G.R. No.

156109             November 18, 2004

KHRISTINE REA M. REGINO, Assisted and Represented by ARMANDO REGINO, petitioner, 

DECISION

PANGANIBAN, J.:

Upon enrolment, students and their school enter upon a reciprocal contract. The students agree to abide by the
standards of academic performance and codes of conduct, issued usually in the form of manuals that are
distributed to the enrollees at the start of the school term. Further, the school informs them of the itemized fees
they are expected to pay. Consequently, it cannot, after the enrolment of a student, vary the terms of the contract.
It cannot require fees other than those it specified upon enrolment.

The Case

Before the Court is a Petition for Review under Rule 45,1 seeking to nullify the July 12, 20022 and the November 22,
20023 Orders of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan (Branch 48) in Civil Case No. U-7541.
The decretal portion of the first assailed Order reads:

"WHEREFORE, the Court GRANTS the instant motion to dismiss for lack of cause of action."4

The second challenged Order denied petitioner's Motion for Reconsideration.

The Facts

Petitioner Khristine Rea M. Regino was a first year computer science student at Respondent Pangasinan Colleges of
Science and Technology (PCST). Reared in a poor family, Regino went to college mainly through the financial
support of her relatives. During the second semester of school year 2001-2002, she enrolled in logic and statistics
subjects under Respondents Rachelle A. Gamurot and Elissa Baladad, respectively, as teachers.

In February 2002, PCST held a fund raising campaign dubbed the "Rave Party and Dance Revolution," the proceeds
of which were to go to the construction of the school's tennis and volleyball courts. Each student was required to
pay for two tickets at the price of P100 each. The project was allegedly implemented by recompensing students
who purchased tickets with additional points in their test scores; those who refused to pay were denied the
opportunity to take the final examinations.

Financially strapped and prohibited by her religion from attending dance parties and celebrations, Regino refused
to pay for the tickets. On March 14 and March 15, 2002, the scheduled dates of the final examinations in logic and
statistics, her teachers -- Respondents Rachelle A. Gamurot and Elissa Baladad -- allegedly disallowed her from
taking the tests. According to petitioner, Gamurot made her sit out her logic class while her classmates were taking
their examinations. The next day, Baladad, after announcing to the entire class that she was not permitting
petitioner and another student to take their statistics examinations for failing to pay for their tickets, allegedly
ejected them from the classroom. Petitioner's pleas ostensibly went unheeded by Gamurot and Baladad, who
unrelentingly defended their positions as compliance with PCST's policy.
On April 25, 2002, petitioner filed, as a pauper litigant, a Complaint5 for damages against PCST, Gamurot and
Baladad. In her Complaint, she prayed for P500,000 as nominal damages; P500,000 as moral damages; at least
P1,000,000 as exemplary damages; P250,000 as actual damages; plus the costs of litigation and attorney's fees.

On May 30, 2002, respondents filed a Motion to Dismiss6 on the ground of petitioner's failure to exhaust
administrative remedies. According to respondents, the question raised involved the determination of the wisdom
of an administrative policy of the PCST; hence, the case should have been initiated before the proper
administrative body, the Commission of Higher Education (CHED).

In her Comment to respondents' Motion, petitioner argued that prior exhaustion of administrative remedies was
unnecessary, because her action was not administrative in nature, but one purely for damages arising from
respondents' breach of the laws on human relations. As such, jurisdiction lay with the courts.

On July 12, 2002, the RTC dismissed the Complaint for lack of cause of action.

Ruling of the Regional Trial Court

In granting respondents' Motion to Dismiss, the trial court noted that the instant controversy involved a higher
institution of learning, two of its faculty members and one of its students. It added that Section 54 of the Education
Act of 1982 vested in the Commission on Higher Education (CHED) the supervision and regulation of tertiary
schools. Thus, it ruled that the CHED, not the courts, had jurisdiction over the controversy.7

In its dispositive portion, the assailed Order dismissed the Complaint for "lack of cause of action" without,
however, explaining this ground.

Aggrieved, petitioner filed the present Petition on pure questions of law.8

Issues

In her Memorandum, petitioner raises the following issues for our consideration:

"Whether or not the principle of exhaustion of administrative remedies applies in a civil action exclusively for
damages based on violation of the human relation provisions of the Civil Code, filed by a student against her
former school.

"Whether or not there is a need for prior declaration of invalidity of a certain school administrative policy by the
Commission on Higher Education (CHED) before a former student can successfully maintain an action exclusively
for damages in regular courts.

