CAGAYAN CAPITOL COLLEGE AND LAUREANA S. ROSALES, PETITIONERS, VS. THE HON. NATIONAL LABOR RELATIONS COMMISSION, VIRGILIO P. VILLEGAS AND LEONOR PAGAPONG, RESPONDENTS.

The propriety of the reinstatement of private respondents as faculty members of petitioner
college is the issue submitted in this petition.

Private respondents Virgilio VilIegas and Leonor Pagapong were teachers on a probational
basis of the petitioner college.

Villegas was initially hired as an instructor in the Nautical
Science Department of said petitioner and was extended an appointment on a
ten-month contractual basis which ended
on March 31, 1982.

Upon expiration of said contract he re-applied and was given a
new contract commencing on June 1, 1982
and ending on March 31, 1983.  Thereafter he re-applied for employment and
was given a contract for a fixed period starting June 1, 1983 up to March
31, 1984.  Upon mutual
agreement the contract was extended
to include the summer of 1984 up to May
31, 1984 which is still
part of the school-year 1983-1984.

Upon expiration of said period he sent a letter re-applying for employment with the petitioner.

His application, however, was turned down because of various
complaints from his students borne out by the report of his superiors who investigated the matter.^[1]

Thus, he filed a complaint in
the Regional Arbitration Office of the National Labor Relations
Commission (NLRC) in Cagayan
City for illegal dismissal with reinstatement,
payment of backwages, moral damages and attorney’s
fees.  Included in the complaint were
claims for underpayment of salary, allowances, wage orders and his share in
tuition fee increases per Presidential Decree No. 451.  It was docketed as NLRC Case no.
RAB-C-0513-84.

On the other hand, respondent Pagapong
was initially hired as a probationary instructor in the High School Department
of petitioner college on June 15, 1981
on a contractual basis to end on March
31, 1982.  Upon
re-application her contract was renewed for another fixed period covering June 1, 1982 up to March 31, 1983.  Her employment was on a probationary
basis.  Similarly, a third contract was
executed by the petitioner college covering the period starting June 15, 1983 and ending on March 31, 1984.  Upon the termination of the said third
contract respondent Pagapong wrote to petitioner
seeking re-employment.  Her application
was accompanied by a clearance.  However,
her application was denied upon the recommendation of her immediate superiors
who considered her inefficient.

Thus, she filed with the Regional Arbitration Branch of the NLRC
a complaint for illegal
dismissal with reinstatement,
with backwages, moral damages and attorney’s
fees.  She also included claims for
underpayment of wages, allowances, wage orders and non-payment of shares in
tuition fee increases per Presidential Decree no. 451.  It was docketed as NLRC Case no. RAB-C-0560-84.

The cases of respondents Villegas and Pagapong
were jointly heard upon agreement of the parties, the
issues and facts being identical.

In their position paper, private respondents Villegas and Pagapong alleged that they were dismissed by petitioners
without valid grounds and that they were deprived of their constitutional right to due process and security of
tenure.  They also raised the issue of
non-compliance with presidential decrees and wage orders pertaining to the
payment of emergency cost of living allowance (ECOLA) and their basic
salary, including non-payment of their shares in tuition fee increases under
Presidential Decree no. 451.

Petitioners, on the other hand, filed their position paper and
supplemental manifestations wherein they denied that private respondents were
illegally dismissed.  They maintained
that the private respondents alleged employment contracts on a probation basis
expired and that the same were not renewed because their performances were considered unsatisfactory while
they were on probation.  Petitioners
further contended that private respondents, as probationary employees, did not
qualify for tenureship as their services on
probation, upon evaluation, did
not reach the standard prescribed for probationary employees.  Petitioners also denied that private
respondents are entitled to backwages, since they
were not illegally dismissed and asserted that they have been paid their wages,
allowances and their shares in tuition fee increases and that they were not entitled to moral damages and
attorney’s fees.

On August 8, 1985,
a decision was rendered by Executive Labor Arbiter Ildefonso
G. Agbuya
dismissing the complaint for
illegal dismissal based on the
following disquisition:

“From the above-quoted portion of the parties’ position paper it is
undisputed that Complainants were hired on a ten (10) months contractual basis as faculty members for a period of three (3) consecutive contracts of employment (school year).  Based on these facts alone, the complaint for illegal dismissal should be dismissed because it is judicial knowledge
that probationary period of instructors or faculty members of any particular
school pursuant to the rules of the Ministry of Education, Culture and Sports is for three (3) years.  Since the
employment of Complainants fall (sic) within the probationary period
of three (3) years, it is therefore management’s prerogative whether to renew the same for permanency or stop the relationship as
what happened in this particular cases (sic). 
We are limiting the basis of
our opinion on the probationary
period provided for by the Ministry of Education, Culture and Sports and need
not discuss the merits as argued by both parties in their respective position
paper (sic).” (pp.211 – 212, Records).”^[2]

Private respondents appealed said decision to the NLRC which
rendered a decision on May 30, 1989
modifying the appealed decision in this manner:

“After a careful review of the records and based on the foregoing facts, we find and so
hold that the Labor Arbiter committed reversible error.

It is an undisputed fact that complainant Virgilio
Villegas worked with respondent Cagayan Capitol
College for six (6) consecutive regular semesters, as college instructor, while complainant Leonor
Pagapong worked with the same respondent for three
(3) consecutive years as classroom teacher.

In this regard, the Manual of Regulations for Private Schools
expressly provides that ‘xxx
probationary period for academic personnel shall not be more than xxx six (6) consecutive
regular semesters for those in the tertiary level’.  (Section 102 of the Manual, 7th Edition, 1984).  The same Manual also provides that ‘full-time
teachers who have rendered three (3)
consecutive years of satisfactory
service shall be considered permanent‘ (Section 75, ibid.).

Based on this Manual of Regulations of Private Schools both
complainants obtained permanent status in their appointment with the respondent
Cagayan Capitol
College and cannot be dismissed
except for cause.  The non-renewal of
their employment contract with the respondent is therefore tantamount to
illegal dismissal.  Hence, complainants
are entitled to reinstatement with
backwages and other benefits.

As regards the claim for moral and exemplary damages, we concur
with the findings of the Labor Arbiter that the same is without basis.  We likewise adopt the award of attorney’s fees of 10% out of the total
monetary award that complainants may receive.

WHEREFORE, the appealed Decision is hereby MODIFIED, declaring
respondents guilty of illegal dismissal and ordering respondents to
reinstate complainants to their former position or any equivalent position with
three (3) years backwages without qualification or deduction.

Respondents are likewise ordered to pay 10% of the total award as
attorney’s fee.

The claims for moral and exemplary damages are dismissed for lack of merit.”^[3]

A motion for reconsideration was filed by petitioners but this
was denied by the public respondent in a resolution dated July 28, 1989.^[4]
Hence this petition wherein petitioners assail
the said decision of public respondent based on the following grounds:

“I

THAT THE HON. NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION AND SERIOUSLY
ERRED IN INTERPRETING THE PERTINENT PROVISIONS OF THE MANUAL OF REGULATIONS FOR
PRIVATE SCHOOLS, 7th EDITION, 1970, THE LABOR CODE OF THE PHILIPPINES AND OTHER
APPLICABLE LAWS AND JURISPRUDENCE BY RULING THAT PRIVATE RESPONDENTS HAVE
ACQUIRED PERMANENT EMPLOYMENT STATUS AND CANNOT BE DISMISSED EXCEPT FOR CAUSE.

II

THAT PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
COMMITTED GRAVE ABUSE OF DISCRETION
AND SERIOUSLY ERRED IN THE INTERPRETATION
OF EXISTING LAWS AND JURISPRUDENCE BY RULING THAT THE ACT OF PETITIONERS IN NOT
RENEWING THE TEACHING CONTRACTS OF PRIVATE RESPONDENTS IS TANTAMOUNT TO ILLEGAL
DISMISSAL AND IN CONSEQUENTLY ORDERING THEIR REINSTATEMENT WITH BACK WAGES.”^[5]

In the same petition is a prayer
for the issuance of a writ of
preliminary injunction to restrain the public respondent from enforcing the
questioned decision dated May 30, 1989
pending resolution of the petition.  In
sum, the petitioner prays for the annulment of said decision dated May 30, 1989 and the resolution dated
July 28, 1989 promulgated
by the NLRC.

