CASE DIGEST: Universidad de Sta. Isabel v. Sambajon

G.R. No. 196280 & 196286 : April 2, 2014




Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational institution in Naga City. Petitioner hired Marvin-Julian L. Sambajon, Jr. (respondent) as a full-time college faculty member with the rank of Assistant Professor on probationary status, as evidenced by an Appointment Contract4 dated November 1, 2002, effective November 1, 2002 up to March 30, 2003.

After the aforesaid contract expired, petitioner continued to give teaching loads to respondent who remained a full-time faculty member of the Department of Religious Education for the two semesters of school-year (SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two semesters of SY 2004-2005 (June 2004 to March 31, 2005).

Sometime in June 2003, after respondent completed his course in Master of Arts in Education, major in Guidance and Counseling, he submitted the corresponding Special Order from the Commission on Higher Education (CHED), together with his credentials for the said masters degree, to the Human Resources Department of petitioner for the purpose of salary adjustment/increase. Subsequently, respondents salary was increased, as reflected in his pay slips starting October 1-15, 2004. He was likewise re-ranked from Assistant Professor to Associate Professor.

In a letter dated October 15, 2004 addressed to the President of petitioner, Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his salary increase should be made effective as of June 2003 and demanded the payment of his salary differential. The school administration thru Sr. Purita Gatongay, D.C., replied by explaining its policy on re-ranking of faculty members, viz: Please be informed that teachers in the Universidad are not re-ranked during their probationary period. The Faculty Manual as revised for school year 2002-2003 provides Re-ranking is done every two years, hence the personnel hold their present rank for two years. Those undergoing probationary period and those on part-time basis of employment are not covered by this provision. This provision is found also in the 2000-2001 Operations Manual.

Your personnel file shows that you were hired as a probationary teacher in the second semester of school year 2002-2003. By October 2004, you will be completing four (4) semesters (two school years) of service. Even permanent teachers are re-ranked only every two years, and you are not even a permanent teacher. I am informed that you have been told several times and made to read the Provision in the Faculty Manual by the personnel office that you cannot be re-ranked because you are still a probationary teacher.

Respondent insisted on his demand for retroactive pay. Petitioner reiterated the school policy on re-ranking of teachers.

However, respondent found the above explanation insufficient and not clear enough. In his letter dated January 12, 2005, he pointed out the case of another faculty member --whom he did not name --also on probationary status whose salary was supposedly adjusted by petitioner at the start of school year (June) after he/she had completed his/her masters degree in March. Respondent thus pleaded for the release of his salary differential, or at the very least, that petitioner give him categorical answers to his questions. A dialogue between the parties ensued but led to conflict.

On February 26, 2005, respondent received his letter of termination. On April 14, 2005, respondent filed a complaint for illegal dismissal against the petitioner.

Labor Arbiter Jesus Orlando M. Quinones ruled that there was no just or authorized cause in the termination of respondents probationary employment. The NLRC rendered its Decision affirming the Labor Arbiter and holding that respondent had acquired a permanent status pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for Private Schools, in relation to Article 281 of the Labor Code, as amended.

Both parties filed separate appeals before the CA. On motion by respondent, the two cases were consolidated (CA-G.R. SP Nos. 108103 and 108168).

The CA sustained the conclusion of the NLRC that respondent had already acquired permanent status when he was allowed to continue teaching after the expiration of his first appointment-contract on March 30, 2003. However, the CA found it necessary to modify the decision of the NLRC to include the award of back wages to respondent.


(1) Whether the NLRC correctly resolved an issue not raised in petitioners appeal memorandum; and

(2) whether respondents probationary employment was validly terminated by petitioner.

HELD: The petition is partly meritorious.

LABOR LAW: NLRC revised rules of procedure

Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was in force at the time petitioner appealed the Labor Arbiters decision, expressly provided that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review, to wit:

Section 4. Requisites for perfection of appeal.

(d) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues that were elevated on appeal.

We have clarified that the clear import of the aforementioned procedural rule is that the NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory.


