Posted: May 1, 2015 in case digests, labor relations
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G.R. No. L-48494 February 5, 1990 en banc


Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971.

On April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was “completion of contract, expiration of the definite period of employment.” Although protesting the announced termination stating that his services were necessary and desirable in the usual business of his employer, and his employment lasted for 5 years – therefore he had acquired the status of regular employee – Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, “in full payment of services for the period May 16, to July 17, 1976 as full payment of contract.”

The Regional Director considered Brent School’s report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a “permanent employee,” to his former position without loss of seniority rights and with full back wages.


Whether or not the provisions of the Labor Code, as amended, have anathematized “fixed period employment” or employment for a term.


Respondent Alegre’s contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.

The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom.

It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court.

The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time.

Article 320 originally stated that the “termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe.” Article 321 prescribed the just causes for which an employer could terminate “an employment without a definite period.” And Article 319 undertook to define “employment without a fixed period” in the following manner: …where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

Subsequently, the foregoing articles regarding employment with “a definite period” and “regular” employment were amended by Presidential Decree No. 850, effective December 16, 1975.

Article 320, dealing with “Probationary and fixed period employment,” was altered by eliminating the reference to persons “employed with a fixed period,” and was renumbered (becoming Article 271).

As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer’s using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.

Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher’s) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes’ contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination.

Paraphrasing Escudero, respondent Alegre’s employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied.



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