Fallarme vs. San Juan De Dios Educational Foundation, et al.
G.R. Nos. 1900015 & 190019. September 14, 2016


Petitioners were hired by San Juan de Dios Educational Foundation, respondent college), for full-time teaching positions. The appointment of petitioner Fallarme was effective at the start of the semester of School Year (SY) 2003-2004 as signified by a memorandum issued by the school informing her that she had been hired. The memorandum did not specify whether she was being employed on a regular or a probationary status. Aside from being appointed to a faculty position, she was also appointed to perform administrative work for the school as personnel officer and to serve as head of the Human Development Counseling Services.

Despite having served as a faculty member since SY 2003-2004, Fallarme was asked only on 1 March 2006 to sign and submit to respondent a written contract on the nature of the former’s employment and corresponding obligations. The contract was denominated as “Appointment and Contract for Faculty on Probation” (appointment contract), and its effectivity period covered the second semester of SY 2005-2006 -specifically from 4 November 2005 to 18 March 2006.

See Sample Probationary Employment Contract in Filipino here

The appointment contract specified the status of Fallarme as a probationary faculty member. After the expiration of the contract, respondent college informed her that it would not be renewed for the first semester of SY 2006-2007. When she asked on what basis her contract would not be renewed, she was informed that it was the school’s “administrative prerogative.”

Petitioner Martinez-Gacos taught at respondent college from the start of SY 2003-2004 and continued to do so for a total of six semesters and one summer. Her engagement as a faculty member was signified by a memorandum issued by the school, which informed her that she had been hired. The memorandum, which was similar to that issued to Fallarme, did not specify whether Martinez-Gacos was being employed on a regular or a probationary status.

Like Fallarme, even though Martinez-Gacos had been employed as a faculty member since SY 2003-2004, it was only on 1 March 2006 that the latter was ordered by respondent Valeriano Alejandro JU to sign and submit a written contract on the nature of her employment and corresponding obligations. The terms of the contract were similar to those in the contract signed by Fallarme. It was also denominated as “Appointment and Contract for Faculty on Probation,” and its effectivity period also covered the second semester of SY 2005-2006 -specifically from 4 November 2005 to 18 March 2006.

Under the appointment contract, the probationary status of Martinez-Gacos was likewise specified for the first time. After the lapse of the contract’s effectivity, she was similarly informed that her contract would not be renewed for the first semester of SY 2006-2007. She was also told that the nonrenewal of her contract was made on the basis of “administrative prerogative.”

Petitioners submitted a letter to respondent Hemandez, questioning the nonrenewal of their respective employment contracts. Not satisfied with the reply, they filed a Complaint against respondents for illegal dismissal, reinstatement, back wages, and damages.

In their defense, respondents claimed that petitioners had been remiss in their duties. Specifically, both of them reportedly sold computerized final examination sheets to their students without prior school approval. Allegedly, Fallarme also sold sociology books to students, while Martinez-Gacos served as part-time faculty in another school and organized out-of-campus activities, all without the permission of respondent college. These infractions supposedly prevented it from considering their services satisfactory.

LA Ruling:

The labor arbiter ruled that petitioners were regular employees who were entitled to security of tenure. Thus, the labor arbiter ordered respondent college to reinstate petitioners and pay them their back wages as well as their 13th month pay.

NLRC Ruling:

Upon respondents’ appeal, the NLRC reversed the Decision of the labor arbiter. It held that petitioners had failed to meet the third requirement for regularization as prescribed by the 1992 Manual; that is, they had not served respondent college satisfactorily. The NLRC found that certain actions they had done without the requisite approval of respondent college brought about their unsatisfactory performance during their probationary period. However, given the failure of respondent to observe due process, the NLRC ordered it to pay them P20,000 each as indemnity. Upon the denial of their Motion for Reconsideration, petitioners proceeded to the CA.

CA Ruling:

The CA affirmed the NLRC Decision. It upheld respondent college’s administrative prerogative to determine whether or not petitioners were entitled to regularization on the basis of respondents’ academic freedom. Furthermore, the award of P20,000 as indemnity to each of the petitioners was upheld. Upon the denial by the CA of their Motion for Reconsideration, petitioners have now come before this Court via this Petition.


