Title
De La Salle University vs. Lao
Case
G.R. No. 56566
Decision Date
Apr 15, 1985
Lolita Lao, a probationary professor at DLSU, contested her termination after her one-year probation. The Supreme Court ruled her termination valid, as her permanent contract was unsigned and withdrawn, dismissing her damages claim.
labor arbiter
jurisdiction
permanent employee

Case Summary (G.R. No. 56566)

Factual Background

Lao alleged that she was maliciously dismissed at the end of her one-year probationary term as an assistant professor of De La Salle University. The Appellate Court found that she was appointed as a “non-tenured full-time probationary assistant professor C” at P13,000 a year, excluding overload payments, as shown in a departmental memorandum dated October 22, 1974 from the chairman of the economics department to the academic vice-president. That memorandum stated that, to strengthen the economics department, Lao was hired full-time effective October 16, 1974. Lao assumed her position and performed her academic duties.

In June 1975, the economics department secretary issued a contract for the school year 1975–76 as a full-time faculty member at P15,155 per annum. The contract contained the conditions of appointment. Lao signed the contract and indicated her residence certificate number and the place and date of issuance (Exh. B). The university president, however, did not sign the contract because the economics chairman, Tajanan, did not forward it. Lao taught during the first semester of the academic year 1975–76.

In August 1975, Lao asked Tajanan about the status of her contract. Tajanan replied that he intended to terminate her services at the end of the first semester, which coincided with the end of her one-year probationary period. That understanding was confirmed by the dean, Patricio R. Ceballos, in a letter to Lao dated August 29, 1975 (Exh. C). The dean stated that her probationary status would end as of the first semester of academic year 1975–76 and that the university decided not to enter into a permanent contract with her. Brother Ortiz, acting dean of the college, in a letter dated September 30, 1975, further confirmed the termination of Lao’s services at the end of the first semester, or on October 15, 1975 (Exh. D).

Lao protested the “abortion” of her contract (Exh. E; 17–26, Record on Appeal). On October 3, 1975, she filed a petition against the university, its president, Brother Ortiz, Ceballos, and Tajanan. She prayed for injunctive relief to prevent termination on October 15, 1975 and for P99,000 in damages. The respondents pleaded, among others, that there was no enforceable contract and that the matter fell within the jurisdiction of the NLRC. Lao’s services were terminated on October 15, 1975.

On January 7, 1976, Lao filed an amended petition. She limited her claim to damages amounting to P99,000. Respondents reiterated their jurisdictional objection and argued that Lao had no cause of action for damages because no contract was violated.

Trial Court Proceedings and Civil Liability Findings

The lower court ruled for Lao. It found that De La Salle University and its officials violated Lao’s rights under her full-time contract. It ordered them to pay Lao solidarily P90,000 as moral and exemplary damages, plus attorney’s fees. The trial court relied on specific Civil Code provisions, namely Articles 1701, 20, 21, 2208(11), 2219(10), 2229, and 2232, as the legal basis for the damages awarded.

Appellate Court Ruling

The Court of Appeals affirmed on November 12, 1980. In doing so, it adopted the characterization of Lao’s appointment as non-tenured full-time probationary assistant professor C and treated the ensuing events as a basis for civil liability. The Appellate Court maintained the conclusion that the respondents’ actions violated Lao’s contractual and protected interests.

The Parties’ Contentions on Appeal

Before the Supreme Court, petitioners assigned errors contending that the case fell within the jurisdiction of the NLRC. They relied on the jurisdictional rule that, under Article 265(f) of the Labor Code, later redesignated as Article 217(5), labor arbiters have exclusive jurisdiction over cases or matters arising from employer-employee relations, unless the Code expressly excludes the dispute.

Petitioners also pressed that Lao never became a permanent employee and that no enforceable contractual right was violated. Respondents’ position in the course of litigation had consistently maintained that there was no enforceable contract, and that Lao had no cause of action for damages in civil court because her legal posture remained that of a probationary employee.

Supreme Court Disposition

The Supreme Court reversed and set aside the Court of Appeals’ decision. It dismissed Lao’s amended petition (complaint). The Court held that the labor arbiter and the NLRC had no jurisdiction over the case and that it was “properly brought before the civil courts.” However, the Court ultimately ruled that Lao had no cause of action for damages, based on the conclusion that she remained a probationary employee whose probationary employment was validly terminated.

Legal Basis and Reasoning

The Supreme Court addressed the pivotal jurisdictional issue through the lens of the labor-law jurisdictional provision. It recognized that petitioners invoked Article 265(f), later Article 217(5), which vests exclusive authority in labor arbiters over matters arising from employer-employee relations unless expressly excluded. The Court stated the controlling point that the existence of employer-employee relations is assumed under the cited provision; it is not treated as the focal dispute in every case.

Nevertheless, the Court reasoned that, in this case, the existence of employer-employee relations between Lao and the university was not the straightforward assumption contemplated by the labor jurisdiction rule. It became necessary to determine whether Lao became a permanent employee after being hired as a probationary employee. The Court held that the resolution of the question of permanence could be handled more competently by the civil courts after a full trial, rather than by a labor arbiter under the position-paper procedure used in labor proceedings.

On the merits, the Court rejected the premise that a permanent employment contract had been completed and enforceable. It found that the purported contract for permanent employment was not finalized because it was not signed by the university president. The Court further found that the agreement was legally withdrawn before it became effective and never delivered to Lao. In light of these findings, Lao’s employment status remained probationary.

The Court concluded that Lao’s probationary employment—rather than any permanent term—was what the university legally terminated. Accordingly, the Court held that the university retained the prerogative to terminate Lao’s probationary employment and

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