BRENT SCHOOL, INC., and REV.
GABRIEL DIMACHE, petitioners, expiration of the employment contract was not one of the just causes provided in the Labor Code
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President,
and DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.
NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor
Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre
was engaged as athletic director by Brent School, Inc. at a yearly compensation of
P20,000.00. 4 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. 5
Some three months before the expiration of the stipulated period, or more precisely 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."
And a month or so later, on May 26, 1976, 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."
However, at the investigation conducted by a Labor Conciliator of said report of termination of
his services, Alegre protested the announced termination of his employment. He argued that
although his contract did stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his employer, and his
employment had lasted for five years, he had acquired the status of a regular employee and
could not be removed except for valid cause. 6 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. The Director pronounced "the ground
relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . .
(as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of
1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and
forwarded the case to the Secretary of Labor for review. 8 The latter sustained the Regional
Director. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Office
dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that
Alegre was a permanent employee who could not be dismissed except for just cause, and
for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
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. Indeed,
the Code did not come into effect until November 1, 1974, some three years after the perfection
of the employment contract, and rights and obligations thereunder had arisen and been mutually
observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the
validity of term employment. It was impliedly but nonetheless clearly recognized by the
Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided
that—
In cases of employment, without a definite period, in a commercial,
industrial, or agricultural establishment or enterprise, the employer or the
employee may terminate at any time the employment with just cause; or
without just cause in the case of an employee by serving written notice on
the employer at least one month in advance, or in the case of an employer,
by serving such notice to the employee at least one month in advance or
one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination
of employment without just cause, may hold the employee liable for
damages.
The employee, upon whom no such notice was served in case of
termination of employment without just cause, shall be entitled to
compensation from the date of termination of his employment in an amount
equivalent to his salaries or wages corresponding to the required period of
notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA
1787 also enumerated what it considered to be just causes for terminating an
employment without a definite period, either by the employer or by the employee without
incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period,
and also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302
provided that —
In cases in which the contract of employment does not have a fixed period,
any of the parties may terminate it, notifying the other thereof one month in
advance.
The factor or shop clerk shall have a right, in this case, to the salary
corresponding to said month.
 The salary for the month directed to be given by the said Article 302 of the Code of
Commerce to the factor or shop clerk, was known as the mesada (from mes, Spanish
for "month"). When Article 302 (together with many other provisions of the Code of
Commerce) was repealed by the Civil Code of the Philippines, Republic Act No. 1052
was enacted avowedly for the precise purpose of reinstating the mesada.
Now, 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 in section 2, Chapter 3,
Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter
3, Title VIII, respectively, of Book IV. 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
on July 18, 1971, 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, for
instance, in Biboso v. Victorias Milling Co., Inc., promulgated on March 31,
1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29,
1983. 14 The Thompson case involved an executive who had been engaged for a fixed period of
three (3) years. Biboso involved teachers in a private school as regards whom, the following
pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time
that their tenure was for a limited duration. Upon its termination, both parties
to the employment relationship were free to renew it or to let it lapse. (p.
254)
Under American law 15 the principle is the same. "Where a contract specifies the period of its
duration, it terminates on the expiration of such period." 16 "A contract of employment for a
definite period terminates by its own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under
the Labor Code (Presidential Decree No. 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, entitled "Probationary and fixed period employment," 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." The
asserted objective to was "prevent the circumvention of the right of the employee to be secured
in their employment as provided . . . (in the Code)."
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: 18
An employment shall be deemed to be without a definite period for purposes
of this Chapter 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.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary
agreement on a fixed term or period would be valid where the employee "has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer." The definition seems a non sequitur. From the premise — that the duties of an
employee entail "activities which are usually necessary or desirable in the usual business or
trade of the employer the" — conclusion does not necessarily follow that the employer and
employee should be forbidden to stipulate any period of time for the performance of those
activities. There is nothing essentially contradictory between a definite period of an employment
contract and the nature of the employee's duties set down in that contract as being "usually
necessary or desirable in the usual business or trade of the employer." The concept of the
employee's duties as being "usually necessary or desirable in the usual business or trade of the
employer" is not synonymous with or identical to employment with a fixed term. Logically, the
