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Respondent Balicena was the Branch Manager of the petitioner companys Iloilo
Branch. Prior to his employment in Grand Motor, he was the Finance Officer of Warner,
Barnes, & Co., when allegedly Mr. Alfredo Cisneros (acting branch manager) induced
him to apply for the position of Branch Manager, as their company (petitioner) was
looking for a CPA. He applied for the job and was accepted. He started working for the
petitioner company on April 1 but resigned from his position in Warner, Barnes, & Co.
only on April 28.

However, he was terminated only after working for the company for only 4 months
because of infractions alleged by the petitioner, such as:
He failed to submit promptly the monthly Income and Loss Statement,
Comparative Projections & Actual Sales Report;
the Comparative Performance Report dated 7/8/1980 on the operation of the
Iloilo Branch for the month of June and May, 1980, the Cash Sales of the Iloilo
Branch went down to P91,318.41 for June, 1980, as compared with the sales for
the month of May, 1980 in the sum of P174,697.77;
Belicena in violation of company policy and without clearance from the head
office in Cebu, extended personal accounts in favor of 15 persons which as of
November, 1980 produced delinquent accounts amounting to P18,435.80; and
Belicena claimed lack of knowledge of the vehicular accident caused by a
subordinate and failed to provide prompt administrative disciplinary action
against the erring employee.

They claimed that Balicena is only a probationary employee, which would be observed
by the company for 4-6 months and that Balicena knew that there is a possibility that he
would not get the job.

Balicena on the other hand alleged that he is a regular employee, although he was not
able to present any contract establishing his status as a regular employee; that the
mishap involving the company's vehicle which was used without his permission and
knowledge could not be blamed upon him; that the alleged reports which he failed to
send were not reminded to him, verbally or in writing; that his sales for the period April
to August, 1980 is higher compared to that for the same period in 1979; and that the
alleged accounts remaining unpaid as of 11/6/1980 would have been collected in full if
he were still the Manager, among other things.

Regional Director and Minister of Labor ruled in favor of Balicena, ordering his
reinstatement, payment of his backwages, and other privileges.

Whether or not private respondent's employment as Branch Manager was temporary or
probationary, and not regular and permanent

At the outset, Balicena was a probationary employee:
There was no written proof of Balicenas appointment or employment as regular
and permanent Branch Manager. There was the fact that he assumed his work
as of April 1 but resigned from his previous company only on April 28, meaning
that if he was really appointed as regular and permanent then he would
have resigned immediately from his old company. But since he was not yet
sure of his status in the petitioner corporation, he resigned late.
The Court cannot sustain Balicenas claim, the absence of a written contract due
to the fact that contracts were given only to those who will pass the probationary
period and the rank-and-file employee, not to those managerial ones, are
contrary to usual business practice especially in multi-million enterprises
as the petitioner corporation. Considering the magnitude of its sales and
operation, petitioner corporation must have taken the necessary precautions to
test the qualifications, ability and performance of its Branch Manager, but he did
not. The conclusion is inevitable that his hiring was temporary.
Balicena had never been hired as manager, and the petitioner company and
Balicenas former company are engaged in different kinds of business so it was
necessary for Balicena to undergo a period of probation to test his
qualifications, skills and experience since managing is a new experience
for him.

The employer has the right or is at liberty to choose as to who will be hired and
who will be declined. It is within the exercise of this right to select his employees that
the employer may set or fix probationary period within which the latter may test and
observed the conduct of the former before hiring him permanently. "The right of the
laborer to sell his labor to such persons as he may choose is, in its essence, the same
as the right of an employer to purchased labor from any person whom it chooses. The
employer and the employee have thus an equality of rights guaranteed by the
DISPOSITION: Order of the Deputy Minister of Labor is REVERSED and SET ASIDE.


ANTONIO F. FLORES was hired as crane operator by ORIENT EXPRESS
PLACEMENT PHILIPPINES for 1 year, subject to a 3-month probationary period.
However, after 1 month and 5 days in Saudi Arabia, Flores was repatriated to the
Philippines. Consequently, he filed a complaint with the POEA for having been
terminated from work for no valid reason. ORIENT EXPRESS and NADRICO countered
that Flores was terminated for poor job performance.
On 7/14/1992, POEA rendered a decision in favor of complainant. It was observed that
neither ORIENT EXPRESS nor NADRICO pointed out the reasonable standards of
work required of Flores by which his incompetency was adjudged; much less did they
specify how the latter failed to live up to such reasonable standards. Hence, his
dismissal was unwarranted.
On appeal, NLRC affirmed the POEA decision. In addition, it ruled that the designation
of Flores as floorman instead of crane operator for which he was hired violated his
employment contract. The NLRC concluded that since Flores never worked as crane
operator, his foreign employer could not have observed and assessed his performance
as such and then come up with a performance evaluation sheet, especially considering
his consistent claim that he was made to work as floorman instead. Subsequent motion
for reconsideration filed by ORIENT EXPRESS and NADRICO was denied. Hence, this
WON the dismissal of FLORES is valid

