By: Atty. Alvin Abenojar, LCB
“An employment contract is perfected upon the meeting of the minds of the parties as to the object and cause, but the employer-employee relationship may commence at a later date if the contract is subject to a suspensive period, not a condition. If an employer unilaterally prevents the fulfillment of the period or rescinds the contract before the agreed start date, the employee is still entitled to remedies for illegal dismissal if the contract was already perfected.” This is the Doctrine laid down by the Court in Aragones vs. Alltech Biotechnology Corporation et al.[1], penned by Justice Caguiao dated April 02, 2025.
The facts of this case are as follows, based on the original decision: Petitioner Aragones was offered the position of Swine Technical Manager Pacific by Alltech through an Offer Letter dated April 1, 2016, which he accepted and signed on April 18, 2016, with employment to commence on July 1, 2016. The Offer Letter required Aragones to sign a formal employment contract on his first day of work. After accepting the offer, Aragones resigned from his previous employer, Cargill Philippines, Inc., on April 25, 2016. In May 2016, Alltech Biotechnology Corporation implemented a global restructuring program, abolishing the position offered to Aragones, and informed him of this development on June 10, 2016; the corporation instead offered him PHP 140,000 as goodwill. Aragones did not accept the offer and instead filed a complaint for non-payment of wages, damages, and other claims, asserting illegal dismissal.
Aragones raised the following arguments in his complaint: his acceptance of the Offer Letter established an employment relationship as of April 18, 2016, and the July 1, 2016 start date was merely a term, not a condition. He further claimed that the requirement to sign a contract on the first day was a formality and did not negate the perfected employment contract. In addition, he maintained that all elements of the four-fold test for employment relationship were present, entitling him to protection against illegal dismissal.
On the other hand, Alltech Biotechnology Corporation posited the following contentions that the perfection of the employment contract is distinct from the commencement of the employment relationship, which was set for July 1, 2016. Likewise, argued that no employer-employee relationship existed when the offer was withdrawn, as the contract required execution on the first day of work and the four-fold test was not satisfied. The corporation maintained that the withdrawal was due to redundancy, and there was no substantial evidence of an employment relationship or illegal dismissal.
Apropos of this case, the Court settled two issues. First, whether or not an employer-employee relationship existed between Aragones and Alltech Biotechnology Corporation. Second, whether or not Aragones was illegally dismissed and entitled to his claims.
The High Court both positively answered in favor of Aragones. On the first issue, the Court underscored that the employment contract was perfected on April 18, 2016, upon Aragones’ acceptance of the offer, and the July 1, 2016 date was a suspensive period, not a condition. The existence of the employment relationship was established upon perfection of the contract, with the demandability of obligations deferred until July 1, 2016. The requirement to sign a contract on the first day was a mere formality and did not affect the existence of the employment relationship. Even if the commencement date was a condition, it was deemed constructively fulfilled because Alltech prevented its occurrence by unilaterally withdrawing the offer. For the second issue, the Court highlighted the following reasons for their ruling. The Court found that Alltech failed to substantiate its claim of redundancy because the only evidence presented was a vague, general affidavit, insufficient to establish a valid redundancy program. Since the employment relationship existed and the dismissal was not justified, Aragones was illegally dismissed and entitled to backwages, separation pay in lieu of reinstatement, and attorney’s fees. The Court denied moral and exemplary damages, finding no bad faith on Alltech’s part, as it honestly believed no employment relationship existed. The total monetary award is subject to 6% legal interest per annum from finality of the decision until full payment.
oOo
[1] G.R. No. 251736
