St. Joseph Academy of Valenzuela Faculty Association vs. St. Joseph Academy of Valenzuela and Damaso D. Lopez

Financial assistance equivalent to one-half month's pay for every year of service may be granted to legally dismissed employees as a measure of social justice and equity, provided the dismissal is not for serious misconduct, does not reflect on the employee's moral character, or involve moral turpitude, and the employee has rendered substantial years of satisfactory service.

Thirteen non-licensee teachers employed by St. Joseph Academy of Valenzuela (SJAV) faced dismissal after failing to secure professional teaching licenses required under Republic Act No. 7836, the Philippine Teachers Professionalization Act. These teachers, members of the St. Joseph Academy of Valenzuela Faculty Association-FUR Chapter-TUCP, had served SJAV for periods ranging from five to nine years with satisfactory performance records. The dispute escalated when the union filed a notice of strike alleging illegal termination and union busting, leading to voluntary arbitration before the Secretary of Labor and Employment.

• Nature of the Dispute: The petitioner union filed a notice of strike against respondent SJAV alleging illegal termination and union busting. The parties subsequently agreed to submit the dispute for voluntary arbitration before the Secretary of Labor and Employment.

• The Affected Employees: Originally, nineteen union members were affected. Four had already passed the teacher's board examinations (Reshiel R. Isagan, Mary Grace C. Dimaunahan, Novelyn I. Puyot, and Elizabeth O. Nicol). The remaining fifteen were non-licensees: Lucita A. Marzan, Ma. Erlinda H. Sarmiento, Ma. Lourdes B. Alonzo, Toni Socorro B. Eliseef, Maureen F. Aliwalas, Yvor Stanley A. Aquino, Teresita M. Musa, Luzviminda L. Cruz, Glenda D. Pedrosa, Ma. Theresa E. Oliveros, Anna Lea C. Junsay, Rebesita F. Ferry, Bernadeth M. Salvador, Maribeth S. Bandola, and Jeneth W. Eugenio. Two of these non-licensees (Eliseef and Musa) later opted to pursue separate claims before the National Labor Relations Commission, leaving thirteen teachers represented in the present petition.

• The SOLE Decision: The SOLE ordered reinstatement with full backwages for the four licensed teachers. For the fifteen non-licensees, the SOLE ordered reinstatement only for those with valid temporary or special permits, limiting their service to the remaining period of permit validity, but with full backwages from the time compensation was withheld until actual reinstatement. The SOLE ruled that even as probationary employees, the non-licensees enjoyed security of tenure and SJAV should have afforded them opportunity to comply with RA 7836's licensure requirement.

• The Court of Appeals Decision: The CA deleted the reinstatement and backwages awards for the non-licensees. It ruled reinstatement was impossible because the Department of Education, Culture and Sports (now DepEd) assigns para-teachers to schools as it determines, SJAV could not be deprived of its right to choose teachers, and the positions had been filled. The CA also held no illegal dismissal was committed since the non-licensees were not regular employees.

• Current Status: By the time of the Supreme Court review, the temporary or special permits of the non-licensees had already expired, rendering reinstatement impossible. The non-licensees had served SJAV for five to nine years with no record of dissatisfaction regarding their teaching performance.

• Reinstatement and Backwages: Petitioner maintained that the CA erred in deleting the SOLE's award of reinstatement and backwages, arguing that even non-licensees enjoyed security of tenure as probationary employees and should have been given opportunity to comply with licensure requirements.

• Financial Assistance and Separation Pay: Petitioner argued that in lieu of reinstatement, separation pay and backwages should be awarded based on "equity and compassionate justice," citing the non-licensees' years of service, their contribution to the school's progress, and their efficiency as teachers.

• Rule 45 Review: Petitioner contended that the CA decision was not in accordance with law and sought restoration of the SOLE's award.

• Legality of Dismissal: Respondent SJAV countered that since the non-licensees could not have become regular employees without the required licenses under RA 7836, no illegal dismissal occurred; consequently, the remedies of reinstatement and backwages were unavailable.

• Impossibility of Reinstatement: SJAV argued that reinstatement was legally and physically impossible as the teaching positions had been filled and only the Department of Education could assign para-teachers to schools.

• Dismissal of Petition: Respondent urged the dismissal of the petition, asserting that the CA correctly applied the law in deleting the monetary awards absent a finding of illegal dismissal.

• Reinstatement and Backwages: Whether the CA committed error in deleting the SOLE's award of reinstatement and backwages for the non-licensee teachers.