In reviewing the Labor Arbiters finding of illegal dismissal, the NLRC concluded that respondent had already attained regular status after the expiration of his first appointment contract as probationary employee. Such conclusion was but a logical result of the NLRCs own interpretation of the law. Since petitioner elevated the questions of the validity of respondents dismissal and the applicable probationary period under the aforesaid regulations, the NLRC did not gravely abuse its discretion in fully resolving the said issues.

There is no merit to this contention. The records show that the petitioners elevated the issues regarding the correctness of the award of damages, reinstatement with backpay, retirement benefits and the cost-saving bonus to the respondent Commission in their appeal. This opened the said issues for review and any action taken thereon by the Commission was well within the parameters of its jurisdiction.

LABOR LAW: probationary employment period

A probationary employee is one who is on trial by the employer during which the employer determines whether or not said employee is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become a proper and efficient employee. The word probationary as used to describe the period of employment implies the purpose of the term or period, but not its length.

It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. The law, however, regulates the exercise of this prerogative to fix the period of probationary employment. While there is no statutory cap on the minimum term of probation, the law sets a maximum trial period during which the employer may test the fitness and efficiency of the employee.

Article 281 of the Labor Code provides:

ART. 281. Probationary Employment Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

LABOR LAW: manual of regulations for private schools

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. On the matter of probationary period, Section 92 of the 1992 Manual of Regulations for Private Schools regulations states:

Section 92. Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.

Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that determines whether or not a faculty member in an educational institution has attained regular or permanent status. Section 9326 of the 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.

Respondent nonetheless claims that subsequently, the probationary period of three years under the regulations was shortened by petitioner as relayed to him by Sr. Evidente herself. However, the latter, together with Sr. Real, categorically denied having informed respondent that his probationary period was abbreviated, allegedly the reason his salary adjustment was not made retroactive. Apart from his bare assertion, respondent has not adduced proof of any decision of the school administration to shorten his probationary period.

In Rev. Fr. Labajo v. Alejandro, we held that:

The three (3)-year period of service mentioned in paragraph 75 of the Manual of Regulations for Private Schools is of course the maximum period or upper limit, so to speak, of probationary employment allowed in the case of private school teachers. This necessarily implies that a regular or permanent employment status may, under certain conditions, be attained in less than three (3) years. By and large, however, whether or not one has indeed attained permanent status in ones employment, before the passage of three (3) years, is a matter of proof.

There can be no dispute that the period of probation may be reduced if the employer, convinced of the fitness and efficiency of a probationary employee, voluntarily extends a permanent appointment even before the three-year period ends. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, the law does not preclude the employer from terminating the probationary employment on justifiable ground; or, a shorter probationary period may be incorporated in a collective bargaining agreement. But absent any circumstances which unmistakably show that an abbreviated probationary period has been agreed upon, the three-year probationary term governs.

As to the Certificate of Employment issued by Sr. Real on January 31, 2005, it simply stated that respondent was a full time faculty member in the Religious Education Department of this same institution and that he holds the rank of Associate Professor. There was no description or qualification of respondents employment as regular or permanent. Neither did the similar Certification also issued by Sr. Real on March 18, 2005 prove respondents status as a permanent faculty member of petitioner.

It bears stressing that full-time teaching primarily refers to the extent of services rendered by the teacher to the employer school and not to the nature of his appointment. Its significance lies in the rule that only full-time teaching personnel can acquire regular or permanent status.

The circumstance that respondents services were hired on semester basis did not negate the applicable probationary period, which is three school years or six consecutive semesters. In Magis Young Achievers Learning Center the Court explained the three years probationary period rule in this wise:

The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the employer has the option not to renew the contract, particularly considering the teachers performance. If the contract is not renewed, the employment relationship terminates. If the contract is renewed, usually for another school year, the probationary employment continues. Again, at the end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for another school year would then be the last year since it would be the third school year of probationary employment. At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer.

For the entire duration of this three-year period, the teacher remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract. It is when the yearly contract is renewed for the third time that Section 93 of the Manual becomes operative, and the teacher then is entitled to regular or permanent employment status.

