St. Mary's Academy of Dipolog City vs. Palacio

An employer commits illegal dismissal when it terminates the services of incumbent teachers for failure to pass the LET prior to the statutory deadline fixed for such registration, as the law's transitory provisions accord incumbent teachers a specific period within which to comply, and premature termination before that deadline defeats the workers' right to security of tenure. However, termination is valid where the teacher is not even qualified to take the LET, rendering compliance with the registration requirement impossible.

St. Mary's Academy of Dipolog City is a private educational institution that hired the respondents as classroom teachers and guidance counselor at different dates in the late 1990s. Republic Act No. 7836, the Philippine Teachers Professionalization Act of 1994, mandated that all teachers pass the Licensure Examination for Teachers (LET) and register with the Professional Regulation Commission (PRC) to practice the teaching profession, subject to transitory provisions granting incumbent teachers a grace period to comply. DECS Memorandum No. 10, S. 1998, issued pursuant to PRC Resolution No. 600, S. 1997, fixed September 19, 2000 as the deadline for incumbent teachers to register as professional teachers. The dispute arose when the school terminated the respondents' employment on March 31, 2000 — nearly six months before the statutory deadline — on the ground that they had not passed the LET.

On different dates in the late 1990s, St. Mary's Academy of Dipolog City hired respondents Calibod, Laquio, Santander, Saile, and Montederamos as classroom teachers, and respondent Palacio as guidance counselor. The respondents were non-board passers at the time of their hiring. Republic Act No. 7836, the Philippine Teachers Professionalization Act of 1994, required all teachers to pass the Licensure Examination for Teachers (LET) and register with the Professional Regulation Commission (PRC) to practice the teaching profession, subject to transitory provisions granting incumbent teachers a grace period to comply. Pursuant to DECS Memorandum No. 10, S. 1998 and PRC Resolution No. 600, S. 1997, the deadline for incumbent teachers to register as professional teachers was fixed at September 19, 2000.

In separate letters dated March 31, 2000, petitioner informed the respondents that their re-application for school year 2000-2001 could not be accepted because they had failed to pass the LET. Petitioner justified the early termination by citing DECS Memorandum No. 10, S. 1998, which requires incumbent teachers to register as professional teachers pursuant to Section 27 of RA 7836. Petitioner claimed it decided to terminate their services before the September 19, 2000 deadline because it would be prejudicial to the school if their services were terminated in the middle of the school year, as it would be difficult to hire licensed teachers as replacements mid-year and the education of students would be compromised. Petitioner also argued that it could not hire respondents for only the period June to September 2000 without violating the DECS policy requiring written contracts of at least one year's duration for teachers.

Together with four other classroom teachers — Padilla, Andalahao, Decipulo, and Marlynn Palacio — who were similarly dismissed, respondents filed a complaint contesting their termination as highly irregular and premature. They admitted being non-board passers but argued that their security of tenure could not be disregarded for failure to register with the PRC or pass the LET prior to the deadline set by RA 7836. They further contended that RA 7836 provides exceptions to the examination requirement, that some of them possessed civil service eligibilities and special permits to teach, and that petitioner's retention of other teachers who likewise lacked the required eligibility showed evident bad faith.

Based on a PRC certification issued on October 23, 2000, only respondent Santander passed the LET, but only for the elementary level, rendering her still unqualified to teach at the high school level. All the others, except respondent Saile, failed the examination. Saile was not qualified to take the LET, having only three out of the minimum ten required educational units in professional education for secondary school teachers under Section 15 of RA 7836 — a fact she did not refute. The Labor Arbiter found the dismissal illegal as premature, a finding affirmed by the NLRC and the CA, which also observed that petitioner had retained and hired other equally unqualified teachers for school year 2000-2001, constituting badges of bad faith.