Under Art. 281 of the Labor Code, the services of an employee hired on a probationary
basis may be terminated 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. However, the Court cannot sustain his dismissal on this
ground because petitioner failed to specify the reasonable standards by which
private respondent's alleged poor performance was evaluated, much less to
prove that such standards were made known to him at the time of his recruitment
in Manila. Both private respondent's Agency-Worker Agreement with ORIENT
EXPRESS and NADRICO never mentioned that:
He must first take and pass a Crane Operators' License Examination in Saudi
Arabia before he would be allowed to even touch a crane
He would be assigned as floorman pending release of the results of the
examination or in the event that he failed;
He would be subjected to a performance evaluation by his superior 1 month after
his hiring to determine whether the company was amenable to continuing with his
Hence, respondent Flores could not be faulted for precisely harboring the impression
that he was hired as crane operator for a definite period of 1 year to commence upon
his arrival at the work-site and to terminate at the end of 1 year. No other condition
was laid out except that he was to be on probation for 3 months. No standard
whatsoever by which such probationary period could be hurdled was specified
and made known to him.
Due process dictates that an employee be apprised beforehand of the condition of his
employment and of the terms of advancement therein. Precisely, implicit in Art. 281 of
the Code is the requirement that reasonable standards be previously made known by
the employer to the probationary employee at the time of his engagement, such an
essential requirement was not met by petitioner, even assuming that Flores' alleged
unsatisfactory performance was true. Besides, unsatisfactory performance is not one of
the just causes for dismissal under the Labor Code.
DISPOSITION: The assailed Decision and Resolution of NLRC are AFFIRMED. Costs
against petitioner Orient Express Placement Philippines.

BUISER V. LEOGARDO 131 SCRA 151 (1984)

FACTS: Petitioners were employed by the private respondent GENERAL TELEPHONE
DIRECTORY COMPANY as sales representatives and charged with the duty of
soliciting advertisements for inclusion in a telephone directory.
1. The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P.
Intengan entered into an "Employment Contract (on Probationary Status)" on
May 26, 1980 with private respondent, a corporation engaged in the business of
publication and circulation of the directory of the Philippine Long Distance
Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same
employment contract on June 11, 1980 with the private respondent.
2. Among others, the "Employment Contract (On Probationary Status)" included the
following common provisions:
The company hereby employs the employee as telephone
representative on a probationary status for a period of eighteen (18)
months, i.e. from May 1980 to October 1981, inclusive. It is understood
that daring the probationary period of employment, the Employee may
be terminated at the pleasure of the company without the necessity of
giving notice of termination or the payment of termination pay. The
Employee recognizes the fact that the nature of the telephone sales
representative's job is such that the company would be able to
determine his true character, conduct and selling capabilities only after
the publication of the directory, and that it takes about eighteen (18)
months before his worth as a telephone saw representative can be
fully evaluated inasmuch as the advertisement solicited by him for a
particular year are published in the directory only the following year.
3. Private respondent prescribed sales quotas to be accomplished or met by the
petitioners. Failing to meet their respective sales quotas, the petitioners were
dismissed from the service by the private respondent.
4. Petitioners, then, filed a complaint for illegal dismissal and claims for back wages,
earned commissions and other benefits
5. Regional director of MOLE dismissed the complaints of petitioners except for the
claim for allowances.
6. Deputy minister Leogardy of MOLE affirmed the decision of the regional director
citing that the petitioners have not attained permanent status since private
respondent was justified in requiring a longer period of probation. Leogardo
likewise ruled that the termination was valid

ISSUE: WON the petitioners are probationary employees

HELD: Generally, the probationary period of employment is limited to six (6) months.
The exception to this general rule is When the parties to an employment contract may
agree otherwise, such as when the same is established by company policy or when the
same is required by the nature of work to be performed by the employee. In the latter
case, there is recognition of the exercise of managerial prerogatives in requiring a
longer period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the employee must learn a particular kind of work such
as selling, or when the job requires certain qualifications, skills, experience or training.
Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and
all doubts on the period of probationary employment. It states as follows:
Probationary Employment has been the subject of misunderstanding in some quarter.
Some people believe six (6) months is the probationary period in all cases. On the other
hand employs who have already served the probationary period are sometimes required
to serve again on probation.
Under the Labor Code, six (6) months is the general probationary period ' but the
probationary period is actually the period needed to determine fitness for the job. This
period, for lack of a better measurement is deemed to be the period needed to learn the
The purpose of this policy is to protect the worker at the same time enable the employer
to make a meaningful employee selection. This purpose should be kept in mind in
enforcing this provision of the Code. This issuance shall take effect immediately.
The very contracts of employment signed and acquiesced to by the petitioners
specifically indicate that "the company hereby employs the employee as telephone
sales representative on a probationary status for a period of eighteen (18) months, i.e.
from May 1980 to October 1981, inclusive. This stipulation is not contrary to law, morals
and public policy.

Holiday Inn Manila vs NLRC

Elena Honasan applied for employment with the Holiday Inn and was on April 15, 1991,
accepted for "on-the-job training" as a telephone operator for a period of three weeks.

