G.R. No. 127448.

September 10, 1998

JUANITO VILLANUEVA, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, (Second Division), HON. COMMISSIONERS:
ROGELIO AYALA, RAUL T. AQUINO, INNODATA PHILS. INC. / INNODATA PROCESSING CORP. and TODD SOLOMON, Respondents.
ATTY. CESAR F. MARAVILLA, JR., for the petitioner
THE SOLICITOR GENERAL, counsel for the respondents
DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari, petitioner Juanito Villanueva seeks to annul the decision 1 of the National Labor Relations
Commission (NLRC) in NLRC Case No. 00-09-06202-95 and its resolution 2 denying petitioners motion for reconsideration. The former
reversed the decision3 of the Labor Arbiter of 21 May 1996 finding that the petitioner was illegally dismissed from his employment.
The factual and procedural antecedents of this case are as follows:
Petitioner Juanito M. Villanueva started working with respondent Innodata Philippines, Inc.,/Innodata Processing Corporation as an
"abstractor" with a daily salary of P180.
The contract of employment 4 provided for a period of effectivity of "one year commencing on Feb. 21, 1994, until Aug. 21, 1995." It
was also stipulated that from 21 February 1994 to 21 August 1994, or for a period of six months, petitioner's employment would be
"contractual" and could be terminated at whatever date within this period by mere service of notice to that effect. However, should
his employment be continued beyond 21 August 1994, he would become a regular employee upon demonstration of sufficient skill to
meet the standards set by the respondent company. Should he fail to demonstrate the ability to master his task during the first six
months, he could be placed on probation for another six months; after which, he could be evaluated for promotion as a regular
employee.
On 21 February 1995, petitioner's services were terminated by reason of "end of contract." 5
Three weeks thereafter, the petitioner was rehired by the respondent corporation, this time, as a data encoder effective 13 March
1995 to 15 August 1995, with a lesser pay of P164.10 per day.6
On 13 August 1995, the petitioner was again separated from the respondent company also on account of "end of contract." 7 This
prompted the petitioner to file a complaint against the respondent company and its president, Todd Solomon, for illegal dismissal
with prayer for moral and exemplary damages and attorney's fees.
In his 21 May 1996 Decision, Labor Arbiter Manuel R. Caday held that as an abstractor engaged in processing, encoding of data,
precoding, editing, proofreading and scoring -- activities which were necessary and desirable in the usual business of the respondent
corporation -- the petitioner was a regular employee pursuant to Article 280 of the Labor Code, who enjoyed security of tenure.
Moreover, when he was allowed to work after 21 August 1994, when his probationary employment of six months expired, he
acquired a vested right to a permanent employment and could only be dismissed for a valid cause.
Accordingly, after finding petitioner's dismissal to be illegal, the Labor Arbiter ordered the respondent company to immediately
reinstate the petitioner to his former position without loss of seniority rights, with full back wages and benefits computed from the
date of his dismissal until his actual reinstatement, less the salaries he received under his second employment contract.
On appeal, respondent NLRC reversed the Labor Arbiter's decision and upheld the validity of petitioner's separation from the
respondent company on the ground that his employment contract was for a fixed period of one year and six months, certain to end
on 21 August 1994.
His motion for reconsideration having been denied, the petitioner filed this special civil action for certiorari contending that
respondent NLRC palpably erred and committed grave abuse of discretion in reversing the decision of the Labor Arbiter. Section 2 of
the contract of employment itself recognized the status of the petitioner as a probationary employee. Having worked beyond 21
August 1994 and for six months thereafter until his dismissal on 21 February 1995, he had become a regular employee "not only by
operation of law (Articles 280 and 281) but also by virtue of the contract."
In its Comment, the respondent company supports the assailed decision and maintains that the petitioner was hired on a fixed-term
basis and was never placed on probation. The termination of his services was not due to his dismissal but the expiration of his term
of employment; thus, he is not entitled to reinstatement, back wages, and damages.
On the other hand, in its Manifestation in Lieu of Comment, the Office of the Solicitor General (OSG) agrees with the petitioner.
Hence, we required the NLRC to file its own comment. As expected, the NLRC urged affirmance of the challenged decision.