• Financial Assistance: Whether financial assistance should be granted to legally dismissed employees as a measure of social justice and equity.

• Reinstatement and Backwages: The CA committed no reversible error in deleting the awards. Reinstatement and backwages are twin remedies available exclusively in cases of illegal dismissal under Article 279 of the Labor Code. Both the SOLE and the CA correctly determined that no illegal dismissal occurred because the non-licensees lacked the mandatory teaching licenses required under Section 26 of RA 7836, precluding them from attaining regular employment status or continuing as professional teachers. The expiration of their temporary permits by the time of adjudication rendered reinstatement legally impossible.

• Financial Assistance: Financial assistance equivalent to one-half month's pay for every year of service is granted to the thirteen non-licensees. Although the dismissal was legal, it was not for serious misconduct, did not reflect on moral character, or involve moral turpitude. The records establish that the teachers rendered five to nine years of satisfactory service without any showing of dissatisfaction by SJAV. In keeping with equity and social justice, as exemplified in Nissan Motor Philippines, Inc. v. Angelo and Pharmacia and Upjohn, Inc. v. Albayda, Jr., such assistance is warranted to alleviate the economic hardship caused by the dismissal while recognizing the employees' substantial contribution to the institution.

• Rule 45 Review in Labor Cases — In a Rule 45 review of a CA decision in a labor case, the Supreme Court considers the correctness of the assailed CA decision, limited to questions of law, and views the CA decision in the same context that the petition for certiorari was presented to it. The inquiry focuses on whether the CA correctly determined the presence or absence of grave abuse of discretion in the administrative agency's decision, not on the intrinsic correctness of the agency's decision on the merits.

• Remedies for Illegal Dismissal — Reinstatement and payment of backwages are twin remedies intended to make the dismissed employee whole. Backwages represent compensation that should have been earned but were not collected because of unjust dismissal, computed from the time of dismissal until actual reinstatement or, if reinstatement is impossible, until the date the decision becomes final. Separation pay, distinct from backwages, is granted where reinstatement is inadvisable due to strained relations and is based on the actual period when the employee was unlawfully prevented from working.

• Financial Assistance for Legal Dismissal — As an exception to the general rule that reinstatement and backwages apply only to illegal dismissals, financial assistance may be granted to legally dismissed employees based on equity and social justice when: (1) the dismissal is not for serious misconduct; (2) it does not reflect on the employee's moral character or involve moral turpitude; and (3) circumstances such as long years of satisfactory service warrant compassionate relief. The measure is typically one-half month's pay for every year of service.

• "In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct."

• "The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal."

• "Nevertheless, the Court, in exceptional cases, has granted financial assistance to legally dismissed employees as an act of 'social justice' or based on 'equity' so long as the dismissal was not for serious misconduct, does not reflect on the employee's moral character, or would involve moral turpitude."

• Phimco Industries, Inc. v. Phimco Industries Labor Association, G.R. No. 170830, August 11, 2010 — Controlling precedent establishing the approach for Rule 45 review of CA decisions in labor cases, emphasizing the distinction between correctness review under Rule 45 and jurisdictional review under Rule 65.

• Nissan Motor Philippines, Inc. v. Angelo, G.R. No. 164181, September 14, 2011 — Cited as basis for granting financial assistance to dismissed employees based on compassionate justice and social justice considerations.

• Pharmacia and Upjohn, Inc. v. Albayda, Jr., G.R. No. 172724, August 23, 2010 — Controlling precedent establishing that financial assistance equivalent to one-half month's pay for every year of service is equitable for legally dismissed employees whose actions, while constituting valid grounds for termination, are not so reprehensible as to warrant disregard of long years of service.

• Article 279, Labor Code — Mandates that an employee unjustly dismissed is entitled to reinstatement without loss of seniority rights and full backwages inclusive of allowances from the time compensation was withheld up to actual reinstatement. Applied to establish that these remedies are contingent upon a finding of illegal dismissal.

• Republic Act No. 7836, Section 26 (Philippine Teachers Professionalization Act) — Provides that no person shall engage in teaching without a valid certificate of registration and professional license or special/temporary permit, and authorizes the Department of Education to assign para-teachers who failed the licensure examination to schools under specific circumstances. Applied to determine that non-licensees could not attain regular employment status.

• Rule 45, Rules of Court — Governs appeals by certiorari to the Supreme Court, limiting review to questions of law. Applied to frame the scope of judicial review of the CA decision.

Maria Lourdes P. A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Lucas P. Bersamin, and Martin S. Villarama, Jr.