REPEATED RENEWAL OF FIXED-TERM CONTRACT, NECESSITY OF WORK PERFORMED, AND CONTROL AMOUNT TO REGULAR EMPLOYMENT

Samonte vs. La Salle Greenhills, Inc.

G.R. No. 199683, February 10, 2016

Facts:

La Salle Greenhills, Inc. (LSGI) contracted the· services of medical professionals, specifically pediatricians, dentists and a physician, to comprise its Health Service Team (HST). Petitioners, along with other members of the HST signed uniform one-page Contracts of Retainer for the period of a specific academic beginning in June of a certain year (1989 and the succeeding 15 years) and terminating in March of the following year when the school year ends.

After fifteen consecutive years of renewal each academic year, where the last Contract of Retainer was for the school year of 2003-2004, LSGI Head Administrator, on that last day of the school year, informed the Medical Service Team, including herein petitioners, that their contracts will no longer be renewed for the following school year by reason of LSGI’s decision to hire two (2) full-time doctors and dentists. One of the physicians from the same Health Service Team was hired by LSGI as a full-time doctor. When petitioners’, along with their medical colleagues’, requests for payment of their separation pay were denied, they filed a complaint for illegal dismissal with prayer for separation pay, damages and attorney’s fees before the NLRC.

Petitioners alleged that they were regular employees who could only be dismissed for just and authorized causes, who, up to the time of their termination. LSGI denied that complainants were regular employees, asserting that complainants were independent contractors who were retained by LSGI by reason of their medical skills and expertise to provide ancillary medical and dental services to both its students and faculty. In the main, LSGI invoked the case of Sonza v. ABS-CBN to justify its stance that complainants were independent contractors and not regular employees.

LA Ruling:

The Labor Arbiter dismissed petitioners’ (and their colleagues’) complaint and ruled that complainants, as propounded by LSGI, were independent contractors under retainership contracts and never became regular employees of LSGI. The Labor Arbiter based its over-all finding of the absence of control by LSGI over complainants. But awarded separation pay on the ground of compassionate social justice. Both parties appealed to the NLRC.

NLRC Ruling:

The NLRC disagreed with the Labor Arbiter’s ruling that complainants were independent contractors based on the latter’s opinion that the services rendered by complainants are not considered necessary to LSGI’ s operation as an educational institution. The NLRC noted that Presidential Decree No. 856, otherwise known as the Sanitation Code of the Philippines, requires that private educational institutions comply with the sanitary laws. Nonetheless, the NLRC found that complainants were fixed-period employees whose terms of employment were subject to agreement for a specific duration. In all, the NLRC ruled that the Contracts of Retainer between complainants and LSGI are valid fixed-term employment contracts where complainants as medical professionals understood the terms thereof when they agreed to such continuously for more than ten (10) years. Consequently, the valid termination of their retainership contracts at the end of the period stated therein, did not entitle complainants to reinstatement, nor, to payment of separation pay. Petitioners filed petition for certiorari.

CA Ruling:

In dismissing the petition for certiorari, the appellate court ruled that the NLRC did not commit an error of jurisdiction which is correctible by a writ of certiorari. The Court of Appeals found that the NLRC’s ruling was based on the Contracts of Retainer signed .by petitioners who, as professionals, supposedly ought to have known the import of the contracts they voluntarily signed, i.e. (a) temporary in character; (b) automatically ceasing on the specified expiration date, or (c) likewise deemed terminated if job/task shall be completed on a date prior to specified expiration date. The Court of Appeals ruled against petitioners’ claim of regular employment. Hence, the petition.

Issue/s:

1.    Whether or not petitioners were independent contractors

2.    Whether or not the contract can be considered as valid fixed-term employment

SC Ruling:

The SC did not find petitioners as independent contractors.

From Brent School vs. Zamora, which remains as the exception rather than the rule in the determination of the nature of employment, there are employment contracts where a “fixed term is an essential and natural appurtenance” such as overseas employment contracts and officers in educational institutions. A fixed-term employment is allowable under the Labor Code only if the term was voluntarily and knowingly entered into by the parties who must have dealt with each other on equal terms not one exercising moral dominance over the other.

A fixed-term contract is an employment contract, the repeated renewals of which make for a regular employment. In all, given the following: (1) repeated renewal of petitioners’ contract for fifteen years, interrupted only by the close of the school year; (2) the necessity of the work performed by petitioners as school physicians dentists; and (3) the existence of LSGI’s power of control over the means and method pursued by petitioners in the performance of their job, petitioners attained regular employment, entitled to security of tenure who could only be dismissed for just and authorized causes. Consequently, petitioners were illegally dismissed and are entitled to the twin remedies of payment of separation pay and full back wages.