Brazil vs. STI Education Services Group, Inc.

A faculty member who does not possess the minimum academic qualifications prescribed under the 1992 MORPS and/or 2008 MORPHE—specifically, a master's degree relevant to the field of teaching for undergraduate programs—is automatically a part-time faculty member and can never attain permanent, regular, or even probationary employment status, regardless of whether the employer voluntarily granted or treated such faculty as a regular employee. Neither estoppel nor equity can contravene this clear statutory mandate, as the operation of educational institutions involves public interest and the right of students to quality education.

Petitioners Luningning Z. Brazil, Salvacion L. Garcera, and Rita S. De Mesa were faculty members of STI Education Services Group, Inc. (STI), a proprietary higher educational institution operating STI College-Legazpi. The 2008 Manual of Regulations for Private Higher Education (2008 MORPHE), issued by the Commission on Higher Education (CHED), prescribes minimum academic qualifications for full-time faculty in higher education institutions, requiring at least a master's degree relevant to the faculty member's field of teaching for undergraduate programs. Its predecessor, the 1992 Revised Manual of Regulations for Private Schools (1992 MORPS), imposed substantially the same requirement. Under both manuals, faculty who do not meet all minimum academic qualifications are automatically classified as part-time and cannot acquire regular or permanent status.

Petitioners Luningning Z. Brazil, Salvacion L. Garcera, and Rita S. De Mesa were faculty members of STI College-Legazpi (STI-Legazpi), a campus of respondent STI Education Services Group, Inc. Brazil was first employed on June 3, 1997 as a part-time faculty member, while Garcera and De Mesa were hired in June 2000 and June 2001, respectively, also on a part-time basis. Over the years, each petitioner claimed to have attained regular employment status. Brazil asserted that she was hired as a "full-load faculty member" in June 2002, receiving a fixed monthly salary, and was regularized on February 1, 2004, as evidenced by a Personnel Action Form. Garcera pointed to a written evaluation dated October 12, 2004 categorizing her status as regular, as well as an April 24, 2008 email from STI Headquarters confirming the regular status of both Brazil and Garcera. De Mesa claimed she became a "full-load faculty member" in 2003 and was considered a regular employee as of June 2009, when she began receiving a fixed monthly salary for twelve months. Petitioners alleged that upon their regularization, STI no longer required them to submit letters of intent or sign semestral contracts, and they enjoyed benefits granted to regular employees, including full salary and statutory benefits during summer, semestral, and Christmas breaks.

On June 3, 2011, STI-Legazpi school administrator Rusty O. Lagatic handed petitioners separate job offers for the first semester of A.Y. 2011-2012. The offers for Brazil and De Mesa were for part-time faculty positions, while Garcera's was for a probationary faculty position. Petitioners refused to sign, contending that although the offers stipulated a higher monthly salary, acceptance would strip them of their security of tenure as regular employees. When petitioners inquired about the change, Lagatic informed them that their 201 files did not contain appointment papers and that they had failed to comply with the standards set out in the 2008 MORPHE, which requires faculty teaching undergraduate programs to hold at least a master's degree relevant to their field. Petitioners countered that Garcera had completed her Master of Arts in Education – English on March 30, 2011, and that Brazil and De Mesa were already writing their theses in Master of Arts in Public Administration and Master of Arts in Physics Education, respectively.

Despite petitioners' repeated requests for amended job offers, Lagatic handed them the same offers on June 8, 2011. Upon their continued refusal, they were replaced with six newly hired faculty members the following day. They received no teaching load when classes started on June 13, 2011, although they were paid salaries for the period June 1 to 15, 2011. In letters dated June 24, 2011, Lagatic informed petitioners that their employment contracts were based on the 2008 MORPHE and STI's General Academic Policies, offering them part-time full-load or probationary status with an addendum granting two additional years to comply with CHED's minimum qualification standards. Petitioners alleged the addendum was absent from the job offers and that the accompanying memorandum from STI Headquarters arrived after classes had already started. Having been placed in a floating status without salary for the period June 16 to 30, 2011, petitioners stopped reporting for work and filed complaints for illegal constructive dismissal with monetary claims before the NLRC. Respondents maintained that petitioners were part-time academic personnel under Section 36 of the 2008 MORPHE because they lacked master's degrees, that part-time employees cannot acquire regular or permanent status under Section 117, and that a CHED Advisory Opinion dated July 17, 2011 confirmed that granting permanent status to unqualified personnel violated the MORPHE. Since petitioners refused to sign their contracts, respondents argued there was no illegal dismissal—the previous contracts had merely expired.

