Universidad de Sta. Isabel vs. Sambajon, Jr.

A private school teacher on probationary status remains under probation for the entire duration of the three-year (six consecutive semesters) period prescribed by the Manual of Regulations for Private Schools, and the mere omission of the word "probationary" in a subsequent appointment contract does not convert the teacher's status to permanent; however, non-renewal of a probationary contract without just or authorized cause, or without showing that the teacher failed to meet reasonable standards made known at the time of engagement, constitutes illegal dismissal entitling the teacher to backwages for the unexpired portion of the probationary period.

Universidad de Sta. Isabel is a non-stock, non-profit religious educational institution in Naga City. It hired Marvin-Julian L. Sambajon, Jr. as a full-time college faculty member in its Department of Religious Education. The probationary period for tertiary-level academic personnel in private schools is governed not solely by Article 281 of the Labor Code but by the 1992 Manual of Regulations for Private Schools, supplemented by DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, which fixes the maximum probationary period at six consecutive regular semesters of satisfactory service for the tertiary level.

Universidad de Sta. Isabel, a non-stock, non-profit religious educational institution in Naga City, hired Marvin-Julian L. Sambajon, Jr. as a full-time college faculty member with the rank of Assistant Professor on probationary status under an Appointment Contract dated November 1, 2002, effective November 1, 2002 up to March 30, 2003. After that contract expired, petitioner continued to assign teaching loads to respondent, who remained a full-time faculty member of the Department of Religious Education for the two semesters of school year 2003-2004 (June 1, 2003 to March 31, 2004) and the two semesters of school year 2004-2005 (June 2004 to March 31, 2005). In total, respondent served five consecutive semesters.

Sometime in June 2003, after respondent completed his Master of Arts in Education, major in Guidance and Counseling, he submitted the corresponding CHED Special Order and his credentials to petitioner's Human Resources Department for the purpose of a salary adjustment. His salary was eventually increased, as reflected in his pay slips starting October 1-15, 2004, and he was re-ranked from Assistant Professor to Associate Professor. Respondent, however, insisted that the salary increase should have been made effective as of June 2003 and demanded payment of his salary differential. In letters dated October 15, 2004 and January 10, 2005, petitioner's officials explained that under the Faculty Manual, teachers are not re-ranked during their probationary period and that re-ranking is done only every two years for permanent teachers; as a probationary teacher, respondent was not entitled to re-ranking or salary adjustment more frequently than a permanent teacher. Respondent found this explanation insufficient and, in a letter dated January 12, 2005, pointed out that another probationary faculty member had allegedly received a salary adjustment at the start of the school year after completing a master's degree. A dialogue was held between respondent and Sr. Ma. Asuncion G. Evidente, D.C., the school President. Respondent claimed that Sr. Evidente told him the school administration had decided to shorten his probationary period to two years based on his satisfactory performance. Sr. Evidente categorically denied this, stating that respondent's appointment as Associate Professor did not affect his probationary status and that petitioner had not exercised any prerogative to shorten the probationary period. Sr. Stella O. Real, D.C., the HR Officer, likewise denied confirming to respondent that his probationary period had been shortened.

On February 26, 2005, respondent received a letter of termination stating that his full-time probationary appointment would not be renewed when it expired on March 31, 2005. No just or authorized cause was stated. Prior to the termination, respondent had consistently received above-average performance ratings from both school officials and students, and had been promoted to Associate Professor after finishing his master's degree. On April 14, 2005, respondent filed a complaint for illegal dismissal. Five appointment contracts were issued to respondent over the course of his employment: the first dated November 1, 2002 (November 1, 2002 to March 30, 2003), the second dated September 28, 2003 (June 1, 2003 to October 31, 2003), the third dated February 26, 2004 (November 1, 2003 to March 31, 2004), the fourth dated September 30, 2004 (June 1, 2004 to October 31, 2004), and the fifth dated October 28, 2004 (November 3, 2004 to March 31, 2005). Only the first and third contracts were signed by respondent. The third contract, unlike the first, did not expressly state that the appointment was on probationary status, but it did provide that unless renewed in writing, the designation would automatically terminate on the stated expiration date. The Labor Arbiter found no just or authorized cause for the termination and ruled the dismissal illegal, ordering backwages and separation pay. The NLRC affirmed but held that respondent had acquired permanent status. The CA sustained the NLRC's conclusion of permanent status and illegal dismissal, modifying the award to include reinstatement and full backwages.

