Case Summary (G.R. No. L-48494)
Material Facts
• On July 18, 1971, Brent School and Alegre executed a five-year fixed-term contract (July 18, 1971–July 17, 1976) at an annual salary of ₱20,000.
• Subsequent agreements (1973–1974) reiterated the same term and conditions.
• On April 20, 1976, Brent School notified the Department of Labor of contract expiration effective July 16, 1976.
• Alegre protested before a Labor Conciliator, claiming he became a regular employee after five years and could be dismissed only for just cause.
Procedural History
• The Labor Conciliator treated the school’s report as an application for clearance to terminate and ordered Alegre’s reinstatement as a permanent employee with back wages.
• The Regional Director, the Secretary of Labor, and finally the Office of the President all sustained that order, ruling expiration of a fixed-term contract is not a just cause under the Labor Code.
• Brent School petitioned the Supreme Court for certiorari, contending that its contract lawfully expired by its own terms.
Applicable Law
• 1987 Constitution (Security of tenure; freedom of contract)
• Labor Code of the Philippines (P.D. 442, as amended by P.D. 850 and B.P. Blg. 130)
• Civil Code (Republic Act No. 386; Articles on period of obligations and contracts of service)
• Termination Pay Law (R.A. 1052, as amended by R.A. 1787)
Evolution of Term Employment under Philippine Law
• Pre-1950: Code of Commerce recognized “mesada” (one-month notice for terminable employment without fixed term).
• Civil Code (1950): No prohibition against fixed-term contracts; allowed stipulations for definite periods.
• Termination Pay Law (1954, 1957): Implied recognition of fixed-term employment alongside notice requirements.
• Labor Code (1974): Explicitly defined probationary, regular, casual, and fixed-period employment; initially regulated termination of fixed-period tenure.
• P.D. 850 (1975) removed references to fixed-period employment in probationary rules but retained just-cause grounds for jobs without definite period.
• B.P. Blg. 130 (1981) eliminated all express references to fixed-term employment in just-cause provisions.
Interpretation of Labor Code Provisions
• Article 280 (formerly Art. 270/319): Defines regular employment by necessity of work in the employer’s business, excluding seasonality and specific projects; contains a “written agreement to the contrary notwithstanding” clause.
• Article 283 (formerly Art. 272): Lists just causes for terminating employment without a definite period, omitting any reference to expiration of a fixed term.
• The Court held these amendments did not intend to render all fixed-term contracts void, but to outlaw only those agreements used to evade security-of-tenure protections.
Constitutional and Public Policy Considerations
• Freedom of contract and respect for civil-law principles permit parties to stipulate definite terms, absent coercion or evasion of labor safeguards.
• The 1987 Constitution guards security of tenure (Art. 13, Sec. 3) but does not categorically prohibit fixed-t
Case Syllabus (G.R. No. L-48494)
Procedural History
- The petition was filed by Brent School, Inc., and Rev. Gabriel Dimache via certiorari under Rule 65, Rules of Court, challenging the final administrative ruling of the Office of the President in a labor case.
- The Labor Conciliator treated Brent School’s notice as an application for clearance to terminate instead of a mere report of expiration, recommending reinstatement.
- The Regional Director denied clearance, ordered reinstatement of Alegre as a “permanent employee” with back wages, and declined to reconsider on motion.
- The Secretary of Labor sustained the Regional Director’s ruling.
- The Office of the President dismissed Brent School’s administrative appeal for lack of merit and affirmed the Labor Secretary.
- Brent School elevated the case to the Supreme Court of the Philippines, seeking reversal of the reinstatement and related orders.
Facts
- On July 18, 1971, Brent School engaged Doroteo R. Alegre as Athletic Director under a written contract for a definite term of five years (to July 17, 1976) at an annual salary of ₱20,000.00.
- Subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974, reaffirmed the same term and conditions.
- On April 20, 1976, three months before contract expiry, Brent School filed with the Department of Labor a “report of termination” effective July 16, 1976, citing expiration of the definite period.
- On May 26, 1976, Alegre accepted ₱3,177.71 as “in full payment of services for the period May 16 to July 17, 1976 as full payment of contract.”
- Alegre protested before the Labor Conciliator, contending that after five years of continuous service he had acquired regular status and could be dismissed only for just cause under the Labor Code.
Issue
- Whether the Labor Code, as amended by Presidential Decrees 442 and 850 and Batas Pambansa Blg. 130, has effectively prohibited or “anathematized” fixed‐period employment contracts, thereby rendering Alegre’s five‐year term void and converting him into a regular employee entitled only to dismissal for just cause.
Applicable Statutory and Jurisprudential Framework
- Prior to Labor Code enactment (effective November 1, 1974):
- Termination Pay Law (R.A. 1052, as amended by R.A. 17