"Whether or not the Commission on Higher Education (CHED) has exclusive original jurisdiction over actions for
damages based upon violation of the Civil Code provisions on human relations filed by a student against the
school."9

All of the foregoing point to one issue -- whether the doctrine of exhaustion of administrative remedies is
applicable. The Court, however, sees a second issue which, though not expressly raised by petitioner, was impliedly
contained in her Petition: whether the Complaint stated sufficient cause(s) of action.

The Court's Ruling

The Petition is meritorious.

Exhaustion of Administrative Remedies

Respondents anchored their Motion to Dismiss on petitioner's alleged failure to exhaust administrative remedies
before resorting to the RTC. According to them, the determination of the controversy hinge on the validity, the
wisdom and the propriety of PCST's academic policy. Thus, the Complaint should have been lodged in the CHED,
the administrative body tasked under Republic Act No. 7722 to implement the state policy to "protect, foster and
promote the right of all citizens to affordable quality education at all levels and to take appropriate steps to ensure
that education is accessible to all."10

Petitioner counters that the doctrine finds no relevance to the present case since she is praying for damages, a
remedy beyond the domain of the CHED and well within the jurisdiction of the courts.11

Petitioner is correct. First, the doctrine of exhaustion of administrative remedies has no bearing on the present
case. In Factoran Jr. v. CA,12 the Court had occasion to elucidate on the rationale behind this doctrine:

"The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity, and
convenience, should not entertain suits unless the available administrative remedies have first been resorted to
and the proper authorities have been given the appropriate opportunity to act and correct their alleged errors, if
any, committed in the administrative forum. x x x.13 "

Petitioner is not asking for the reversal of the policies of PCST. Neither is she demanding it to allow her to take her
final examinations; she was already enrolled in another educational institution. A reversal of the acts complained
of would not adequately redress her grievances; under the circumstances, the consequences of respondents' acts
could no longer be undone or rectified.

Second, exhaustion of administrative remedies is applicable when there is competence on the part of the
administrative body to act upon the matter complained of.14 Administrative agencies are not courts; they are
neither part of the judicial system, nor are they deemed judicial tribunals.15 Specifically, the CHED does not have
the power to award damages.16 Hence, petitioner could not have commenced her case before the Commission.

Third, the exhaustion doctrine admits of exceptions, one of which arises when the issue is purely legal and well
within the jurisdiction of the trial court.17 Petitioner's action for damages inevitably calls for the application and the
interpretation of the Civil Code, a function that falls within the jurisdiction of the courts.18

Second Issue:

Cause of Action

Sufficient Causes of Action Stated in the Allegations in the Complaint

As a rule, every complaint must sufficiently allege a cause of action; failure to do so warrants its dismissal.19 A
complaint is said to assert a sufficient cause of action if, admitting what appears solely on its face to be correct, the
plaintiff would be entitled to the relief prayed for. Assuming the facts that are alleged to be true, the court should
be able to render a valid judgment in accordance with the prayer in the complaint.20

A motion to dismiss based on lack of cause of action hypothetically admits the truth of the alleged facts. In their
Motion to Dismiss, respondents did not dispute any of petitioner's allegations, and they admitted that "x x x the
crux of plaintiff's cause of action is the determination of whether or not the assessment of P100 per ticket is
excessive or oppressive."21 They thereby premised their prayer for dismissal on the Complaint's alleged failure to
state a cause of action. Thus, a reexamination of the Complaint is in order.

The Complaint contains the following factual allegations:

"10. In the second week of February 2002, defendant Rachelle A. Gamurot, in connivance with PCST, forced
plaintiff and her classmates to buy or take two tickets each, x x x;

"11. Plaintiff and many of her classmates objected to the forced distribution and selling of tickets to them but the
said defendant warned them that if they refused [to] take or pay the price of the two tickets they would not be
allowed at all to take the final examinations;

"12. As if to add insult to injury, defendant Rachelle A. Gamurot bribed students with additional fifty points or so in
their test score in her subject just to unjustly influence and compel them into taking the tickets;

"13. Despite the students' refusal, they were forced to take the tickets because [of] defendant Rachelle A.
Gamurot's coercion and act of intimidation, but still many of them including the plaintiff did not attend the dance
party imposed upon them by defendants PCST and Rachelle A. Gamurot;

"14. Plaintiff was not able to pay the price of her own two tickets because aside form the fact that she could not
afford to pay them it is also against her religious practice as a member of a certain religious congregation to be
attending dance parties and celebrations;

"15. On March 14, 2002, before defendant Rachelle A. Gamurot gave her class its final examination in the subject
'Logic' she warned that students who had not paid the tickets would not be allowed to participate in the
examination, for which threat and intimidation many students were eventually forced to make payments:

"16. Because plaintiff could not afford to pay, defendant Rachelle A. Gamurot inhumanly made plaintiff sit out the
class but the defendant did not allow her to take her final examination in 'Logic;'

"17. On March 15, 2002 just before the giving of the final examination in the subject 'Statistics,' defendant Elissa
Baladad, in connivance with defendants Rachelle A. Gamurot and PCST, announced in the classroom that she was
not allowing plaintiff and another student to take the examination for their failure and refusal to pay the price of
the tickets, and thenceforth she ejected plaintiff and the other student from the classroom;

"18. Plaintiff pleaded for a chance to take the examination but all defendants could say was that the prohibition to
give the examinations to non-paying students was an administrative decision;

"19. Plaintiff has already paid her tuition fees and other obligations in the school;

"20. That the above-cited incident was not a first since PCST also did another forced distribution of tickets to its
students in the first semester of school year 2001-2002; x x x " 22

The foregoing allegations show two causes of action; first, breach of contract; and second, liability for tort.

Reciprocity of the
School-Student Contract

In Alcuaz v. PSBA,23 the Court characterized the relationship between the school and the student as a contract, in
which "a student, once admitted by the school is considered enrolled for one semester."24 Two years later, in Non
v. Dames II,25 the Court modified the "termination of contract theory" in Alcuaz by holding that the contractual
relationship between the school and the student is not only semestral in duration, but for the entire period the
latter are expected to complete it."26 Except for the variance in the period during which the contractual relationship
is considered to subsist, both Alcuaz and Non were unanimous in characterizing the school-student relationship as
contractual in nature.

The school-student relationship is also reciprocal. Thus, it has consequences appurtenant to and inherent in all
contracts of such kind -- it gives rise to bilateral or reciprocal rights and obligations. The school undertakes to
provide students with education sufficient to enable them to pursue higher education or a profession. On the
other hand, the students agree to abide by the academic requirements of the school and to observe its rules and
regulations.27

The terms of the school-student contract are defined at the moment of its inception -- upon enrolment of the
student. Standards of academic performance and the code of behavior and discipline are usually set forth in
manuals distributed to new students at the start of every school year. Further, schools inform prospective
enrollees the amount of fees and the terms of payment.

In practice, students are normally required to make a down payment upon enrollment, with the balance to be paid
before every preliminary, midterm and final examination. Their failure to pay their financial obligation is regarded
as a valid ground for the school to deny them the opportunity to take these examinations.

The foregoing practice does not merely ensure compliance with financial obligations; it also underlines the
importance of major examinations. Failure to take a major examination is usually fatal to the students' promotion
to the next grade or to graduation. Examination results form a significant basis for their final grades. These tests
are usually a primary and an indispensable requisite to their elevation to the next educational level and, ultimately,
to their completion of a course.

Education is not a measurable commodity. It is not possible to determine who is "better educated" than another.
Nevertheless, a student's grades are an accepted approximation of what would otherwise be an intangible product
of countless hours of study. The importance of grades cannot be discounted in a setting where education is
generally the gate pass to employment opportunities and better life; such grades are often the means by which a
prospective employer measures whether a job applicant has acquired the necessary tools or skills for a particular
profession or trade.

Thus, students expect that upon their payment of tuition fees, satisfaction of the set academic standards,
completion of academic requirements and observance of school rules and regulations, the school would reward
them by recognizing their "completion" of the course enrolled in.

The obligation on the part of the school has been established in Magtibay v. Garcia,28 Licup v. University of San
Carlos29 and Ateneo de Manila University v. Garcia,30 in which the Court held that, barring any violation of the rules
on the part of the students, an institution of higher learning has a contractual obligation to afford its students a fair
opportunity to complete the course they seek to pursue.

We recognize the need of a school to fund its facilities and to meet astronomical operating costs; this is a reality in
running it. Crystal v. Cebu International School31 upheld the imposition by respondent school of a "land purchase
deposit" in the amount of P50,000 per student to be used for the "purchase of a piece of land and for the
construction of new buildings and other facilities x x x which the school would transfer [to] and occupy after the
expiration of its lease contract over its present site."
The amount was refundable after the student graduated or left the school. After noting that the imposition of the
fee was made only after prior consultation and approval by the parents of the students, the Court held that the
school committed no actionable wrong in refusing to admit the children of the petitioners therein for their failure
to pay the "land purchase deposit" and the 2.5 percent monthly surcharge thereon.

In the present case, PCST imposed the assailed revenue-raising measure belatedly, in the middle of the semester. It
exacted the dance party fee as a condition for the students' taking the final examinations, and ultimately for its
recognition of their ability to finish a course. The fee, however, was not part of the school-student contract
entered into at the start of the school year. Hence, it could not be unilaterally imposed to the prejudice of the
enrollees.