• Issue Not Raised on Appeal: Petitioner argued that the NLRC gravely abused its discretion in resolving the issue of whether respondent had attained regular or permanent status, when this issue was not raised in its appeal memorandum. The Labor Arbiter's finding that respondent was dismissed while still a probationary employee was not appealed by respondent and had therefore become final.
• Correct Interpretation of Probationary Period: Petitioner sought the correct interpretation of Section 92 of the 1992 Manual of Regulations for Private Schools and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, contending that the probationary period for teachers is three years (six consecutive semesters) and that respondent had not completed this period.
• Fixed-Term Contracts: Petitioner asserted that respondent's probationary period expired at the end of each semester for which he was contracted to teach, and that it was not obligated to renew his services at the end of the fifth semester. It treated the appointment contracts as fixed-term contracts such that respondent was not terminated but merely allowed to expire.

• Acquisition of Permanent Status: Respondent maintained that he had acquired permanent status when petitioner allowed him to continue teaching after the expiration of his first probationary appointment contract on March 30, 2003, pursuant to the last paragraph of Article 281 of the Labor Code providing that an employee allowed to work after a probationary period shall be considered a regular employee.
• Shortening of Probationary Period: Respondent claimed that petitioner had decided to shorten his probationary period to two years, as relayed to him by Sr. Evidente during their dialogue, on the basis of his satisfactory performance.
• Entitlement to Full Backwages: Respondent asserted that the NLRC erred in not awarding him full backwages consistent with the finding that he had acquired permanent status.

• Scope of NLRC Review: Whether the NLRC correctly resolved the issue of respondent's employment status when it was not specifically raised in petitioner's appeal memorandum.
• Probationary Status and Validity of Termination: Whether respondent's probationary employment was validly terminated by petitioner.

• Scope of NLRC Review: Yes. The NLRC did not gravely abuse its discretion in resolving the issue of respondent's employment status, as this was a logical consequence of resolving the questions of the validity of the dismissal and the applicable probationary period that petitioner itself elevated on appeal.
• Probationary Status and Validity of Termination: No. Respondent was still a probationary employee at the time of termination, having served only five of the six consecutive semesters required under the Manual of Regulations; however, the non-renewal was illegal because no just or authorized cause was given and no reasonable standards for denial of permanent status were shown.

• Scope of NLRC Review: Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC provides that the Commission shall limit itself to reviewing only the specific issues elevated on appeal. However, petitioner's appeal memorandum raised the issues of whether respondent was illegally dismissed and whether petitioner shortened the probationary period, and specifically sought the correct interpretation of the Manual of Regulations for Private Schools and DOLE-DECS-CHED-TESDA Order No. 01. The NLRC's conclusion that respondent had attained regular status was a logical result of its interpretation of the law in resolving these issues. As held in Roche (Phils.) vs. NLRC, when a party elevates issues for review, any action taken by the Commission thereon is within the parameters of its jurisdiction. The NLRC therefore did not gravely abuse its discretion.

