ABERDEEN COURT, INC., AND RICHARD NG, PETITIONERS, VS. MATEO C. AGUSTIN JR., RESPONDENT.

Aberdeen Court versus Agustin

The Case

This is a labor case about a probationary employee who was let go before his six months were up. Aberdeen Court, Incorporated, and its officer Richard Ng, are the petitioners; Mateo Agustin Junior is the respondent. Agustin was hired as an electrical engineer on a six-month probationary basis and was dismissed after a dispute over a technical report on exhaust air balancing. The case matters because it gathers in one place the rules every reviewee must know on probationary employment: the two grounds for lawful termination under Article 281 of the Labor Code, the employer's duty to make known the reasonable standards for regularization at the time of engagement, the burden of proof that rests on the employer, and the award of nominal damages where a dismissal for just cause is done without the required notice.

Procedural History

Agustin filed a complaint for illegal dismissal with the labor arbiter. The labor arbiter ruled in his favor, declaring that he had been illegally dismissed and ordering Aberdeen Court to reinstate him to his former position without loss of seniority rights and to pay him backwages of 175,933.33 pesos. Aberdeen Court appealed to the National Labor Relations Commission. The Commission reversed the labor arbiter and dismissed the complaint for lack of merit. Agustin then went up to the Court of Appeals on a petition for certiorari under Rule 65. The Court of Appeals granted the petition, set aside the Commission's decision, and reinstated the labor arbiter's decision. Aberdeen Court moved for reconsideration, which the Court of Appeals denied. Aberdeen Court then came to the Supreme Court on a petition for review on certiorari under Rule 45.

Facts

On September 16, 1996, Aberdeen Court employed Agustin for the purpose of troubleshooting the electrical problems in its establishment. He was engaged on a six-month probationary basis. His employment contract provided that if management found his performance unsatisfactory at any time during the probationary period, management could terminate his services at any time, even before the end of the agreed six-month period.

On January 12 and 13, 1997, personnel of Centigrade Industries, Incorporated, took readings of the exhaust air balancing at the fifth and sixth floors of Aberdeen Court's premises. Aberdeen Court claimed that Agustin was placed in charge of the undertaking. Agustin claimed that Engineer Abad merely asked him to accompany the personnel and show them the location of the exhaust air outlets. He pointed out that exhaust air balancing falls under heating, ventilating and air conditioning work, which is the field of mechanical engineers, and that he was an electrical engineer. After the Centigrade personnel finished, they submitted their report to Agustin, and he signed it. Aberdeen Court alleged that he accepted and signed the report without verifying its correctness, and that Engineer Abad later found that four rooms on the fifth floor and five rooms on the sixth floor had been done incorrectly. Agustin said that he brought the report to Engineer Abad, who directed him to sign it because he had been present during the reading, and that he signed merely to acknowledge receipt of a copy.

The parties also differed on what happened on January 15, 1997. Aberdeen Court said that management confronted Agustin, that he ignored management and left the company, and that this made it impossible to send him any further notice. Agustin said that he was summarily dismissed that afternoon, that he was told at the personnel office that his services were being terminated, and that he was offered about 4,000 pesos in exchange for signing documents stating that the company had no further liability and that he was voluntarily resigning. He refused to sign. The next day he sought help from the Department of Labor and Employment, was told to report for work since no notice of termination had been served on him, and reported for work, but was told he could no longer do so. Within that same month he filed his complaint for illegal dismissal.

Issues

• Whether or not the Court of Appeals erred in reversing the factual findings of the National Labor Relations Commission.
• Whether or not the reinstatement of a probationary employee beyond the six-month probationary period amounts to regularizing his employment.
• Whether or not Agustin was validly dismissed, and if so, what the consequences are where the employer failed to observe due process.

Applicable Provisions

Article 281 of the Labor Code provides:

Article 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 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.

This is the provision that supplies the two grounds for terminating a probationary employee and the requirement that the standards for regularization be made known at the time of engagement.

Book Six, Rule One, Section Six of the Implementing Rules of the Labor Code provides:

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

(c) The services of an employee who has been engaged on probationary basis may be terminated only for a just cause, when he fails to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer.

(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.

This rule spells out the employer's duty to communicate the standards at the time of engagement, and the consequence that an employee is deemed regular where no standards are made known.

Ruling

On the first issue, the Court held that the factual findings of the National Labor Relations Commission are generally accorded respect and even finality, but this rule does not shield a decision that is contrary to law or to the evidence. The Court examined the record and agreed with the Commission's assessment of Agustin's conduct. The Court held that the rule requiring standards to be made known should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met. The Court quoted the Commission's finding that prudence and due diligence required Agustin not to readily accept the report handed to him, and that by his omission and lack of concern he showed himself undeserving of continued employment.

On the second issue, the Court held that the Court of Appeals erred in reinstating Agustin, since he was validly dismissed for just cause. The Court did not sustain the argument that reinstatement would regularize him; rather, it set aside the reinstatement altogether because the dismissal was for cause.

On the third issue, the Court held that although the dismissal was for just cause, Aberdeen Court violated due process by not affording Agustin the required notice. Following its ruling in Agabon versus the National Labor Relations Commission, the Court held that an employer who dismisses an employee for just cause but does so without notice is liable for nominal damages in the amount of 30,000 pesos.

Doctrine

A probationary employee may be terminated either for a just cause or for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement. The employer bears the burden of proving the validity of the dismissal, and this burden is not lessened by the fact that the employee is still on probation, because probationary employees are protected by the constitutional guarantee of security of tenure.

The requirement that standards be made known at the time of engagement cannot be used to excuse an employee who acts contrary to basic knowledge and common sense, for in such a case there is no need to spell out a policy or standard to be met.

Even where the dismissal is for just cause, the employer must observe due process. A valid dismissal presupposes not only a valid cause but also a valid manner of dismissal, and failure to give the required notice makes the employer liable for nominal damages of 30,000 pesos.

Disposition

The petition was partly granted: Agustin was declared dismissed for just cause, and Aberdeen Court and Richard Ng were ordered to pay him nominal damages of 30,000 pesos, with no costs.

Remember This

The one line to memorize is that a dismissal for just cause but without notice is valid as to the cause yet exposes the employer to nominal damages of 30,000 pesos. Examiners use this case to test the two grounds for terminating probationary employment, the employer's duty to communicate reasonable standards at the time of engagement, and the due process requirement even in a dismissal for cause.