decisive determinant in term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being understood to be "that which
must necessarily come, although it may not be known when." 19 Seasonal employment, and
employment for a particular project are merely instances employment in which a period, where
not expressly set down, necessarily implied.
Of course, the term — period has a definite and settled signification. It means, "Length of
existence; duration. A point of time marking a termination as of a cause or an activity; an end, a
limit, a bound; conclusion; termination. A series of years, months or days in which something is
completed. A time of definite length. . . . the period from one fixed date to another fixed
date . . ." 20 It connotes a "space of time which has an influence on an obligation as a result of a
juridical act, and either suspends its demandableness or produces its extinguishment." 21 It
should be apparent that this settled and familiar notion of a period, in the context of a contract of
employment, takes no account at all of the nature of the duties of the employee; it has absolutely
no relevance to the character of his duties as being "usually necessary or desirable to the usual
business of the employer," or not.
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). The article 22 now reads:
. . . Probationary employment.—Probationary employment shall not exceed
six months from the date the employee started working, unless it is covered
by an apprenticeship agreement stipulating a longer period. The services of
an employee who has been engaged in a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion
clause declaring irrelevant written or oral agreements "to the contrary," and (c) making the
provision treat exclusively of "regular" and "casual" employment. As revised, said article,
renumbered 270, 23 now reads:
 . . . Regular and Casual Employment.—The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular 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 employed
is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to he casual if it is not covered by the
preceding paragraph: provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists.
The first paragraph is identical to Article 319 except that, as just mentioned, a clause
has been added, to wit: "The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties . . ." The clause
would appear to be addressed inter alia to agreements fixing a definite period for
employment. There is withal no clear indication of the intent to deny validity to
employment for a definite period. Indeed, not only is the concept of regular
employment not essentially inconsistent with employment for a fixed term, as above
pointed out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly
acknowledged the propriety of term employment: it listed the "just causes" for which
"an employer may terminate employment without a definite period," thus giving rise to
the inference that if the employment be with a definite period, there need be no just
cause for termination thereof if the ground be precisely the expiration of the term
agreed upon by the parties for the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas
Pambansa Bilang 130, 24 to eliminate altogether reference to employment without a definite
period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently
read: "An employer may terminate an employment for any of the following just causes: . . . " BP
130 thus completed the elimination of every reference in the Labor Code, express or implied, to
employment with a fixed or definite period or term.
It is in the light of the foregoing description of the development of the provisions of the Labor
Code bearing on term or fixed-period employment that the question posed in the opening
paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw
stipulations in employment contracts laying down a definite period therefor? Are such
stipulations in essence contrary to public policy and should not on this account be accorded
legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-
period employment in the Labor Code, and the specific statement of the rule 25 that—
. . . Regular and Casual Employment.— The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
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 employed is seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to
recognize, the validity and propriety of contracts and obligations with a fixed or definite period,
and imposes no restraints on the freedom of the parties to fix the duration of a contract,
whatever its object, be it specie, goods or services, except the general admonition against
stipulations contrary to law, morals, good customs, public order or public policy. 26 Under the
Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by nature seasonal or for specific
projects with pre-determined dates of completion; they also include those to which the parties by
free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for
seasonal work nor for specific projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment will all that it implies does not appear ever to
have been applied, Article 280 of the Labor Code not withstanding; also appointments to the
positions of dean, assistant dean, college secretary, principal, and other administrative offices in
educational institutions, which are by practice or tradition rotated among the faculty members,
and where fixed terms are a necessity, without which no reasonable rotation would be possible.
Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of
Labor 27 implicitly recognize that certain company officials may be elected for what would amount
to fixed periods, at the expiration of which they would have to stand down, in providing that these
officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc.
because the stockholders or the board of directors for one reason or another did not re-elect
them."
There can of course be no quarrel with the proposition that where from the circumstances it is
apparent that periods have been imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregarded as contrary to public policy, morals, etc.
But where no such intent to circumvent the law is shown, or stated otherwise, where the reason
for the law does not exist, e.g., where it is indeed the employee himself who insists upon a
period or where the nature of the engagement is such that, without being seasonal or for a
specific project, a definite date of termination is a sine qua non, would an agreement fixing a
period be essentially evil or illicit, therefore anathema? Would such an agreement come within
the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right
of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given 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 interpretation that the notice is only a reminder is consistent with the
the head. court's finding in Labajo supra. ...32