• Probationary Status and Validity of Termination: The probationary employment of teachers in private schools is governed not solely by the Labor Code but by the 1992 Manual of Regulations for Private Schools, which has the force of law. Section 92 thereof fixes the maximum probationary period for tertiary-level academic personnel at six consecutive regular semesters of satisfactory service, and Section 93 provides that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. The CA and NLRC erred in concluding that respondent had acquired permanent status. The omission of the word "probationary" in the third appointment contract dated February 26, 2004 did not convert his status to permanent, because that contract expressly provided that unless renewed in writing, the appointment would automatically expire. Respondent himself admitted in his January 12, 2005 letter that he was still a probationary teacher. His bare assertion that petitioner had shortened his probationary period was unsupported by any proof of a school administration decision to that effect, and both Sr. Evidente and Sr. Real denied having informed him of any such shortening. Under Rev. Fr. Labajo vs. Alejandro, whether a teacher has attained permanent status before the maximum period is a matter of proof, and absent circumstances unmistakably showing an abbreviated probationary period, the three-year term governs. The practice of issuing semester-based appointment contracts did not negate the applicable probationary period. As explained in Magis Young Achievers' Learning Center vs. Manalo, the teacher remains under probation for the entire three-year period, and it is only upon renewal for the third time that Section 93 becomes operative. In Mercado vs. AMA Computer College-Parañaque City, Inc., the Court recognized that fixed-term contracts may be used as a convenient arrangement during the probationary period, but Article 281 of the Labor Code assumes primacy, and the school cannot freely choose not to renew contracts simply because their terms have expired. Respondent had served only five semesters and had not completed the six-semester probationary period. Nevertheless, his dismissal was illegal. A probationary employee enjoys limited security of tenure and may be terminated only for just or authorized cause, or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement. Petitioner gave no just or authorized cause for the non-renewal, and respondent had consistently received above-average performance ratings and had been promoted to Associate Professor. Respondent was therefore entitled to continue his probationary period, and his employment was deemed renewed for the following semester (first semester of SY 2005-2006). Given the acrimony between the parties, it was certain that petitioner would not retain respondent beyond the three-year period, so backwages were confined to the unexpired portion of the probationary period — one semester.

• Probationary Employment of Private School Teachers — The probationary period for academic personnel in private schools is governed by the Manual of Regulations for Private Schools, not solely by the Labor Code. For the tertiary level, the maximum probationary period is six consecutive regular semesters of satisfactory service. The teacher remains under probation for the entire duration of this period. The practice of issuing semester-based or fixed-term appointment contracts does not negate the probationary period; Article 281 of the Labor Code assumes primacy over the fixed-term character of the contract during the probationary period. The school cannot freely choose not to renew contracts simply because their terms have expired without complying with probationary termination rules.

• Acquisition of Permanent Status — Full-time teachers who have satisfactorily completed the probationary period prescribed by the Manual of Regulations shall be considered regular or permanent. Whether a teacher has attained permanent status before the maximum period is a matter of proof. Absent circumstances unmistakably showing that an abbreviated probationary period has been agreed upon, the three-year (six-semester) term governs. The mere omission of the word "probationary" in an appointment contract does not convert a teacher's status to permanent, especially where the contract expressly provides for automatic expiration unless renewed in writing.

• Security of Tenure of Probationary Employees — Probationary employees are entitled to constitutional protection of security of tenure during and before the end of the probationary period. Their services may be terminated only for: (a) a just cause, (b) an authorized cause, or (c) failure to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement. Non-renewal of a probationary contract without any of these grounds constitutes illegal dismissal, entitling the employee to backwages for the unexpired portion of the probationary period.

• "The probationary employment of teachers in private schools is not governed purely by the Labor Code. The Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools." — This passage establishes the doctrinal framework that the Manual of Regulations, not the Labor Code alone, determines whether a private school faculty member has attained regular or permanent status.

• "Since it was explicitly provided in the above contract that unless renewed in writing respondent's appointment automatically expires at the end of the stipulated period of employment, the CA erred in concluding that simply because the word 'probationary' no longer appears below the designation (Full-Time Faculty Member), respondent had already become a permanent employee." — This passage articulates the ratio decidendi on why the omission of the word "probationary" in an appointment contract does not, by itself, confer permanent status on a teacher.

• "Given the clear constitutional and statutory intents, we cannot but conclude that in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-period character of the contract must give way." — This quotation from Mercado vs. AMA Computer College-Parañaque City, Inc., as adopted by the Court, defines the controlling rule when probationary status overlaps with fixed-term employment contracts in the academic setting.

