A' Prime Security Services, Inc. vs. NLRC

An employee who has already attained regular employment status with a previous employer cannot be subjected to a new probationary period when transferred to or absorbed by a sister company or related entity; upon completion of the probationary term, the employee automatically becomes a regular employee who may only be dismissed for just cause and after due process.

• Private respondent Othello C. Moreno worked as a security guard for one year with Sugarland Security Services, Inc. at the U.S. Embassy Building along Roxas Boulevard, Manila.
• On January 30, 1988, he was rehired by petitioner A' Prime Security Services, Inc. (a sister company of Sugarland) and assigned to the same post at the U.S. Embassy.
• Petitioner absorbed Moreno and other security guards from Sugarland when it took over the latter's security contracts with the U.S. Embassy.
• Despite his prior service, Moreno was forced to sign new six-month probationary employment contracts with petitioner.
• On March 17, 1988, Moreno was caught sleeping on post and was issued a memorandum giving him a "last warning."
• On March 25, 1988, he was involved in a quarrel with another security guard that resulted in a near shootout.
• Moreno completed his six-month probationary period on July 27, 1988, having started on January 30, 1988.
• On August 1, 1988, petitioner terminated Moreno's services by letter citing his failure to meet company standards based on behavioral and neuropsychological tests conducted that same day, as well as his prior infractions.
• During his employment, petitioner deducted P20.00 per month from Moreno's salary allegedly for withholding tax without issuing receipts, and paid him P2,187.00 monthly, below the P2,410.17 rate stipulated in the PADPAO memorandum of agreement.
• Petitioner presented a resignation letter from Moreno, but the same was written on company form, contained quitclaim language, and was not acknowledged before a notary public.

• Sugarland Security Services, Inc. and A' Prime Security Services, Inc. are two separate and distinct juridical entities with separate corporate personalities.
• Moreno was hired on a probationary basis on January 30, 1988, and signed an authority to deduct from his salary for any loss or damage caused to client properties.
• Termination was a legitimate exercise of management discretion based on Moreno's inefficiency, ineptness, and below-bar performance during the probationary period, which made him a liability to the company and its client, the U.S. Embassy.
• The termination was justified by Moreno's violations of company rules (sleeping on post and quarreling with a co-worker) and his failure to pass the psychological tests administered at the end of his probationary period.
• The resignation letter submitted by Moreno evidenced his voluntary termination.

• Sugarland is a sister company of A' Prime, and the latter absorbed the former's security contracts and personnel, including Moreno.
• Moreno was already a regular employee with Sugarland prior to his absorption by A' Prime, and there was no legal basis to subject him to a new probationary employment period.
• By completing the six-month probationary period with A' Prime on July 27, 1988, Moreno automatically became a regular employee, making his dismissal on August 1, 1988 illegal.
• The psychological tests were conveniently contrived and conducted only on the day of dismissal, showing premeditated intent to terminate.
• The alleged violations (sleeping on post and quarreling) were first offenses not punishable by dismissal under company rules.
• The deductions for withholding tax were illegal as no receipts were provided.

• Procedural: Whether the National Labor Relations Commission and Labor Arbiter committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that Moreno was illegally dismissed.
• Substantive Issues: Whether Moreno's employment with A' Prime was a continuation of his employment with Sugarland Security Services, Inc. Whether Moreno was a regular or probationary employee at the time of his dismissal. Whether Moreno's dismissal was illegal.

• Procedural: The Court found no grave abuse of discretion on the part of the NLRC or the Labor Arbiter. The petition for certiorari was dismissed for lack of merit.

• Substantive: The Court ruled that Moreno's employment with A' Prime was a continuation of his employment with Sugarland. Petitioner failed to specifically deny the allegations regarding the sister company relationship and the absorption of Sugarland's contracts and personnel before the Labor Arbiter; thus, these material averments were deemed admitted under Section 1, Rule 9 of the Rules of Court. The Court refused to sanction the practice of transferring regular employees to related entities to deprive them of security of tenure.

  The Court held that Moreno became a regular employee upon completion of his six-month probationary period on July 27, 1988. At the time of his dismissal on August 1, 1988, he already enjoyed security of tenure as a regular employee. There was no legal basis to subject him to a new probationary period since he was already a regular employee when absorbed from Sugarland.

  The dismissal was illegal because: (1) the psychological and behavioral tests were conducted on the same day as the dismissal, indicating they were conveniently contrived to justify termination rather than sincerely assess fitness for regularization; (2) the alleged violations (sleeping on post and quarreling) were first offenses under Circular No. 1 of the company, punishable only by warning and suspension, respectively, not dismissal; and (3) Moreno was deprived of the opportunity to be heard before his termination.

• Deemed Admission of Material Averments — Under Section 1, Rule 9 of the Rules of Court and Section 3, Rule I of the Revised Rules of the NLRC, material allegations in a complaint that are not specifically denied are deemed admitted. This principle was applied to establish the sister company relationship and absorption of employees.
• Automatic Conversion to Regular Employment — Completion of the probationary period automatically converts the employee's status to regular employment by operation of law, entitling the employee to security of tenure.
• Non-Circumvention of Security of Tenure — Employers cannot defeat the rights of regular employees by transferring them to sister companies or related entities with identical owners to subject them to new probationary periods; courts will pierce the corporate veil to prevent circumvention of labor laws.
• Progressive Discipline — Company disciplinary rules providing for graduated penalties (warning for first offense, suspension for second, dismissal for third) must be strictly followed; first offenses cannot be punished by dismissal unless the rules expressly so provide.
• Good Faith Requirement in Probationary Evaluation — Psychological or performance tests administered to justify non-regularization must be conducted in good faith and at a time that genuinely allows for evaluation of the employee's fitness, not conveniently contrived on the day of dismissal.

• "The Court cannot sanction the practice of some companies which, shortly after a worker has become a regular employee, effects the transfer of the same employee to another entity whose owners are the same, or identical, in order to deprive subject employee of the benefits and protection he is entitled to under the law."
• "There is no basis for subjecting private respondent to a new probationary or temporary employment on January 30, 1988, considering that he was already a regular employee when he was absorbed by A' Prime from Sugarland, its sister company."
• "Were respondent-appellant really sincere in its motive of fully screening its employees before they could be regularized it should have done so, prior to complainant's hiring or even after the commission of complainant's infractions of the company rules adverted to by appellant way back in March 1988, when complainant was only about two (2) months on probation."
• "As the infractions of Sections VIII and IX of Circular No. 1 by private respondent were first offenses, they were not punishable by dismissal."

• Section 1, Rule 9, Rules of Court — Provides that material averments in a complaint, other than those as to the amount of damage, shall be deemed admitted when not specifically denied; cited to establish that petitioner's failure to deny the sister company relationship constituted an admission.
• Section 3, Rule I, Revised Rules of the NLRC — Provides for the suppletory application of the Rules of Court and prevailing jurisprudence in labor cases.
• Article 281 (now Article 296) of the Labor Code — Governs probationary employment; implied in the Court's discussion regarding the automatic conversion to regular status upon completion of the probationary period.

• Melo, Vitug, Panganiban, and Gonzaga-Reyes, JJ. — Joined in the unanimous decision without issuing separate concurring opinions.