• Right to Premature Termination: Petitioner insisted that it had the right to terminate respondents' services as early as March 2000 without waiting for the September 19, 2000 deadline set by law, due to the need to fix the school organization prior to the applicable school year.
• Operational Prejudice: Petitioner argued that it would be difficult to hire licensed teachers in the middle of the school year as respondents' replacements, and that mid-year termination might compromise the education of students and school operations.
• Contract Duration Policy: Petitioner contended that it could not hire respondents for the period covering only June to September 2000 because it would contravene the DECS policy requiring written contracts of at least one year's duration for teachers.
• Limitation of Backwages: Petitioner argued that assuming respondents were "prematurely" terminated in March 2000, they were at most entitled to backwages up to September 19, 2000 only, because on that date they were already dismissible for cause for not having obtained their teachers' license.

• Security of Tenure: Respondents argued that their security of tenure could not simply be disregarded for failure to register with the PRC or pass the LET prior to the deadline set by RA 7836.
• Statutory Exceptions: Respondents contended that RA 7836 provides for exceptions to the taking of the examination, and that some of them possessed civil service eligibilities and special permits to teach, making their outright dismissal illegal.
• Bad Faith: Respondents pointed out that petitioner's retention and acceptance of other teachers who likewise did not possess the required eligibility showed evident bad faith in terminating them.

• Premature Dismissal: Whether the Court of Appeals erred in holding that the dismissal of respondents was premature because it was effected on March 31, 2000, prior to September 19, 2000, the deadline set by the PRC for teachers to acquire their license.
• Limitation of Backwages: Whether, assuming respondents were "prematurely" terminated in March 2000, they were entitled to backwages only up to September 19, 2000, on which date they were already dismissible for cause for not having obtained their teachers' license.

• Premature Dismissal: No. The dismissal of Palacio, Calibod, Laquio, Santander, and Montederamos was premature and illegal, having been effected on March 31, 2000 — before the September 19, 2000 statutory deadline for incumbent teachers to register as professional teachers under RA 7836 and related regulations. However, Saile's dismissal was valid because she was not qualified to take the LET and could not possibly obtain the prerequisite to continue teaching.
• Limitation of Backwages: No. The issue regarding the amount of backwages was belatedly raised by petitioner only in its motion for reconsideration before the CA, and thus could not be entertained. The award of limited backwages covering March 31, 2000 to September 30, 2000 was sustained.

• Premature Dismissal: RA 7836, through its Sections 26, 27, and 31, established a transitory framework granting incumbent teachers a specific period within which to register as professional teachers. DECS Memorandum No. 10, S. 1998, pursuant to PRC Resolution No. 600, S. 1997, fixed the deadline at September 19, 2000. Until that date, incumbent teachers — even if unregistered and unlicensed — were legally permitted to practice the teaching profession. Petitioner terminated the respondents on March 31, 2000, nearly six months before the deadline, thereby denying them the privilege accorded by law to comply with the registration requirement. Petitioner's justifications — operational prejudice, difficulty in hiring mid-year replacements, and the DECS policy on yearly contracts — were rejected. Contractual stipulations on yearly duration could not override statutory law, pursuant to the principle that an existing law enters into and forms part of a valid contract without need for express reference. The prejudice to school operations from retaining respondents was characterized as trivial and speculative compared to the consequences of their unemployment. Petitioner's retention of other unqualified teachers for school year 2000-2001 indicated ulterior motive. As for Saile, however, she lacked the minimum ten units in professional education required under Section 15 of RA 7836 to even be admitted to the LET, a fact she did not refute. Since she could not possibly obtain the prerequisite license, her termination was just and legal.

• Limitation of Backwages: Petitioner's contention that backwages should be limited to September 19, 2000 — the date respondents allegedly became dismissible for cause — was rejected on two grounds. First, petitioner could not presume that respondents could not timely comply with the requirements of law. Second, and procedurally decisive, petitioner assailed the amount of backwages for the first time only in its motion for reconsideration before the CA, rendering the issue belatedly raised and beyond the Court's cognizance. The award of limited backwages from March 31, 2000 to September 30, 2000, as ruled by the Labor Arbiter and affirmed by the NLRC and CA, was accordingly sustained.

• Security of Tenure of Teachers Under Transitory Provisions — The right to security of tenure protects incumbent teachers from premature dismissal during the transitory period granted by law to comply with professional registration requirements. RA 7836 and its implementing regulations fixed September 19, 2000 as the deadline for incumbent teachers to register as professional teachers; termination before that deadline, absent any other valid cause, constitutes illegal dismissal. The employer cannot deny workers the privilege accorded by law to comply within the statutory period.