The only question before us is whether the NLRC committed grave abuse of discretion in reversing the decision of the Labor Arbiter,
which ordered the reinstatement of the petitioner with full back wages.
We resolve the issue in the affirmative. The NLRC committed grave abuse of discretion when it reversed the findings of fact of the
Labor Arbiter by giving undue, if not unwarranted, emphasis on the dates fixed in the contract and failing to consider the rest of the
terms of the contract, as well as the attendant circumstances surrounding petitioners employment. Section 2 of the Contract of
Employment in question provided:
Section 2. This contract shall be effective for a period of one year commencing on Feb. 21, 1994 until Aug. 21, 1995, unless sooner
terminated pursuant to the provision hereof.
From Feb. 21, 1994 to August 21, 1994, or for a period of six (6) months, the EMPLOYEE shall be contractual during which the
EMPLOYER can terminate the EMPLOYEE's services by serving written notice to that effect. Such termination shall be immediate, or
at whatever date within this six-month period, as the EMPLOYER may determine. Should the EMPLOYEE continue his employment
beyond Aug. 21, 1994, he shall become a regular employee upon demonstration of sufficient skill in terms of his ability to meet the
standards set by the EMPLOYER. If the EMPLOYEE fails to demonstrate the ability to master his task during the first six months he
can be placed on probation for another six (6) months after which he will be evaluated for promotion as regular employee.
We agree with the OSG that the contract cannot be strictly construed as one for a fixed term. For one, while the first paragraph of
Section 2 spoke of the contract's duration to be "one" year, it was in fact, for one year and six months because it was to commence
on 21 February 1994 and terminate on 21 August 1995. For another, while the second paragraph specified the first six-month period
of employment, 21 February to 21 August 1994, as contractual, the third sentence of that paragraph granted the petitioner regular
employment status should he "continue his employment beyond August 21, 1994, upon demonstration of sufficient skill in terms of
his ability to meet the standards" set by the respondent company. It is clear that the first six months was in reality the "probation
period" under Article 281 of the Labor Code,8 since petitioner would become a regular employee if the employment would continue
beyond that period upon demonstration of sufficient skill in accord with the standards set by the respondent corporation.
Significantly, the respondent company alleges that it has never placed the petitioner on probation. 9 This could only mean that
petitioner's continuance in employment beyond 21 August 1994 was not for probation purposes under the fourth sentence of the
second paragraph of Section 2 reading as follows: "If the employee fails to demonstrate the ability to master his task during the first
six months he can be placed on probation for another six (6) months after which he will be evaluated for promotion as a regular
employee." If the petitioner was thus allowed to remain in employment beyond 21 August 1994, it could be for no other reason than
that he demonstrated "sufficient skill in terms of his ability to meet the standards set" by the respondent company. He, therefore,
became a regular employee by virtue of the third sentence of the second paragraph of Section 2 of the contract.
Besides, the Labor Arbiter found that as an abstractor, the petitioner was engaged in "processing, encoding of data, precoding,
editing, proofreading and scoring, all of which activities are deemed necessary and desirable in the usual business 10 of respondent
company." The employment then was "regular" under the first paragraph of Article 280 of the Labor Code, which reads:
ART. 280. Regular and casual employment. -- The provisions of written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
The termination of petitioner's employment contract on 21 February 1995, as well as the subsequent issuance on 13 March 1995 of a
"new" contract for five months as "data encoder," was a devious, but crude, attempt to circumvent petitioner's right to security of
tenure as a regular employee guaranteed by Article 279 of the Labor Code. 11 Hence, the so-called "end of contract" on 21 February
1995 amounted to a dismissal without any valid cause.
Notably, the respondent company prepared the contract of employment. It was a contract of adhesion, and petitioner had only to
adhere to it by signing it. Its terms should be construed strictly against the party who prepared it. 12 Any ambiguity therein must be
resolved against the respondent company,13 especially because under Article 1702 of the Civil Code, in case of doubt, all labor
contracts shall be construed in favor of the laborer. We cannot allow the respondent company to construe otherwise what appears to
be clear from the wordings of the contract. The interpretation which the respondent company seeks to wiggle out is wholly
unacceptable, as it would result in a violation of petitioner's right to security of tenure guaranteed in Section 3 of Article XIII of the
Constitution and in Articles 279 and 281 of the Labor Code.
WHEREFORE, the challenged decision of 11 October 1996 and resolution of 29 November 1996 of the National Labor Relations
Commission are SET ASIDE, and the decision of the Labor Arbiter of 21 May 1996 in NLRC-NCR-00-09-06202-95 is REINSTATED.
Costs against private respondent Innodata Philippines, Inc.
SO ORDERED.