For her services, she received food and transportation allowance.
On May 13, 1992,
after completing her training, she was employed on a "probationary basis" for a period
of six months ending November 12, 1991.

Her employment contract stipulated that the Hotel could terminate her probationary
employment at any time prior to the expiration of the six-month period in the event of
her failure (a) to learn or progress in her job; (b) to faithfully observe and comply with
the hotel rules and the instructions and orders of her superiors; or (c) to perform her
duties according to hotel standards.
On November 8, 1991, four days before the expiration of the stipulated deadline,
Holiday Inn notified her of her dismissal, on the ground that her performance had not
come up to the standards of the Hotel.

Honasan filed a complaint for illegal dismissal, claiming that she was already a regular
employee at the time of her separation and so was entitled to full security of tenure.

Issue: Honasan was already a regular employee at the time of her dismissal, which
was made 4 days days before the expiration of the probation period.

We find in the Hotel's system of double probation a transparent scheme to circumvent
the plain mandate of the law and make it easier for it to dismiss its employees even
after they shall have already passed probation. The petitioners had ample time to
summarily terminate Honasan's services during her period of probation if they were
deemed unsatisfactory.
The employer has absolute discretion in hiring his employees in accordance with his
standards of competence and probity. This is his prerogative. Once hired, however, the
employees are entitled to the protection of the law even during the probation period and
more so after they have become members of the regular force. The employer does not
have the same freedom in the hiring of his employees as in their dismissal.
Honasan was placed by the petitioner on probation twice, first during her on-the-
job training for three weeks, and next during another period of six months,
ostensibly in accordance with Article 281. Her probation clearly exceeded the
period of six months prescribed by this article.
Probation is the period during which the employer may determine if the employee is
qualified for possible inclusion in the regular force. In the case at bar, the period was for
three weeks, during Honasan's on-the-job training. When her services were continued
after this training, the petitioners in effect recognized that she had passed probation and
was qualified to be a regular employee.
Honasan was certainly under observation during her three-week on-the-job training. If
her services proved unsatisfactory then, she could have been dropped as early as
during that period. But she was not. On the contrary, her services were continued,
presumably because they were acceptable, although she was formally placed this time
on probation.
Even if it be supposed that the probation did not end with the three-week period of on-
the-job training, there is still no reason why that period should not be included in the
stipulated six-month period of probation. Honasan was accepted for on-the-job training
on April 15, 1991. Assuming that her probation could be extended beyond that date, it
nevertheless could continue only up to October 15, 1991, after the end of six months
from the earlier date. Under this more lenient approach, she had become a regular
employee of Holiday Inn and acquired full security of tenure as of October 15, 1991.
The consequence is that she could no longer be summarily separated on the ground
invoked by the petitioners. As a regular employee, she had acquired the protection of
Article 279 of the Labor Code


- 43 Complainants are deaf-mutes who were hired by respondent Far East Bank and
Trust Co. as Money Sorters and Counters through an "Employment Contract for
Handicapped Workers".

- FAR EAST disclaimed that BERNARDO ET AL were regular employees AND that they
were hired temporarily under a special employment arrangement due to "pakiusap".

- NLRC affirmed ruling of the labor arbiter that BERNARDO ET AL could not be deemed
regular employees under Art. 280 of the Labor Code.

WON NLRC is guilty of grave abuse of discretion in holding that
1. money sorters and counters working in a bank are not regular employees
2. employment contracts signed and renewed by the petitioners, which provide for a
period of 6 months, were valid

1. YES. Only the employees, who worked for more than 6 months and whose contracts
were renewed are deemed regular. Hence, their dismissal from employment was illegal.

- According to FAR EAST, the employment contracts were prepared in accordance with
A80 LC, which provides Art. 80. Employment agreement.
Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:
(c) The duration of employment period; and

- FAR EAST entered into contract with a total of 56 handicapped workers and renewed
the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the hiring of others lead
to the conclusion that their tasks were beneficial and necessary to the bank. More
important, these facts show that they were qualified to perform the responsibilities
of their positions. In other words, their disability did not render them unqualified
or unfit for the tasks assigned to them.

- Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-
bodied person .

- Since the Magna Carta accords them the rights of qualified able-bodied persons, they
are thus covered by Article 280 of the Labor Code

- The task of counting and sorting bills is necessary and desirable to the business of
respondent bank. With the exception of sixteen of them, BERNARDO ET AL performed
these tasks for more than six months.

- As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the
simple expedient of extending to them probationary appointments, ad infinitum ."

The contract signed by petitioners is akin to a probationary employment, during
which the bank determined the employees' fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. No employer is allowed to
determine indefinitely the fitness of its employees.

- As regular employees, the 27 petitioners are entitled to security of tenure; that is, their
services may be terminated only for a just or authorized cause. Therefore, when FAR
EAST failed to show such cause, they are deemed illegally dismissed and entitled to
back wages and reinstatement without loss of seniority rights and other privileges.
Considering that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged, petitioners are hereby
awarded separation pay in lieu of reinstatement.