Skyway O & M Corporation vs. Reinante

A probationary employee's dismissal based on a performance appraisal that was deliberately rendered false and unmeritorious constitutes illegal dismissal, and a compromise agreement that lacks reasonable consideration and a meeting of the minds cannot operate as a valid waiver or quitclaim to bar the employee's claim for illegal dismissal and monetary benefits.

Petitioner Skyway O & M Corporation employed respondent Wilfredo M. Reinante as Intelligence Officer, first under a fixed-term contract from June 26, 2008 to November 25, 2008, and thereafter as a probationary employee starting November 26, 2008. During the probationary period, Wilfredo discovered that Skyway had hired and promoted unqualified security officers, prompting him to file administrative complaints against his supervisor Augusto Alcantara and the company. The dispute centers on whether Wilfredo's termination on the last day of his probationary period—predicated on a below-average performance rating—was a valid exercise of the employer's right to terminate a probationary employee for failure to meet reasonable standards, or a retaliatory and bad-faith dismissal unsupported by substantial evidence.

Petitioner Skyway O & M Corporation hired respondent Wilfredo M. Reinante as Intelligence Officer under a fixed-term employment contract from June 26, 2008 to November 25, 2008. Immediately upon expiration of that term, Skyway renewed his services and appointed him as a probationary employee on November 26, 2008.

In May 2009, Wilfredo took a vacation leave and, upon his physician's advice due to hypertension, filed an application for sick leave. Skyway, through a Memorandum dated May 4, 2009, disapproved his vacation leave application and directed him to report for work to discuss his on-the-job performance and continued absence without proper authority. On May 21, 2009, Wilfredo received a pre-termination notice from Skyway's Traffic Safety Management and Security Department (TSMSD) for allegedly failing to meet the company's pre-performance standards, based on a Performance Appraisal Report submitted by his supervisor, Augusto Alcantara. On May 25, 2009—his last day as a probationary employee—Wilfredo was dismissed. The termination letter stated that his performance during the probationary period from November 26, 2008 to April 2009 was below average and that he had failed to meet the standards set by Skyway. Five days later, Wilfredo secured a clearance certificate and claimed his terminal pay through an attorney-in-fact.

Meanwhile, Wilfredo had filed administrative complaints against Augusto, assailing the latter's authority to assess his performance, as well as against Skyway for hiring and promoting unqualified security officers. The parties eventually entered into a compromise agreement and amicable settlement, under which Wilfredo agreed not to file any case against Skyway and to withdraw the administrative cases he had filed against its security officers. Notwithstanding demand, however, TSMSD failed to comply with the terms and conditions of the compromise agreement, prompting Wilfredo to file a complaint for constructive dismissal, non-payment of service incentive leave, moral and exemplary damages, and attorney's fees.

The Labor Arbiter found that Wilfredo was illegally dismissed, noting that his supervisor Augusto Alcantara and another Skyway employee, Domingo T. Hernandez, both admitted rendering false and unmeritorious ratings on Wilfredo's performance appraisal. Augusto himself stated in an affidavit that, due to his own volition, he rendered an unmeritorious rating against Wilfredo, which was made the basis of his termination, when in truth he should not have been dismissed. The NLRC affirmed this finding, observing that the appraisal report had no basis and was biased. The CA likewise affirmed, inferring from Skyway's rehiring of Wilfredo for the same position after his fixed-term contract expired that management was satisfied with his performance and that he was qualified and competent for the job.

• Illegal Dismissal: Petitioner argued that the CA gravely erred in ruling that Wilfredo was illegally dismissed, maintaining that his termination was based on a valid performance appraisal showing below-average performance during the probationary period.
• Monetary Claims: Petitioner argued that the CA gravely erred in awarding monetary claims to Wilfredo, contending that the compromise agreement and amicable settlement between the parties constituted a valid waiver that barred Wilfredo from filing the illegal dismissal case.

• Invalid Waiver: Respondent countered that the compromise agreement did not constitute a valid waiver because there was no meeting of the minds between the parties on its consideration, as Wilfredo understood the settlement to include three considerations—payment of ₱100,000.00, suspension of the "significant seven," and a security officer position—while Skyway maintained that the only consideration was the payment of ₱100,000.00.
• Illegal Dismissal: Respondent maintained that his dismissal was illegal, as his performance appraisal was deliberately falsified by his supervisor Augusto Alcantara, who admitted rendering an unmeritorious rating to prevent Wilfredo from attaining regular employment status.