  1. Whether or not respondents were regular employees
  2. Whether or not nonrenewal of the contract was a valid exercise of “administrative prerogative”
  3. Whether or not due process was observed

SC Ruling:

The SC denied the petition.

A review of the records will show that they were considered regular employees since Day One of their employment.

It is established that while the Labor Code provides general rules as to probationary employment, these rules are supplemented by the Manual of Regulations for Private Schools with respect to the period of probationary employment of private school teachers. As prescribed by the 1992 Manual, a teacher must satisfy the following requisites to be entitled to regular faculty status: (1) must be a full-time teacher; (2) must have rendered three years of service (or six consecutive semesters of service for teachers on the tertiary level); and (3) that service must have been satisfactory.

In Abbott Laboratories v. Alcaraz, this Court explained that valid probationary employment under Art. 281 presupposes the concurrence of two requirements: (1) the employer must have made known to the probationary employee the reasonable standard that the latter must comply with to qualify as a regular employee; and (2) the employer must have informed the probationary employee of the applicable performance standard at the time of the latter’s engagement. Failing in one or both, the employee, even if initially hired as a probationary employee, shall be considered a regular employee.

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With respect to the regularization of probationary teachers, the standards laid down in Abbott Laboratories apply to the third requisite under the 1992 Manual: that they must have rendered satisfactory service. As observed by this Court in Colegio del Santisimo Rosario v. Rojo, the use of the term satisfactory connotes the requirement for schools to set reasonable standards to be followed by teachers on probationary employment. For how else can one determine if probationary teachers have satisfactorily completed the probationary period if standards therefor are not provided?”

Therefore, applying Article 281 of the Labor Code, a school must not only set reasonable standards that will determine whether a probationary teacher rendered satisfactory service and is for regular status; !t must also communicate these standards to the teacher at the start of the probationary period. Should it fail to do so, the teacher shall be deemed a regular employee from Day One.

An examination of the records will show that when they were hired in 2003, they each signed a mere memorandum informing them that they had passed the qualifying examinations for faculty members, and that they were being hired effective first semester of SY 2003-2004. The memorandum did not indicate their status as probationary employees, the specific period of effectivity of their status as such, and the reasonable standards they needed to comply with to be granted regular status. The failure to inform them of these matters was in violation of the requirements of valid probationary employment.

The appointment contracts invoked by respondents appear to be an afterthought, as they asked petitioners to sign the contracts only when the latter’s three-year probationary period was about to expire. Apparently, this act was an effort to put a stamp of validity on respondents’ refusal to renew petitioners’ contracts.

Limitation on the exercise of administrative prerogative

Indeed, the determination of whether the performance of probationary teaching personnel has been sufficiently satisfactory as to warrant their regularization lies in the hands of the school pursuant to its administrative prerogative, which is an extension of its academic freedom under Section 5(2), Article XIV41 of the Constitution. Academic freedom gives the school the discretion and the prerogative to impose standards on its teachers and to determine whether these have been met upon the conclusion of the probationary period.

It must be pointed out that the school’s exercise of administrative prerogative in this respect is not plenary as respondents would like us to believe. The exercise of that prerogative is still subject to the limitations imposed by the Labor Code and jurisprudence on valid probationary employment.

Violation of procedural due process

We find a complete deviation from the two-notice rule in this case. The records show that respondent college effectively dismissed petitioners by sending them a written notice informing them that the school would no longer renew their contracts for the forthcoming semester. We find that the letters were abruptly sent and lacked any specification of the grounds for their termination. Neither did the letters give petitioners the opportunity to explain their side. To aggravate the matter, upon their inquiry into the reason behind their termination, all that respondent college cited was its supposed “administrative prerogative,” which was misplaced as discussed earlier.

In Agabon v. National Labor Relations Commission, this Court held that if the dismissal was for a valid cause, failure to comply with the -proper procedural requirements shall not nullify the dismissal, but shall only warrant the payment of indemnity in the form of nominal damages. The amount of damages is addressed to the sound discretion of the Court, taking into account the relevant circumstances.

Considering the circumstances in the present case and in compliance with prevailing jurisprudence, we deem it appropriate for respondent college to pay petitioners P30,000 each. This amount is in lieu of the P20,000 awarded to each petitioner by the NLRC and the CA.

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