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Mercado vs AMA In response, AMACC contended that the petitioners-teachers

worked under a contracted term under a non-tenured appointment

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

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-

Inevitably, the termination of employment of employees on

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