• Factual Question Propriety: Whether the issue of whether Wilfredo was illegally dismissed is a factual question not proper for review under Rule 45.
• Validity of Dismissal: Whether Wilfredo was illegally dismissed from his probationary employment.
• Validity of Waiver: Whether the compromise agreement between the parties constitutes a valid waiver or quitclaim barring Wilfredo's illegal dismissal claim.
• Monetary Awards: Whether Wilfredo is entitled to backwages, separation pay, damages, and attorney's fees.

• Factual Question Propriety: No. The determination of whether Wilfredo was illegally dismissed is essentially a factual question not proper for review under Rule 45, and the uniform factual findings of the LA, NLRC, and CA—supported by substantial evidence—are accorded finality.
• Validity of Dismissal: No, the dismissal was illegal. A probationary employee may be terminated only for just cause, authorized cause, or failure to qualify under reasonable standards made known at the time of engagement; here, the performance appraisal was deliberately falsified and had no basis.
• Validity of Waiver: No. The compromise agreement did not constitute a valid waiver because there was no meeting of the minds on its consideration, and Skyway failed to prove that Wilfredo voluntarily executed it with full understanding and reasonable consideration.
• Monetary Awards: Yes. Wilfredo is entitled to full backwages, separation pay in lieu of reinstatement due to strained relations, moral and exemplary damages, and attorney's fees, all earning legal interest at six percent per annum from finality until full payment.

• Factual Question Propriety: The Court is not a trier of facts and will not reexamine or re-evaluate the probative value of evidence already passed upon by the LA and the NLRC and affirmed by the CA. Factual findings of quasi-judicial bodies like the NLRC, when supported by substantial evidence, are accorded respect and even finality, more so when they coincide with those of the LA, and given even more weight when affirmed by the CA. Because the LA, NLRC, and CA uniformly found Wilfredo illegally dismissed, the Court declined to disturb those findings.

• Validity of Dismissal: A probationary employee is one placed on trial by an employer to determine whether the employee is qualified for permanent employment. While a probationary employee enjoys security of tenure, the employee's services may be terminated for a just cause, an authorized cause, or failure to qualify in accordance with reasonable standards prescribed by the employer and made known at the time of engagement. Here, Wilfredo's supervisor Augusto Alcantara admitted in his affidavit that he deliberately rendered an unmeritorious rating against Wilfredo, which was made the basis of his termination, when in truth he should not have been dismissed. This was corroborated by Domingo T. Hernandez. The CA also correctly observed that Wilfredo's rehiring for the same position after his fixed-term contract expired indicated management's satisfaction with his performance. The termination based on the alleged unsatisfactory performance rating was thus effected merely as a subterfuge after Wilfredo discovered Skyway's hiring of unqualified security officers. Because Wilfredo was not dismissed for a just or authorized cause, his dismissal was illegal.

• Validity of Waiver: Waivers and quitclaims are looked upon with disfavor as contrary to public policy. For a waiver or quitclaim to be valid and binding, it must be shown that the person executing it did so voluntarily, with full understanding of its contents, and with reasonable and credible consideration; the burden is on the employer to prove voluntary execution. Skyway failed to discharge this burden. The NLRC noted that the settlement agreement did not specify when, how, and in what manner it was to be fulfilled. Wilfredo identified three considerations—payment of ₱100,000.00, suspension of the "significant seven," and a security officer position—while Skyway maintained the only consideration was ₱100,000.00. There was thus no meeting of the minds between the parties, rendering the agreement invalid as a waiver.

• Monetary Awards: In view of Wilfredo's illegal dismissal, he is entitled to full backwages from the time of dismissal until the finality of the Decision. Reinstatement is proper in principle, but payment of separation pay in lieu of reinstatement is warranted due to the strained relations between the parties. Separation pay is computed at one month salary for every year of service, with a fraction of at least six months considered as one whole year, from the time of illegal dismissal until finality. Moral damages of ₱20,000.00 and exemplary damages of ₱10,000.00 are proper because the dismissal was orchestrated as a retaliatory action after Wilfredo discovered Skyway's hiring of unqualified security officers. Attorney's fees are sanctioned when the employee is dismissed in bad faith and compelled to litigate to protect his rights, as in this case. All monetary awards earn legal interest at six percent per annum from finality until full payment.

• Security of Tenure of Probationary Employees — A probationary employee enjoys security of tenure, though not on the same plane as a regular employee. The services of a probationary employee may be terminated only for: (1) a just cause; (2) an authorized cause; or (3) failure to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer and made known to the employee at the time of engagement. In this case, the third ground was invoked but failed because the performance standards were not genuinely applied—the appraisal was deliberately falsified.