• Equity and Estoppel: Petitioners insisted that despite the application of the 2008 MORPHE, an employer educational institution that has granted or treated its employees as regular or permanent employees can be held liable for illegal constructive dismissal, and subsequent compliance with the MORPHE is not an available defense for employers in such cases.
• Unilateral Grant of Regular Status: Petitioners argued that unlike in Son vs. UST, where regularization was pursuant to a Collective Bargaining Agreement, the grant of regular status in their case was unilateral and not a shared endeavor, such that the fault or violation rests on STI alone.
• Constructive Dismissal: Petitioners maintained that being offered part-time or probationary contracts after years of being treated as regular employees, coupled with being placed on floating status without salary, constituted illegal constructive dismissal.
• De Mesa's Regular Status: Petitioners reiterated that De Mesa was already a regular employee as of June 2009, enjoying the same benefits as regular employees, and that her grant of regular status after the effectivity of the 2008 MORPHE was immaterial.

• Part-time Status Under MORPHE: Respondents argued that since petitioners were not holders of a master's degree, they were part-time academic personnel under Section 36 of the 2008 MORPHE, and under Section 117, a part-time employee cannot acquire regular or permanent status.
• CHED Validation: Respondents contended that their act of extending part-time and probationary employment contracts was validated by a CHED Advisory Opinion dated July 17, 2011, which clarified that granting permanent or regular status to academic teaching personnel lacking the required academic qualifications violated Sections 117 and 118 of the 2008 MORPHE.
• No Illegal Dismissal: Respondents posited that since petitioners refused to sign their respective contracts, there could be no illegal dismissal—their previous employment contracts had merely expired.
• Ineligibility for Probationary Status: Respondents argued that under the 2008 MORPHE, an academic teaching personnel cannot acquire probationary status without first possessing a master's degree to teach in his or her major field, such that Brazil and Garcera could not have become regular employees.

• Nature of Employment: Whether faculty members who failed to attain permanent status under the 1992 MORPS and/or 2008 MORPHE for lack of a master's degree, but who were voluntarily treated as regular employees by their employer, may claim regular or permanent employment status and the corollary right to security of tenure.
• Estoppel and Equity: Whether the doctrines of estoppel and equity may be invoked to prevent an educational institution from denying regular employment status to faculty members who do not meet the minimum academic qualifications prescribed by law.
• Constructive Dismissal: Whether the refusal to sign part-time or probationary job offers—after years of being treated as regular employees—constitutes illegal constructive dismissal.

• Nature of Employment: No. Faculty members who do not possess the minimum academic qualifications under the 1992 MORPS and/or 2008 MORPHE are automatically part-time faculty and can never attain permanent, regular, or even probationary status, regardless of the employer's prior conduct in treating them as regular employees.
• Estoppel and Equity: No. Neither estoppel nor equity can contravene the clear positive mandate of the 2008 MORPHE, as the operation of educational institutions involves public interest and the grant of regular status to unqualified personnel violates public policy.
• Constructive Dismissal: No. Petitioners were part-time faculty with fixed-term employment; their contracts expired by their own terms, and the employer was not obliged to renew them. Refusal to sign compliant job offers resulted in separation from service, not dismissal.

• Nature of Employment: The Court explained that there are two interrelated ways to classify the nature of employment of faculty in higher education institutions. First, a faculty may be classified as full-time or part-time based on academic qualifications and teaching load under the MORPHE/MORPS. Second, under the Labor Code and applicable jurisprudence, a faculty may be classified as permanent, probationary, or fixed-term, with emphasis on security of tenure. A faculty who does not meet all minimum academic qualifications—including possession of a master's degree for undergraduate programs—is automatically part-time. Only a full-time faculty can be considered a permanent or regular employee, and even then, permanent status requires three consecutive years of service (or six consecutive semesters) of satisfactory service as a probationary employee. A part-time faculty can never attain probationary status because probationary employment is a pathway to permanent status, which part-time faculty are categorically barred from achieving. Consequently, a part-time faculty will always be a fixed-term employee. Applying these standards, petitioners were hired on a semestral basis and did not possess the required master's degrees, making them part-time faculty with fixed-term status. Garcera, who obtained her master's degree in March 2011, would have qualified for probationary status had she signed the corresponding job offer.

• Estoppel and Equity: Petitioners essentially claimed estoppel on the part of respondents in granting them regular status despite the clear import of the 2008 MORPHE. The Court rejected this argument, relying on its ruling in Son vs. UST, which held that the doctrine of estoppel cannot operate to give effect to an act that is otherwise null and void or ultra vires, and that no estoppel can be predicated on an illegal act. The Court found no material distinction between a CBA provision granting tenure by default and a unilateral grant of regular status, as petitioners voluntarily accepted the benefits of the illegal arrangement. The principle of equity cannot prevail over the positive mandate of the law, as application of equity would be tantamount to overruling or supplanting the express provisions of the MORPHE. A provision in an employment contract prescribing a nature of employment violative of law is deemed unwritten and has no effect as to the parties.

