G.R. No. L-80383 September 26, 1988
REV. FR. EMMANUEL LABAJO, personally and in his capacity as Director of San Andres High School, Maramag, Bukidnon, and, SAN ANDRES HIGH SCHOOL OF MARAMAG, INCORPORATED, petitioners, vs. PUREZA V. ALEJANDRO, ZENAIDA S. DAHILAN, JOSEPHINE A. CHAN, HERNANI C. MIAGUE, OPHELIA M. MIAGUE, ROLANDO T. AMAR and The HON. NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS

The six private respondents were teachers at San Andres High School. On March 13, 1985, they each received a letter from petitioner Fr. Emmanuel Labajo, the school director, informing them that their services would be terminated effective March 31, 1985. They filed a complaint for illegal dismissal, alleging violation of due process and security of tenure, and sought reinstatement, backwages, and payment of unpaid employment benefits. Petitioners admitted a monetary indebtedness of P52,173.67 for unpaid benefits but argued the teachers were estopped from claiming these as they were allegedly aware of the school’s financial limitations. Crucially, petitioners contended the teachers were merely probationary employees whose fixed-term contracts expired on March 31, 1985, and were not renewed. For two teachers, additional grounds of alleged estafa were raised. The Labor Arbiter and the NLRC ruled in favor of the teachers, declaring the dismissals illegal and ordering reinstatement with backwages.

ISSUE

The primary issue is whether the private respondents, as probationary teachers on fixed-term contracts, were illegally dismissed when their contracts expired and were not renewed.

RULING

The Supreme Court reversed the NLRC and held the dismissals were not illegal. The legal logic centered on the nature of probationary employment and fixed-term contracts. The Court found the teachers were indeed probationary employees, as evidenced by their contracts and the school’s classification. As probationary employees, they enjoyed security of tenure, but this was limited to the duration of their contracts. The Court, citing Brent School, Inc. vs. Zamora, ruled that upon the lawful expiration of a fixed-term contract, the employer is under no obligation to renew it. The termination resulted from the contract’s natural expiration, not a dismissal for cause. Therefore, the non-renewal constituted a justifiable separation, not an illegal dismissal. Consequently, the remedies of reinstatement and backwages were not available. However, the Court affirmed the monetary award of P52,173.67 for unpaid benefits, which petitioners had acknowledged, and upheld the dismissal of petitioners’ counterclaim for damages. The decision underscores that while probationary employees are protected from arbitrary dismissal during their contract term, their tenure ends with the contract’s expiry if non-renewal is not motivated by union activity or other constitutionally protected acts.