Paulino Ungos III

Lawyer | Law Professor | Author

Tag: fixed-term employment

  • Not a Mere Run-of-the-Mill Employee

    Arlene started working as a Casual or Assistant Clinical Instructor for two semesters for the school year 1992-1993 in Holy Name University (HNU)’s College of Nursing while awaiting the results of her Nursing Board Examination.

    In the second semester of school year 1994-1995, she worked at the Medical Ward as a full-time Clinical Instructor until the school year 1998-1999. During the second semester of that school year, she transferred to the Guidance Center where she worked as a Nursing Guidance Instructor. In the meantime, she was elected as Municipal Councilor of Carmen, Bohol. She took a leave of absence from HNU upon her reelection as Municipal Councilor for the period from 2001 up to 2004.

    Sometime in the year 2004, Arlene rejoined HNU and was given a full-time load for the school year 2004-2005. For school years 2005-2006 and 2006-2007, Arlene signed contracts for term/semestral employment.

    However, in a notice dated February 28, 2007, HNU informed Arlene that her contract of employment, which would have expired on March 31, 2007, will no longer be renewed.

    Arlene filed a complaint for illegal dismissal against HNU. She argued that since she taught at HNU for more than six consecutive regular semesters, she already attained the status of a regular employee under the Manual of Regulations for Private School Teachers. She posited that she was not guilty of any infractions under the Labor Code of the Philippines or the Manual of Regulations for Private School Teachers. She concluded that she was illegally dismissed from employment as no valid or justifiable cause supported the same.

    On the other hand, HNU stated that for the school years 1995-1996, 1996-1997 and 1997-1998, Arlene received letters of appointment for each semester, with definite dates of commencement and end of her employment. Thus, HNU asserted that when her probationary appointment for the period June 1, 1997 until March 31, 1998 expired, that it was not obliged to renew her contract. With regard to the school years 2004-2005, 2005-2006, and 2006-2007, HNU contended that Arlene remained as a probationary employee.

    HNU stated that the completion of her probationary period did not automatically make her a permanent employee since she failed to satisfactorily comply with all the conditions of her probationary employment. HNU insisted that Arlene was not dismissed; rather, her contract of employment merely expired on March 31, 2007.

    Did Arlene attain regular status?

    The Supreme Court ruled in the negative.

    The Court reiterated prevailing jurisprudence in that the Manual of Regulations for Private Schools, not the Labor Code of the Philippines, determines whether or not a faculty member in a private educational institution has attained a permanent or regular status. According to the Court, before a private school teacher acquires permanent status, he or she should satisfy the following requisites: 1) The teacher must have served full-time; 2) he/she must have rendered three consecutive years of service; and 3) such service must have been satisfactory.

    In the present case, the Court found that Arlene failed to meet the required criteria to be considered as a permanent employee.

    According to the Court, prevailing regulations require a minimum of one-year clinical practice experience to qualify as a faculty member in a college of nursing, and is therefore, required for one to be considered as a full-time faculty of such.

    Although Arlene had rendered three consecutive years of satisfactory service, she never alleged to have performed clinical duties such as treating actual patients or assisting doctors in such treatment, nor did she present any substantial evidence to prove such. The Court stated that since Arlene failed to provide substantial evidence, much less clearly describe what kind of work she rendered as a clinical instructor, it could not consider Arlene’s work experience as “clinical practice.” For the Court, Arlene did not qualify as a full-time teacher at the College of Nursing of HNU.

    Based on evidence, the Court declared Arlene to be a fixed-term employee of HNU.

    The Court reiterated established jurisprudence that recognizes the validity of fixed-term employment contracts, as long as such contracts do not circumvent the employee’s right to security of tenure. According to the Court, the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure are the following:

    • The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
    • It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.

    In the present case, the Court considered Arlene’s part-time status and ruled that even if no written fixed-term contract was presented, judicial notice can be made upon the fact that teachers’ employment contracts are for a specific semester or term.

    The Court added that with respect to consent, the fixed-term contracts must be presumed to be knowingly and voluntarily entered into. It is a basic rule that “one who alleges defect or lack of valid consent to a contract by reason of fraud or undue influence must establish by full, clear and convincing evidence such specific acts that vitiated a party’s consent, otherwise, the latter’s presumed consent to the contract prevails.”

