Holiday Inn Manila and/or Hubert Liner and Baby Disquitado vs. NLRC and Elena Honasan

Probationary employment cannot exceed six months from the date the employee started working; where an employer imposes a double probation that extends beyond six months, the employee becomes a regular employee entitled to security of tenure, and any subsequent dismissal must be for just cause and with due process.

Holiday Inn Manila, Hubert Liner, and Baby Disquitado were the employer-petitioners; Elena Honasan was the private respondent. The Labor Code limits probationary employment to six months under Article 281 and guarantees security of tenure to regular employees under Article 279, with removal of regular employees governed by Articles 282 to 284 and Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code.

Elena Honasan applied for employment with Holiday Inn and on April 15, 1991 was accepted for on-the-job training as a telephone operator for a period of three weeks. For her services, she received food and transportation allowance.

After completing her training, she was employed on a probationary basis for a period of six months ending November 12, 1991. Her employment contract stipulated that the Hotel could terminate her probationary employment at any time prior to the expiration of the six-month period in the event of her failure (a) to learn or progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions and orders of her superiors; or (c) to perform her duties according to hotel standards.

On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn notified her of her dismissal, on the ground that her performance had not come up to the standards of the Hotel.

Through counsel, Honasan filed a complaint for illegal dismissal, claiming that she was already a regular employee at the time of her separation and so was entitled to full security of tenure. The Labor Arbiter dismissed the complaint on April 22, 1992, holding that her separation was justified under Article 281 of the Labor Code. The NLRC reversed, holding that Honasan had become a regular employee and so could not be dismissed as a probationer.

The Supreme Court's factual analysis noted that Honasan was placed on probation twice: first during her three-week on-the-job training, and next during another period of six months. She was under observation during her three-week on-the-job training; if her services proved unsatisfactory then, she could have been dropped as early as during that period, but she was not. Even if the probation did not end with the three-week period of on-the-job training, that period should be included in the stipulated six-month period of probation. From April 15, 1991, six months ended October 15, 1991, so she had become a regular employee by that date.

• Timeliness of Appeal: Petitioners argued that the NLRC should not have entertained Honasan's appeal because it was filed out of time; they claimed she filed it on the thirteenth.
• Probationary Status: Petitioners maintained that Honasan was still a probationary employee when she was dismissed four days before the expiration of the probation period, and thus could be terminated for failure to meet hotel standards under Article 281.

• Regular Employment: Honasan claimed that she was already a regular employee at the time of her separation and so was entitled to full security of tenure.
• Illegal Dismissal: Honasan filed a complaint for illegal dismissal, asserting that her separation from Holiday Inn was unlawful.

• Timeliness of Appeal: Whether the NLRC erred in entertaining Honasan's appeal despite petitioners' claim that it was filed out of time.
• Regular Employment / Probation: Whether Honasan had become a regular employee at the time of her dismissal, considering the three-week on-the-job training and the six-month probationary period.
• Illegal Dismissal / Due Process: Whether Honasan's dismissal was illegal because it was without just cause and without the procedure for removing regular employees.

• Timeliness of Appeal: No. The appeal was timely. Notices to a party must be coursed through counsel of record, and the reglementary period runs from counsel's receipt. Honasan's counsel received the Labor Arbiter's decision on May 18, 1992, while the appeal had already been filed on May 8, 1992; even if filed on the thirteenth, it was still timely.
• Regular Employment / Probation: Yes. Honasan became a regular employee. Probationary employment cannot exceed six months from the date the employee started working. The three-week on-the-job training and the six-month probation constituted a double probation exceeding six months; even counting from April 15, 1991, six months ended October 15, 1991.
• Illegal Dismissal / Due Process: Yes. The dismissal was illegal. As a regular employee, Honasan could be dismissed only for just cause or authorized cause under Article 279, with the grounds in Articles 282 to 284 and the procedure in Rule XIV, Book V. None was observed.