G.R. No. 162839

October 12, 2006

INNODATA PHILIPPINES, INC., petitioner,

vs.
JOCELYN L. QUEJADA-LOPEZ and ESTELLA G. NATIVIDAD-PASCUAL, respondents.
DECISION
PANGANIBAN, J.:
A contract that misuses a purported fixed-term employment to block the acquisition of tenure by the employees deserves to be struck down for being
contrary to law, morals, good customs, public order and public policy.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the September 18, 2003 Decision 2 of the Court of Appeals
(CA) in CA-GR SP No. 73416, as well as its March 15, 2004 Resolution3 denying petitioners Motion for Reconsideration. The decretal portion of the
Decision states:
"WHEREFORE, the challenged decision of November 27, 2001 and resolution of July 22, 2002 of the National Labor Relations
Commission are SET ASIDE, and the decision of the Labor Arbiter of December 29, 1999 in NLRC NCR CASE NO. 00-03-02732-98
is REINSTATED and AFFIRMED in all respect."4
The Facts
The factual antecedents are narrated by the CA as follows:
"Innodata Philippines, Inc., is engaged in the encoding/data conversion business. It employs encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and do the job orders of its clients.
"Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by Innodata Philippines, Inc. They [worked] from March
4, 1997, until their separation on March 3, 1998.
"Claiming that their job was necessary and desirable to the usual business of the company which is data processing/conversion and
that their employment is regular pursuant to Article 280 of the Labor Code, [respondents] filed a complaint for illegal dismissal and
for damages as well as for attorneys fees against Innodata Phils., Incorporated, Innodata Processing Corporation and Todd
Solomon. [Respondents] further invoke the stare decicis doctrine in the case of Juanito Villanueva vs. National Labor Relations
Commission, et al., G.R. No. 127448 dated September 17, 1998 and the case of Joaquin Servidad vs. National Labor Relations
Commission, et al., G.R. No. 128682 dated March 18, 1999, arguing that the Highest Court has already ruled with finality that the
nature of employment at [petitioner] corporation is regular and not on a fixed term basis, as the job in the company is necessary and
desirable to the usual business of the corporation.
"On the other hand, [petitioner] contends that [respondents] employment contracts expired, for [these were] only for a fixed period
of one (1) year. [Petitioner] company further invoked the Brent School case by saying that since the period expired, [respondents]
employment was likewise terminated.
"After examination of the pleadings filed, Labor Arbiter Donato G. Quinto rendered a judgment in favor of complainants, the
dispositive portion of which reads:
WHEREFORE, foregoing premises considered, judgment is hereby rendered:
(1) Holding complainants Estella G. Natividad and Jocelyn Quejada to have been illegally dismissed by [Petitioners]
Innodata Philippines Incorporated and Innodata Processing Corporation and ordering said [petitioners] to reinstate them
to their former position without los[s] of seniority rights, or to a substantially equivalent position, and to pay them jointly
and severally, backwages computed from the time they were illegally dismissed on March 3, 1998 up to the date of this
decision in the amount of P112,535.28 EACH, or in the total amount of P225,070.56 for the two of them;
(2) Further, [petitioners] are ordered to pay, jointly and severally, [respondents] attorneys fees in the amount equivalent to
10% of their respective awards; and
(3) All other claims are hereby dismissed for lack of merit.
SO ORDERED.
"Not satisfied, [petitioner] corporation interposed an appeal in the National Labor Relations Commission, which reversed and set
aside the Labor Arbiters decision and dismissed [respondents] complaint for lack of merit. It declared that the contract between

