Title
Colegio del Santisimo Rosario vs. Rojo
Case
G.R. No. 170388
Decision Date
Sep 4, 2013
A probationary teacher, after three consecutive school years, gained permanent status; the employer's failure to set performance standards rendered his dismissal illegal.
high school teacher
permanent employment
illegal dismissal

Case Summary (G.R. No. 170388)

Factual Antecedents and Employer’s Non-Renewal Decision

CSR hired respondent on probationary status for the school years 1992–1993, 1993–1994, and 1994–1995. On April 5, 1995, Mofada decided not to renew respondent’s services. When respondent’s contract ended, CSR treated the arrangement as a termination brought about by expiration of the probationary employment terms, not by dismissal for cause. Respondent, however, maintained that because he had already served three consecutive school years, he should have been considered a regular employee under the rules for probationary teachers, and that CSR’s decision not to renew his contract was therefore an illegal dismissal.

Respondent’s argument relied on paragraph 75 of the 1970 Manual, which he invoked to claim that full-time teachers who rendered three consecutive years of satisfactory services should be deemed permanent. He also asserted that the three years of probationary teaching he had completed should have ripened into regular status.

CSR and Mofada resisted. They maintained that the end of respondent’s probationary employment corresponded to the expiration of his contract for the school year 1994–1995, which they stated would expire on March 31, 1995. Thus, they asserted that respondent was not dismissed; instead, his probationary contract simply expired and was not renewed. CSR also contended that the “three years” referenced in the Manual referred to thirty-six months (36 months), not three school years, and that respondent had served only three school years of 10 months each, or 30 months, which was allegedly short of the required 36 months.

Complaint for Illegal Dismissal and the Theories of the Parties

On July 13, 1995, respondent filed a complaint for illegal dismissal. He alleged that after serving three consecutive school years, which he claimed was the maximum period for probationary employment, he should have been extended permanent employment. In response, petitioners argued that non-renewal was proper because probationary teachers are not automatically regular upon completing the number of years stated in the Manual unless specific conditions and standards are satisfied, and because the “three years” in the Manual should be understood as 36 months.

The controversy centered on whether the completion of the third consecutive school year of probationary employment automatically conferred regular or permanent status, and whether CSR could lawfully refuse renewal by relying solely on contract expiration.

Ruling of the Labor Arbiter: Regular Status and Bad Faith

The Labor Arbiter ruled that “three school years” meant three years of 10 months each, not 12 months, and concluded that respondent had served three consecutive school years. The LA found that this already attained respondent’s regular employment status, and thus, CSR’s decision not to renew his contract for the school year 1995–1996 constituted illegal dismissal.

The LA also found petitioners guilty of bad faith, reasoning that CSR treated respondent’s termination as merely the expiration of the third employment contract while insisting that the school board deliberated on non-renewal without presenting admissible proof of respondent’s alleged regular performance evaluation. The LA awarded respondent P39,252.00 for severance compensation and 13th month pay, plus moral and exemplary damages, and also imposed 10% attorneys’ fees, while dismissing other claims for lack of merit.

Ruling of the NLRC: Regular Employment, Lack of Known Standards, and Relief

On appeal, the NLRC affirmed the LA’s ruling with modification on the award of separation pay. The NLRC held that after serving three school years, respondent had attained regular employment, particularly because CSR did not make known to respondent the reasonable standards he should meet. The NLRC agreed with the LA that the non-renewal was attended by bad faith.

As to remedies, the NLRC ordered respondent’s reinstatement without loss of seniority rights and with full backwages until actual reinstatement. It further provided that if reinstatement was no longer feasible, CSR would pay separation pay in addition to full backwages. The NLRC directed its Computation Division to compute the backwages to be attached to the decision.

Court of Appeals’ Affirmance: Compliance with Requirements for Regular Status

The Court of Appeals denied petitioners’ petition for certiorari on August 31, 2005. The CA relied on Cagayan Capitol College v. National Labor Relations Commission and held that respondent had satisfied the requirements to acquire permanent employment and security of tenure: first, that the teacher is a full-time teacher; second, that the teacher must have rendered three (3) consecutive years of service; and third, that the service must have been satisfactory.

