CASE DIGEST : Brent School, Inc. v. Zamora G.R. No. L-48494, February 5, 1990 En Banc — Narvasa, J.

 

FACTS

Doroteo R. Alegre was employed by Brent School, Inc. as its athletic director under a written employment contract executed on July 18, 1971. The contract provided for a fixed period of five years, beginning on July 18, 1971 and ending on July 17, 1976, with an annual compensation of ₱20,000. Subsequent agreements executed in 1973 and 1974 reiterated the same terms and conditions, including the fixed expiration date.

On April 20, 1976, about three months before the expiration of the contract, Alegre was furnished a copy of Brent School's report to the Department of Labor advising that his services would terminate upon the expiration of the definite period. The stated reason was “completion of contract, expiration of the definite period of employment.” Alegre objected to the termination. He contended that because his services were necessary and desirable to the usual business of the school, he should be considered a regular employee entitled to security of tenure under the Labor Code.

The dispute was brought before the National Labor Relations Commission and eventually reached the Supreme Court. The principal question concerned the validity of the fixed-term employment contract in light of the provisions of the Labor Code governing regular employment and security of tenure. The case required the Court to determine whether the parties could validly agree upon a definite period for the employment relationship.

ISSUE

The first issue was whether a written employment contract stipulating a definite period of employment is valid under the Labor Code, notwithstanding the provision concerning regular employment and the employee's right to security of tenure.

The second issue was whether Alegre should be considered a regular employee merely because the work he performed was necessary or desirable in the usual business or trade of Brent School. The Court had to determine whether the nature of the work alone controlled the employee's status despite the parties' express agreement fixing the duration of employment.

HELD

The Supreme Court upheld the validity of the fixed-term employment contract and ruled that Alegre's employment lawfully ended upon the expiration of the agreed period. The Court held that the mere fact that the employee's services were necessary or desirable in the employer's usual business or trade does not automatically invalidate an otherwise legitimate agreement fixing the period of employment.

The Court examined Article 280 of the Labor Code, which then provided the rules concerning regular and casual employment. The Court explained that the provision was intended principally to prevent employers from circumventing an employee's right to security of tenure by making arrangements that, despite their form, were actually intended to defeat regular employment. It did not mean that all agreements providing for a fixed period of employment were automatically invalid.

The Court held that fixed-term employment is not prohibited when the period was agreed upon knowingly and voluntarily by the parties, without force, duress, or improper pressure, and where the parties dealt with each other on relatively equal terms. The decisive consideration is not simply whether the employee performs activities necessary or desirable in the employer's business, but whether the fixed period was genuinely and voluntarily agreed upon and was not intended to circumvent security of tenure.

The Court also explained that the employment relationship may validly be terminated by the expiration of the period agreed upon by the parties. In this case, the five-year period was expressly stated in the original contract and was reiterated in the subsequent agreements. There was no showing that the fixed period had been imposed upon Alegre through circumstances that vitiated his consent or that the arrangement was designed to evade the Labor Code's requirements on security of tenure.

Accordingly, the Court sustained the validity of Alegre's fixed-term employment and held that his services could lawfully end upon the expiration of the agreed period. The Court therefore dismissed the petition, with the challenged ruling sustaining the termination upon expiration of the fixed-term contract left undisturbed.