Aberdeen Court, Inc. and Ng vs. Agustin

A probationary employee may be dismissed for just cause even without prior notice of the reasonable standards for regularization, but the employer must still observe due process by affording the employee the required notice; failure to do so renders the employer liable for nominal damages. The two grounds for terminating a probationary employee under Article 281 of the Labor Code are: (a) just cause, and (b) failure to qualify as a regular employee in accordance with reasonable standards made known to the employee at the time of engagement.

Aberdeen Court, Inc. (Aberdeen) is a corporation that employed Mateo C. Agustin Jr. as an electrical engineer on a six-month probationary basis beginning September 16, 1996, for the purpose of trouble shooting electrical problems in its establishment. The employment contract contained a stipulation allowing management to terminate Agustin's services at any time during the probationary period if his performance was considered unsatisfactory. The case involves the interplay between Article 281 of the Labor Code governing probationary employment and the due process requirements for valid termination of employment.

On September 16, 1996, Aberdeen Court, Inc. employed Mateo C. Agustin Jr. as an electrical engineer on a six-month probationary basis to trouble shoot electrical problems in the company's establishment. The employment contract provided that management could terminate his services at any time during the probationary period if his performance was considered unsatisfactory.

On January 12 and 13, 1997, personnel of Centigrade Industries, Inc. performed a reading of the exhaust air balancing at the fifth and sixth floors of Aberdeen's premises. Petitioners claimed that Agustin was placed in charge of the undertaking. Agustin, however, asserted that Engr. Abad merely requested him to accompany the Centigrade personnel to show the location of the exhaust air outlet, since the reading of exhaust air balancing falls under heating, ventilating, and air conditioning (HVAC) work, which is within the realm of mechanical engineers, not electrical engineers. After the Centigrade personnel finished their job, they submitted their report to Agustin. Petitioners alleged that Agustin accepted and signed the report without verifying its correctness; Engr. Abad later checked the work and found that four rooms in the fifth floor and five rooms in the sixth floor were incorrectly done. Agustin, for his part, claimed that he took the report to Engr. Abad, who directed him to sign it because Agustin was present when the reading was conducted; Agustin claimed he signed merely to evidence receipt of a copy of the report.

The parties also differed on the events of January 15, 1997. Petitioners claimed that Aberdeen management confronted Agustin with his failure to check the job and asked him to explain his side, but Agustin allegedly ignored management and left the company. Agustin, however, claimed that he was summarily dismissed that afternoon when Ms. Lani Carlos of the Personnel Department informed him that Aberdeen was terminating his services as electrical engineer, offering him two weeks' salary on condition that he sign documents stating the company had no more liability and that he was voluntarily resigning. Agustin refused to sign. The following day, January 16, 1997, Agustin sought assistance from the Department of Labor and Employment (DOLE), which told him to report for work since no notice of termination had been served. When Agustin reported for work, Ms. Carlos told him he could not do so.

Within the same month, Agustin filed a complaint for illegal dismissal, docketed as NLRC NCR Case No. 00-01-00466-97. The labor arbiter rendered judgment in favor of Agustin, declaring illegal dismissal and ordering reinstatement and backwages of ₱175,933.33. Petitioners appealed to the NLRC, which reversed the labor arbiter's decision. Agustin then filed a petition for certiorari with the Court of Appeals, which ruled in his favor and reinstated the labor arbiter's decision. Petitioners filed a motion for reconsideration, which was denied, prompting them to file the instant petition with the Supreme Court.

• NLRC Findings of Fact: Petitioners argued that findings of fact of the NLRC, except where there is grave abuse of discretion committed by it, are conclusive on the Supreme Court, citing National Union of Workers in Hotels, Restaurants and Allied Industries vs. NLRC, Suarez vs. NLRC, and Travelaire & Tours Corporation vs. NLRC.

• Regularization of Probationary Employee: Petitioners contended that the Court of Appeals had no legal right to regularize the employment of a probationary employee without assessing the employee's performance, and that ordering reinstatement beyond March 15, 1997 (six months from commencement) resulted in regularizing Agustin's employment.

• Limitation on Backwages: Petitioners argued that assuming reinstatement was legal, backwages should not go beyond one month from submission for decision (April 30, 1997).

• Just Cause for Termination: Petitioners claimed that Agustin was terminated because he failed to qualify as a regular employee, and that the rule requiring employers to make known reasonable standards should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, citing the NLRC's finding that prudence and due diligence required Agustin to verify the report himself.

• Constructive Dismissal: Agustin argued that he was constructively dismissed, although the Court of Appeals noted the erroneous choice of terminology did not preclude a finding of illegal dismissal.

• Immediate Filing of Complaint: Agustin's immediate recourse to the DOLE and subsequent filing of the complaint for illegal dismissal was inconsistent with abandonment, shifting the burden of proof to the employer to establish the validity of the dismissal.

• Lack of Just Cause: Agustin maintained that exhaust air balancing was neither covered by his duties nor competence as an electrical engineer, and that the offense, if any, was his first committed offense, devoid of malice, and not his sole responsibility.

• Failure to Show Reasonable Standards: Agustin argued that petitioners failed to show the reasonable standards for regularization that should have been made known to him at the time of engagement, as required by Article 281 of the Labor Code.

