Whaaaat? That is just insane. I'm pretty sure if I was called the "C" word by a parent, my principal would ask them to leave immediately. If a student called me that, he or she would be sent to our disciplinary campus. I once had a student call me a bitch loudly to my face and bow up to me, and I was asked if I wanted press charges--I didn't because she was such a troubled kid, but she was sent to alternative school for this incident. This is literally the only time I've ever had a student curse at me!
Dude--move to rural Texas. At my district, students are allowed to have phones if they're using them to study, etc.; otherwise, if they were playing on their phone or texting, I could take those suckers up, and they'd have to pay $15 to get their phone back. I actually feel like that's a little harsh, but it beats your alternative!
Also, I'm a school counselor now, and kids definitely still fail here! I spend about 40% of my day giving pep talks to kids, trying to motivate them to actually study, so they can pass and graduate!
We're a very poor district with some problems, but it sounds like you're in an awful place. Or, maybe it's just different in your part of the world? We definitely have to document speaking with parents about student failures, but I make these calls at the 6 weeks progress reports as well, so we often have several people (teacher, counselor, admin) to confirm that the parent was contacted and informed.