FIXED-TERM EMPLOYMENT TO BE VALID MUST COMPLY WITH EITHER OF THE TWO CRITERIA IN BRENT CASE

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Fixed-term employment is valid under both the Civil Code and the Labor Code. Brent recognized that the Civil Code and the Labor Code allow the execution of fixed-term employment contracts. But when periods have been imposed to prevent an employee from acquiring his or her security of tenure, the contract effectively runs counter to public policy and morals, and must, therefore, be disregarded.

Thus, the SC held in the following case:

Claret School of Quezon City vs. Sinday
G.R. No. 226358, October 9, 2019

Fixed-term employment; Brent doctrine; Brent is the exception rather than the general rule; Fixed-term is not illegal per se or against public policy; Fixed-term is valid only under certain circumstances; For a fixed-term employment to be valid there must be a day certain agreed upon; Fixed-term contract contains the day certain agreed upon. Without said contract there is no day certain agreed upon which is the decisive determinant of fixed-term employment; Fixed-term employment cannot be held valid based on mere allegations and speculations; More or less equal footing in entering into the contract; There is moral dominance if the employee is not in a position to bargain on the terms of employment; There is no genuine freed to contract when a fixed-term employment is used as a vehicle to exploit economic disadvantage; Freedom to contract under the Civil Code; Freedom to contract should be narrowly interpreted when applied to labor contracts as these involve public interest

Facts:

Petitioner Claret School of Quezon City (Claret) is an education institution which hired Madelyn I. Sinday (Sinday) in several capacities for different periods. Further, Sinday is the wife of one of Claret’s longtime drivers. Their children are scholars of Claret.

Sinday alleged that Claret engaged her as a releasing clerk in its book sale, tasking her with the inventory and release of books to Claret’s students. Afterwards, Sinday worked as a filing clerk at Claret’s HR Department, where she updated employees’ files, delivered memoranda to different departments, and assisted in school programs. Thereafter, she was posted back as a releasing clerk which she held until July 14, 2011.

Before her job as releasing clerk had expired, Sinday applied for work at one of Claret’s departments, Claret Technical-Vocational Training Center (Claretech), which taught vocational and technical skills to underprivileged students. She started her new work as secretary, preparing materials, assisting in the delivery of correspondence to other departments, and encoding and filing documents, among other tasks.

Sinday claimed that Fr. Renato B. Manubag, approved her classification as a regular employee. She was classified under the non-teaching or non-academic school employees.

However, in May 2013, Claret asked Sinday to sign a Probationary Employment Contract covering the period of January 16, 2013 to July 15, 2013. When the contract expired, Sinday asked the HR regarding her employment status, but she was told that her tenure would expire on July 31, 2013 because of the change in the school administration. Her supervisor also told her that her dismissal was due to cost-cutting, particularly the need to reduce the employees from three to two.

Desperate for work, Sinday continued to work for Claret and was employed on August 1, 2013 as a substitute teacher aide at Claret’s Child Study Center. When the permanent teacher aide returned on October 25, 2013, Sinday stopped working for Claret. Sinday repeatedly pleaded to be reinstated at least as a checker at the school’s water station, but Claret denied her requests.

Thus, Sinday file dher Complaint, claiming that she had been a regular employee as she performed various jobs that were usually necessary and desirable in the usual business of Claret. On the part of Claret, it denied Sinday’s claims averring that she was merely a part-time fixed-term contractual employee whom the school accmoodated because her husband was its longtime driver. It also argued that Sinday was well aware of her fixed-term employment as confirmed by her application letters and biodata, which showed her employment’s duration.

Claret claimed that Sinday’s position was not a plantilla position. Also, that she did not regularly work for eight hours a day, five days a week. Her services being required only as needed. While she was classified as  a regular employee, the decision was nonetheless revoked later due to Claretech’s financial difficulties.

Further, Claret claimed that Sinday stole the school’s relief goods intended for typhoon victims. The school supposedly let the incident slide, citing the security agency’s failure to immediately investigate the incident and the impending expiration of her employment.

LA Ruling:

The LA found that Sinday was illegally dismissed.

The LA held that the repeated hiring of Sinday for around three years conferred her with regular employment status. The conditions for a valid fixed-term employment were absent because Sinday did not appear to have knowingly and voluntarily agreed to the arrangement.

The LA also held that Claret failed to prove that Sinday consented to her fixed-term employment. Claret appealed to the NLRC.

NLRC Ruling:

The NLRC reversed the LA’s Decision and found that Sinday was not illegally dismissed.

The NLRC ruled that it was clear to Sinday that her employment with Claret was merely part-time contractual, not regular, as shown in her biodata. The lack of a document showing Sinday’s contractual employment did not itself grant Sinday regular employee status, since there are other contrary evidence as as Sinday’s application letters and biodata.

There was no circumvention of security of tenure as Sinday was not pressured to accept the various positions which were clearly needed only for certain periods. She was not coerced or forced into applying for these positions. Claret also did not exercise moral dominance over Sinday since both of them benefitted from the fixed-term employment.

Sinday moved for reconsideration. But it was denied by the NLRC. Aggrieved, Sinday filed a petition for certiorari before the Court of Appeals (CA).

CA Ruling:

The CA reversed the Decision of the NLRC and found that Sinday was illegally dismissed.

The CA explained that for a fixed-term employment to be valid, there must be a day certain agreed upon by the parties for the commencement of the termination of employment. Here, since there was no day certain agreed upon, the CA said that Sinday’s employment cannot be deemed for a fixed-period.

