Moral v. Momentum Properties Management Corporation

A probationary employee who fails to meet the reasonable regularization standards made known at the time of engagement may be validly terminated, but the employer must serve a written notice of termination within a reasonable time from the effective date; dismissal effected through text messages instead of the required written notice constitutes a violation of statutory due process warranting the award of nominal damages.

Petitioner Myra M. Moral was hired by respondent Momentum Properties Management Corporation as a probationary Leasing Assistant assigned to Solemare Parksuites, a condominium building in Parañaque City, under the supervision of Leasing Manager Elizabeth Tungol. The Employment Agreement dated 28 June 2013 stipulated a six-month probationary period commencing 26 June 2013 until 26 December 2013, with appraisals scheduled at the third and fifth months of employment. The agreement expressly provided that petitioner's employment could be terminated at any time for cause and that she would be given a notice of employment status before the sixth month. The Labor Code and its Omnibus Implementing Rules prescribe specific procedures for terminating probationary employees who fail to meet regularization standards, requiring a written notice served within a reasonable time from the effective date of termination.

On 26 June 2013, respondent Momentum Properties Management Corporation hired petitioner Myra M. Moral as a probationary Leasing Assistant under an Employment Agreement dated 28 June 2013. The agreement stipulated a six-month probationary period from 26 June 2013 to 26 December 2013, with performance appraisals scheduled at the third and fifth months of employment. Petitioner was assigned to Solemare Parksuites, a condominium building on Bradco Avenue, Parañaque City, to render clerical and secretarial services in the leasing operations of the building, under the supervision of Leasing Manager Elizabeth Tungol. She worked eight hours a day from 9:00 a.m. to 6:00 p.m.

In November 2013, in line with the Employment Agreement, petitioner's overall performance and capacity to meet the demands of her work were assessed by her immediate superiors during the fifth month of her employment. On 29 November 2013, petitioner was asked to report to respondent's head office in Makati City to take Verbal, Non-Verbal, and Numerical Examinations administered by the Human Resources Department. Petitioner garnered below-average scores in these tests. In her PTI-Numerical Examination consisting of 30 items, she obtained a raw score of six, leaving 10 items blank. In her PTI-Verbal Examination consisting of 50 items, she received a raw score of 19. She was likewise asked to write about herself and where she saw herself in the future, and to draft a memorandum for a given situation; both outputs were marked as questionable by the HR Department, with the memorandum found to be peppered with grammatical errors and erasures. In her Performance Appraisal Report, petitioner received below-average ratings in several key results areas, including Contract Management, Basic Financial/Accounting Functions, and Customer Service/Communication Skills, as well as in behavioral factors such as Service Orientation, Communication, Judgment, Risk Control, Process Improvement, and Training. Her overall grade was 1.43, which fell under the rating norm for below average.

Based on these results, HR and Administration Manager Annie Ocampo directed Tungol to advise petitioner to report to the head office to discuss her poor evaluation scores, but petitioner disregarded the request. Tungol was then instructed to talk to petitioner about possibly extending her employment contract and improving her performance during such an extension period. According to respondent, petitioner no longer reported for work as of 27 December 2013. Petitioner, for her part, alleged that on 27 December 2013, she was informed of her dismissal and advised to no longer report for work; upon inquiring about the reason, respondent ignored her query and ceased contact. Petitioner presented text messages she received from Tungol informing her that she should no longer report for work and instructing her to report to the HR Department to process her clearance and backpay. On 7 January 2014, Ocampo prepared a Notice of Absence without Official Leave (NAWOL) requiring petitioner to submit a written explanation within five days from receipt, but the Court of Appeals later found this to be an afterthought, as it was issued five days after petitioner had already been informed of her dismissal. On 13 January 2014, while respondent awaited petitioner's response to various invitations to report to the head office, petitioner filed a Request for Assistance before the NCR Arbitration Branch of the NLRC. After conciliation and mediation efforts failed, the parties submitted their Position Papers, Replies, and Rejoinders, and the case was submitted for resolution.

• Illegal Dismissal: Petitioner maintained that she was illegally dismissed because respondent failed to provide any notice or justifiable cause for severing her employment, in violation of both substantive and procedural due process requirements mandated by law.
• Constructive Dismissal: Petitioner alleged that she was not dismissed on the ground of poor performance but for reasons known only to respondent, which do not constitute just or authorized cause for termination.