[respondents] and [petitioner] company was for a fixed term and therefore, the dismissal of [respondents], at the end of their one
year term agreed upon, was valid.
"A motion for reconsideration was filed but was denied in an order dated July 22, 2002."5
Ruling of the Court of Appeals
The CA ruled that respondents were regular employees in accordance with Section 280 of the Labor Code. It said that the fixed-term contract prepared
by petitioner was a crude attempt to circumvent respondents right to security of tenure.
Hence, this Petition.6
Issues
Petitioner raises the followings issues for the Courts consideration:
I
"Whether or not the Court of Appeals committed serious reversible error when it did not take into consideration that fixed-term
employment contracts are valid under the law and prevailing jurisprudence.
II
"Whether or not the Court of Appeals committed serious reversible error when it failed to take into consideration the nature of the
business of petitioner vis--vis its resort to fixed-term employment contracts.
III
"Whether or not the Court of Appeals seriously erred when it failed to consider the fixed-term employment contracts between
petitioner and respondents as valid.
IV
"Whether or not the Court of Appeals seriously erred when it held that regularity of employment is always premised on the fact that it
is directly related to the business of the employer.
V
"Whether or not the Court of Appeals committed serious reversible error in setting aside the Decision of the National Labor Relations
Commission, dated 27 November 2001 and Resolution of 22 July 2002, respectively[,] and reinstated the decision of the Labor
Arbiter dated 29 December 1999."7
The foregoing issues may be reduced into one question: whether the alleged fixed-term employment contracts entered into by petitioner and
respondents are valid.
The Courts Ruling
The Petition has no merit.
Sole Issue:
Validity of the Fixed-Term Contract
Petitioner contends that the regularity of the employment of respondents does not depend on whether their task may be necessary or desirable in the
usual business of the employer. It argues that the use of fixed-term employment contracts has long been recognized by this Court.
Petitioner adds that Villanueva v. NLRC8 and Servidad v. NLRC9 do not apply to the present factual circumstances. These earlier cases struck down the
employment contracts prepared by herein Petitioner Innodata for being "devious, but crude, attempts to circumvent [the employees] right to security of
tenure x x x." Petitioner avers that the present employment contracts it entered into with respondents no longer contain the so-called "double-bladed"
provisions previously found objectionable by the Court.
Petitioners contentions have no merit.
While this Court has recognized the validity of fixed-term employment contracts in a number of cases,10 it has consistently emphasized that when the
circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary
to law, morals, good customs, public order or public policy.11

In a feeble attempt to conform to the earlier rulings of this Court in Villanueva12 and Servidad,13 petitioner has reworded its present employment
contracts. A close scrutiny of the provisions, however, show that the double-bladed scheme to block the acquisition of tenurial security still exists.
To stress, Servidad struck down the following objectionable contract provisions:
"Section 2. This Contract shall be effective for a period of 1 [year] commencing on May 10, 1994, until May 10, 1995 unless sooner
terminated pursuant to the provisions hereof.
"From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the EMPLOYEE shall be contractual during which the
EMPLOYER can terminate the EMPLOYEES services by serving written notice to that effect. Such termination shall be immediate,
or at whatever date within the six-month period, as the EMPLOYER may determine. Should the EMPLOYEE continue his
employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of
his ability to meet the standards set by the EMPLOYER. If the EMPLOYEE fails to demonstrate the ability to master his task during
the first six months he can be placed on probation for another six (6) months after which he will be evaluated for promotion as a
regular employee."14
In comparison, the pertinent portions of the present employment contracts in dispute read as follows:
"TERM/DURATION
1. The EMPLOYER hereby employs, engages and hires the EMPLOYEE, and the EMPLOYEE hereby accepts such appointment as
FORMATTER effective March 04, 1997 to March 03, 1998, a period of one (1) year.
xxxxxxxxx
"TERMINATION
7.1 This Contract shall automatically terminate on March 03, 1998 without need of notice or demand.
xxxxxxxxx
7.4 The EMPLOYEE acknowledges that the EMPLOYER entered into this Contract upon his express representation that he/she is
qualified and possesses the skills necessary and desirable for the position indicated herein. Thus, the EMPLOYER is hereby
granted the right to pre-terminate this Contract within the first three (3) months of its duration upon failure of the EMPLOYEE to meet
and pass the qualifications and standards set by the EMPLOYER and made known to the EMPLOYEE prior to execution hereof.
Failure of the EMPLOYER to exercise its right hereunder shall be without prejudice to the automatic termination of the
EMPLOYEEs employment upon the expiration of this Contract or cancellation thereof for other causes provided herein and by
law."15 (Emphasis supplied)
Like those in Villanueva and Servidad, the present contracts also provide for two periods. Aside from the fixed one-year term set in paragraph 1,
paragraph 7.4 provides for a three-month period during which petitioner has the right to pre-terminate the employment for the "failure of the employees
to meet and pass the qualifications and standards set by the employer and made known to the employee prior to" their employment. Thus, although
couched in ambiguous language, paragraph 7.4 refers in reality to a probationary period.
Clearly, to avoid regularization, petitioner has again sought to resort alternatively to probationary employment and employment for a fixed term.
Noteworthy is the following pronouncement of this Court in Servidad:
"If the contract was really for a fixed term, the [employer] should not have been given the discretion to dismiss the [employee] during
the one year period of employment for reasons other than the just and authorized causes under the Labor Code. Settled is the rule
that an employer can terminate the services of an employee only for valid and just causes which must be shown by clear and
convincing evidence.
xxxxxxxxx
"The language of the contract in dispute is truly a double-bladed scheme to block the acquisition of the employee of tenurial security.
Thereunder, [the employer] has two options. It can terminate the employee by reason of expiration of contract, or it may use failure
to meet work standards as the ground for the employees dismissal. In either case, the tenor of the contract jeopardizes the right of
the worker to security of tenure guaranteed by the Constitution."16
In the interpretation of contracts, obscure words and provisions shall not favor the party that caused the obscurity.17 Consequently, the terms of the
present contract should be construed strictly against petitioner, which prepared it.18
Article 1700 of the Civil Code declares:
"Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."

