Title
Brent School, Inc. vs. Zamora
Case
G.R. No. L-48494
Decision Date
Feb 5, 1990
Alegre, hired under a fixed-term contract, contested termination upon expiration, claiming regular employee status. SC upheld contract validity, ruling expiration as lawful termination.
termination
regular employee
voluntary

Case Summary (G.R. No. L-48494)

Factual Background

The petition arose from an employment contract by which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed the term of employment for five years from July 18, 1971 to July 17, 1976. Subsequent written agreements in 1973 and 1974 reiterated the same terms and the same expiry date. On April 20, 1976 the School furnished the Department of Labor a report advising that Alegre’s services would terminate upon expiration of the contract, stating the ground as “completion of contract, expiration of the definite period of employment.” On May 26, 1976 Alegre accepted P3,177.71 with a receipt describing the amount as full payment for services to July 17, 1976. Alegre later protested before a Labor Conciliator, claiming that by virtue of rendering five years of service in activities “usually necessary or desirable” to the employer he had become a regular employee and could be dismissed only for just cause.

Trial and Administrative Proceedings

The Labor Conciliator and the Regional Director treated the School’s filing as an application for clearance to terminate and refused clearance. The Regional Director ordered Alegre reinstated as a “permanent employee” without loss of seniority and with full back wages, holding that the asserted ground of expiration was not sanctioned by P.D. 442 and was prohibited by a Bureau of Private Schools Circular. The Regional Director denied the School’s motion for reconsideration. The Secretary of Labor reviewed and sustained the Regional Director’s ruling. The Office of the President dismissed the School’s appeal and affirmed the Labor Secretary. The School then filed a petition for certiorari under Rule 65, Rules of Court to this Court.

Issues Presented

The central legal question was whether the provisions of the Labor Code, as amended, had effectively interdicted the use and enforcement of fixed period employment clauses so that expiration of an agreed term could not operate as a valid ground for termination. Related questions were whether Alegre had become a regular employee entitled to security of tenure after five years of service and whether departmental clearance or notice was required for termination by expiration.

Parties’ Contentions

Petitioner Brent School, Inc. maintained that the fixed-term contract was valid when executed in 1971 under prevailing law and that its expiration lawfully terminated Alegre’s employment. The School argued that preexisting statutes and the Civil Code recognized obligations and contracts with definite periods and that the Labor Code should not be read to abolish voluntary term contracts absent intent to prevent circumvention. Respondent Doroteo R. Alegre contended that his work involved activities “usually necessary or desirable” to the employer and that after five years he acquired the status of a regular employee who could be dismissed only for just cause. The administrative respondents relied on provisions of the Labor Code and its implementing rules in treating the School’s report as requiring clearance and in denying termination based solely on expiration.

Ruling of the Supreme Court

The Court reversed and set aside the decision of the public respondent. It held that Alegre’s contract of employment lawfully terminated by reason of the expiration of the agreed term and that he was not entitled to reinstatement or to the remedies previously awarded by administrative agencies. The Court ordered no pronouncement as to costs.

Legal Basis and Reasoning

The Court traced the legal history of term employment. It observed that prior to the Labor Code, term contracts were implicitly recognized by R.A. 1052 as amended by R.A. 1787, and by provisions of the former Code of Commerce and the Civil Code which permit obligations with a period. The Court cited decisions such as Biboso v. Victorias Milling Co., Inc. and J. Walter Thompson Co. (Phil.) v. NLRC for the rule that a contract for a definite period terminates upon expiration of that period. The Court examined the evolution of the Labor Code provisions. It noted that Article 319 (later renumbered and recast as Articles 270 and 280) defined “employment without a definite period” by reference to activities “usually necessary or desirable” to the employer, and that subsequent amendments by P.D. 850 and B.P. Blg. 130 removed or altered explicit references to fixed-period employment and added the clause “The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties.” The Court held that a literal and indiscriminate reading of that clause to outlaw all voluntary fixed-term contracts would lead to absurd and unjust consequences and would exceed the legitimate aim of preventing circumvention of security of tenure. The Court applied principles of statutory construction to construe Article 280 narrowly. It held that the clause was intended to target agreements entered into specifically to evade the employee’s right to security of tenure, not to invalidate fixed-term contracts freely and knowingly entered into without coercion or other vitiating circumstances. The Court emphasized that the decisive determinant in term employment is the day certain agreed by the parties rather than the character of the duties performed. The Court relied on precedent including Escudero v. Office of the President (G.R. No. 57822) and Labajo v. Alejandro (G.R. No. 80383) to support the proposition that an appointment or contract with a definitive period terminates at its expiration without necessity of a termination notice. The Court therefore concluded that Alegre’s employment terminated upon the expiration of his last contract on Ju

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