Cathay Pacific Airways, Limited vs. Marin

A probationary employee may be validly denied regular employment on the ground of unsatisfactory performance where the employer made the reasonable standards known to him at the time of engagement and gave him every opportunity to improve, even if written memoranda and copies of the assessment reports were not furnished, since the employee's attention was verbally called and the matter discussed with him.

Cathay Pacific Airways, Ltd. is an international airline that engaged Philip Luis F. Marin as a Reservations Officer on a probationary basis. Marin had previously worked for Saudia Airlines as a ticketing agent. The dispute is governed by Article 281 of the Labor Code, which permits an employer to terminate a probationary employee either for a just cause or upon the employee's failure to qualify as a regular employee in accordance with reasonable standards made known to him by the employer at the time of his engagement.

Cathay Pacific Airways, Ltd. hired Philip Luis F. Marin as a Reservations Officer. In a letter dated March 30, 1992, Country Manager (Philippines) Peter W. Foster confirmed Marin's appointment effective April 6, 1992 for a probationary period of six months, at a monthly salary of P5,334.00, including holidays and rest days, with a promise of a salary review upon satisfactory completion of the probationary period. The letter stated that Cathay reserved the right to "terminate [Marin's] services during the probationary period if [his] performance proves to be unsatisfactory, in which case, [he] will receive the salary due [him] at the time of the termination of [his] services," and that Marin would be "reconfirmed as a member of [the] regular staff upon completion of the probationary period."

As a reservation officer, Marin was tasked to book passengers, answer queries related to their itinerary in the telesales area, and respond to telexes from one port to another. He was prohibited from receiving or making personal calls in the telesales area and had to use the lounge during coffee breaks, there being a separate room and telephone for personal calls. The House Rules of the Reservation Department provided that breaks shall be taken only in the Staff Room and/or the Staff Lounge, that personal calls may be done only during break time and only through a specified telephone number, that taking or making personal calls is strictly prohibited during an employee's tour of duty or company time, that taking personal calls from the Automatic Call Distribution System or business lines is strictly prohibited at all times unless it is an emergency, that chatting, gossiping or talking noisily in the work areas at all times are strictly prohibited, and that no employee shall leave his designated work station or area unless with prior knowledge of his supervisors. According to Cathay, Montallana briefed Marin on these standards and expectations on April 13, 1992, after the comptrollers' strike at the airport was settled, and again on July 6, 1992; Marin, for his part, claimed that he was never briefed on the company's employment standards, that he started working without knowing Cathay's rules and regulations, that he was briefed only on April 13, 1992 on the rules regarding phone calls, break time, and others, and that he came to know of the company's rules and regulations on his own initiative.

According to Gozun, Marin's direct supervisor, Marin was caught conversing noisily with co-employee Aileen Lao during office hours, the two being seated back-to-back in a cubicle, and Gozun called their attention and instructed them to go back to work. On June 26, 1992, Gozun again found Marin conversing noisily with a co-employee during office hours, distracting other employees and leaving several calls unattended, and Marin repeated his infractions twice in July 1992 in the telesales area. He was advised by Montallana and Leviste of the results of the staff assessment on July 6, 1992 and told to stop his disruptive conduct at his work station and to mend his ways. In August 1992, Marin was found taking his coffee break at the telesales area, which was used exclusively for receiving and entertaining calls from the public, and was again found chatting noisily with co-employees, disrupting their work; on September 18, 1992, he received personal calls from the telesales area, blocking customers' calls. Leviste testified that on September 17, 1992 she called his attention after seeing him take a personal call on another ACD position, and that on September 18, 1992, while she and Montallana were monitoring the telephone sales area, they saw Marin take personal calls on an ACD position, one of which was a conversation with another Cathay Pacific staff about a trip and about pasalubong.

The staff assessments of Gozun and Montallana dated July 6, 1992 and September 30, 1992, both noted by the Reservations Manager, found Marin's over-all performance below normal or less than normally expected of a reservation officer. Per the July 1992 Staff Assessment Report, while Marin had a good relationship with the staff and was able to accomplish his work, he had been seen chatting noisily with them during office hours, disrupting the operations of the reservation department, and he always left his work area and chatted, leaving calls from the public unanswered. The September 30, 1992 report noted that conductwise he needed a big improvement, that he was noisy and always talking with staff even if there were a lot of calls, that he took his coffee breaks in the work area, disrupted his colleagues who were at work during lunch breaks, was restless and could not stay in the work area during work hours, and needed maturity in tackling daily reservations work. Leviste testified that she briefed Marin on the July 6, 1992 staff assessment in the presence of Montallana, going through the assessment form one by one, telling him his strong points and weak points, and advising him to continue with his good points but to improve on his weak points, particularly his distractive behavior. Marin claimed that while he received copies of some documents which were to be used to evaluate his performance, he was not briefed on what the documents were about; that he never received any memorandum calling his attention to any infraction; and that he was not furnished a copy of the October 14, 1991 Memorandum of M.A. Canizares, as well as the staff assessment made by Gozun. He pointed out that he did not commit any infraction during his probationary employment, that the alleged infractions were mere fabrications and "products of afterthought," and that his performance ratings during the months from May to July 1992 showed that his work performance was good.