    In the present case, Arlene merely alleged that she was a regular employee and that her being a contractual employee was just a lame reason given by HNU to terminate her without due process. The Court viewed such allegations as self-serving and unsubstantiated that failed to overturn the presumption mentioned earlier.

    With regard to the second requisite, the Court found that Arlene was more or less on equal footing with HNU. According to the Court, Arlene was an honors graduate, an elected public official, and not a mere run-of-the-mill employee, who had the capability to be on equal footing in dealing with her employer when it came to her employment terms.

    The Court concluded that Arlene was validly contracted for a fixed-term, the expiry of which occurred with her latest contract on March 31, 2007. Such effectively ended the employee-employer relationship she had with HNU. No dismissal, whether illegal or not, ever happened. The Court accordingly denied her claims.

    Further reading:

    • Palgan v. Holy Name University, G.R. No. 219916, February 10, 2021.

  • Nothing Contradictory Between a Definite Employment Period and the Nature of the Employee’s Duties

    Julian, Larry, and a group of co-workers were engaged as janitors, messengers, and utility persons by LBP Service Corporation, which had a manpower service agreement with Land Bank of the Philippines.

    In 2014, the manpower service agreement between LBP Service Corporation and Land Bank of the Philippines expired and resulted in the recall of Julian, Larry and the group.

    Believing that they were illegally dismissed from employment, Julian and the group filed a complaint against LBP Service Corporation before the Office of the Labor Arbiter. In such complaint, they also claimed to be regular employees of LBP Service Corporation since they performed services necessary and desirable to its business.

    LBP Service Corporation countered that Julian, Larry, and the group were supposed to be reassigned to a different client, but they opted to resign.

    On December 10, 2014, the Labor Arbiter dismissed the complaint.

    The Office of the Labor Arbiter declared Julian, Larry, and the group as fixed-term contractual employees of LBP Service Corporation.

    However, the Office of the Labor Arbiter found no evidence that LBP Service Corporation terminated their employment contracts, since the notice of recall did not amount to a termination of their services.

    The Office of the Labor Arbiter ordered Larry and a number of his co-complainants to report for work because their engagement merely lapsed when the manpower services agreement between LBP Service Corporation and Land Bank of the Philippines expired.

    For the Office of the Labor Arbiter, Larry and the group were still in LBP Service Corporation’s workforce and may be deployed to its other clients.

    However, the Office of the Labor Arbiter did not order Julian and another group of co-complainants to return to work because they were found to have voluntarily resigned from their employment.

    Julian, Larry, and the group appealed to the National Labor Relations Commission, but the Commission dismissed their appeal and affirmed the Office of the Labor Arbiter’s Decision.

    Julian, Larry, and the group filed a petition for certiorari before the Court of Appeals, which, however, affirmed the ruling of the Commission.

    Julian, Larry and the group elevated their case to the Supreme Court, and insisted on their claim that they were regular employees of LBP Service Corporation.

    Were Julian, Larry and the group regular employees of LBP Service Corporation?

    The Supreme Court ruled in the negative. It agreed with the ruling of the Court of Appeals and labor tribunals that Julian, Larry and the group were fixed-term contractual employees of LBP Service Corporation.

    The Court discussed that contracts of employment for a fixed term are not unlawful unless it is apparent from the circumstances that the periods have been imposed to circumvent the laws on security of tenure.

    The Court reiterated the following criteria of a valid fixed-term employment, to wit:

    • The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
    • It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.

    In the present case, the Court found that Julian, Larry and the group were employed on a contract basis to meet LBP Service Corporation’s commitment to its client, the Land Bank of the Philippines.

    The Court also found that at the time of their hiring, they were informed through their respective employment contracts that their engagement was for a specific period.

    The Court further remarked that such employment contracts expressly stipulated the duration of their services, to wit:

    • Employee’s voluntary resignation;
    • Non-renewal or termination of the contract with the client company where the employee is assigned; or
    • When the company of assignment no longer needs the employee’s services, but with future referral and employment with another client.