It is a salutary principle in statutory construction that there exists a valid Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of
presumption that undesirable consequences were never intended by a his last contract with Brent School on July 16, 1976 without the necessity of any notice. The
legislative measure, and that a construction of which the statute is fairly advance written advice given the Department of Labor with copy to said petitioner was a mere
susceptible is favored, which will avoid all objecionable mischievous, reminder of the impending expiration of his contract, not a letter of termination, nor an
undefensible, wrongful, evil and injurious consequences. 28 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.
Nothing is better settled than that courts are not to give words a meaning
which would lead to absurd or unreasonable consequences. That s a
principle that does back to In re Allen decided oil October 27, 1903, where it WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE.
was held that a literal interpretation is to be rejected if it would be unjust or Respondent Alegre's contract of employment with Brent School having lawfully terminated with
lead to absurd results. That is a strong argument against its adoption. The and by reason of the expiration of the agreed term of period thereof, he is declared not entitled
words of Justice Laurel are particularly apt. Thus: "The fact that the to reinstatement and the other relief awarded and confirmed on appeal in the proceedings
construction placed upon the statute by the appellants would lead to an below. No pronouncement as to costs.
absurdity is another argument for rejecting it. . . ." 29
SO ORDERED.
. . . We have, here, then a case where the true intent of the law is clear that
calls for the application of the cardinal rule of statutory construction that
such intent of spirit must prevail over the letter thereof, for whatever is within
the spirit of a statute is within the statute, since adherence to the letter
would result in absurdity, injustice and contradictions and would defeat the
plain and vital purpose of the statute. 30

Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral agreements conflicting with
the concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily 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 where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its purview, the law would
bemade to apply to purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences.

Such interpretation puts the seal on Bibiso 31 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.
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO,
JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA
MOONYEEN MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.
FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign
corporation licensed to do business in the Philippines, executed in Manila two (2) separate
contracts of employment, one with private respondent Ethelynne B. Farrales and the other with
private respondent Ma. M.C. Mamasig. 1 The contracts, which became effective on 9 January
1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by
the mutual consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the
right to terminate this agreement at any time by giving the EMPLOYEE
notice in writing in advance one month before the intended termination or in
lieu thereof, by paying the EMPLOYEE wages equivalent to one month's
salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of
Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction
to consider any matter arising out of or under this agreement.
Respondents then commenced training in Pakistan. After their training period, they began
discharging their job functions as flight attendants, with base station in Manila and flying
assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the
contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the local
branch of PIA, sent separate letters both dated 1 August 1980 to private respondents Farrales
and Mamasig advising both that their services as flight stewardesses would be terminated
"effective 1 September 1980, conformably to clause 6 (b) of the employment agreement [they
had) executed with [PIA]."2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint,
docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits
and bonuses, against PIA with the then Ministry of Labor and Employment ("MOLE"). After
several unfruitful attempts at conciliation, the MOLE hearing officer Atty. Jose M. Pascual
ordered the parties to submit their position papers and evidence supporting their respective
positions. The PIA submitted its position paper, 3 but no evidence, and there claimed that both
private respondents were habitual absentees; that both were in the habit of bringing in from
abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila
International Airport had been discreetly warned by customs officials to advise private
respondents to discontinue that practice. PIA further claimed that the services of both private
respondents were terminated pursuant to the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the
reinstatement of private respondents with full backwages or, in the alternative, the payment to
them of the amounts equivalent to their salaries for the remainder of the fixed three-year period
of their employment contracts; the payment to private respondent Mamasig of an amount
equivalent to the value of a round trip ticket Manila-USA Manila; and payment of a bonus to each
of the private respondents equivalent to their one-month salary. 4 The Order stated that private
respondents had attained the status of regular employees after they had rendered more than a
year of continued service; that the stipulation limiting the period of the employment contract to
three (3) years was null and void as violative of the provisions of the Labor Code and its
implementing rules and regulations on regular and casual employment; and that the dismissal,
having been carried out without the requisite clearance from the MOLE, was illegal and entitled
private respondents to reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister,
MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the
latter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay
each of the complainants [private respondents] their salaries corresponding to the unexpired
portion of the contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and
the Order of the Deputy Minister as having been rendered without jurisdiction; for having been
rendered without support in the evidence of record since, allegedly, no hearing was conducted
by the hearing officer, Atty. Jose M. Pascual; and for having been issued in disregard and in
violation of petitioner's rights under the employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the
subject matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction
over the same being lodged in the Arbitration Branch of the National Labor Relations
Commission ("NLRC") It appears to us beyond dispute, however, that both at the time the
complaint was initiated in September 1980 and at the time the Orders assailed were rendered on
January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by Deputy Minister
Vicente Leogardo, Jr.), the Regional Director had jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of
employees with at least one (1) year of service without prior clearance from the Department of
Labor and Employment:
 Art. 278. Miscellaneous Provisions — . . .
(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with at
least one year of service during the last two (2) years, whether such service
is continuous or broken, without prior written authority issued in accordance
with such rules and regulations as the Secretary may promulgate . . .
(emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code,
made clear that in case of a termination without the necessary clearance, the Regional
Director was authorized to order the reinstatement of the employee concerned and the
payment of backwages; necessarily, therefore, the Regional Director must have been
given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or
dismissal without prior clearance shall be conclusively presumed to be
termination of employment without a just cause. The Regional Director shall,
in such case order the immediate reinstatement of the employee and the
payment of his wages from the time of the shutdown or dismissal until the
time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was
similarly very explicit about the jurisdiction of the Regional Director over termination of
employment cases:
Under PD 850, termination cases — with or without CBA — are now placed
under the original jurisdiction of the Regional Director. Preventive
suspension cases, now made cognizable for the first time, are also placed
under the Regional Director. Before PD 850, termination cases where there
was a CBA were under the jurisdiction of the grievance machinery and
voluntary arbitration, while termination cases where there was no CBA were
under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its
implementing rules and regulations with respect to termination and
preventive suspension cases are:
1. The Regional Director is now required to rule on every application for
clearance, whether there is opposition or not, within ten days from receipt
thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction,
still his order was null and void because it had been issued in violation of petitioner's right to
procedural due process .6 This claim, however, cannot be given serious consideration. Petitioner
was ordered by the Regional Director to submit not only its position paper but also such
evidence in its favor as it might have. Petitioner opted to rely solely upon its position paper; we
must assume it had no evidence to sustain its assertions. Thus, even if no formal or oral hearing
was conducted, petitioner had ample opportunity to explain its side. Moreover, petitioner PIA
was able to appeal his case to the Ministry of Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be rejected. At the
time the complaint was filed by private respondents on 21 September 1980 and at the time the
Regional Director issued his questioned order on 22 January 1981, applicable regulation, as
noted above, specified that a "dismissal without prior clearance shall be conclusively presumed
to be termination of employment without a cause", and the Regional Director was required in