On October 2, 1992, Gozun and Montallana submitted to Leviste the staff assessment report of Marin dated September 30, 1992, and after a conference during which they recommended that his probationary employment be terminated, Leviste agreed with the recommendation and informed Marin of the staff assessment, the recommendation of the reservation supervisors, and Cathay's decision not to regularize his employment on account of his "below normal work performance." So as not to prejudice his chance for employment in other companies, Leviste suggested that Marin had the option to voluntarily resign from Cathay, and showed him two letters signed by Foster dated October 2, 1992, one accepting his voluntary resignation and the other terminating his probationary employment. Marin claimed that Leviste gave him two white bond papers and asked him to make a letter of resignation, and that when he refused, he was given another letter terminating his probationary employment allegedly due to unsatisfactory performance. On October 5, 1992, Marin sought advice from Foster, who rejected his request to be extended regular employment and told him that Cathay had given him all the chances and opportunities but that he failed to live up to the standards and expectations of the company; Foster suggested that Marin would be better off resigning voluntarily, and when Marin threatened to take legal action against Cathay, Foster replied that Cathay would then have to take the appropriate legal recourse. Foster never demanded that Marin resign from his employment.

On October 15, 1992, Marin filed a complaint for illegal dismissal against Cathay and Foster before the NLRC, later amended to include claims for 13th month pay, moral and exemplary damages, and attorney's fees. The Labor Arbiter and the NLRC found that Marin had admitted knowing the rules and regulations of the company, that his below-normal performance was evidenced by the two staff assessments of Gozun and Montallana, that the supervisors' testimonies were based on their own personal knowledge and needed no corroboration from Marin's former co-employees, and that Marin had been served written notices and afforded the opportunity to be heard and defend himself.

• Grave Abuse of Discretion: Petitioner argued that respondent failed to prove that the NLRC committed grave abuse of discretion amounting to excess or lack of jurisdiction in issuing its resolutions.
• Finality of Factual Findings: Petitioner maintained that the findings of fact of the Labor Arbiter as affirmed by the NLRC are considered with finality, the NLRC having acquired a unique expertise because its jurisdiction is confined to specific matters, and that both the Labor Arbiter and the NLRC did not give credence to respondent's evidence and relied on petitioner's evidence.
• Compliance with Due Process and Standards: Petitioner argued that, contrary to the CA's findings, the records show respondent was in fact briefed by Gozun and Montallana on the standards to qualify for regularization after the probationary period, and was adequately informed of the basis of the termination, conformably with Rule 28, Department Order No. 9, Series of 1997 of the DOLE, and that he was served a copy of Foster's October 2, 1992 letter as mandated by Article 281 of the Labor Code.
• Good Faith and Graceful Exit: Petitioner insisted that it did not merely inform respondent of its decision not to extend regular employment on account of his below-normal performance; Leviste and Foster went out of their way to suggest that he voluntarily resign so that his chances of employment in other companies would not be adversely affected.

• Grave Abuse of Discretion: Respondent averred that the NLRC committed grave abuse of discretion amounting to excess of jurisdiction when it upheld the Labor Arbiter's finding that he was furnished a written notice apprising him of the particular acts or omissions for which his dismissal was sought, when nothing in the records would support such a declaration; when it declared that he was afforded due hearing when nothing in the records would support such a conclusion; and when it declared that he was briefed of the standards he had to meet to be extended regular employment when documentary and testimonial evidence would show that there was no such formal briefing.
• Speculation and Conjecture: Respondent maintained that the findings and conclusion of the Labor Arbiter and NLRC were based on surmises, speculations and conjectures.
• Documents Received: Respondent insisted that the only documents he received from Cathay related to his employment were the Employment Contract dated March 30, 1992, the CX Reservations Update 1992, the Minutes of Reservations Meeting, the Computer Generated Individual Performance Reports, and the Letters (Notices) dated October 2, 1992 of Peter Foster; that even Foster's October 2, 1992 letter did not state whether his performance was below par, and no copy of the staff assessments of Gozun was attached; and that he was not furnished a copy of any memorandum related to his supposed infractions and alleged below-par work performance before his meeting with Leviste on October 2, 1992.
• Afterthought: Respondent posited that the staff assessment reports of Gozun and Montallana were merely the products of afterthoughts of petitioners made only after the termination of his employment.

