ST. THERESITA’S ACADEMY AND/OR THE SERVANTS OF ST. JOSEPH, REPRESENTED BY SR. ANITA BAGO, PETITIONERS, VS. THE NATIONAL LABOR RELATIONS COMMISSION AND LILIA ARIOLA, RESPONDENTS.

Petition for certiorari with application for preliminary
injunction and/or restraining order to annul and/or set aside the resolution
dated July 2, 1990 of the Fourth
Division of the National Labor Relations Commission (Cebu City) (NLRC, for
short), affirming with modification the decision dated August 14, 1987 of the
Labor Arbiter of Bacolod City in RAB-VI-Case No. 0201-­83. The dispositive portion of the decision of
the NLRC reads as follows:

“WHEREFORE, the appeal filed by respondents is hereby
dismissed for lack of merit and the decision of the Labor Arbiter dated August
14, 1987 is hereby MODIFIED. Respondent
is hereby ordered to pay complainant her backwages limited to three (3) years
without deduction and qualification starting April 1983. In lieu of reinstatement, respondents are
hereby ordered to give separation pay to herein complainant computed at the
rate of one month’s salary for every year of service from June 1979 up to March
1986, the end of the three (3)
year rule on backwages.” (p. 39,
Rollo.)

The private respondent, Lilia G. Ariola, had been employed as a
school teacher since the school year 1954­-55 up to the school
year 1975-76 (or for 22 continuous years). She retired on March 30, 1976 with separation benefits in the
amount of P4,927.30. For a while, she
worked as an insurance underwriter. In
1979, the Mother Superior invited her to go back as a school teacher because
the school needed qualified and good teachers in
Mathematics and English. The complainant accepted on condition that she should be
considered a regular teacher and not as
a newly hired teacher. That condition was accepted without
hesitation. She signed a
contract with the school which was renewable yearly.

Complainant and her co-teachers were paid summer living allowance
in 1979-1980 and 1980-1981. However, in
June 1981, that amount was deducted from their salaries. Complainant and her co-teachers protested
against the deduction. A meeting was
called by the school to explain that the payment of the summer living allowance
had been a mistake, hence, it must be paid back to the school. Another meeting was called by the Mother
Superior to discuss the legality of the deduction and/or nonpayment of the
summer living allowance. In that
meeting, the complainant and her co-teachers pleaded for the revival of the
summer living allowance but they were advised by the Mother Superior that the
school could not afford to give it to them. The matter was referred to the Ministry of Labor and Employment. Because of the agitation for the payment of
the summer living allowance, the Siervas de San Jose, which owns and operates
respondent school in Silay City, held a board meeting on January 19, 1983
(Exhibit I), wherein it was resolved that effective school year 1983-84, no
Siervas de San Jose School shall rehire a retired teacher and that any rehired
retiree who is at present a member
of the faculty shall be notified that
her/his Teacher’s Contract will not be
renewed for the coming year.

After four (4) years
of continuous satisfactory service, complainant was notified on March 1, 1983
that her contract would no longer be renewed at the end of the school year
1982-83. A report was made to the
office of the Ministry of Labor and Employment regarding the impending
termination of her teacher’s contract (Annex E).

On April 7, 1985, private respondent filed in the NLRC, National
Arbitration Branch No. VI in Bacolod City, a complaint against the petitioner
for Illegal Dismissal praying for reinstatement with backwages, ECOLA, non
payment of allowances, underpayment of 13th month pay and damages.

On August 14, 1987, the Labor Arbiter rendered a decision
ordering the petitioner to pay the private respondent separation pay computed
at one-half (1/2) month for every year of her 4-year service with the school.