• Incorporation of Law into Contracts — An existing law enters into and forms part of a valid contract without the need for the parties to expressly make reference to it. Stipulations in a contract must be read in conjunction with statutory and administrative regulations, and stipulations made upon the convenience of the parties are valid only if not contrary to law. A DECS policy requiring yearly contracts for teachers cannot override the statutory grace period granted to incumbent teachers.

• Social Justice and Protection to Labor — Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the justification that those with less privilege in life should have more in law. While the employer's right to protect its interest is recognized, it must be exercised in a manner that does not infringe on the workers' right to security of tenure.

• Belatedly Raised Issues — Issues raised for the first time on motion for reconsideration before an appellate court cannot be entertained by the Supreme Court, as they are deemed belatedly raised.

• "Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law." — This passage articulates the Court's guiding principle in resolving the tension between the employer's operational interests and the workers' right to security of tenure, and is frequently cited in Philippine labor jurisprudence.

• "As the law has provided a specific timeframe within which respondents could comply, petitioner has no right to deny them of this privilege accorded to them by law." — This statement captures the ratio decidendi: the statutory grace period for teacher registration is a privilege that the employer cannot unilaterally truncate through premature termination.

• "Provisions in a contract must be read in conjunction with statutory and administrative regulations. This finds basis on the principle 'that an existing law enters into and forms part of a valid contract without the need for the parties expressly making reference to it.'" — This passage defines the doctrine of incorporation of law into contracts as applied to defeat petitioner's reliance on the DECS yearly-contract policy.

• Escorpizo vs. University of Baguio, 366 Phil 166 (1999) — Cited as authority for the principle that an existing law enters into and forms part of a valid contract without need for express reference, supporting the Court's rejection of petitioner's reliance on the DECS yearly-contract policy.
• Central Bank Employees Association, Inc. vs. Bangko Sentral ng Pilipinas, 487 Phil 531 (2004) — Cited for the social justice principle that the law bends over backward to accommodate the interests of the working class, underpinning the Court's protective stance toward the dismissed teachers.

• Section 13, Republic Act No. 7836 (Philippine Teachers Professionalization Act of 1994) — Requires all applicants for registration as professional teachers to undergo a written examination and obtain a valid certificate of registration and professional license before practicing as professional teachers, except as otherwise allowed by the Act.
• Section 15, Republic Act No. 7836 — Sets qualification requirements for LET applicants, including a minimum of ten units in professional education for secondary school teachers; applied to uphold Saile's dismissal because she lacked the required units and thus could not even take the LET.
• Section 26, Republic Act No. 7836 — Provides for registration and exceptions, granting incumbent teachers a transitory period to register as professional teachers, with provisions for temporary or special permits for those who fail the LET (para-teachers).
• Section 27, Republic Act No. 7836 — Prohibits the practice of teaching without a valid certificate of registration and professional license, except as otherwise allowed under the Act.
• Section 31, Republic Act No. 7836 — Transitory provision granting all incumbent teachers five years from the organization of the Board for Professional Teachers within which to qualify and be included in the roster of professionals.
• DECS Memorandum No. 10, S. 1998 — Implemented Sections 26, 27, and 31 of RA 7836, fixing September 19, 2000 as the deadline for incumbent teachers to register as professional teachers.
• PRC Resolution No. 600, S. 1997 (BPT Resolution No. 600, Series of 1997) — Provided guidelines for teacher registration beyond September 19, 1997, extending the deadline to September 19, 2000.
• Article 1306, New Civil Code — Provides that stipulations in contracts are valid only if not contrary to law, morals, good customs, public order, or public policy; applied to reject petitioner's reliance on the DECS yearly-contract policy.
• Article 279, Labor Code of the Philippines — Governs reinstatement and backwages for illegally dismissed employees; cited by the Labor Arbiter in awarding separation pay and limited backwages.

Chief Justice Renato C. Corona (Chairperson), Associate Justice Presbitero J. Velasco, Jr., Associate Justice Teresita J. Leonardo-De Castro, and Associate Justice Jose Portugal Perez concurred.