• Constructive Dismissal: Under a fixed-term employment contract, the employer-employee relationship is severed upon the expiration of the term without the necessity of any notice, and non-renewal does not equate to dismissal. There is no security of tenure in fixed-term employment. Since petitioners were part-time faculty with fixed-term status, STI was not obliged to offer them the two-year compliance program or any renewed contract. STI had the right to hire replacement faculty in light of petitioners' refusal to accept compliant job offers, and bad faith could not be imputed to a party that merely chose to abide by the law. Petitioners were separated from service by their own refusal to sign contracts made in accordance with the 2008 MORPHE, not by any act of dismissal.

• Ineligibility of Part-time Faculty for Regularization — A faculty member who does not possess the minimum academic qualifications prescribed under the 1992 MORPS and/or 2008 MORPHE is automatically a part-time faculty member and can never attain permanent, regular, or even probationary employment status. Only a full-time faculty—one who meets all minimum academic qualifications—may be considered for permanent or probationary status. The Court applied this doctrine to hold that petitioners, lacking master's degrees, were part-time faculty with fixed-term employment regardless of STI's prior treatment of them as regular employees.

• Three Requisites for Permanent Employment of Tertiary-Level Faculty — For a faculty member teaching in the tertiary level to acquire permanent employment or security of tenure, the following must concur: (1) the faculty member must be a full-time faculty; (2) he or she must have rendered three consecutive years of service or six consecutive semesters (i.e., the probationary period); and (3) such service must have been satisfactory. This test, established in Lacuesta vs. Ateneo de Manila University, was applied to show that petitioners failed the first requisite—they were not full-time faculty because they lacked the required master's degrees.

• Estoppel Cannot Validate an Illegal Act — The doctrine of estoppel cannot operate to give effect to an act which is otherwise null and void or ultra vires. No estoppel can be predicated on an illegal act. The Court applied this principle to reject petitioners' claim that STI was estopped from denying them regular status, as the grant of regular status to unqualified faculty violated the 2008 MORPHE and public policy.

• Equity Cannot Supplant Positive Law — Courts may resort to equity only when there is insufficiency or absence of law. The principle of equity cannot prevail over the positive mandate of the law; its application would be tantamount to overruling or supplanting the express provisions of the law. The Court invoked this doctrine to reject petitioners' equity-based plea for relief.

• Validity of Fixed-Term Employment for Teachers — Fixed-term employment contracts for teachers are valid provided that: (1) the fixed period was agreed upon knowingly and voluntarily by the parties, without force, duress, or improper pressure; and (2) the employer and employee dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. Under fixed-term employment, the relationship is severed upon expiration of the term without necessity of notice, and non-renewal does not constitute dismissal.

• Pari Delicto in Illegal Employment Arrangements — Where both employer and employee are in violation of the law—the employer for maintaining unqualified professors and the employee for agreeing to be employed despite knowledge of lacking necessary qualifications—they are in pari delicto, and the law cannot come to the aid of the employee on the sole ground of the employer's violation.

• "Neither estoppel nor equity can contravene a clear provision of law." — This opening statement frames the entire decision's ratio decidendi: the Court's refusal to allow equitable or estoppel-based claims to override the mandatory academic qualification requirements under the MORPHE.

• "The principle of equity cannot prevail over the positive mandate of the law, such as the 2008 MORPHE in this case. Application of equity 'would be tantamount to overruling or supplanting the express provisions of the law.'" — This passage articulates the hierarchy between equity and positive statutory law in the context of educational regulation, establishing that public policy embodied in the MORPHE overrides equitable considerations.

• "Basic is the rule that the nature of employment is determined by the factors set by law, regardless of any contract expressing otherwise." — This quotation states the fundamental principle that employment status is a matter of law, not contract, and that contractual provisions prescribing an employment classification violative of law are deemed unwritten.

• "the fact that UST continues to hire and maintain professors without the necessary master's degrees is not a ground for claiming illegal dismissal, or even reinstatement. As far as the law is concerned, respondents are in violation of the CHED regulations for continuing the practice of hiring unqualified teaching personnel; but the law cannot come to the aid of petitioners on this sole ground." — Quoted from Son vs. UST and adopted as controlling in the present case, this passage explains the pari delicto doctrine as applied to illegal employment arrangements in educational institutions.

