BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and DOROTEO R.

ALEGRE

G.R. No. L-48494 February 5, 1990 en banc

Labor Article 294 : Regular and Casual Employment)

FACTS:

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.

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

RULING:
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
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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.