• Finality of Factual Findings of Quasi-Judicial Bodies — Factual findings of quasi-judicial bodies like the NLRC, when supported by substantial evidence, are accorded respect and even finality by the Supreme Court, more so when they coincide with those of the Labor Arbiter, and given more weight when affirmed by the Court of Appeals. This doctrine barred Skyway from relitigating the facts of Wilfredo's dismissal before the Supreme Court under Rule 45.

• Invalidity of Quitclaims and Waivers — Waivers or quitclaims are looked upon with disfavor and frowned upon as contrary to public policy. A waiver is valid and binding only if executed voluntarily, with full understanding of its contents, and with reasonable and credible consideration. The burden is on the employer to prove voluntary execution. The Court applied this doctrine to invalidate the compromise agreement because there was no meeting of the minds on its consideration and Skyway failed to prove voluntary execution.

• Strained Relations as Basis for Separation Pay in Lieu of Reinstatement — When reinstatement is no longer feasible due to strained relations between the parties, payment of separation pay in lieu of reinstatement is proper. The Court applied this principle given the adversarial history between Wilfredo and Skyway, including Wilfredo's administrative complaints against Skyway's officers and the retaliatory nature of the dismissal.

• "Though not on the same plane as that of a permanent employee, a probationary employee enjoys security of tenure. Other than being terminated for a just or authorized cause, a probationary employee may be dismissed due to his or her failure to qualify in accordance with the standards of the employer made known to him or her at the time of his or her engagement." — This passage articulates the controlling doctrine on the three grounds for validly terminating a probationary employee, and is the analytical pivot for the Court's finding that Wilfredo's dismissal was illegal.

• "Waivers or quitclaims are looked upon with disfavor, and are frowned upon for being contrary to public policy. Unless it can be shown that the person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and credible consideration, the same is not a valid and binding undertaking." — This is the canonical formulation of the doctrine on validity of quitclaims in labor cases, applied here to invalidate the compromise agreement for lack of meeting of the minds on consideration.

• "Considering that Wilfredo was not dismissed for a just or authorized cause, his dismissal from employment was illegal. As properly observed by the CA, the termination of his employment based on his alleged unsatisfactory performance rating was effected merely as a subterfuge after he discovered the hiring or appointment by Skyway of unqualified security officers." — This passage states the ratio decidendi connecting the falsified performance appraisal to the conclusion of illegal dismissal and the retaliatory motive underlying the termination.

• Bank of Lubao, Inc. vs. Manabat, 680 Phil. 792 (2012) — Cited for the proposition that the Supreme Court is not a trier of facts and will not reexamine evidence in a Rule 45 petition; followed in support of dismissing the factual challenge.
• Emeritus Security and Systems, Inc. vs. Dailig, 731 Phil. 319 (2014) — Cited for the doctrine that factual findings of the NLRC, when supported by substantial evidence and affirmed by the CA, are accorded finality; followed.
• Moral vs. Momentum Properties Management Corporation, G.R. No. 226240, March 6, 2019 — Cited for the definition and purpose of probationary employment; followed.
• Philippine National Oil Company-Energy Development Corp. vs. Buenviaje, 788 Phil. 508 (2016) — Cited for the three grounds for terminating a probationary employee; followed.
• Abbott Laboratories, Phil. vs. Alcaraz, 714 Phil. 510 (2010) — Cited alongside PNOC-EDC for the standards governing probationary employee dismissal; followed.
• Dagasdas vs. Grand Placement and General Services Corp., 803 Phil. 463 (2017) — Cited for the doctrine on the disfavored status of quitclaims and waivers and the employer's burden to prove voluntary execution; followed.
• Alba vs. Espinosa, G.R. No. 227734, August 9, 2017 — Cited for the rule on attorney's fees in labor cases where the employee is dismissed in bad faith and compelled to litigate; followed.
• Barroga vs. Quezon Colleges of the North, G.R. No. 235572, December 5, 2018 — Cited for the rule that monetary awards earn legal interest at six percent per annum from finality until full payment; followed.

• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court, limited to questions of law. Applied to bar Skyway from raising factual issues regarding the illegality of dismissal, as the uniform factual findings of the LA, NLRC, and CA are conclusive.
• Labor Code provisions on probationary employment (as discussed through jurisprudence) — While no specific article was cited by number, the decision applies the principle that a probationary employee may be terminated only for just cause, authorized cause, or failure to meet reasonable standards made known at the time of engagement, consistent with Article 296 (formerly Article 281) of the Labor Code as construed in the cited jurisprudence.

Peralta (Chairperson), Leonen, and A. Reyes, Jr., JJ., concurred. Hernando, J., was on leave.