LABOR LAW: probationary status and fixed-term employment

The existence of the term-to-term contracts covering the petitioners employment is not disputed, nor is it disputed that they were on probationary status not permanent or regular status from the time they were employed on May 25, 1998 and until the expiration of their Teaching Contracts on September 7, 2000. As the CA correctly found, their teaching stints only covered a period of at least seven (7) consecutive trimesters or two (2) years and three (3) months of service. This case, however, brings to the fore the essential question of which, between the two factors affecting employment, should prevail given AMACCs position that the teachers contracts expired and it had the right not to renew them. In other words, should the teachers probationary status be disregarded simply because the contracts were fixed-term?

The provision on employment on probationary status under the Labor Code is a primary example of the fine balancing of interests between labor and management that the Code has institutionalized pursuant to the underlying intent of the Constitution.

On the one hand, employment on probationary status affords management the chance to fully scrutinize the true worth of hired personnel before the full force of the security of tenure guarantee of the Constitution comes into play. Based on the standards set at the start of the probationary period, management is given the widest opportunity during the probationary period to reject hirees who fail to meet its own adopted but reasonable standards. These standards, together with the just and authorized causes for termination of employment the Labor Code expressly provides, are the grounds available to terminate the employment of a teacher on probationary status. For example, the school may impose reasonably stricter attendance or report compliance records on teachers on probation, and reject a probationary teacher for failing in this regard, although the same attendance or compliance record may not be required for a teacher already on permanent status. At the same time, the same just and authorized causes for dismissal under the Labor Code apply to probationary teachers, so that they may be the first to be laid-off if the school does not have enough students for a given semester or trimester. Termination of employment on this basis is an authorized cause under the Labor Code.

Labor, for its part, is given the protection during the probationary period of knowing the company standards the new hires have to meet during the probationary period, and to be judged on the basis of these standards, aside from the usual standards applicable to employees after they achieve permanent status. Under the terms of the Labor Code, these standards should be made known to the teachers on probationary status at the start of their probationary period, or at the very least under the circumstances of the present case, at the start of the semester or the trimester during which the probationary standards are to be applied. Of critical importance in invoking a failure to meet the probationary standards, is that the school should show as a matter of due process how these standards have been applied. This is effectively the second notice in a dismissal situation that the law requires as a due process guarantee supporting the security of tenure provision, and is in furtherance, too, of the basic rule in employee dismissal that the employer carries the burden of justifying a dismissal. These rules ensure compliance with the limited security of tenure guarantee the law extends to probationary employees.

To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school, however, cannot forget that its system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew contracts simply because their terms have expired. The inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code established to balance relationships between labor and management.

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 conclusion is immeasurably strengthened by the petitioners and the AMACCs hardly concealed expectation that the employment on probation could lead to permanent status, and that the contracts are renewable unless the petitioners fail to pass the schools standards.

LABOR LAW: illegal dismissal

Notwithstanding the limited engagement of probationary employees, they are entitled to constitutional protection of security of tenure during and before the end of the probationary period. The services of an employee who has been engaged on probationary basis may be terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer.

Thus, 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.

In a letter dated February 26, 2005, petitioner terminated the services of respondent stating that his probationary employment as teacher will no longer be renewed upon its expiry on March 31, 2005, respondents fifth semester of teaching. No just or authorized cause was given by petitioner. Prior to this, respondent had consistently achieved above average rating based on evaluation by petitioners officials and students. He had also been promoted to the rank of Associate Professor after finishing his masters degree course on his third semester of teaching. Clearly, respondents termination after five semesters of satisfactory service was illegal.

Respondent therefore is entitled to continue his three-year probationary period, such that from March 31, 2005, his probationary employment is deemed renewed for the following semester (1st semester of SY 2005-2006). However, given the discordant relations that had arisen from the parties dispute, it can be inferred with certainty that petitioner had opted not to retain respondent in its employ beyond the three-year period.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED.