LEONEN, SAJ.:
WHEREFORE, premises considered, complainant's appeal is GRANTED. The assailed Decision of the Labor Arbiter dated July 28, 2016 is VACATED and a new one is issued DECLARING complainant Vanessa Laura S. Arcilla to have been illegally dismissed by respondent San Sebastian College-Reco[l]etos, Manila.In a January 31, 2017 Resolution,[24] the National Labor Relations Commission denied San Sebastian's Motion for Reconsideration.
In view of the illegal dismissal of complainant, respondent San Sebastian-Recoletos, Manila is hereby ORDERED to pay complainant Vanessa Laura S. Arcilla the following:
1) Backwages form the time of her illegal dismissal on October 31, 2015 up to October 30, 2017; 2) Three-month salary as her separation pay; [3)] Attorney's Fees equivalent to 10% of the monetary award[.]
Attached is the computation which forms part of the Decision.
SO ORDERED.[23]
WHEREFORE, the Decision dated November 15, 2016 and Resolution dated January 31, 2017 of public respondent National Labor Relations Commission are NULLIFIED. Accordingly, the Decision dated July 28, 2016 of the labor arbiter is REINSTATED.The Court of Appeals first agreed with the National Labor Relations Commission that there was no merit to San Sebastian's claim that it did not renew Arcilla's appointment due to a K to 12 program-related retrenchment scheme. There was no evidence that the Department of Labor and Employment was notified of such a retrenchment, and Arcilla was not paid the required separation pay.[28]
SO ORDERED.[27]
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?[49] (Citations omitted)The same procedural antecedents are present in this case. Thus, we examine whether the Court of Appeals correctly ascribed grave abuse of discretion to the National Labor Relations Commission.
... such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[51] (Citations omitted)In Quebral v. Angbus Construction, Inc.,[52] this Court applied the definition to labor cases:
In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence, which refers to that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has basis in the evidence and the applicable law and jurisprudence, then no grave abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition.[53] (Citations omitted)Using these parameters, this Court finds that the Court of Appeals erred in finding that the National Labor Relations Commission gravely abused its discretion in reversing the Labor Arbiter's dismissal of petitioner's Complaint for illegal dismissal.
SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.On the other hand, Article XIV, Section 5(2) of the Constitution guarantees that "[a]cademic freedom shall be enjoyed in all institutions of higher learning."
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.
[I]t is to be noted that the reference is to the "institutions of higher learning" as the recipients of this boon. It would follow then that the school or college itself is possessed of such a right. It decides for itself its aims and objectives and how best to attain them. It is free from outside coercion or interference save possibly when the overriding public welfare calls for some restraint. It has a wide sphere of autonomy certainly extending to the choice of students. This constitutional provision is not to be construed in a niggardly manner or in a grudging fashion. That would be to frustrate its purpose, nullify its intent.[58]This concept of academic freedom finds its roots in the fundamental freedom of expression. In ancient Greece, philosophers and their students were persecuted and silenced in their pursuit of knowledge:
Since Socrates, numberless individuals of the same heroic mold have similarly defied the stifling strictures of authority, whether State, Church, or various interest groups, to be able to give free rein to their ideas. Particularly odious were the insidious and blatant attempts at thought control during the time of the Inquisition until even the Medieval universities, renowned as intellectual centers in Europe, gradually lost their autonomy.The academic freedom enjoyed by institutions of higher learning protects the unbridled pursuit of knowledge. More knowledge facilitates better, more meaningful participation. As Constitutional Commissioner Rosario Braid said, "[c]ommunication and information provide the leverage for power. They enable the people to act, to make decisions, to share consciousness in the mobilization of the nation."[60]
In time, such noble strivings, gathering libertarian encrustations along the way, were gradually crystallized in the cluster of freedoms which awaited the champions and martyrs of the dawning modem age. This was exemplified by the professors of the new German universities in the 16th and 17th centuries such as the Universities of Leiden (1575), Helmstadt (1574) and Heidelberg (1652). The movement back to freedom of inquiry gained adherents among the exponents of fundamental human rights of the 19th and 20th centuries. "Academic freedom", the term as it evolved to describe the emerging rights related to intellectual liberty, has traditionally been associated with freedom of thought, speech, expression and the press; in other words, with the right of individuals in university communities, such as professors, researchers and administrators, to investigate, pursue, discuss and, in the immortal words of Socrates, "to follow the argument wherever it may lead," free from internal and external interference or pressure.[59]
An informed citizenry with access to the diverse currents in political, moral and artistic thought and data relative to them, and the free exchange of ideas and discussion of issues thereon, is vital to the democratic government envisioned under our Constitution.[62]Institutional academic freedom carries with it the right to select who are worthy to take part in the education of its students. Therefore, relationships between institutions of higher learning and their faculty members should not be viewed as simple employer-employee relationships. In evaluating them, the courts must accord institutions of higher learning the prerogative to determine who may teach. This includes setting standards for their teachers and determining whether they have been met.
The standards by which the service of the probationary teacher may be adjudged satisfactory so that he may acquire permanence in his employment or security of tenure, are set by the school. The setting of those standards, and the determination of whether or not they have been met, have been held by this Court to be the prerogative of the school, consistent with academic freedom and constitutional autonomy by which educational institutions have the right to choose who should teach.[63] (Citation omitted)Nevertheless, the autonomy of institutions of higher learning to set standards for their faculties must be tempered with the protection of labor. In determining who may teach, they cannot be arbitrary. One limitation is that the period of probation cannot exceed, among others, six consecutive regular semesters of satisfactory service for those in the tertiary level, or nine consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.[64] Sections 92 and 93 of the 1992 Manual of Regulations for Private Schools state:
SECTION 92. Probationary Period. — Subject in all instances to compliance with 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.During this period, the standards imposed on the probationary faculty members must be reasonable, well laid, and properly communicated.[65] The standards for regularization must be made known to the probationary faculty members with some specificity and measurability at the time of engagement. The employee must be clearly informed of the job's functions.[66] This Court only excuses the employer's failure to elaborate specific standards when the job is self-descriptive in nature, as in the case of maids, cooks, drivers, or messengers.[67]
SECTION 93. Regular or Permanent Status. — Those who have served the probationary period shall be made regular or permanent. Fulltime teachers who have satisfactorily completed their probationary period shall be considered regular or permanent.
In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at the time of engagement, the employee shall be deemed a regular employee.[68]Without having been previously informed of the standards to be applied during the period of probation, the employee cannot be deemed to have been on probation, during that period.[69] The employee "is deemed to have been hired from day one as a regular employee."[70]
Labor, for its part, is given the protection during the probationary period 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.[71] (Emphasis supplied, citations omitted)This Court has likewise affirmed the validity of fixed-term contracts between academic personnel and institutions of higher learning so long as they do not circumvent the employee's right to security of tenure,[72] as where:
. . . a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his [or her] consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.[73]Here, the Labor Arbiter,[74] the National Labor Relations Commission,[75] and the Court of Appeals[76] consistently found that the nature of petitioner's employment was both probationary and for a fixed term. This is supported by petitioner's employment contracts[77] annexed to her Position Paper.
The fixed-term character of employment essentially refers to the period agreed upon between the employer and the employee; employment exists only for the duration of the term and ends on its own when the term expires. In a sense, employment on probationary status also refers to a period because of the technical meaning "probation" carries in Philippine labor law — a maximum period of six months, or in the academe, a period of three years for those engaged in teaching jobs. Their similarity ends there, however, because of the overriding meaning that being "on probation" connotes, i.e., a process of testing and observing the character or abilities of a person who is new to a role or job.In other words, when an employee's probationary status overlaps with fixed-term employment not specifically used for a fixed term, the probationary nature of the employment prevails. Thus, the employee may not be dismissed solely because the fixed term expired. The employment may only be terminated for a just or authorized cause or when the employee fails to meet the reasonable standards made known to the employee at the time of the engagement.[80]
Understood in the above sense, the essentially protective character of probationary status for management can readily be appreciated. But this same protective character gives rise to the countervailing but equally protective rule that the probationary period can only last for a specific maximum period and under reasonable, well-laid and properly communicated standards. Otherwise stated, within the period of the probation, any employer move based on the probationary standards and affecting the continuity of the employment must strictly conform to the probationary rules.
Under the given facts where the school year is divided into trimesters, the school apparently utilizes its fixed-term contracts as a convenient arrangement dictated by the trimestral system and not because the workplace parties really intended to limit the period of their relationship to any fixed term and to finish this relationship at the end of that term. If we pierce the veil, so to speak, of the parties' so-called fixed-term employment contracts, what undeniably comes out at the core is a fixed-term contract conveniently used by the school to define and regulate its relations with its teachers during their probationary period.
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 AMACC's 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 school's standards.
To highlight what we mean by a fixed-term contract specifically used for the fixed term it offers, a replacement teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent teacher on a one-year study leave. The expiration of the replacement teacher's contracted term, under the circumstances, leads to no probationary status implications as she was never employed on probationary basis; her employment is for a specific purpose with particular focus 011 the term and with every intent to end her teaching relationship with the school upon expiration of this term.
If the school were to apply the probationary standards (as in fact it says it did in the present case), these standards must not only be reasonable but must have also been communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract. As explained above, the details of this finding of just cause must be communicated to the affected teachers as a matter of due process.[79] (Emphasis in the original, citation omitted)
ARTICLE 296. [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. (Emphasis supplied)Respondent may only terminate petitioner's employment for just or authorized causes, or if petitioner failed to qualify as a regular employee per respondent's reasonable standards set at the time of her engagement. However, the Court of Appeals failed to point to any just or authorize cause for petitioner's termination. It even affirmed the National Labor Relations Commission's finding that respondent failed to satisfy the requirements for a valid retrenchment.[85] Moreover, there is no allegation or proof that the nonrenewal of petitioner's contract was due to her failure to meet respondent's standards for regular employment. For merely invoking the expiration of the fixed term to terminate petitioner's employment, respondent illegally dismissed petitioner.
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.However, the rule in Brent has been qualified in Mercado, as cited by petitioner. In Mercado, this Court noted that, while Brent settled the validity of fixed-term contracts, courts should take care in applying the case since it did not involve any issue of probationary employment.[88]
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule — a rule reaffirmed in the recent case of Escudero vs. Office of the President where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:"Reyes' (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo, ..."Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied.[87] (Citations omitted)
As above discussed, probationary employees enjoy security of tenure during the term of their probationary employment such that they may only be terminated for cause as provided for by law, or if at the end of the probationary period, the employee failed to meet the reasonable standards set by the employer at the time of the employee's engagement. Undeniably, respondent was hired as a probationary teacher and, as such, it was incumbent upon petitioner to show by competent evidence that she did not meet the standards set by the school. This requirement, petitioner failed to discharge. To note, the termination of respondent was effected by that letter stating that she was being relieved from employment because the school authorities allegedly decided, as a cost-cutting measure, that the position of "Principal" was to be abolished. Nowhere in that letter was respondent informed that her performance as a school teacher was less than satisfactory.[92]All told, the National Labor Relations Commission's findings had basis in the evidence, the applicable law, and jurisprudence. Consequently, the Court of Appeals erroneously ascribed grave abuse of discretion to the National Labor Relations Commission.