Acting on the petition, the Court, on October 4, 1989, without
giving due course to the petition, required the respondents to comment thereon
within ten (10) days from notice and issued a temporary restraining order
enjoining the public respondent from enforcing the questioned decision and
resolution and further required petitioner to file a bond in the amount of P20,000.00
within forty-eight (48) hours from notice.

After careful deliberation on the petition, the comment thereto
of respondents and the memoranda of the parties, the Court finds that the petition is impressed with
merit.

There is no question that private respondents were probationary
teachers.  Thus, they are covered by the policy instructions issued by the
Department of Labor and Employment that the probationary employment of
professional instructors and teachers shall be subject to the standards
established by the Department of Education and Culture.  Said standards are embodied in paragraph 75
of the Manual of Regulations for Private
Schools, as follows:

“75. Full time teachers who have rendered three (3)
consecutive years of satisfactory services shall be considered permanent.”

In University
of Sto.
Tomas vs. National Labor Relations Commission,^[6] this Court in interpreting the foregoing
rule, held that the legal requisites for a teacher to acquire permanent
employment and security of tenure are as follows:

“(1) The teacher is a full time teacher;

 (2) The teacher must have rendered three (3)
consecutive years of service; and

 (3) Such service must have been satisfactory.”

There is no question that private
respondents have been employed for three (3) consecutive years as teachers at petitioners’s college and on a full time basis. 
However, they do not automatically become permanent unless it is shown
that their services during the probationary
period were satisfactory.

The contention of respondents that upon termination of the three-year probationary period the
teacher automatically becomes permanent is not quite correct.  It must be conditioned on the compliance with
the third requisite that the services of said teacher during the probationary
period was satisfactory.

The employer is the one who is to set the standards and determine whether or not the services of an
employee are satisfactory.  It is the
prerogative of an employer to determine whether or not the said standards have been complied with.  In fact, it is the right of the employer
to shorten the probationary period if he is impressed with the services of the
employee.

This prerogative of a school to provide standards for its
teachers and to determine whether or not these standards have been met is in accordance with academic freedom
and constitutional autonomy which give educational
institution the right to choose who should teach.^[7]

At the start of their employment, private respondents were duly
furnished the Faculty Manual expressly stating among others, the duties of teachers and the grounds for termination of employment or non-appointment to permanent status of a
probationary employee.

In the case of respondent Villegas, it appears that there were
complaints of students during his last
year of service and that these complaints were duly investigated by the
Acting Dean of the Nautical Department who came up with the report of the acts
complained of.^[8]

Thus, his performance was considered unsatisfactory and was not
renewed by petitioner college after the third
year.  That he was made to teach in the summer of 1984 appears to be prompted
by the fact that the summer sessions were still part of the third probationary period which started in July of the first
semester of school year 1981-82.

Similarly, respondent Pagapong was
found to be inefficient due to her absences.

The Court thus finds
and so holds that private respondents were not illegally dismissed by petitioner.

WHEREFORE, the petition is hereby GRANTED and the
questioned decision and resolution of the National Labor Relations Commission
dated May 30, 1989 and July 28, 1989, respectively, are
hereby SET ASIDE and another decision is hereby rendered DISMISSING the
complaints filed by private respondents. 
The restraining order issued by the Court on October 4, 1989 is hereby made permanent.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Annexes D, D-1, and D-3 to petitioner’s position paper; page 76, records.

^[2]
Page 129, Rollo.

^[3]
Pages 21 to 22, Rollo.

^[4]
Annex B, pages 25 to 27, Rollo.

^[5]
Page 7, Rollo.

^[6]
G.R. No. 85519, promulgated February
15, 1990.

^[7]
Dizon, Law on Schools and Students, pages 289 to 292,
citing Wilsons
Institutional Academy.

^[8]
Annexes D, D-1, D-2, and D-3 to the Petitioner’s Position Paper; page 76,
records.