• Lack of Due Process: Agustin contended that petitioners failed to show compliance with due process requirements, as there was no notice of termination sent to him, and a valid dismissal presupposes not only the validity of its cause but also the validity of the manner by which dismissal is done.

• Just Cause for Dismissal: Whether Agustin's dismissal was for just cause despite the employer's failure to make known the reasonable standards for regularization at the time of engagement.

• Due Process in Dismissal: Whether petitioners violated due process in dismissing Agustin by not affording him the required notice.

• Just Cause for Dismissal: Yes. Agustin was dismissed for just cause. The rule requiring employers to make known reasonable standards for regularization 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.

• Due Process in Dismissal: Yes, petitioners violated due process. 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, pursuant to Agabon vs. NLRC.

• Just Cause for Dismissal: The Court agreed with the NLRC's finding that even if technically the reading of exhaust air balancing was not within the realm of Agustin's expertise as an electrical engineer, prudence and due diligence imposed upon him the duty not to readily accept the report handed to him by the workers of Centigrade Industries. Required of Agustin was that he himself proceed to the work area, inquire from the workers as to any difficulties encountered, problems fixed, and otherwise observe for himself the progress and/or condition/quality of the work performed. The Court found it hard to believe that Agustin would just have been made to sign the report to signify his presence, noting that by saying so, Agustin was inadvertently degrading himself from an electrical engineer to a mere watchdog. By his omission, lack of concern, and grasp of basic knowledge and common sense, Agustin showed himself to be undeserving of continued employment from probationary employee to regular employee. The Court distinguished this situation from cases like Servidad vs. NLRC and Secon Philippines Ltd. vs. NLRC, where the nature of the job required specific standards to be communicated; here, the conduct in question was contrary to basic knowledge and common sense, requiring no spelled-out policy or standard.

• Due Process in Dismissal: The Court found that petitioners violated due process in dismissing Agustin by not affording him the required notice. Citing Agabon vs. NLRC, 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. The dismissal was for just cause, but the procedural defect of failing to provide notice warranted the award of nominal damages.

• Just Cause for Dismissal of Probationary Employee — Under Article 281 of the Labor Code, a probationary employee may be terminated either (a) for just cause, or (b) when the employee fails to qualify as a regular employee in accordance with reasonable standards made known to the employer at the time of engagement. The Court applied this doctrine by holding that the requirement of making known reasonable standards does not apply where the employee's conduct is contrary to basic knowledge and common sense, requiring no spelled-out policy or standard.

• Due Process in Termination of Employment — A valid dismissal presupposes not only the validity of its cause but also the validity of the manner by which dismissal is done. An employer who dismisses an employee for just cause but fails to observe due process by not affording the required notice is liable for nominal damages. The Court applied this doctrine in awarding ₱30,000 nominal damages to Agustin.

• Nominal Damages for Procedurally Defective Dismissal — 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. This doctrine, established in Agabon vs. NLRC, was applied to the present case where petitioners had just cause for dismissal but violated due process.

• "The above rule, however, 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." — This passage articulates the Court's limitation on the requirement of making known reasonable standards for regularization, holding that basic knowledge and common sense need not be spelled out as standards.

• "It bears stressing that even if technically the reading of air exhaust balancing is not within the realm of expertise of the complainant, still it ought not to be missed that prudence and due diligence imposed upon him not to readily accept the report handed to him by the workers of Centigrade Industries." — This quotation from the NLRC, adopted by the Court, establishes the standard of prudence and due diligence expected of a probationary employee even in tasks outside his technical expertise.

• "Nevertheless, it appears that petitioners violated due process in the dismissal of respondent, by not affording him the required notice. As this Court held in Agabon, et al. v. NLRC, et al., 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." — This passage states the controlling doctrine on the award of nominal damages for procedurally defective dismissals, even where just cause exists.

• Agabon vs. NLRC, G.R. No. 158693, November 17, 2004 — Controlling precedent establishing that an employer who dismisses an employee for just cause but without notice is liable for nominal damages of ₱30,000. The Court applied this doctrine directly to the present case.

• Servidad vs. NLRC, G.R. No. 128682, March 18, 1999, 305 SCRA 49 — Cited to illustrate the requirement that employees be informed of reasonable standards for regularization at the start of employment; distinguished in the present case because the conduct involved was contrary to basic knowledge and common sense.

• Secon Philippines Ltd. vs. NLRC, G.R. No. 97399, December 3, 1999, 319 SCRA 685 — Cited to show that dismissal is illegal where the employer does not prove the employee was properly apprised of job standards; distinguished on the same ground as Servidad.

• Article 281, Labor Code of the Philippines — Governs probationary employment, providing that probationary employment shall not exceed six months, and that the services of a probationary employee may be terminated for just cause or when the employee fails to qualify as a regular employee in accordance with reasonable standards made known to the employee at the time of engagement. The Court applied this provision to determine that Agustin's dismissal was for just cause.

• Book VI, Rule I, Section 6, Implementing Rules of the Labor Code (D.O. No. 10, Series of 1997) — Provides the rules on probationary employment, including the requirement that employers make known to the employee the standards for qualifying as a regular employee at the time of engagement, and that where no standards are made known, the employee shall be deemed a regular employee. The Court noted this rule but held it should not exculpate a probationary employee who acts contrary to basic knowledge and common sense.

Davide, Jr., C.J. (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ., concurred.