• No Dismissal Occurred: Respondent argued that petitioner failed to show through substantial evidence that she was dismissed from work, contending that petitioner simply stopped reporting for work as of 27 December 2013.
• Inadmissibility of Text Messages: Respondent contended that the text messages purportedly from Tungol were not verified or authenticated in accordance with the Rules on Electronic Evidence, and that even if they were from Tungol, they could not be regarded as a formal notice of termination because the authority to terminate resides with the HR Department.
• Validity of Probationary Termination: Respondent averred that petitioner was hired as a probationary employee, was made aware of the evaluation she had to undergo to attain regularization, and failed to comply with the regularization standards made known to her at the time of her engagement, as indicated by her poor ratings in both her performance evaluation and Performance Appraisal Report.

• Validity of Termination: Whether petitioner was illegally dismissed by respondent.
• Procedural Due Process: Whether the manner of petitioner's dismissal complied with the procedural due process requirements for terminating a probationary employee.
• Nominal Damages: Whether petitioner is entitled to nominal damages and, if so, in what amount.

• Validity of Termination: No, the dismissal was not illegal. Petitioner was a probationary employee who failed to meet the regularization standards made known to her at the time of engagement, giving respondent the statutory right to refuse her regularization.
• Procedural Due Process: No, the dismissal was procedurally infirm. The employer terminated petitioner through text messages from her immediate superior instead of the written notice required under Section 2, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code.
• Nominal Damages: Yes, P30,000.00. Because the dismissal process was initiated by an act imputable to the employee—her failure to meet regularization standards—the case is akin to dismissals for just causes, warranting the amount fixed in Agabon vs. NLRC.

• Validity of Termination: A probationary employee is one placed on trial by an employer to determine fitness for permanent employment. The essence of probationary employment lies in the dual purpose of allowing the employer to observe the employee's competency while the employee seeks to prove qualification for regularization. An employer must communicate the regularization standards to the probationary employee at the time of engagement; failure to do so renders the employee a regular employee. In this case, the Employment Agreement dated 28 June 2013 expressly established petitioner's probationary status, set the six-month period, and scheduled appraisals at the third and fifth months. Petitioner was well-aware that her regularization depended on her ability to fulfill the requirements of her position. The evidence showed that petitioner failed to comply with these standards: she received below-average scores in aptitude tests, her written outputs were marked questionable, and her Performance Appraisal Report yielded an overall grade of 1.43, falling under the below-average rating norm. As long as the employer has made known the regularization standards at the time of engagement, the refusal to regularize an employee who fails to meet those standards is within the ambit of the law. Respondent was exercising its statutory hiring prerogative when it refused to hire petitioner on a permanent basis.

• Procedural Due Process: While respondent had the substantive right to terminate petitioner's probationary employment, the manner of dismissal was not in accordance with law. The usual two-notice rule governing terminations for just or authorized causes does not apply to probationary employees terminated for failure to meet regularization standards. Instead, Section 2, Rule I, Book VI, as amended by Department Order No. 147-15, of the Omnibus Rules Implementing the Labor Code provides that it is sufficient that a written notice is served on the employee within a reasonable time from the effective date of termination. The records showed that petitioner's dismissal was effected through a series of text messages from Tungol, her immediate superior, rather than through the mandated written notice. The NAWOL issued by Ocampo on 7 January 2014 was merely an afterthought, issued five days after petitioner had already been informed of her dismissal. The procedural infirmity attending the termination thus warranted the award of nominal damages.

• Nominal Damages: In Agabon vs. NLRC, the Court pronounced that where the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal or render it illegal, but the employer must indemnify the employee for the violation of statutory rights through nominal damages. The payment of nominal damages serves to deter employers from future violations of statutory due process rights and vindicates the fundamental right to due process. Because petitioner's dismissal proceeded from her failure to comply with the standards required for regularization—an act imputable to the employee, akin to dismissals due to just causes under Article 297 of the Labor Code—the Court deemed it appropriate to fix the amount of nominal damages at P30,000.00, consistent with Agabon.