such case to" order the immediate reinstatement of the employee and the payment of his wages
from the time of the shutdown or dismiss until . . . reinstatement." In other words, under the then
applicable rule, the Regional Director did not even have to require submission of position papers
by the parties in view of the conclusive (juris et de jure) character of the presumption created by
such applicable law and regulation. In Cebu Institute of Technology v. Minister of Labor and
Employment, 8 the Court pointed out that "under Rule 14, Section 2, of the Implementing Rules
and Regulations, the termination of [an employee] which was without previous clearance from
the Ministry of Labor is conclusively presumed to be without [just] cause . . . [a presumption
which] cannot be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment
with private respondents Farrales and Mamasig, arguing that its relationship with them was
governed by the provisions of its contract rather than by the general provisions of the Labor
Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by
agreement between the parties; while paragraph 6 provided that, notwithstanding any other
provision in the Contract, PIA had the right to terminate the employment agreement at any time
by giving one-month's notice to the employee or, in lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract is
the law between the parties. 10 The principle of party autonomy in contracts is not, however, an
absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may
establish such stipulations as they may deem convenient, "provided they are not contrary to law,
morals, good customs, public order or public policy." Thus, counter-balancing the principle of
autonomy of contracting parties is the equally general rule that provisions of applicable law,
especially provisions relating to matters affected with public policy, are deemed written into the
contract. 11 Put a little differently, the governing principle is that parties may not contract away
applicable provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and employment is clearly such an area
and 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. It is thus necessary to appraise
the contractual provisions invoked by petitioner PIA in terms of their consistency with applicable
Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that
paragraph 5 of that employment contract was inconsistent with Articles 280 and 281 of the Labor
Code as they existed at the time the contract of employment was entered into, and hence
refused to give effect to said paragraph 5. These Articles read as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed from the time his
compensation was withheld from him up to the time his reinstatement.
 Art. 281. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular
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 services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered as regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,  12 the Court had occasion to examine
in detail the question of whether employment for a fixed term has been outlawed under the
above quoted provisions of the Labor Code. After an extensive examination of the history and
development of Articles 280 and 281, the Court reached the conclusion that a contract providing
for employment with a fixed period was not necessarily unlawful:
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down
or disregarded as contrary to public policy, morals, etc. But where no such
intent to circumvent the law is shown, or stated otherwise, where the reason
for the law does not exist e.g. where it is indeed the employee himself who
insists upon a period or where the nature of the engagement is such that,
without being seasonal or for a specific project, a definite date of termination
is a sine qua non would an agreement fixing a period be essentially evil or
illicit, therefore anathema Would such an agreement come within the scope
of Article 280 which admittedly was enacted "to prevent the circumvention of
the right of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given 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
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 employers" 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.
xxx xxx xxx
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein should
be construed to refer to the substantive evil that the Code itself has singled
out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment
was agreed upon knowingly and voluntarily 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 where it
satisfactorily appears that the employer and employee dealt with each other
on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview,
the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended consequences. (emphasis
supplied)
It is apparent from Brent School that the critical consideration is the presence or
absence of a substantial indication that the period specified in an employment
agreement was designed to circumvent the security of tenure of regular employees
which is provided for in Articles 280 and 281 of the Labor Code. This indication must
ordinarily rest upon some aspect of the agreement other than the mere specification of
a fixed term of the ernployment agreement, or upon evidence aliunde of the intent to
evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between
petitioner PIA and private respondents, we consider that those provisions must be read together
and when so read, the fixed period of three (3) years specified in paragraph 5 will be seen to
have been effectively neutralized by the provisions of paragraph 6 of that agreement. Paragraph
6 in effect took back from the employee the fixed three (3)-year period ostensibly granted by
paragraph 5 by rendering such period in effect a facultative one at the option of the employer
PIA. For petitioner PIA claims to be authorized to shorten that term, at any time and for any
cause satisfactory to itself, to a one-month period, or even less by simply paying the employee a
month's salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is
to render the employment of private respondents Farrales and Mamasig basically employment at
the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6 were intended to
prevent any security of tenure from accruing in favor of private respondents even during the
limited period of three (3) years,13 and thus to escape completely the thrust of Articles 280 and
281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies,
firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue
for settlement of any dispute arising out of or in connection with the agreement "only [in] courts
of Karachi Pakistan". The first clause of paragraph 10 cannot be invoked to prevent the
application of Philippine labor laws and regulations to the subject matter of this case, i.e., the
employer-employee relationship between petitioner PIA and private respondents. We have
already pointed out that the relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties
agreeing upon some other law to govern their relationship. Neither may petitioner invoke the
second clause of paragraph 10, specifying the Karachi courts as the sole venue for the
settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant
circumstances of this case will show the multiple and substantive contacts between Philippine
law and Philippine courts, on the one hand, and the relationship between the parties, upon the
other: the contract was not only executed in the Philippines, it was also performed here, at least
partially; private respondents are Philippine citizens and respondents, while petitioner, although
a foreign corporation, is licensed to do business (and actually doing business) and hence
resident in the Philippines; lastly, private respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe. All the above contacts point to the
Philippine courts and administrative agencies as a proper forum for the resolution of contractual
disputes between the parties. Under these circumstances, paragraph 10 of the employment
agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction
vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not
undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be
presumed that the applicable provisions of the law of Pakistan are the same as the applicable
provisions of Philippine law.14