The CA concluded that respondent met these requisites because he was employed as a full-time high school teacher for three consecutive school years and CSR did not show that he had unsatisfactory performance. The CA also observed that respondent had held the position of Prefect of Discipline, which involved responsibility, and that the only reason Mofada gave for non-renewal was the alleged expiration of the contract rather than any showing of unsatisfactory service. The CA further stressed that CSR failed to show that it set performance standards for respondent, which could have served as a basis for determining satisfactory or unsatisfactory performance.

According to the CA, because CSR did not make known reasonable standards to respondent at the time of engagement, respondent was deemed a regular employee, and the failure to renew his contract was therefore an illegal dismissal. The CA denied petitioners’ motion for reconsideration in its November 10, 2005 Resolution.

The Supreme Court’s Issue and the Petitioners’ Position

The Supreme Court framed the issue as whether the CA and NLRC committed grievous and reversible error in ruling that a basic education teacher hired for three consecutive school years as a probationary employee automatically became a permanent employee upon completion of his third year of probation, despite petitioners’ reliance on: (a) the Court’s pronouncement in Colegio San Agustin v. NLRC that a probationary teacher acquires permanent status only when allowed to work after the probationary period; and (b) DOLE-DECS-CHED-TESDA Order No. 01, s. 1996, which provides that teachers who have served the probationary period shall be made regular or permanent if allowed to work after such probationary period.

Petitioners insisted that at the end of the probationary period, both the school and the teacher remained free to renew or let the contract lapse. They argued that a teacher hired for three consecutive years as a probationary employee does not automatically become regular upon completion of the third year, and that only the school’s positive act of hiring the teacher for the next school year makes him regular.

Legal Basis: Probationary Employment in the Academe and the Manual’s Framework

The Supreme Court denied the petition. It began by stating that cases involving probationary employment of teaching personnel are not governed solely by the Labor Code because the Labor Code is supplemented—particularly on probationary duration—by special rules found in the Manual of Regulations for Private Schools. The Court found that, under Section 92 of the 1992 Manual, the probationary period for academic personnel in the elementary and secondary levels “shall not be more than three (3) consecutive years of satisfactory service.”

The Court recognized that in actual practice, teaching personnel often enter into fixed-term contracts for one school year, which may be renewed for another school year. Under this scheme, the third year ends the probationary period. The Court explained that at the end of the third year, the employer may decide whether to extend a permanent appointment, which depends on whether the employee met reasonable standards of competence and efficiency set by the employer. Still, within the three-year period, the teacher remains on probation, and the teacher cannot automatically claim security of tenure merely by the passage of time.

At the same time, the Supreme Court reconciled this fixed-term contracting practice with Article 281 of the Labor Code, which allows termination of a probationary employee for just cause or for failure to qualify as a regular employee in accordance with reasonable standards made known to the employee at the time of engagement, and which further provides that an employee allowed to work after the probationary period shall be considered regular.

Reconciliation with Section 93 of the Manual and Due Process Requirements

The Supreme Court harmonized Article 281 with Section 93 of the 1992 Manual, which provides that those who have served the probationary period shall be made regular or permanent, and that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. The Court emphasized that the term “satisfactorily” necessarily implied that schools must set reasonable standards and that these standards must guide evaluation; otherwise, there is no meaningful basis to determine whether the probationary period was satisfactorily completed.

Accordingly, the Court held that while mere service for three consecutive years does not automatically yield permanent appointment, the necessary inquiry also includes whether the teacher was a full-time teacher and whether the services rendered were satisfactory, assessed through standards that the employer must set and communicate.

The Court anchored its due process analysis on Mercado v. AMA Computer College-Paranaque City, Inc., explaining that where probationary status overlaps with fixed-term contracting, Article 281 assumes primacy. The Court reiterated that probationary teachers must be informed of the reasonable standards against whic

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