• Timeliness of Appeal: All notices which a party is entitled to receive must be coursed through his counsel of record, and the running of the reglementary period is reckoned from the date of receipt of the judgment by the counsel of the appellant. Notice to the appellant himself is not sufficient notice. Honasan's counsel received the Labor Arbiter's decision on May 18, 1992, but the appeal had already been filed by Honasan herself on May 8, 1992. Even accepting petitioners' claim that it was filed on the thirteenth, the appeal was still filed on time, in fact even before the start of the reglementary period.
• Regular Employment / Probation: Article 281 limits probationary employment to six months from the date the employee started working. Honasan was placed on probation twice: first during her on-the-job training for three weeks, and next during another period of six months. Her probation clearly exceeded the period of six months prescribed by Article 281. Probation is the period during which the employer may determine if the employee is qualified for possible inclusion in the regular force. The three-week on-the-job training was such a period; when her services were continued after this training, petitioners in effect recognized that she had passed probation and was qualified to be a regular employee. Even if the probation did not end with the three-week period of on-the-job training, there was no reason why that period should not be included in the stipulated six-month period of probation. From April 15, 1991, six months ended October 15, 1991, so she had become a regular employee of Holiday Inn and acquired full security of tenure as of October 15, 1991.
• Illegal Dismissal / Due Process: As a regular employee, Honasan could no longer be summarily separated on the ground invoked by petitioners. Article 279 provides that in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by the Labor Code. The grounds for the removal of a regular employee are enumerated in Articles 282, 283, and 284, and the procedure for such removal is prescribed in Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code. These rules were not observed: Honasan was simply told that her services were being terminated because they were found to be unsatisfactory; no administrative investigation of any kind was undertaken to justify this ground; she was not even accorded prior notice, let alone a chance to be heard. The Hotel's system of double probation was a transparent scheme to circumvent the plain mandate of the law and make it easier for it to dismiss its employees even after they shall have already passed probation. Having failed to terminate her during her period of probation, petitioners could dismiss her only upon proof of any of the legal grounds for the separation of regular employees, to be established according to the prescribed procedure. The Court also noted the constitutional policy to give the utmost protection to the working class against such maneuvers.

• Probationary Employment under Article 281 — Probationary employment shall not exceed six months from the date the employee started working, unless covered by an apprenticeship agreement stipulating a longer period. 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 by the employer at the time of engagement. An employee allowed to work after the probationary period is considered a regular employee. The Court applied this by treating the three-week on-the-job training as part of probation and holding that the double probation exceeded six months, making Honasan regular.
• Security of Tenure under Article 279 — In regular employment, the employer cannot terminate the employee except for just cause or when authorized by the Labor Code. An unjustly dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and other benefits or their monetary equivalent. Because Honasan had become regular, her summary dismissal for unsatisfactory performance was illegal, and the NLRC's reinstatement and backwage order was upheld.
• Procedural Due Process in Dismissal — The grounds for removing a regular employee are enumerated in Articles 282, 283, and 284 of the Labor Code, and the procedure is prescribed in Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code. The Court found these rules unobserved because Honasan was simply told her services were unsatisfactory, without administrative investigation, prior notice, or a chance to be heard.
• Employer's Hiring Prerogative vs. Dismissal — The employer has absolute discretion in hiring according to standards of competence and probity, but once hired, employees are entitled to the protection of the law even during probation and more so after becoming regular. The employer does not have the same freedom in dismissal as in hiring. The Court used this to reject the Hotel's attempt to dismiss a probationer beyond the statutory period.
• Double Probation as Circumvention — A scheme of placing an employee on probation twice—first through on-the-job training and then through a formal probationary period—that extends beyond the six-month statutory limit is a transparent scheme to circumvent the law and makes it easier to dismiss employees after they have passed probation. The Court characterized Holiday Inn's system as such and held it could not defeat Honasan's regular status.

• "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 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. An employee who is allowed to work after a probationary period shall be considered a regular employee." — This is the statutory basis for the six-month limit and for Honasan's regular status.
• "Probation is the period during which the employer may determine if the employee is qualified for possible inclusion in the regular force. In the case at bar, the period was for three weeks, during Honasan's on-the-job training. When her services were continued after this training, the petitioners in effect recognized that she had passed probation and was qualified to be a regular employee." — This states the ratio for treating the on-the-job training as probation and for finding that Honasan had passed it.
• "We find in the Hotel's system of double probation a transparent scheme to circumvent the plain mandate of the law and make it easier for it to dismiss its employees even after they shall have already passed probation." — This is the Court's canonical characterization of the employer's double probation scheme as a circumvention of Article 281.

• Ruiz vs. Court of Appeals, 201 SCRA 577 (1991) — Cited for the rule that notices a party is entitled to receive must be coursed through counsel of record, and the reglementary period is reckoned from receipt by counsel.
• Zoleta vs. Drilon, 166 SCRA 548 (1988) — Cited for the rule that notice to the appellant himself is not sufficient notice.

• Article 281, Labor Code — Probationary employment shall not exceed six months from the date the employee started working, unless covered by an apprenticeship agreement stipulating a longer period; services may be terminated for just cause or failure to qualify under reasonable standards made known at engagement; an employee allowed to work after probation is regular. Applied because the double probation exceeded six months, making Honasan regular.
• Article 279, Labor Code — Security of tenure: in regular employment, the employer cannot terminate except for just cause or authorized cause; an unjustly dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, allowances, and other benefits or their monetary equivalent. Applied because Honasan was a regular employee dismissed without just cause or procedure.
• Articles 282, 283, and 284, Labor Code — Grounds for removal of a regular employee. Applied because none of these grounds was established, and the required procedure was not followed.
• Rule XIV, Book V, Omnibus Rules Implementing the Labor Code — Procedure for removal of regular employees. Applied because no administrative investigation, prior notice, or hearing was conducted before Honasan's dismissal.

Griño-Aquino, Davide, Jr., Bellosillo and Quiason, JJ., concur.