• "While no vested right to a permanent appointment had as yet accrued in favor of respondent since he had not completed the prerequisite three-year period (six consecutive semesters) necessary for the acquisition of permanent status as required by the Manual of Regulations for Private Schools — which has the force of law — he enjoys a limited tenure. During the said probationary period, he cannot be terminated except for just or authorized causes, or if he fails to qualify in accordance with reasonable standards prescribed by petitioner for the acquisition of permanent status of its teaching personnel." — This passage states the Court's holding on the limited security of tenure enjoyed by probationary teachers and the grounds for their lawful termination.

• Magis Young Achievers' Learning Center vs. Manalo, G.R. No. 178835, February 13, 2009, 579 SCRA 421 — Controlling precedent on the three-year probationary period rule for private school teachers. The Court relied on this case to explain that the teacher remains under probation for the entire three-year period, that semester-based contracts do not negate the probationary period, and that it is only upon renewal for the third time that Section 93 of the Manual becomes operative. The Court also adopted its framework for computing backwages confined to the unexpired probationary period.

• Mercado vs. AMA Computer College-Parañaque City, Inc., G.R. No. 183572, April 13, 2010, 618 SCRA 218 — Followed precedent on the interplay between probationary status and fixed-term employment contracts. The Court adopted its ruling that Article 281 of the Labor Code assumes primacy when probationary status overlaps with fixed-term contracts not specifically used for the fixed term they offer.

• Rev. Fr. Labajo vs. Alejandro, 248 Phil. 194 (1988) — Cited for the principle that the three-year period is the maximum probationary period and that attainment of permanent status before that period is a matter of proof, with the three-year term governing absent circumstances unmistakably showing an abbreviated period was agreed upon.

• Lacuesta vs. Ateneo de Manila University, 513 Phil. 329 (2005) — Cited for the proposition that the Manual of Regulations for Private Schools, not the Labor Code, determines whether a faculty member has attained regular or permanent status.

• Roche (Phils.) vs. NLRC, 258-A Phil. 160 (1989) — Cited to support the ruling that the NLRC did not gravely abuse its discretion in resolving the issue of employment status, since petitioner had opened the issues of validity of dismissal and applicable probationary period on appeal.

• Article 281, Labor Code — Governs probationary employment in general, providing that probationary employment shall not exceed six months unless covered by an apprenticeship agreement, that termination may be for just cause or failure to qualify under reasonable standards made known at the time of engagement, and that an employee allowed to work after a probationary period shall be considered a regular employee. The Court applied the last paragraph in conjunction with the Manual of Regulations to determine when a teacher acquires regular status.

• Section 92, 1992 Manual of Regulations for Private Schools — Fixes the maximum probationary period for academic personnel at the tertiary level at six consecutive regular semesters of satisfactory service. The Court held that this provision, not the six-month period under the Labor Code, governs the probationary period of private school teachers.

• Section 93, 1992 Manual of Regulations for Private Schools — Provides that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. The Court held that this provision becomes operative only upon the teacher's completion of the six-semester probationary period.

• DOLE-DECS-CHED-TESDA Order No. 01, series of 1996 — Supplements the Manual of Regulations by providing guidelines on the status of employment of teachers and academic personnel in private educational institutions, including the definition of full-time teaching personnel and the rule that part-time personnel cannot acquire regular or permanent status. The Court applied these guidelines to confirm that respondent, as a full-time faculty member, was subject to the six-semester probationary period.

• Section 4(d), Rule VI, 2005 Revised Rules of Procedure of the NLRC — Provides that on appeal, the NLRC shall limit itself to reviewing only the specific issues elevated for review. The Court applied this rule to determine whether the NLRC gravely abused its discretion in resolving the issue of respondent's employment status, concluding it did not because the issue was a logical consequence of the questions petitioner itself raised.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Lucas P. Bersamin, and Associate Justice Bienvenido L. Reyes concurred.