FACTS:

The petitioners in this case were former faculty members of AMA Computer College-Parañaque City, Inc. (AMACC). They were engaged as probationary faculty members with different positions and contracts. AMACC implemented new screening guidelines for faculty, including performance standards for salary increases, which the petitioners failed to meet. The petitioners filed a complaint for underpayment of wages, non-payment of overtime and overload compensation, 13th month pay, and discriminatory practices. They later amended their complaint to include the charge of illegal dismissal, claiming that it was in retaliation for their complaint and that AMACC failed to give adequate notice. The Labor Arbiter declared the petitioners illegally dismissed and ordered their reinstatement and monetary benefits. The NLRC affirmed the ruling, citing the applicable law as Section 92 of the Manual of Regulations for Private Schools. AMACC filed a petition for certiorari with the Court of Appeals (CA), which granted the petition and dismissed the complaint. The petitioners filed a petition for review with the Supreme Court, arguing that the CA erred in reversing the LA and NLRC rulings and not ordering their reinstatement with full backwages.

The petitioners were hired as probationary faculty members by AMA Computer College (AMACC) for a fixed term. They were terminated by AMACC after two years and three months, citing their failure to meet the performance standards for the school year 2000-2001. The petitioners contested their termination, claiming that AMACC violated the Labor Code by introducing new screening guidelines near the end of their probationary period. The Labor Arbiter ruled that they were illegally dismissed, and the NLRC affirmed the finding, but citing a different provision of the Labor Code. The CA, however, granted AMACC's petition and dismissed the complaint, stating that AMACC had a reasonable basis for not renewing the contracts and had the right to set standards for regularization. The petitioners filed a petition for review with the Supreme Court, arguing that the CA erred in reversing the LA and NLRC rulings and not ordering their reinstatement with full backwages.

The petitioners in this case argue that they were illegally dismissed by AMACC, claiming that they were hired on a permanent basis despite AMACC's contention that they were hired on a non-tenured and fixed-term basis. They argue that their employment was terminated based on undisclosed standards, which is a violation of the Labor Code. They assert that the CA incorrectly ruled that no actual dismissal occurred and that they are not entitled to reinstatement, full backwages, and attorney's fees. AMACC argues that the petitioners were hired on a non-tenured and fixed-term basis, and their contracts were not renewed due to poor performance and failure to meet the school's standards. AMACC emphasizes that the petitioners were aware of the school's regularization policies, including the need to obtain a passing rating on the Performance Appraisal for Teachers (PAST).

ISSUES:

1. Should the teachers' probationary status be disregarded simply because the contracts were fixed-term?

2. Does the school have the right not to renew the teachers' contracts?

3. Whether the fixed-term character of employment can be reconciled with the probationary status of an employee.

4. Whether the school's use of fixed-term contracts during the probationary period complies with the requirements of Article 281 of the Labor Code.

5. Whether the expiration of a fixed-term contract of a replacement teacher on a specific purpose with a particular focus on the term and with intent to end the teaching relationship upon expiration of the term leads to probationary status implications.

6. Whether the probationary standards applied by the school must be reasonable and communicated to the teachers at the start of the probationary period.

7. Whether the non-renewal of the petitioners' contracts lacked the supporting finding of just cause, making it illegal.

RULING:

1. The teachers' probationary status should not be disregarded simply because the contracts were fixed-term. The manual of Regulations for Private Schools recognizes that a teacher remains on probationary status for the entire duration of a three-year fixed-term contract.

2. The school has the right not to renew the teachers' contracts. The school has the prerogative to determine the terms and conditions of hiring, including the use of fixed-term employment contracts. As long as the standards for faculty members are reasonable and not arbitrary, the school has the right to set them and decide whether or not these standards have been met.

3. The fixed-term character of employment refers to the agreed-upon duration of the employment, and it ends on its own when the term expires. On the other hand, probationary status involves a process of testing and observing the abilities of a new employee. While both may refer to a period, their nature and purpose are distinct. Thus, there can be reconciliation between the fixed-term character of employment and the probationary status of an employee.

4. The school's use of fixed-term contracts during the probationary period is subject to the requirements of Article 281 of the Labor Code. If the school's fixed-term contracts are used merely as an arrangement dictated by the trimestral system and not to limit the period of the employment relationship, the contracts should be subject to the provisions on probationary status. Failure to reconcile the fixed-term contracts with the requirements of Article 281 would negate the purpose of the probationary period and undermine the balance in labor and management relationships established by the Constitution and the Labor Code.

5. The expiration of a fixed-term contract of a replacement teacher on a specific purpose with a particular focus on the term and with intent to end the teaching relationship upon expiration of the term does not lead to probationary status implications as the employment is for a specific purpose and the employee was never employed on a probationary basis.

6. If an employer applies probationary standards, they must not only be reasonable but also have been communicated to the teachers at the start of the probationary period or at the start of the period when they were to be applied. Failure to do so would violate due process.

7. The non-renewal of the petitioners' contracts lacked the supporting finding of just cause, making it illegal. The school failed to introduce evidence of the exact terms of the standards and how they were applied to the petitioners. Thus, without evidence of just cause for non-renewal, the termination of employment of employees on probationary status is illegal.

PRINCIPLES:

• In certiorari proceedings, the CA only examines the factual findings of the NLRC to determine whether there was grave abuse of discretion by the NLRC.

• The CA does not assess the sufficiency of evidence in certiorari proceedings, except when the factual findings are not supported by substantial evidence.

• The period of probation for academic personnel in private schools is governed by the Manual of Regulations for Private Schools, which provides for specific periods of probation depending on the level of education.

• An employee who has been engaged on a probationary basis may be terminated for a just cause if he fails to qualify as a regular employee according to reasonable standards made known by the employer at the time of engagement.

• Fixed-period employment during the probationary period is an accepted practice in the teaching profession.

• The contract of probationary employment should specify its period or term.

• A school enjoys academic freedom, which includes the right to set standards for teachers and determine who should teach.

• The school's management prerogative includes the right to regulate all aspects of employment, including hiring and the decision not to renew contracts.

• The provision on employment on probationary status in the Labor Code aims to balance the interests of labor and management.

• During the probationary period, management has the widest opportunity to reject hirees who fail to meet its own reasonable standards, provided that these standards have been made known to the employees and applied consistently.

• Probationary employees are entitled to the limited security of tenure guarantee, which requires the employer to justify any dismissal by showing compliance with the probationary standards and due process.

• Fixed-term employment refers to employment with a specific agreed-upon duration and ends when the term expires.

• Employment on probationary status involves a process of testing and observing the abilities of a new employee.

• When the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 of the Labor Code, which governs probationary status, should take primacy.

• An employment contract with a fixed-term for a specific purpose and a particular focus on the term does not result in probationary status implications.

• Probationary standards must be reasonable, communicated to the employees, and must have just cause for termination.

• Failure to comply with the due process requirement of communicating probationary standards and just cause for termination renders the non-renewal of contracts illegal.