We conclude that private respondents Farrales and Mamasig were illegally dismissed and that
public respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor
any act without or in excess of jurisdiction in ordering their reinstatement with backwages.
Private respondents are entitled to three (3) years backwages without qualification or deduction.
Should their reinstatement to their former or other substantially equivalent positions not be
feasible in view of the length of time which has gone by since their services were unlawfully
terminated, petitioner should be required to pay separation pay to private respondents
amounting to one (1) month's salary for every year of service rendered by them, including the
three (3) years service putatively rendered.

ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order
dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1) private
respondents are entitled to three (3) years backwages, without deduction or qualification; and (2)
should reinstatement of private respondents to their former positions or to substantially
equivalent positions not be feasible, then petitioner shall, in lieu thereof, pay to private
respondents separation pay amounting to one (1)-month's salary for every year of service
actually rendered by them and for the three (3) years putative service by private respondents.
The Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED. Costs
against petitioner.

SO ORDERED.
ZOSIMO CIELO, petitioner, ZOSIMO CIELO, of legal age, married, Filipino citizen, and a resident of Agusan, Canyon, Camp Philipps,
vs. now and hereinafter called the SECOND PARTY,
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, HENRY LEI and/or HENRY LEI
TRUCKING respondents.
WITNESSETH

Francisco D. Alas for petitioner.

That the FIRST PARTY is an owner of some cargo trucks.
Mateo G. Delegencia for private respondent.

WHEREAS, the SECOND PARTY desires to operate one of the said cargo trucks which he himself shall
 
drive for income;

CRUZ, J.:
NOW, THEREFORE, for the foregoing premises, the FIRST PARTY does hereby assign one cargo truck of his
fleet to the SECOND PARTY under the following conditions and stipulations:
The petitioner is a truck driver who claims he was illegally dismissed by the private respondent, the
Henry Lei Trucking Company. The Labor Arbiter found for him and ordered his reinstatement with back
1. That the term of this Agreement is six (6) months from and after the execution
wages.1 On appeal, the decision was reversed by the National Labor Relations Commission, which held
hereof, unless otherwise earlier terminated at the option of either party;
that the petitioner's employment had expired under a valid contract.2 The petitioner then came to us
on certiorari under Rule 65 of the Rules of Court.
2. That the net income of the said vehicle after fuel and oil shall be divided by and
between them on ninety/ten percent (90/10%) basis in favor of the FIRST PARTY;
Required to submit a Comment (not to file a motion to dismiss), the private respondent nevertheless
moved to dismiss on the ground that the petition was filed sixty-eight days after service of the
challenged decision on the petitioner, hence late. The motion was untenable, of course. Petitions 3. That there is no employer/employee relationship between the parties, the
for certiorari under Rule 65 may be instituted within a reasonable period, which the Court has nature of this Agreement being contractual;
consistently reckoned at three months.**
4. In the event the SECOND PARTY needs a helper the personnel so employed by
In his own Comment, the Solicitor General defended the public respondent and agreed that the contract him shall be to his personal account, who shall be considered his own employee;
between the petitioner and the private respondent was a binding agreement not contrary to law, morals
or public policy. The petitioner's services could be legally terminated upon the expiration of the period 5. That the loss of or damage to the said vehicle shall be to account of the SECOND
agreed upon, which was only six months. The petitioner could therefore not complain that he had been PARTY; he shall return the unit upon the expiration or termination of this contract
illegally dismissed. in the condition the same was received by him, fair wear and tear excepted.

