Mercado vs AMA
worked under a contracted term under a non-tenured appointment
Facts: The petitioners are members of the faculty of AMA in Paranaque.
They executed individual Teachers Contracts for each of the trimesters that
they were engaged to teach, with the following common stipulation:
1. POSITION. The TEACHER has agreed to accept a non-
tenured appointment to work in the College of xxx
effective xxx to xxx or for the duration of the last term
that the TEACHER is given a teaching load based on the
assignment duly approved by the DEAN/SAVP-COO.
[Emphasis supplied]
On the school year 2000-2001, AMACC implemented new faculty
screening guidelines, set forth in its Guidelines on the
Implementation of AMACC Faculty Plantilla. Under the new
screening guidelines, teachers were to be hired or maintained based
on extensive teaching experience, capability, potential, high
academic qualifications and research background. The performance
standards under the new screening guidelines were also used to
determine the present faculty members entitlement to salary
increases. The petitioners failed to obtain a passing rating based on
the performance standards; hence AMACC did not give them any
salary increase.
Because of AMACCs action on the salary increases, the petitioners-
teachers filed a complaint with the Arbitration Branch of the
National Labor Relations Commission (NLRC) on July 2000 for
underpayment of wages, non-payment of overtime and overload
compensation, 13th month pay, and for discriminatory practices.
On September 2000, the petitioners-teachers individually received a
memorandum from AMACC informing them that with the expiration
of their contract to teach, their contract would no longer be
renewed.
Petitioners-teachers amended their labor arbitration complaint to
include the charge of illegal dismissal against AMACC. Petitioners-
teachers claimed that their dismissal was illegal because it was
made in retaliation for their complaint for monetary benefits and
discriminatory practices against AMACC.
In response, AMACC contended that the petitioners-teachers
and were still within the three-year probationary period for
teachers. Their contracts were not renewed for the following term
because they failed to pass the Performance Appraisal System for
Teachers (PAST). This move was justified according to AMACC since
the school has to maintain its high academic standards.
Issue: WON the petitioners were illegally dismissed
Held: Yes. The existence of the term-to-term contracts covering the
petitioners employment is not disputed, nor is it disputed that they
were on probationary status not permanent or regular status from
the time they were employed on May 25, 1998 and until the
expiration of their Teaching Contracts on September 7, 2000. As the
CA correctly found, their teaching stints only covered a period of at
least seven (7) consecutive trimesters or two (2) years and three (3)
months of service. This case, however, brings to the fore the
essential question of which, between the two factors affecting
employment, should prevail given AMACCs position that the
teachers contracts expired and it had the right not to renew them.
In other words, should the teachers probationary status be
disregarded simply because the contracts were fixed-term?
The provision on employment on probationary status under the
Labor Code is a primary example of the fine balancing of interests
between labor and management that the Code has institutionalized
pursuant to the underlying intent of the Constitution.
On the one hand, employment on probationary status affords
management the chance to fully scrutinize the true worth of hired
personnel before the full force of the security of tenure guarantee
of the Constitution comes into play. Based on the standards set at
the start of the probationary period, management is given the
widest opportunity during the probationary period to reject hirees
who fail to meet its own adopted but reasonable standards. These
standards, together with the just and authorized causes for
termination of employment the Labor Code expressly provides, are
the grounds available to terminate the employment of a teacher on
probationary status. For example, the school may impose
reasonably stricter attendance or report compliance records on
teachers on probation, and reject a probationary teacher for failing
in this regard, although the same attendance or compliance record
may not be required for a teacher already on permanent status. At
the same time, the same just and authorizes causes for dismissal
under the Labor Code apply to probationary teachers, so that they
may be the first to be laid-off if the school does not have enough
students for a given semester or trimester. Termination of
employment on this basis is an authorized cause under the Labor
Code.

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. While AMACC
claimed that the petitioners-teachers failed to pass the PAST and
other requirements for regularization, the exact terms of the
standards were never introduced as evidence; neither does the
evidence show how these standards were applied to petitioners-
teachers

Inevitably, the termination of employment of employees on

probationary status lacks the supporting finding of just cause that
the law requires and, hence, illegal.