• Validity of Termination of Probationary Employment: Whether Marin's probationary employment was validly terminated on the ground of unsatisfactory performance.
• Due Process and Notice of Standards: Whether Cathay complied with the requirement of making known to Marin the reasonable standards for regularization and with the due process requirements for terminating a probationary employee.
• Finality of Factual Findings: Whether the CA erred in supplanting the factual findings of the Labor Arbiter and the NLRC with its own.

• Validity of Termination of Probationary Employment: Yes. A probationary employee may be terminated when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement, and Marin's unsatisfactory performance was established by the staff assessments and the supervisors' testimonies.
• Due Process and Notice of Standards: Yes. Cathay substantially complied, since Marin was verbally briefed on the standards and his infractions and given every opportunity to improve; written memoranda may be dispensed with for administrative convenience as long as the employee's attention is called and the matter discussed with him.
• Finality of Factual Findings: Yes. The CA erred, as the NLRC's factual findings, supported by substantial evidence, were entitled to respect and finality.

• Validity of Termination of Probationary Employment: Article 281 of the Labor Code provides that the services of an employee 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 at the time of engagement. A probationary employee enjoys only a temporary employment status, not a permanent one, and is terminable anytime as long as the termination is made before the expiration of the six-month probationary period. The employer's power to terminate is subject to three conditions: (1) it must be exercised in accordance with the specific requirements of the contract; (2) the dissatisfaction on the part of the employer must be real and in good faith, not prejudicial so as to violate the contract or the law; and (3) there must be no unlawful discrimination in the dismissal, with the burden of proving just or valid cause resting on the employer. Cathay's decision not to extend regular employment was based on the staff assessment reports of Gozun and Montallana dated July 6, 1992 and September 30, 1992, which found Marin's performance below normal. The reports documented his noisy chatting during office hours, leaving his work area, taking coffee breaks in the telesales area, and receiving personal calls from the ACD lines. Leviste briefed him on the July 6, 1992 assessment and advised him to improve, but he persisted. The supervisors' testimonies were positive and categorical, made under oath, and Marin failed to show any ill motive on their part. Following Manlimos vs. NLRC and Colegio de San Agustin vs. NLRC, the SC agreed with the Labor Arbiter and NLRC that Marin's employment was not terminated during the probationary period but that he was simply not extended regular employment on account of unsatisfactory performance; the contract merely expired and there was no illegal dismissal.

• Due Process and Notice of Standards: The employer must make known to the probationary employee the reasonable standards for regularization at the time of engagement, and due process requires notice and hearing. Under the October 14, 1991 Memorandum of M.A. Canizares, however, written memoranda may be dispensed with for administrative convenience, but the employee's attention should be called at all times and the matter discussed with the employee concerned. Under Aberdeen Court, Inc. vs. Agustin, Jr., the standards requirement 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. Marin was briefed by Montallana on April 13, 1992 on the rules and regulations and the work expected of him, and again on July 6, 1992. Leviste briefed him on the July 6, 1992 staff assessment in the presence of Montallana, going through the assessment form one by one and advising him to improve on his weak points. While he was not furnished with the pink-colored set of regulations or copies of the staff assessment reports, he was briefed on their contents and admitted receiving copies of documents used to evaluate his performance. He was even allowed to confer with and appeal to Foster. His claim that the infractions were fabrications had no factual basis, and he failed to show ill motive on the part of the supervisors. Cathay therefore substantially complied with due process and the standards requirement.

• Finality of Factual Findings: The findings of fact of the Labor Arbiter, affirmed by the NLRC, are generally accorded respect and finality, especially because the NLRC has acquired a unique expertise in matters within its jurisdiction. The CA may not substitute its own factual findings for those of the NLRC absent grave abuse of discretion. The CA reversed the NLRC on the ground that Cathay did not observe the two-notice requirement and that Marin was not briefed on the standards. But the records showed that Marin was briefed and given every opportunity to improve, and that the supervisors' testimonies were based on personal knowledge. The CA's findings were contrary to the evidence on record, and the CA erred in supplanting the NLRC's factual findings.

