FACTS:

Doroteo R. Alegre was employed by Brent School, Inc. as an athletic director under a fixed-term contract of five years. When the contract was about to expire, Alegre was informed of his termination due to the completion of the contract. Alegre claimed that he had become a regular employee and contested his termination. The Regional Director ordered Alegre's reinstatement, and this decision was affirmed by the Secretary of Labor and the Office of the President. Brent School appealed to the Supreme Court, asserting the validity of the employment contract under the Termination Pay Law and the Code of Commerce.

The case discusses the legality of fixed-term employment contracts under Philippine law. The Civil Code of the Philippines recognizes the validity of fixed-term employment contracts. The Labor Code, which came into effect in 1974, also explicitly acknowledged fixed-term employment. Nonetheless, some provisions of the Labor Code seemed to contradict the principle of fixed-term employment. The Court emphasized that the key factor in fixed-term employment should be the agreed-upon commencement and termination dates, rather than the nature of the employee's duties.

In another case, the issue was whether the petitioner's project-based employment was illegal. The petitioner argued for regular employment status, claiming that his work was necessary and desirable for the respondent's business. The respondent argued that the petitioner's contract was valid and lawful because it was for a specific project with a definite period. The labor arbiter, the NLRC, and the CA ruled in favor of the petitioner, considering his employment as regular. Dissatisfied, the respondent appealed to the Supreme Court for final resolution.

ISSUES:

1. Is it the legislative intention to outlaw stipulations in employment contracts laying down a definite period?

2. Are stipulations for a definite period of employment contrary to public policy and should not be accorded legitimacy?

3. Whether fixed-term employment contracts are limited only to seasonal work or specific projects, or if they can also encompass contracts with a specific date of termination.

4. Whether Article 280 of the Labor Code should be given a narrow and literal interpretation or a reasonable interpretation that avoids absurd consequences.

5. Whether the clause in Article 280 of the Labor Code, which categorically states that all written or oral agreements conflicting with the concept of regular employment are null and void, should be strictly applied.

6. Whether the termination of employment upon the expiration of a fixed-term contract requires a notice of termination.

RULING:

1. Yes, it is the legislative intention to outlaw stipulations in employment contracts laying down a definite period. The gradual and progressive elimination of references to term or fixed-period employment in the Labor Code and the specific statement of the rule that an employment shall be deemed regular unless it falls under certain exceptions indicate that the intention is to abolish term or fixed-period employment.

2. Stipulations for definite periods of employment are not contrary to public policy and should be accorded legitimacy. Although the provisions of the Labor Code no longer explicitly allow term or fixed-period employment, it can be inferred from the provisions that if the employment is for a definite period, there is no need for a just cause to terminate the employment. This implies that term or fixed-period employment is still considered valid and lawful.

3. Fixed-term employment contracts are not limited to seasonal work or specific projects. They can also include contracts with a specific date of termination. The law should not restrict the right of an employee to freely stipulate with the employer the duration of their engagement.

4. Article 280 of the Labor Code should be given a reasonable interpretation that avoids absurd consequences. The law must be interpreted to prevent undesirable consequences and should not lead to unjust or absurd results.

5. The clause in Article 280 of the Labor Code should not be strictly applied and should only refer to agreements aimed at circumventing security of tenure.

6. The termination of employment upon the expiration of a fixed-term contract does not require a notice of termination.

PRINCIPLES:

• A day certain refers to "that which must necessarily come, although it may not be known when."

• The term period in the context of a contract of employment refers to a space of time that has an influence on an obligation, either suspending its demandability or producing its extinguishment.

• The concept of regular employment is not essentially inconsistent with employment for a fixed term.

• Stipulations for a definite period of employment are not contrary to public policy and should be accorded legitimacy.

• An employment is deemed regular if the employee has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer, unless it is for a specific project or undertaking or if the work is seasonal in nature.

• A casual employment is one that is not covered by the definition of regular employment.

• Fixed-term employment contracts are not limited to seasonal work or specific projects.

• The law must be given a reasonable interpretation to avoid absurd or unreasonable consequences.

• Courts should not give words a meaning that would lead to unjust or absurd results. The intent and spirit of the law should prevail over its literal interpretation.

• The intent or spirit of the law must prevail over the letter of the law, as adherence to the letter may result in absurdity, injustice, and contradictions.

• Article 280 of the Labor Code aims to prevent circumvention of the employee's right to security of tenure by ruling out agreements entered into for the purpose of circumventing said right.

• The clause in Article 280 should be construed to only apply to agreements that conflict with the concept of regular employment as defined in the code.

• Fixed-term employment agreements, entered into voluntarily and without any force or duress, are not covered by the clause in Article 280.

• Termination of employment upon the expiration of a fixed-term contract does not require a notice of termination.