Facts:
– Chona A. Magallones and Pauline Joy M. Lucino (respondents) were employed as events marketing and logistics officers by Adstratworld Holdings, Inc. (Adstratworld) starting from January 2012 without any written contract.
– They were given a basic monthly salary of P10,000 with no other benefits, except for partial 13th-month pay and bonus given only during Christmas.
– On July 16, 2013, Adstratworld issued probationary contracts to the respondents with a salary increase to P11,000.
– On January 8, 2014, they were informally dismissed from their roles.
– The respondents claimed they were regular employees due to over a year of service and the necessity of their roles for the company’s business.
– They filed complaints for illegal dismissal with additional claims for various pays and damages.
– Adstratworld countered that they were probationary employees who did not meet company performance standards, justifying the termination.
Procedural Posture:
1. Before the Labor Arbiter: The LA dismissed the complaint citing adherence to standards justification due to company policy violations by respondents, though ordered payment for their last pay.
2. Before the NLRC: The NLRC affirmed the LA decision with modification regarding unpaid salary amounts, favoring the interpretation of the probationary period validity based on work performance standards made known to respondents.
3. Before Court of Appeals: The CA overturned the NLRC’s decision, classifying respondents as regular employees from the beginning and qualifying the dismissal as illegal. The CA ordered moral and exemplary damages, attorney’s fees and back pays among others.
4. Before the Supreme Court: Adstratworld petitioned for a review on certiorari appealing the CA’s decision on grounds including lack of evidence supporting grave abuse of discretion by NLRC.
Issues:
1. Whether the respondents were regular or probationary employees under the law.
2. Whether the CA erred in finding grave abuse of discretion by the NLRC regarding the dismissal.
3. Whether respondents were illegally dismissed by Adstratworld.
Court’s Decision:
– The Supreme Court affirmed the CA’s decision that respondents were regular employees since they had worked for more than a year fulfilling necessary roles for Adstratworld, contrary to the employer’s claim of probationary status post-July 2013.
– Adstratworld failed to set known standards or duly inform respondents necessary for justified probationary dismissal, thus the firing without due process was illegal.
– Substantive due process was violated since the company did not provide a valid cause under Labor Code just cause stipulations, and procedural due process was neglected as no adequate explanations or hearings were provided.
– Grantees of moral and exemplary damages, attorney’s fees acknowledged by CA were upheld but claims for overtime, night differential and some premium pays were deleted due to insufficient evidence.
Doctrine:
– Regular employment is established after a year of service in a necessary/desirable role or when substantial evidence shows tasks align with core company functions.
– An employer must establish clear employment standards and communicate such at the commencement of employment; failure for probationary employees equivalates to regular status.
– Illegal dismissal claims burden the employer to prove lawful and procedural termination action.
Class Notes:
– Regular employee status is automatic after a year unless lawful probationary guidelines are met (Art. 295, Labor Code).
– Substantive and procedural requirements are stringent in employee dismissals (Art. 297, Labor Code).
– Employee testimony on unrefuted employment shown in records (pay, tasks) strengthen claims of regular employment.
Historical Background:
– The case underlines employment security principles in the Philippines, emphasizing workers’ rights to due process amid common probationary misuse reconciling labor market fluidity with statutory employee protections.
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