• Probationary Employment — A probationary employee enjoys only a temporary employment status, not a permanent one, and is terminable anytime as long as the termination is made before the expiration of the six-month probationary period. His employment may be terminated either (1) for a just cause; or (2) when he fails to qualify as a regular employee in accordance with reasonable standards made known to him by the employer at the start of his employment. The SC applied this to uphold Marin's termination.
• Employer's Power to Terminate a Probationary Employee — The power is subject to three conditions: (1) it must be exercised in accordance with the specific requirements of the contract; (2) the dissatisfaction on the part of the employer must be real and in good faith, not prejudicial so as to violate the contract or the law; and (3) there must be no unlawful discrimination in the dismissal. The burden of proving just or valid cause for dismissing an employee rests on the employer. The SC found all three conditions satisfied.
• Due Process in Probationary Employment — Written memoranda may be dispensed with for administrative convenience, but the employee's attention should be called at all times and the matter discussed with the employee concerned. The SC applied this to hold that verbal briefing and discussion sufficed, and that the absence of written memoranda and copies of the assessment reports did not amount to a denial of due process.
• Substantial Compliance with the Standards Requirement — The employer need not furnish the probationary employee with a copy of the written standards where the employee was briefed on their contents and admitted receiving documents used to evaluate his performance. The SC applied this to hold that Cathay complied with the statutory requirement.
• Aberdeen Court Doctrine — The rule on making known the standards 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 SC quoted this doctrine and applied it to Marin, whose infractions violated basic rules of workplace conduct.
• Finality of NLRC Factual Findings — The findings of fact of the Labor Arbiter, affirmed by the NLRC, are generally accorded respect and finality, the NLRC having acquired a unique expertise because its jurisdiction is confined to specific matters. The SC applied this to hold that the CA erred in substituting its own factual findings.

• "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." — Article 281 of the Labor Code, quoted by the SC as the governing rule on probationary employment.
• "The power of the employer to terminate an employee on probation is thus subject to the following conditions: (1) it must be exercised in accordance with the specific requirements of the contract; (2) the dissatisfaction on the part of the employer must be real and in good faith, not prejudicial so as to violate the contract or the law; and (3) there must be no unlawful discrimination in the dismissal. The burden of proving just or valid cause for dismissing an employee rests on the employer." — The SC's formulation of the conditions for validly terminating a probationary employee.
• "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." — Quoted from Aberdeen Court, Inc. vs. Agustin, Jr. and applied to Marin, whose infractions violated basic rules of workplace conduct.
• "Thus, respondent cannot validly claim that he was denied due process simply because he was not given a copy of the September 30, 1992 Staff Assessment Report of Gozun." — The SC's conclusion on the due process issue, holding that verbal briefing and discussion sufficed.

• Secon Philippines, Ltd. vs. NLRC, 377 Phil. 711, 717 (1999) — Followed; cited for the rule that probationary employment may be terminated when the employee fails to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of employment and after due process.
• Manlimos vs. NLRC, G.R. No. 113337, March 2, 1995, 242 SCRA 145, 156 — Followed; cited for the rule that the constitutional protection on the probationary employee ends upon the expiration of the probationary period.
• Colegio de San Agustin vs. NLRC, G.R. No. 87333, September 6, 1991, 201 SCRA 398, 403 — Followed; cited for the rule that if the employee is not given permanent or regular employment on account of unsatisfactory work performance, he cannot be said to have been illegally dismissed; the contract merely expired.
• Aberdeen Court, Inc. vs. Agustin, Jr., G.R. No. 149371, April 13, 2005, 456 SCRA 32 — Quoted and applied; the standards requirement should not exculpate a probationary employee who acts contrary to basic knowledge and common sense.
• De la Cruz, Jr. vs. NLRC, G.R. No. 145417, December 11, 2003, 418 SCRA 226, 236 — Cited; a probationary employee enjoys only a temporary employment status.
• Dusit Hotel Nikko vs. Gatbartos, G.R. No. 161654, May 5, 2006 — Cited; the conditions on the employer's power to terminate a probationary employee.
• Willi Hahn Enterprises vs. Maghuyop, G.R. No. 160348, December 17, 2004, 447 SCRA 349, 354 — Cited; a decision to afford a probationary employee a graceful exit is within the employer's discretion.
• Alcira vs. NLRC, G.R. No. 149859, June 9, 2004, 431 SCRA 508, 514 — Cited; the employer complied with the statutory requirement where the employee received copies of documents used to evaluate his performance.

• Article 281, Labor Code — Provides that probationary employment shall not exceed six months from the date the employee started working, and that the services of an employee 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 at the time of his engagement. The SC applied this as the governing rule and upheld the termination.
• Department Order No. 10, Series of 1997, DOLE — Provides that 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, and that where no standards are made known at that time, the employee shall be deemed a regular employee. Cited in the decision's footnote as the regulatory framework.
• Rule 28, Department Order No. 9, Series of 1997, DOLE — Cited by petitioner as the basis for the termination, which the SC upheld as having been complied with.
• Rules II(c), IV and V, House Rules of the Reservation Department — The company rules violated by Marin: breaks shall be taken only in the Staff Room and/or the Staff Lounge; personal calls may be done only during break time and only through a specified telephone number; taking or making personal calls is strictly prohibited during an employee's tour of duty or company time; taking personal calls from the ACD or business lines is strictly prohibited at all times unless it is an emergency; chatting, gossiping or talking noisily in the work areas at all times are strictly prohibited; and no employee shall leave his designated work station or area unless with prior knowledge of his supervisors. The SC applied these to hold that Marin's conduct constituted violations.