Indeed, a contract of employment is impressed with public interest. For this reason, provisions of applicable statutes are deemed written into the
contract. Hence, the "parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply
contracting with each other."19 Moreover, in case of doubt, the terms of a contract should be construed in favor of labor.20
Lastly, petitioner claims that it was constrained by the nature of its business to enter into fixed-term employment contracts with employees assigned to
job orders. It argues that inasmuch as its business is that of a mere service contractor, it relies on the availability of job orders or undertakings from its
clients. Hence, the continuity of work cannot be ascertained.
Petitioners contentions deserve little consideration.
By their very nature, businesses exist and thrive depending on the continued patronage of their clients. Thus, to some degree, they are subject to the
whims of clients who may decide to discontinue patronizing their products or services for a variety of reasons. Being inherent in any enterprise, this
entrepreneurial risk may not be used as an excuse to circumvent labor laws; otherwise, no worker could ever attain regular employment status.
Finally, it is worth noting that after its past employment contracts had been declared void by this Court, petitioner was expected to ensure that the
subsequent contracts would already comply with the standards set by law and by this Court. Regrettably, petitioner failed to do so.
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution are AFFIRMED. Costs against petitioner.SO ORDERED.
G.R. No. L-63316 July 31, 1984
ILUMINADA VER BUISER, MA. CECILIA RILLOACUA and MA. MERCEDES P. INTENGAN, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the Ministry of Labor & Employment, and GENERAL TELEPHONE
DIRECTORY, CO., respondents.
Jimenez, Apolo & Leynes Law Office for petitioners.
The Solicitor General for respondent Deputy Minister.
Abad, Legayada & Associates for private respondent.
GUERRERO, J.:
This is a petition for certiorari seeking to set aside the Order of the Deputy Minister of Labor and Employment, affirming the Order of the Regional
Director, National Capital Region, in Case No. NCR-STF-5-2851-81, which dismissed the petitioners' complainant for alleged illegal dismissal and
unpaid commission.
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.
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.
Among others, the "Employment Contract (On Probationary Status)" included the following common provisions:
l. 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 darung 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.
Corollary to this, the 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. The records show that the private respondent terminated the services
of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18, 1981 for their failure to
meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and Employment, a complaint for illegal dismissal with claims
for backwages, earned commissions and other benefits, docketed as Case No. NCR-STF-5-2851-81.