• Son vs. University of Santo Tomas, G.R. No. 211273, April 18, 2018 — Controlling precedent on all fours with the present case. Faculty members without the required master's degrees claimed tenure under a CBA provision granting tenure by default. The Court held the CBA provision null and void for violating the 1992 MORPS, applied the pari delicto doctrine, and rejected estoppel and waiver arguments. The Court found no material distinction between a CBA-based grant and a unilateral grant of regular status.

• Lacuesta vs. Ateneo de Manila University, 513 Phil. 329 (2005) — Cited as the landmark case establishing the three requisites for permanent employment of tertiary-level faculty: (1) full-time status, (2) three consecutive years or six consecutive semesters of satisfactory service, and (3) satisfactory service.

• Mercado vs. AMA Computer College-Parañaque City, Inc., 632 Phil. 228 (2010) — Cited for reconciling the conflict between probationary status and fixed-term employment, and for holding that Article 281 of the Labor Code assumes primacy when probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers. Also cited for the nature of fixed-term employment in contrast to probationary employment.

• Brent School, Inc. vs. Zamora, 60 Phil. 747 (1990) — Cited as the foundational case upholding the validity of fixed-term employment contracts for teachers, establishing the two-pronged test for validity: knowing and voluntary agreement, and absence of moral dominance by the employer.

• De La Salle Araneta University, Inc. vs. Dr. Eloisa G. Magdurulang, G.R. No. 224319, November 20, 2017 — Cited for the rule that in counting the probationary period for purposes of regularization, appointments on a part-time basis are not included, even those that commenced prior to the effectivity of the 2008 MORPHE. Also cited for the standard of review in Rule 45 petitions from CA decisions in labor cases.

• University of the East vs. Pepanio, 702 Phil. 191 (2013) — Cited by the NLRC for the proposition that the operation of educational institutions involves public interest, and that the grant of regular status to unqualified personnel is against the public policy embodied in the 2008 MORPHE.

• Section 35, 2008 MORPHE — Prescribes minimum faculty qualifications for higher education institutions, requiring holders of a master's degree to teach mainly in their major field for undergraduate programs. Applied to determine that petitioners, lacking master's degrees, did not meet the minimum academic qualifications for full-time faculty.

• Section 36, 2008 MORPHE — Defines full-time and part-time faculty, requiring possession of minimum academic qualifications as one of five requisites for full-time status. All faculty who do not meet the foregoing qualifications are considered part-time. Applied to classify petitioners as part-time faculty.

• Section 117, 2008 MORPHE — Provides that an academic teaching personnel who does not possess the minimum academic qualifications shall be considered a part-time employee and cannot avail of probationary employment status; a part-time employee cannot acquire regular or permanent status. Applied to bar petitioners from claiming probationary or permanent status.

• Section 118, 2008 MORPHE — Provides that a full-time academic teaching personnel who has satisfactorily completed probationary employment and possesses minimum qualifications shall acquire regular or permanent status if re-hired or re-appointed. Also provides that a regular or permanent faculty who requests a part-time load may forfeit regular or permanent status. Applied to show that only full-time faculty who complete probationary employment may attain permanent status.

• Section 119, 2008 MORPHE — Provides that the regular teaching load of full-time academic teaching personnel shall be determined by the institution but shall not exceed 24 units per semester or term. Cited to explain that the teaching load requirement is subject to institutional discretion and is not absolute.

• Section 44, 1992 MORPS — Prescribes minimum faculty qualifications for tertiary level undergraduate courses, requiring a holder of a master's degree to teach largely in his major field. Cited as the predecessor provision substantially identical to Section 35 of the 2008 MORPHE.

• Section 45, 1992 MORPS — Defines full-time and part-time faculty, with requirements substantially identical to Section 36 of the 2008 MORPHE. Cited as the predecessor provision.

• Sections 92 and 93, 1992 MORPS — Provide for the probationary period (six consecutive regular semesters for tertiary level) and the rule that full-time teachers who satisfactorily complete their probationary period shall be considered regular or permanent. Cited as the predecessor to Sections 117 and 118 of the 2008 MORPHE.

• Article 281, Labor Code — Governs probationary employment, providing that probationary employment shall not exceed six months unless covered by an apprenticeship agreement, and that services may be terminated for just cause or failure to qualify as a regular employee under reasonable standards made known at the time of engagement. Cited as supplemented by the 1992 MORPS with respect to the probationary period for academic personnel.

• Article 6, Civil Code — Provides that rights may be waived unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. Cited in Son to support the ruling that a waiver of the MORPHE requirements is contrary to law and prejudicial to students and the public.

Justices Bersamin (Acting Chairperson), Del Castillo, Jardeleza, and Gesmundo concurred.