    In addition, the Court found no evidence indicating that Julian, Larry and the group were pressured into signing their fixed-term contracts or that LBP Service Corporation exhibited dominance over them. The Court remarked that Julian, Larry and the group had the chance to refuse but they consciously accepted their contracts. Significantly, it was found that the periods and conditions stipulated in their employment contracts were likewise not intended to deny them from acquiring security of tenure.

    The Court noted Julian, Larry and the group’s claim that they were regular employees. However, the Court declared such claim to be untenable. The Court stated that the fact that an employee is engaged to perform activities that are necessary and desirable in the usual business of the employer does not prohibit the fixing of employment for a definite period. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.

    For the Court, Julian, Larry and the group were fixed-term employees.

    Further reading:

    • Tuppil, Jr. v. LBP Service Corp., G.R. No. 228407, 10 June 2020.

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  • Well Aware of Her Fixed-Term Employment

    Madelyn narrated that in April 2010, the school engaged her as a releasing clerk in its book sale, tasking her with the inventory and release of books to the school’s students.

    In July 2010, Madelyn worked as a filing clerk at the school’s Human Resources Department, where she updated employees’ files, delivered memoranda to different departments, and assisted in school programs. In April 2011, she was posted back as a releasing clerk. She held this position until July 14, 2011.

    On July 15, 2011, she worked as a secretary at the school’s Technical-Vocational Training Center (Claretech), which taught vocational and technical skills to underprivileged students. There she prepared materials, assisted in the delivery of correspondence to other departments, and encoded and filed documents.

    In May 2013, the school asked Madelyn to sign a Probationary Employment Contract covering the period of January 16, 2013 to July 15, 2013. When the contract expired, she was told that her tenure would expire on July 31, 2013 because of a change in school administration and due to cost-cutting.

    But Madelyn was able to work for the school starting August 1, 2013 as a substitute teacher aide at the school’s Child Study Center. When the permanent teacher aide returned on October 25, 2013, Madelyn stopped working for the school.

    Madelyn repeatedly pleaded to be reinstated at least as a checker at the school’s water station, but the school denied her requests.

    Thus, Madelyn filed her Complaint, claiming that she had been a regular employee since she performed various jobs that were usually necessary and desirable in the usual business of the school.

    The school denied Madelyn’s claims averring that she was merely a part-time fixed-term contractual employee whom the school accommodated because her husband was its longtime driver. It also argued that Madelyn was well aware of her fixed-term employment as confirmed by her application letters and biodata, which showed her employment’s duration.

    Moreover, the school claimed that Madelyn’s position at Claretech was not a plantilla position because the department was only at its experimental stage, merely relying on donations and the school’s marketing research fund. When Claretech began incurring deficits, the clerical functions were allegedly absorbed by the administrator’s functions, dissolving Madelyn’s position.

    Was Madelyn engaged under a fixed-term employment?

    The Supreme Court ruled in the negative.

    The Supreme Court reiterated the principles in Brent School v. Zamora which recognized the validity of fixed-term employment under both the Civil Code and the Labor Code of the Philippines, as follows:

    Brent recognized that the Civil Code and the Labor Code of the Philippines 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”; or
    • 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 rationale behind this safeguard is that when a prospective employee, on account of special skills or market forces, is in a position to make demands upon the prospective employer, such prospective employee needs less protection than the ordinary worker. Lesser limitations on the parties’ freedom of contract are thus required for the protection of the employee.

    The Supreme Court has emphasized that Brent is the exception rather than the general 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.

    Moreover, the Court held that 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.

    In the present case, the Supreme Court found no contract evidencing Madelyn’s fixed-term employment. The Court said that this militated against the school’s assertion of fixed-term employment. According to the Court, the decisive determinant in fixed-term employments is the day certain agreed upon by the parties for the commencement and termination of their employment relationship. For the Court no day certain was agreed upon by the parties.

    The Court noted that the school persistently asserted that Madelyn should have known that her employment was only for a fixed term given the circumstances and nature of her job. However, the Court found that the school failed to present the contracts for the positions held by Madelyn. The Court said that absent any contract, it cannot be said that Madelyn was informed of the nature of her employment, as well as the duration and scope of her work. A fixed-term employment, the Court said, cannot be held valid based on mere allegations and speculations.