Moreover, the CA found that neither of the two criteria laid down in the Brent was present in this case. Claret failed to prove that it dealt with Sinday in more or less equal terms, with no moral dominance on its part. For the CA, the absence of the written contract defeated Claret’s claim because it raised doubts as to whether Sinday was properly informed of the terms of her employment, such as its duration and schope, as well as her employment status.

Claret moved for reconsideration, but its Motion was denied by the CA. Thus, it filed a petition for review on certiorari before the SC.

Issue/s:

Whether or not the absence of evidence proving compliance with the criteria of Brent case renders the fixed-term engagement invalid

Whether or not there is valid fixed-term employment without a written contract proving that the employee was made aware of the nature and duration of fixed-term employment

Whether or not there is a valid fixed-term employment if there is no evidence of agreement on the day certain

SC Ruling:

The SC denied the petition.

The SC held that Article 295 of the Labor code categorizes employees into regular, project, seasonal, and casual. It further classifieds regular employees into two kinds: (1) those engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) casual employees who have rendered at least one year of service, whether such service is continuous or broken.

In 1990, Brent recognized another classification of employment: fixed-term employment. It was ruled that fixed-term employments are valid under both the Civil Code and the Labor Code. Brent recognized that the Civil Code and the Labor Code allow the execution of fixed-term employment contracts. But when periods have been imposed to prevent an employee from acquiring his or her security of tenure, the contract effectively runs counter to public policy and morals, and must, therefore, be disregarded.

In drawing the line, Brent laid down the criteria under which a fixed-term employment cannot be deemed in circumvention of the security of tenure:

• When the parties have knowingly and voluntarily agreed upon a fixed period of employment without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent;
• When it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with the employer not having exercised any moral dominance over the employee

The ruling in Brent is the exception rather than the rule, and a fixed-term employment is recognized as valid only under certain circumstances, particularly when a fixed-term is an essential and natural appurtenance. In determining the validity of a fixed-term employment, the level of protection accorded to labor is ascertained based on the nature of the work, qualifications of the employee and other relevant circumstances. Hence, the criteria limit the application of Brent to particular cases where the employer and the employee are on a more or less equal footing in entering into the contract. If none of the aforementioned criteria are present, the Court will strike down a fixed-term employment contract.

Citing Pure Foods Corporation vs. NLRC, the SC held that the Court struck down a fixed-term employment contract after having found that the employees and employer did not deal with each other in more or less equal terms since the employees were compelled to accept five-month employment contracts given the difficulty of finding work as cannery workers.

Ciiting another case, Lynvil Fishing Enterprises, Inc. vs. Ariola, the SC held that fixed-term employment is invalid because the employees were doing tasks necessary to the employer’s business and they were repeatedly rehired for more than 10 years. The employees’ need for a continued source of income forced them to accept the fixed-term employment.

In this case, the SC held that neither of the two criteria in Brent is present. For the SC, Claret did not deal with Sinday in more or less equal terms with no moral dominance on its part. Sinday’s whole family depended on Claret. The husband is the longtime driver and the children are its scholars. Sinday was not in a position to bargain on the terms of her employment. Plain wage earners should not be faulted for tolerating the jobs they desperately need.

Brent recognized the validity of fixed-term employments only within the context that employers and employees are on equal footing. That employees agree to be repeatedly hired on a fixed-term basis only reveals the deeper problem of proverty and growing economic inequality between labor and capital.

Moreover, the freedom to contract under the Civil Code should be narrowly interpreted when applied to labor contracts, since these contracts are imbued with public interest. The Civil Code itself recognized that labor contracts should not be treated as ordinary civil contracts under Articles 1700 and 1702. Our labor laws are deemed incorporated into these contracts. The parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.

The absence of a contract evidencing the fixed-term employment militates against Claret’s claims. The decisive determinant in fixed-term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship. Here, there was no day certain agreed upon by the parties.

The acid test in determining regular employment is whether there is a reasonable connection between the employee’s activities and the usual business of the employer. This is corollary to Article 295 of the Labor Code, which provides that the nature of work must be necessary or desirable in the usual business or trade of the employer to consider the employee as regular.

Indeed, repeated engagement under contract of hire is indicative of the necessity and desirability of the employee’s work in the employer’s business. Citing Magsalin vs. National Organization of Working Men, the SC held that the repeated rehiring of workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of the company.

In this case, Sinday has been engaged to perform activities that are usually necessary or desirable in Claret’s usual business. Her services as a clerk at the book sale, as a secretary at Claretech, and as a substitute teacher aide are necessary and desirable to petitioner’s business as an educational institution. Claret’s repeated hiring of Sinday for over three years only strengthens the conclusion that her services are, indeed, necessary and desirable to its business.

Fixed-term employment is not illegal per se or against public policy. Nevertheless, before the validity is recognized, the criteria in Brent must first be sufficiently established. Here, Claret failed to show that either of the two criteria is present and, quite the contrary, the case records reveal that Claret and Sinday did not deal with each other in more or less equal terms. Thus, the SC held that Sinday is a regular employee who is entitled to security of tenure.

Claret failed to substantiate that it validly dismissed Sinday. The claim that Sinday stole the relief goods from the school premises was not substantiated since Claret even admitted that it failed to act on the alleged infraction. No investigations were ever conducted regarding the security agency’s report.

There was failure to comply with the due process requirements as set forth in the case of King of Kings Transport, Inc. vs. Mamac. The employer has the burden of proof to show that an employee’s dismissal was for just or authorized cause, and that the dismissal was not illegal. Claret failed to discharge this burden. No notice was served on Sinday informing her of the grounds of her termination. She was not given the opportunity to be heard. The SC held that without complying with procedural due process requirements, Claret could not have validly terminated Sinday’s services.

Since the termination of Sinday’s employment was rendered without regard to due process, the SC found her to have been illegally dismissed.