling’s termination was by reason of
his failure to achieve his set quota.

WWWEC claimed it gave Aliling the chance to explain his inability to reach his quota
through its memo addressed to the latter. However, Aliling denies having received such
letter and WWWEC has failed to refute his contention of non-receipt. In net effect,
WWWEC was at a loss to explain the exact just reason for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed failed to achieve his sales
quota, his termination from employment on that ground would still be unjustified.

Article 282 of the Labor Code considers any of the following acts or omission on the part of
the employee as just cause or ground for terminating employment:

(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and

(e) Other causes analogous to the foregoing. (Emphasis supplied)

An employee’s failure to meet sales or work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for
dismissal under Article 282 of the Code. However, in order for the quota imposed to be
considered a valid productivity standard and thereby validate a dismissal,
management’s prerogative of fixing the quota must be exercised in good faith for
the advancement of its interest. The duty to prove good faith, however, rests with
WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC
must show that such quota was imposed in good faith. This WWWEC failed to do,
perceptibly because it could not. The fact of the matter is that the alleged imposition of the
quota was a desperate attempt to lend a semblance of validity to Aliling’s illegal dismissal.

Being an experimental activity and having been launched for the first time, the sales of GX
services could not be reasonably quantified. This would explain why WWEC’s sales
manager implied in her email that other bases besides sales figures will be used to
determine Aliling’s performance. And yet, despite such a neutral observation, Aliling was
still dismissed for his dismal sales of GX services. In any event, WWWEC failed to
demonstrate the reasonableness and the bona fides on the quota imposition.

Employees must be reminded that while probationary employees do not enjoy permanent
status, they enjoy the constitutional protection of security of tenure. They can only be
terminated for cause or when they otherwise fail to meet the reasonable standards made
known to them by the employer at the time of their engagement. Respondent WWWEC
miserably failed to prove the termination of petitioner was for a just cause nor was there
substantial evidence to demonstrate the standards were made known to the latter at the
time of his engagement. Hence, petitioner’s right to security of tenure was breached.

3. Aliling’s right to procedural due process was violated.

To effect a legal dismissal, the employer must show not only a valid ground therefor, but
also that procedural due process has properly been observed. When the Labor Code
speaks of procedural due process, the reference is usually to the two (2)-written
notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code, which provides:

Section 2. Standard of due process: requirements of notice. — In all cases of termination

of employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the
Code:

(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;

(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due
consideration of all the circumstance, grounds have been established to justify his
termination.

In case of termination, the foregoing notices shall be served on the employee’s last known
address.

MGG Marine Services, Inc. v. NLRC tersely described the mechanics of what may be
considered a two-part due process requirement which includes the two-notice rule, "x x x
one, of the intention to dismiss, indicating therein his acts or omissions complained
against, and two, notice of the decision to dismiss; and an opportunity to answer and
rebut the charges against him, in between such notices."

King of Kings Transport, Inc. v. Mamac expounded on this procedural requirement in this
manner:

(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation
within a reasonable period. "Reasonable opportunity" under the Omnibus Rules
means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a
period of at least five calendar days from receipt of the notice xxxx Moreover, in
order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A
general description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the grounds
under Art. 288 [of the Labor Code] is being charged against the employees
 (2) After serving the first notice, the employees should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to (1)
explain and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a representative or
counsel of their choice x x x.

(3) After determining that termination is justified, the employer shall serve the
employees a written notice of termination indicating that: (1) all the
circumstances involving the charge against the employees have been considered;
and (2) grounds have been established to justify the severance of their employment.
(Emphasis in the original.)

Here, the first and second notice requirements have not been properly observed,
thus tainting petitioner’s dismissal with illegality.

The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling
of the likelihood of his termination and directing him to account for his failure to meet the
expected job performance would have had constituted the "charge sheet," sufficient to
answer for the first notice requirement, but for the fact that there is no proof such letter had
been sent to and received by him. In fact, in his December 13, 2004 Complainant’s Reply
Affidavit, Aliling goes on to tag such letter/memorandum as fabrication. WWWEC did not
adduce proof to show that a copy of the letter was duly served upon Aliling. Clearly
enough, WWWEC did not comply with the first notice requirement.

Aliling is entitled to backwages

and separation pay in lieu of reinstatement

Aliling cannot be rightfully considered as a mere probationary employee. Accordingly, the

probationary period set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became part of the
WWWEC organization as a regular employee of the company without a fixed term of
employment. Thus, he is entitled to backwages reckoned from the time he was
illegally dismissed.

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

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. (Emphasis supplied)

Clearly, the law intends the award of backwages and similar benefits to accumulate past
the date of the Labor Arbiter’s decision until the dismissed employee is actually reinstated.
But if, as in this case, reinstatement is no longer possible, this Court has
consistently ruled that backwages shall be computed from the time of illegal
dismissal until the date the decision becomes final.

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the

ground of strained relationship.

In Golden Ace Builders v. Talde,41 the Court ruled:

The basis for the payment of backwages is different from that for the award of
separation pay. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the employer.
Backwages represent compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for computing backwages is
usually the length of the employee's service while that for separation pay is the actual
period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases

Philippines instructs:

[T]he award of separation pay is inconsistent with a finding that there was no illegal
dismissal, for under Article 279 of the Labor Code and as held in a catena of cases,
an employee who is dismissed without just cause and without due process is entitled
to backwages and reinstatement or payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and

reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement

without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the parties. Separation
pay in lieu of reinstatement may likewise be awarded if the employee decides not to
be reinstated.

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.
Strained relations must be demonstrated as a fact, however, to be adequately supported
by evidence — substantial evidence to show that the relationship between the employer
and the employee is indeed strained as a necessary consequence of the judicial
controversy.