G.R. No. L-53453 January 22, 1986
MANILA HOTEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and RENATO L. CRUZ, respondents.

FACTS

Renato L. Cruz was employed by Manila Hotel Corporation as a gardener under a six-month probationary appointment effective September 22, 1976. The appointment stipulated that his job performance would be reviewed upon the expiration of the probationary period, and if satisfactory, he would be reclassified as a regular employee. On March 19, 1977, just two days before the expiration of his probationary period, Cruz and three other probationary gardeners were informed by management that their positions were being abolished due to economic recession and a retrenchment policy. They were told to resign immediately and were effectively terminated. Cruz reported for work the next day but found his time card removed.
Cruz filed a complaint for illegal dismissal. He later discovered that two of the other terminated gardeners had been promoted to steward and one was retained as the sole gardener, contradicting the claim of position abolition. The Labor Arbiter ruled in favor of Cruz, ordering his reinstatement as a regular employee with full backwages. The National Labor Relations Commission affirmed this decision in toto.

ISSUE

Whether the termination of a probationary employee one day before the expiration of his probationary period, allegedly due to the abolition of his position for economic reasons, constitutes illegal dismissal.

RULING

Yes, the termination was illegal. The Supreme Court affirmed the NLRC decision but modified the backwages award. The legal logic is anchored on the security of tenure guaranteed to all employees, including probationary workers, under the Constitution and the Labor Code. Article 282 of the Labor Code explicitly provides that the services of a probationary employee may be terminated only for a just cause or when the employee fails to qualify as a regular employee according to reasonable standards made known at the time of engagement.
The Court found that the purported abolition of Cruz’s position due to economic reverses was not made in good faith. The promotion and retention of his co-probationary employees demonstrated that the hotel’s operational needs still required the services of a gardener, rendering the retrenchment claim a mere pretext to terminate Cruz. Since the termination occurred a day before his probationary period ended, the employer lost the right to evaluate his fitness for regular employment based on reasonable standards. By operation of law, allowing an employee to work after the probationary period results in regular employment. His dismissal, being without just or authorized cause, was illegal. Consequently, he was entitled to reinstatement without loss of seniority rights and to backwages. However, applying the prevailing policy for expediency, backwages were limited to three years without qualification or deduction.