As an examination of the claimed agreement was necessary to the resolution of this case, the Court IN WITNESS WHEREOF, the parties hereunto affixed their signature on this 30th day of June, 1984, at
required its production by the petitioner. But he could not comply because he said he had not been given Digos, Davao del Sur, Philippines.
a copy by the private respondent. A similar requirement proved fruitless when addressed to the private
respondent, which explained it could not locate the folder of the case despite diligent search. It was only
on October 15, 1990, that the records of the case, including the subject agreement, were finally received (Sgd.) (Sgd.)
by the Court from the NLRC, which had obtained them from its Cagayan de Oro regional office.3 HENRY LEI ZOSIMO CIELO
First Party Second Party
The said agreement reads in full as follows:

AGREEMENT
(Sgd.) (Sgd.)
VICTOR CHAN AMALFE M. NG
KNOW ALL MEN BY THESE PRESENTS:

The agreement was supposed to have commenced on June 30, 1984, and to end on December 31, 1984.
This Agreement made and executed by and between:
On December 22, 1984, however, the petitioner was formally notified by the private respondent of the
termination of his services on the ground of expiration of their contract. Soon thereafter, on January 22,
HENRY LEI, of legal age, Filipino citizen, married, and a resident of Digos, Davao del Sur, now and 1985, the petitioner filed his complaint with the Ministry of Labor and Employment.
hereinafter called the FIRST PARTY,
In his position paper, the petitioner claimed he started working for the private respondent on June 16,
—a n d — 1984, and having done so for more than six months had acquired the status of a regular employee. As
such, he could no longer be dismissed except for lawful cause. He also contended that he had been
removed because of his refusal to sign, as required by the private respondent, an affidavit reading as
follows:
AFFIDAVIT
That I, ZOSIMO CIELO, Filipino, of legal age, married/single and a resident of Agusan Canyon, Camp
Philipps, after having been duly sworn to in accordance with law, hereby depose and say:
That I am one of the drivers of the trucks of Mr. HENRY LEI whose hauling trucks are under contract with
the Philippine Packing Corporation;
That I have received my salary and allowances from Mr. HENRY LEI the sum of P1,421.10 for the month
of October 1984. That I have no more claim against the said Mr. Henry Lei.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 15th day of November 1984.
Driver
The private respondent rests its case on the agreement and maintains that the labor laws are not
applicable because the relations of the parties are governed by their voluntary stipulations. The contract
having expired, it was the prerogative of the trucking company to renew it or not as it saw fit.
The writ will issue.
While insisting that it is the agreement that regulates its relations with the petitioner, the private
respondent is ensnared by its own words. The agreement specifically declared that there was no
employer-employee relationship between the parties. Yet the affidavit the private respondent prepared
required the petitioner to acknowledge that "I have received my salary and allowances from Mr. Henry
Lei," suggesting an employment relationship. According to its position paper, the petitioner's refusal to
sign the affidavit constituted disrespect or insubordination, which had "some bearing on the renewal of
his contract of employment with the respondent." Of this affidavit, the private respondent had this to
say:
. . . Since October 1984, respondent adopted a new policy to require all their employees to
sign an affidavit to the effect that they received their salaries. Copy of which is hereto
attached as Annex "C," covering the months of October and November 1984. All
other employees of the respondent signed the said affidavit, only herein complainant refused
to do so for reasons known only to him. . . .
It appears from the records that all the drivers of the private respondent have been hired on a fixed
contract basis, as evidenced by the mimeographed form of the agreement and of the affidavit. The
private respondent merely filled in the blanks with the corresponding data, such as the driver's name and
address, the amount received by him, and the date of the document. Each driver was paid through
individual vouchers4 rather than a common payroll, as is usual in companies with numerous employees.
The private respondent's intention is obvious. It is remarkable that neither the NLRC nor the Solicitor
General recognized it. There is no question that the purpose behind these individual contracts was to
evade the application of the labor laws by making it appear that the drivers of the trucking company
were not its regular employees.
Under these arrangements, the private respondent hoped to be able to terminate the services of the
drivers without the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements,
which, significantly, were uniformly limited to a six-month period. No cause had to be established
because such renewal was subject to the discretion of the parties. In fact, the private respondent did not
even have to wait for the expiration of the contract as it was there provided that it could be "earlier
terminated at the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from becoming regular
employees and thus be entitled to security of tenure and other benefits, such as a minimum wage, cost-