On appeal by the school to the NLRC, the latter ruled that:

(1) the year-to-year
contract between petitioner and private respondent violated Art. 280 of the
Labor Code, hence, despite the fixed period provided therein, private
respondent became a “regular” employee who could not be dismissed
except for cause;

(2) when the
year-to-year contracts went beyond three years, private respondent became a
“regular” or “permanent” employee, pursuant to Sec. 75 of
the Manual of Regulations for private schools, which provides that
“full-time teachers who have rendered three consecutive years of
satisfactory service shall be considered permanent” (p. 11, Rollo); and

(3) the policy of
the school of no longer renewing the year-to-year contracts of teachers who had
been recalled from retirement, violated the security of tenure of the
complainant.

On July 2, 1990, the NLRC issued the resolution quoted earlier in
this decision.

In its petition for review of that decision, the petitioner alleges
that:

1. the NLRC decision is
clearly contrary to the decision of this Court;

2. the NLRC ruling confuses the three
year-to-year probationary contracts given to new teachers
before they become “regular and permanent,” with the year-to-year or
other fixed period contract given to teachers who are being
recalled from retirement; for the year-to-year contract
with a retired teacher is not intended to test the teacher’s fitness to be
hired on a permanent basis, unlike a new teacher who must first be tested; and

3. it is the prerogative of an employer to
adopt a policy of not rehiring retired teachers and of not renewing the
annual contracts of teachers who have been recalled
from retirement.

A review of the records of this case shows that the NLRC did not
abuse its discretion in affirming with modification the decision of the Labor
Arbiter.

Article 280 of the Labor Code defines regular employment as
follows:

“ART. 280. Regular and
Casual Employment. – The provisions of written agreement
to the contrary notwithstanding and regardless
of the oral agreement of the parties,
an employment shall be deemed to be
regular where the employee has been engaged
to perform activities which are usually
necessary or desirable in the usual business
or trade of the employer except where the
employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.

“An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That any employee who has rendered
at least one year of service, whether
such service is continuous or broken,
shall be considered a regular employee
with respect to the activity in which
he is employed and his employment shall continue while
such actually exists.” (Underscoring supplied.)

With respect to school teachers, paragraph 75 of the Manual of
Regulations for Private Schools provides:

“Full-time teachers who have rendered three (3) years of
satisfactory service shall be considered permanent.” (p. 63, Rollo.)

Furthermore, paragraphs 7 and 9 of the Teacher’s Contract which the
petitioner and the private respondent signed, categorically stipulated:

“7. This CONTRACT SHALL BE IN FULL FORCE AND
EFFECT during the school year 1982-1983 from June to March, unless sooner
terminated by either party for valid causes and approved by the Director of
Private Schools. In the absence of
valid cause(s) for termination of services, this CONTRACT shall
be rendered for the same period until
the teacher shall have gained a Regular
or Permanent Status, pursuant to the pertinent
provisions of the Manual of Regulations
for Private Schools.

“9. This CONTRACT shall not
affect the Permanent Status of the teacher,
even if entered into every school year;
provided that the Probationary Period for
new teachers shall be three (3) years.” (Emphasis supplied, p. 79, Rollo.)

The record shows that after Ariola retired in 1976, she was
rehired three (3) years later and rendered four (4) more years of satisfactory
service to the petitioner in the school years 1979-1980, 1980-1981, 1981-1982,
and 1982-1983.

When she was rehired in 1979 she did not have to undergo the
3-year probationary employment for new teachers for her teaching competence had
already been tried and tested during her 22 years of service to the school in
1954 to 1976. She reentered the service
in 1979 as a regular or permanent teacher. She could not be discharged solely on account of the expiration of her
fourth annual contract. She could only
be dismissed for cause and with due process, as provided in Article 279 of the
Labor Code.

The NLRC did not abuse its discretion in holding that her
dismissal from the service, on account of the expiration of her annual
contract, was illegal and that the school is liable to pay her backwages and
separation pay.

WHEREFORE, the
petition for certiorari is DISMISSED, with costs against the petitioner.

SO ORDERED.

Medialdea and
Bellosillo, JJ., concur.

Padilla, J., no part, former
lawyer of Servants of St. Joseph.

Cruz, J., (Chairman), on leave.