Such contract is by no means an ordinary one. In Non, we stressed that the school-student contract "is imbued
with public interest, considering the high priority given by the Constitution to education and the grant to the State
of supervisory and regulatory powers over all educational institutions."32 Sections 5 (1) and (3) of Article XIV of the
1987 Constitution provide:

"The State shall protect and promote the right of all citizens to quality education at all levels and shall take
appropriate steps to make such declaration accessible to all.

"Every student has a right to select a profession or course of study, subject to fair, reasonable and equitable
admission and academic requirements."

The same state policy resonates in Section 9(2) of BP 232, otherwise known as the Education Act of 1982:

"Section 9. Rights of Students in School. – In addition to other rights, and subject to the limitations prescribed by
law and regulations, students and pupils in all schools shall enjoy the following rights:

xxx    xxx    xxx

(2) The right to freely choose their field of study subject to existing curricula and to continue their course therein
up to graduation, except in cases of academic deficiency, or violation of disciplinary regulations."

Liability for Tort

In her Complaint, petitioner also charged that private respondents "inhumanly punish students x x x by reason only
of their poverty, religious practice or lowly station in life, which inculcated upon [petitioner] the feelings of guilt,
disgrace and unworthiness;"33 as a result of such punishment, she was allegedly unable to finish any of her subjects
for the second semester of that school year and had to lag behind in her studies by a full year. The acts of
respondents supposedly caused her extreme humiliation, mental agony and "demoralization of unimaginable
proportions" in violation of Articles 19, 21 and 26 of the Civil Code. These provisions of the law state thus:

"Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith."

"Article 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage."

"Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and
other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a
cause of action for damages, prevention and other relief:
(1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relations of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his beliefs, lowly station in life, place of birth, physical defect, or
other personal condition."

Generally, liability for tort arises only between parties not otherwise bound by a contract. An academic institution,
however, may be held liable for tort even if it has an existing contract with its students, since the act that violated
the contract may also be a tort. We ruled thus in PSBA vs. CA,34 from which we quote:

"x x x A perusal of Article 2176 [of the Civil Code] shows that obligations arising from quasi-delicts or tort, also
known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether
express or implied. However, this impression has not prevented this Court from determining the existence of a tort
even when there obtains a contract. In Air France v. Carrascoso (124 Phil. 722), the private respondent was
awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted,
however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one arising form a
contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a
contract, for the act that breaks the contract may be also a tort. x x x This view was not all that revolutionary, for
even as early as 1918, this Court was already of a similar mind. In Cangco v. Manila Railroad (38 Phil. 780), Mr.
Justice Fisher elucidated thus: 'x x x. When such a contractual relation exists the obligor may break the contract
under such conditions that the same act which constitutes a breach of the contract would have constituted the
source of an extra-contractual obligation had no contract existed between the parties.'

"Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21 x x
x."35

Academic Freedom

In their Memorandum, respondents harp on their right to "academic freedom." We are not impressed. According
to present jurisprudence, academic freedom encompasses the independence of an academic institution to
determine for itself (1) who may teach, (2) what may be taught, (3) how it shall teach, and (4) who may be
admitted to study.36In Garcia v. the Faculty Admission Committee, Loyola School of Theology,37 the Court upheld
the respondent therein when it denied a female student's admission to theological studies in a seminary for
prospective priests. The Court defined the freedom of an academic institution thus: "to decide for itself aims and
objectives and how best to attain them x x x free from outside coercion or interference save possibly when
overriding public welfare calls for some restraint."38

In Tangonan v. Paño,39 the Court upheld, in the name of academic freedom, the right of the school to refuse
readmission of a nursing student who had been enrolled on probation, and who had failed her nursing subjects.
These instances notwithstanding, the Court has emphasized that once a school has, in the name of academic
freedom, set its standards, these should be meticulously observed and should not be used to discriminate against
certain students.40 After accepting them upon enrollment, the school cannot renege on its contractual obligation
on grounds other than those made known to, and accepted by, students at the start of the school year.
In sum, the Court holds that the Complaint alleges sufficient causes of action against respondents, and that it
should not have been summarily dismissed. Needless to say, the Court is not holding respondents liable for the
acts complained of. That will have to be ruled upon in due course by the court a quo.

WHEREFORE, the Petition is hereby GRANTED, and the assailed Orders REVERSED. The trial court is DIRECTED to
reinstate the Complaint and, with all deliberate speed, to continue the proceedings in Civil Case No. U-7541. No
costs.

SO ORDERED.

Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.