of-living allowances, vacation and sick leaves, holiday pay, and other statutory requirements. The private
respondent argues that there was nothing wrong with the affidavit because all the affiant acknowledged
therein was full payment of the amount due him under the agreement. Viewed in this light, such
acknowledgment was indeed not necessary at all because this was already embodied in the vouchers
signed by the payee-driver.1âwphi1 But the affidavit, for all its seeming innocuousness, imported more
than that. What was insidious about the document was the waiver the affiant was unwarily making of
the statutory rights due him as an employee of the trucking company.
And employee he was despite the innocent protestations of the private respondent. We accept the
factual finding of the Labor Arbiter that the petitioner was a regular employee of the private respondent.
The private respondent is engaged in the trucking business as a hauler of cattle, crops and other cargo
for the Philippine Packing Corporation. This business requires the services of drivers, and continuously
because the work is not seasonal, nor is it limited to a single undertaking or operation. Even if ostensibly
hired for a fixed period, the petitioner should be considered a regular employee of the private
respondent, conformably to Article 280 of the Labor Code providing as follows:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessarily 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 services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
actually exists. (Emphasis supplied)
In Brent School, Inc. vs. Zamora, the Court affirmed the general principle that "where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc."
Such circumstances have been sufficiently established in the case at bar and justify application of the
following conclusions:
Accordingly, and since the entire purpose behind the development of legislation culminating
in the present Article 280 of the Labor Code clearly appears to have been, as already
observed, to prevent circumvention of the employee's right to be secure in his tenure, the
 clause in said article indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
The private respondent's argument that the petitioner could at least be considered on probation basis
only and therefore separable at will is self-defeating. The Labor Code clearly provides as follows:
Art. 281. Probationary employment. — Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.
There is no question that the petitioner was not engaged as an apprentice, being already an experienced
truck driver when he began working for the private respondent. Neither has it been shown that he was
informed at the time of his employment of the reasonable standards under which he could qualify as a
regular employee. It is plain that the petitioner was hired at the outset as a regular employee. At any
rate, even assuming that the original employment was probationary, the Labor Arbiter found that the
petitioner had completed more than six month's service with the trucking company and so had acquired
the status of a regular employee at the time of his dismissal.
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
In refusing to sign the affidavit as required by the private respondent, the petitioner was merely
protecting his interests against an unguarded waiver of the benefits due him under the Labor Code. Such
willful disobedience should commend rather than prejudice him for standing up to his rights, at great risk
to his material security, against the very source of his livelihood.
The Court looks with stern disapproval at the contract entered into by the private respondent with the
petitioner (and who knows with how many other drivers). The agreement was a clear attempt to exploit
the unwitting employee and deprive him of the protection of the Labor Code by making it appear that
the stipulations of the parties were governed by the Civil Code as in ordinary private transactions. They
were not, to be sure. The agreement was in reality a contract of employment into which were read the
provisions of the Labor Code and the social justice policy mandated by the Constitution. It was a deceitful
agreement cloaked in the habiliments of legality to conceal the selfish desire of the employer to reap
undeserved profits at the expense of its employees. The fact that the drivers are on the whole practically
unlettered only makes the imposition more censurable and the avarice more execrable.
WHEREFORE, the petition is GRANTED. The decision of the National Labor Relations Commission is SET
ASIDE and that of the Labor Arbiter REINSTATED, with costs against the private respondents.

Even if it be assumed that the six-month period had not yet been completed, it is settled that the
SO ORDERED.
probationary employee cannot be removed except also for cause as provided by law. It is not alleged
that the petitioner was separated for poor performance; in fact, it is suggested by the private respondent
that he was dismissed for disrespect and insubordination, more specifically his refusal to sign the
affidavit as required by company policy. Hence, even as a probationer, or more so as a regular employee,
the petitioner could not be validly removed under Article 282 of the Labor Code, providing as follows:

Art. 282. Termination by employer. — An employer may terminate an employment for any of

the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work

(b) Gross and habitual neglect by the employee of his duties;