    Furthermore, although the school argued that she executed a Memorandum of Agreement that provided for the terms of her employment, the Court found that such agreement referred to her engagement as a substitute teacher aide. As for the rest of the positions she held, the school failed to provide any contract.

    The Court ruled even then the criteria in Brent were absent. According to the Court the school did not deal with Madelyn in more or less equal terms with no moral dominance on its part. Madelyn’s whole family depended on the school. Her husband was the school’s longtime driver and their children were its scholars. Madelyn was a high school graduate whose ordinary qualifications compelled her to accept the various positions offered by the school. The Court said that given these circumstances, Madelyn was not in a position to bargain on the terms of her employment. It could not be said that no moral dominance was exerted by the school merely because both parties benefitted from the fixed-term employment.

    The Court added that there could be no genuine freedom to contract when a fixed-term employment is used as a vehicle to exploit the economic disadvantage of workers like Madelyn. Plain wage earners should not be faulted for tolerating jobs they desperately need. Brent recognized the validity of fixed-term employments only within the context that employers and employees are on an equal footing. That employees agree to be repeatedly hired on a fixed-term basis only reveals the deeper problem of poverty and growing economic inequality between labor and capital.

    The Court declared that Madelyn was a regular employee of the school for her repeated engagement under contract of hire was indicative of the necessity and desirability of her work. Her services as a clerk at the book sale, as a secretary at Claretech, and as a substitute teacher aide were found to be necessary and desirable to the school’s business as an educational institution. The school’s repeated hiring of Madelyn for over three (3) years only strengthened the conclusion that her services are necessary and desirable to its business.

    Further reading:

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

  • On Equal Footing

    In a case for illegal dismissal filed by members of a Health Service Team against La Salle Greenhills, Inc., the Supreme Court set aside the finding of said members’ fixed-term employment.

    The parties to the fixed-term employment contract were not on equal footing.

    The Court emphasized that the ruling in Brent School, Inc. v. Zamora1G.R. No. L-48494, February 5, 1990, 260 PHIL 747-765 should be strictly construed, in that it should apply to cases where it appears that the employer and employee are on equal footing. In the present case, the Court found that this was not so for the members of the Health Services Team.

    • The uniform one-page Contracts of Retainer signed by the Health Service Team members were prepared by La Salle Greenhills, Inc.
    • While the Health Service Team members were medical professionals, this fact had not placed them on equal footing with La Salle Greenhills, Inc. According to the Court, the Health Service Team members obviously did not want to lose their jobs that they had stayed in for fifteen years.
    • The contracts had no specificity regarding terms and conditions of employment that would indicate that the Health Service Team members and La Salle Greenhills, Inc. were on equal footing in negotiating it. The Court stated that without specifying what the tasks assigned to each Health Service Team member were, La Salle Greenhills, Inc. “may upon prior written notice to the retainer, terminate [the] contract should the retainer fail in any way to perform his assigned job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just cause.”

    Power of control was exercised over the Health Service Team members.

    The power of control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is enough that the employer has the right to wield that power.

    In ruling that La Salle Greenhills, Inc. exercised control over the Health Services Team members, the Court took into account:

    • The repeated renewal of each Health Service Team member’s contract for fifteen years, interrupted only by the close of the school year;
    • The necessity of the work performed by the Health Service Team members as school physicians and dentists; and
    • The control exercised by La Salle Greenhills, Inc. over the means and method pursued by the Health Service Team members in the performance of their job.

    The repeated renewals of each Health Service Team member’s fixed-term employment contract made for a regular employment.

    Finally, the Court noted the repeated renewals of the Contracts of Retainer of the Health Service Team members spanning a decade and a half. Said the Court: “The repeated engagement under contract of hire is indicative of the necessity and desirability of the [employee’s] work in respondent’s business and where employee’s contract has been continuously extended or renewed to the same position, with the same duties and remained in the employ without any interruption, then such employee is a regular employee.”

    The Court thus declared the Health Service Team members’ regular employment status. They were entitled to security of tenure and could only be dismissed for just and authorized causes.

    Further reading:

    • Samonte v. La Salle Greenhills, Inc., G.R. No. 199683, February 10, 2016.

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