The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the complaints of the petitioners, except the claim for
allowances which private respondent was ordered to pay. A reconsideration of the Order was sought by the petitioners in a motion filed on September
30, 1982. This motion, however, was treated as an appeal to the Minister of Labor.
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated January 7, 1983, affirming the Regional Director's Order
dated September 21, 1982, wherein it ruled that the petitioners have not attained permanent status since private respondent was justified in requiring a
longer period of probation, and that the termination of petitioners' services was valid since the latter failed to meet their sales quotas.
Hence, this petition for certiorari on the alleged ground that public respondent committed grave abuse of discretion amounting to lack of jurisdiction.
Specifically, petitioners submit that:
1. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to lack of jurisdiction in ruling that the
probationary employment of petitioners herein is eighteen (18) months instead of the mandated six (6) months under the Labor Code, and in
consequently further ruling that petitioners are not entitled to security of tenure while under said probation for 18 months.
2. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to lack of jurisdiction in ruling that
petitioners were dismissed for a just and valid cause.
3. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to lack of jurisdiction in ruling that
petitioners are not entitled to the commissions they have earned and accrued during their period of employment.
Petitioners contend that under Articles 281-282 of the Labor Code, having served the respondent company continuously for over six (6) months, they
have become automatically regular employees notwithstanding an agreement to the contrary. Articles 281-282 read thus:
Art. 282. Probationary Employment. Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it iscCovered 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. (As amended by PD 850).
Art. 281. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceeding paragraph. Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such actually exists. (As amended by PD 850).
It is petitioners' submission that probationary employment cannot exceed six (6) months, the only exception being apprenticeship and learnership
agreements as provided in the Labor Code; that the Policy Instruction of the Minister of Labor and Employment nor any agreement of the parties could
prevail over this mandatory requirement of the law; that this six months prescription of the Labor Code was mandated to give further efficacy to the
constitutionally-guaranteed security of tenure of workers; and that the law does not allow any discretion on the part of the Minister of Labor and
Employment to extend the probationary period for a longer period except in the aforecited instances. Finally, petitioners maintain that since they are
regular employees, they can only be removed or dismissed for any of the just and valid causes enumerated under Article 283 of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
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 job.

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.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine the character and selling capabilities
of the petitioners as sales representatives. The Company is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone
Directories. Publication of solicited ads are only made a year after the sale has been made and only then win the company be able to evaluate the
efficiency, conduct, and selling ability of its sales representatives, the evaluation being based on the published ads. Moreover, an eighteen month
probationary period is recognized by the Labor Union in the private respondent company, which is Article V of the Collective Bargaining Agreement, ...
thus:
Probationary Period New employees hired for regular or permanent shall undergo a probationary or trial period of six
(6) months, except in the cases of telephone or sales representatives where the probationary period shall be eighteen (I
8) months.
And as indicated earlier, 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.
We, therefore, hold and rule that the probationary employment of petitioners set to eighteen (18) months is legal and valid and that the Regional Director
and the Deputy Minister of Labor and Employment committed no abuse of discretion in ruling accordingly.
On the second assignment of error that public respondent committed grave abuse of discretion in ruling that petitioners were dismissed for a just and
valid cause, this is not the first time that this issue has been raised before this Court. Earlier, in the case of "Arthur Golez vs. The National Labor
Relations Commission and General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983, the petition for certiorari which raised the same issue
against the herein private respondent was dismissed by this Court for lack of merit.
The practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction. (Philippine
American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to
observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted reasonable period,
or by producing unsatisfactory results. This management prerogative of requiring standards availed of so long as they are exercised in good faith for the
advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA) of September 1981, in support of their third assignment
of error. Petitioners cannot avail of this agreement since their services had been terminated in May, 1981, at a time when the CBA of September, 1981
was not yet in existence.
In fine, there is nothing in the records to show any abuse or misuse of power properly vested in the respondent Deputy Minister of Labor and
Employment. For certiorari to lie, "there must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative
inaccordance with centuries of both civil and common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180). The "abuse of discretion must be grave
and patent, and it must be shown that the discretion was exercised arbitrarily or despotically." (Palma and Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97,
100; Philippine Virginia Tobacco Administration vs. Lucero, 125 SCRA 337, 343).
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.

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