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UMALI v. HOBBYWING SOLUTIONS, INC., G.R. No. 221356, | 2018

Case Digest: G.R. No. 221356 | March 14, 2018

Maria Carmela P. Umali vs. Hobbywing Solutions, Inc.

Ponente: Justice Reyes, Jr.

Nature of the Petition

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the Decision dated May 29, 2015 and Resolution dated November 4, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 136194. The petition seeks the reinstatement of the National Labor Relations Commission (NLRC) ruling that the petitioner was illegally dismissed and entitled to reinstatement and backwages.

Court Ruling

The Supreme Court REVERSED and SET ASIDE the Court of Appeals' May 29, 2015 Decision and November 4, 2015 Resolution. The Court reinstated the January 15, 2014 NLRC Decision in NLRC NCR Case No. 04-06101-13, confirming that the petitioner was illegally dismissed.

Key Doctrines

✔️ Probationary Employees & Regularization: Under Article 281 of the Labor Code, an employee engaged beyond the probationary period of six months automatically acquires regular employment status. Any attempt to circumvent this provision undermines the State's protection for labor.

✔️ Extensions of Probationary Employment: While exceptions exist—such as when explicitly agreed upon by contract or required by company policy—the general rule remains that probationary employment cannot exceed six months. Employers bear the burden of proof to justify extensions.

✔️ Invalid Extensions & Security of Tenure: Employers must present valid reasons for probationary extensions. Without a legitimate basis, such extensions violate an employee’s right to security of tenure.

✔️ Burden of Proof on Employers: Employers must demonstrate that:

  • The employee was indeed probationary, and

  • The extension was warranted, fair, and not a strategy to prevent regularization. Failure to justify the extension leads to a finding of illegal dismissal.

Case Background

The petitioner, Maria Carmela P. Umali, was hired as a Pitboss Supervisor by Hobbywing Solutions, Inc., an online casino gaming establishment, on June 19, 2012. Despite not signing any employment contract initially, she received a regular salary.

Probationary Extension Dispute

  • In January 2013, the petitioner was asked to sign two separate contracts for probationary employment:

    • A five-month contract, then

    • A three-month contract.

  • On February 18, 2013, she was informed that her employment had ended and was advised to wait for notice regarding rehiring or regularization.

  • She was denied further work, prompting her to file a case for illegal dismissal.

Employer’s Defense

  • The respondent claimed that the probationary period extension was valid, based on the signed contracts.

  • The company allegedly offered her regularization, but she declined due to a personal reason—her best friend’s non-retention.

  • She processed her exit clearance, asserting it was a voluntary separation.

Court’s Legal Findings

  • The Supreme Court ruled that the petitioner's dismissal was illegal since she worked beyond the allowable probationary period and had already attained regular employee status.

  • The respondent failed to explain the need for multiple probationary contracts, reinforcing the petitioner's claim that she was already a regular employee.

  • The company’s actions violated the Labor Code, making the termination arbitrary and unlawful.

Conclusion

The Supreme Court upheld the NLRC’s ruling that Maria Carmela P. Umali was illegally dismissed. Since she had already acquired regular employment status, her termination was unjustified. The Court reinstated her entitlement to reinstatement and backwages.

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