• Probationary Employment and Regularization Standards — A probationary employee is one placed on trial by an employer during which the latter determines whether the former is qualified for permanent employment. The employer must comply with two requirements: (1) communicate the regularization standards to the probationary employee, and (2) make such communication at the time of the employee's engagement. Failure to comply renders the employee a regular employee. The exception is when the job is self-descriptive in nature, such as maids, cooks, drivers, and messengers. In this case, the Employment Agreement satisfied both requirements, and petitioner's failure to meet the communicated standards justified the refusal to regularize.

• Termination Procedure for Probationary Employees — The usual two-notice rule governing terminations for just or authorized causes does not govern the termination of a probationary employee for failure to qualify as a regular employee. Instead, it is sufficient that a written notice is served on the employee within a reasonable time from the effective date of termination, pursuant to Section 2, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code. Dismissal via text messages from an immediate superior does not satisfy this requirement.

• Nominal Damages for Procedural Due Process Violations (Agabon Doctrine) — Where the dismissal is for a just cause, the lack of statutory due process does not nullify the dismissal or render it illegal, but the employer must indemnify the employee with nominal damages. The amount is addressed to the sound discretion of the court, taking into account relevant circumstances. Where the dismissal process is initiated by an act imputable to the employee (akin to just causes), nominal damages of P30,000.00 are appropriate. Where the dismissal is for an authorized cause, the amount is P50,000.00.

• "As long as the employer has made known to the employee the regularization standards at the time of the employee's engagement, the refusal of the former to regularize the latter, by reason of the latter's failure to comply with the regularization standards, is within the ambit of the law." — This passage articulates the controlling rule on the validity of terminating a probationary employee for failure to meet regularization standards, provided the standards were communicated at the time of engagement.

• "With respect to the termination of a probationary employee, a different procedure is applied – the usual two-notice rule does not govern." — This statement distinguishes the procedural requirements for terminating probationary employees from those applicable to regular employees, establishing that a single written notice served within a reasonable time suffices.

• "The violation of the employee's right to statutory due process by the employer warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances." — This formulation from the Court's citation of Agabon vs. NLRC sets the framework for awarding nominal damages where substantive grounds for dismissal exist but procedural due process was violated.

• Agabon vs. National Labor Relations Commission, 485 Phil. 248 (2004) — Controlling precedent on the award of nominal damages for violations of statutory due process in employee dismissals. The Court applied its framework to fix nominal damages at P30,000.00, treating the probationary employee's failure to meet regularization standards as akin to a just-cause dismissal initiated by an act imputable to the employee.

• Abbott Laboratories, Philippines vs. Alcaraz, 714 Phil. 510 (2013) — Followed on the nature of probationary employment, the employer's obligation to communicate regularization standards at the time of engagement, and the distinction in termination procedure for probationary employees (the two-notice rule does not govern).

• Canadian Opportunities Unlimited, Inc. vs. Dalangin, Jr., 681 Phil. 21 (2012) — Cited for the definition of a probationary employee as one placed on trial by an employer during which the latter determines fitness for permanent employment, and the dual purpose of the probationary period.

• Philippine National Oil Company-Energy Development Corporation vs. Buenviaje, 788 Phil. 508 (2016) — Followed on the rule that probationary employment cannot exceed six months and the requirement that the employer inform the employee of reasonable regularization standards at the time of engagement.

• Section 6(d), Rule I, Book VI, Omnibus Rules Implementing the Labor Code (as amended by Department Order No. 147-15) — 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; where no standards are made known, the employee shall be deemed a regular employee. Applied to find that respondent satisfied this requirement through the Employment Agreement.

• Section 2, Rule I, Book VI, Omnibus Rules Implementing the Labor Code (as amended by Department Order No. 147-15) — Governs the procedure for termination of a probationary employee: where termination is due to the employee's failure to meet the employer's standards, it is sufficient that a written notice is served on the employee within a reasonable time from the effective date of termination. Applied to find that dismissal via text messages did not comply with this requirement.

• Article 292(b), Labor Code (as amended by Section 33 of Republic Act No. 10151) — Sets forth the two-notice rule for termination of employment based on just causes. The Court clarified that this provision does not govern the termination of probationary employees for failure to qualify as regular employees.

• Article 297, Labor Code — Defines just causes for termination of employment. The Court analogized the probationary employee's failure to meet regularization standards to dismissals under this article for purposes of fixing the amount of nominal damages at P30,000.00.

Del Castillo, Leonen, and Caguioa, JJ., concurred. Perlas-Bernabe, J., was on official leave.