Philippines: The Employment Law Landscape After Aragones vs. Alltech: If An Employment Contract Is Perfected By Consent, When Should Probationary Periods Be Deemed To Begin and End?

Authors: Rashel Ann C. Pomoy and Paolo Miguel Consignado

Introduction

The Philippine Supreme Court’s decision in Aragones vs. Alltech Biotechnology Corporation, G.R. No. 251736, 2 April 2025 (“Alltech”) is a watershed in Philippine jurisprudence. In that case, the Supreme Court reaffirmed that an employment contract is perfected based on consent and, thus, begins as soon as an employment offer is accepted by the prospective employee. This remains true even if the parties had agreed that the employee will not immediately start work, but only on a later date (perhaps, even months) after the employee had accepted the job offer. It also clarified for the first time the difference in legal effect between suspensive conditions versus suspensive periods in the context of employment contracts.

However, while the case of Alltech carried significant doctrinal value, one must nonetheless remain careful in applying it in all employment issues, especially, in reckoning when a probationary period would begin and end.

For example, if a person accepts a job offer with a 6-month probationary period on 1 January 2026 but agrees to begin work only on 1 February 2026, would that person be deemed a regular employee if they continue working by 1 July 2026 (i.e., upon the lapse of six months from contract perfection on 1 January 2026) or by 1 August 2026 (i.e., upon the lapse of six months from start of work on 1 February 2026)?

 

Doctrinal Value of Alltech

In the case of Alltech, a prospective employee accepted, signed, and sent back a job offer letter to his employer on 18 April 2016. However, the offer letter stipulated that the prospective employee will only begin work on 1 July 2016. Before the employee could start work, though, the employer underwent a restructuring and had to inform the prospective employee that the job offered to him had been eliminated. The prospective employee then filed a complaint for illegal dismissal against the employer. The employer argued that there could be no illegal dismissal to speak of, since no employment relationship had been formed until the prospective employee begins work on 1 July 2016.

When the case reached the Supreme Court, it held that an employment relationship had been formed on 18 April 2016, or from the moment the prospective employee had accepted the job offer and communicated it to the employer.

The Supreme Court further clarified that employers could continue making employment offers conditional upon the happening of certain events (such as first securing a satisfactory background check on the prospective employee). If the condition does not happen (such as when the employee fails a background check), then no employment relationship is created.

This is different, however, when the parties merely agree to defer the date when the employment contract is to be performed, such as in the case of Alltech. In that case, the creation of an employment relationship is not made conditional upon the happening of an uncertain event (such as the employee’s passing of a qualifying background check). What the parties are agreeing to was merely the deferral of the contract’s performance (i.e., the duty start of work) to a future but certain date (known under the Civil Code as a suspensive period).

On its face, then, Alltech has doctrinally established that employment contracts (unless subject to a condition) are consensual contracts that would always begin from the moment of perfection. However, should this principle similarly apply in reckoning the start and end dates of probationary periods?

The Purpose of a Probationary Period Is for the Employer and the Employee to Mutually Observe Each Other

Article 296 of the Philippine Labour Code provides that a probationary employee attains regular employment if they are “allowed to work after a probationary period[.]” Thus, for 6-month probationary period, the reckoning point of when this period begins is equally crucial in determining when it would end for the purpose of determining whether the probationary employee had already attained the status of regular employment (in the absence of a positive act to terminate employment prior to regularization).

 

Relevantly, Philippine jurisprudence recognizes that a probationary period is intended for the mutual benefit of both the employer and the employee.[1] On the one hand, the employer gets to observe the fitness, propriety and efficiency of a probationary employee for regular and permanent employment. On the other hand, the employee is given the opportunity to experience the environmental conditions at the workplace, and to prove that he or she has the qualifications for regular employment.

 

Therefore, if the purpose of a probationary period is for both employer and employee to mutually observe each other, then it stands to reason that this period should be reckoned from the moment the employee starts working on 1 February 2026, and not when the employment contract is perfected on 1 January 2026. Otherwise, if the probationary period would include the period when the employee has not commenced work, then both the employer and employee are deprived of a significant period allowed by law (in this case, about a month) to actually observe each other at the workplace.

 

Notably, in the Concurring and Dissenting Opinion of Justice Alfredo Benjamin S. Caguioa in C.P. Reyes Hospital vs. Barbosa, G.R. No. 228357, 16 April 2024, he emphasized that the key phrase in Article 296 of the Labour Code in conferring regular status upon an employee is that he or she is “allowed to work” after the lapse of the probationary period. According to the Justice, if this happens, the law considers the employer estopped from claiming that the probationary employee is not fit enough for regular employment after allowing the probationary period to lapse — since, at that point, the employer would have been given more than sufficient opportunity to observe and inform the employee about any performance-related issues during the probationary period.

 

Accordingly, since both the intent for the probationary period and the effect of estoppel under Article 296 of the Labour Code are premised upon the observation of actual work during the probationary period, it appears then that, unlike the case of Alltech, probationary periods must still be reckoned from the date when the employee started working. The purpose of the probationary period, and the basis for the effect of estoppel, would not be met if the employee had not actually started work yet.

 

Conclusion

The case of Alltech significantly holds that an employment contract is consensual, and that it begins from the moment of perfection. However, although an employment relationship is created from the moment the job offer is accepted, it appears that this cannot be similarly applied in calculating when a probationary period would begin based on prevailing jurisprudence concerning probationary periods.

Thus, it remains prudent for stakeholders on employment law to carefully consider these nuances between the start date for an employment contract vis-à-vis the start and end dates for probationary periods.