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VOL. 230, FEBRUARY 28, 1994 423

Philippine Village Hotel vs. NLRC
*
G.R. No. 105033. February 28, 1994.

PHILIPPINE VILLAGE HOTEL, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION (SECOND DIVISION)
AND TUPAS LOCAL CHAPTER NO. 1362, JUANITO ACUIN,
MAMERTA MANGUBAT, RAUL SONON, ELGAR PEMIS,
ORLANDO PARAGUISON, FERDINAND VELASCO, MIKE
ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE
TIMING, ANTONIO MANALILI, RODELIO QUERIA and
REYNALDO SANTOS, respondents.

Labor Law; Regular and Casual Employees; Contracts with a fixed

or specific period valid.—An examination of the contents of the private
respondents’ contracts of employment shows that indeed private
respondents voluntarily and knowingly agreed to be employed only for
a period of one (1) month or from February 1, 1989 to March 1, 1989.
The fact that private respondents were required to render services
usually necessary or desirable in the operation of petitioner’s business
for the duration of the one (1) month dry-run operation period does not
in any way impair the validity of the contractual nature of private
respondents’ contracts of employment which specifically stipulated
that the employment of the private respondents was only for one (1)
month.
Same; Same; Same; Words and Phrases; “Day Certain” and
“Period”, defined.—In upholding the validity of a contract of
employment with a fixed or specific period, we have held that 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. The term period was further defined to be the 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 or the period from one fixed date to another
fixed date.
Same; Same; Validly terminated employees are not deemed to
continue their regular employment status if they are subsequently

________________

* SECOND DIVISION.

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reemployed.—In the instant case, private respondents were validly

terminated by the petitioner when the latter had to close its business
due to financial losses. Following the directives of the NLRC to give
priority in hiring private respondents should it resume its business,
petitioner hired private respondents during their one (1) month
dryrun operation. However, this does not mean that private
respondents were deemed to have continued their regular employment
status, which they enjoyed before their aforementioned termination
due to petitioner’s financial losses. Besides, the previous decision of
the public respondent NLRC in Case No. 8-3277-86 finding the
termination of private respondents’ employment to be valid has long
become final and executory. Public respondent NLRC cannot anymore
argue that the temporary cessation of the petitioner’s operation due to
financial reverses merely suspended private respondents’
employment. The employee-employer relationship had come to an end
when the employer had closed its business and ceased operations. The
hiring of new employees when it reopened after three (3) years is valid
and to be expected. The prior employment which was terminated
cannot be joined or tacked to the new employment for purposes of
security of tenure.
Same; Same; While it is true that security of tenure is a
constitutionally guaranteed right of the employees, it does not, however,
mean perpetual employment for the employee.—While it is true that
security of tenure is a constitutionally guaranteed right of the
employees it does not, however, mean perpetual employment for the
employee because our law, while affording protection to the employee,
does not authorize oppression or destruction of an employer. It is well
settled that the employer has the right or is at liberty to choose who
will be hired and who will be denied employment. The right of a
laborer to sell his labor to such persons as he may choose is, in its
essence, the same as the right of an employer to purchase labor from
any person whom it chooses. The employer and the employee have an
equality of right guaranteed by the Constitution. If the employer can
compel the employee to work against the latter’s will, this is servitude.
If the employee can compel the employer to give him work against the
employer’s will, this is oppression.

PETITION for certiorari to annul and set aside a decision of

the National Labor Relations Commission.

The facts are stated in the opinion of the Court.

     Ponce Enrile, Cayetano, Reyes Manalastas for petitioner.
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Philippine Village Hotel vs. NLRC

          Tupaz & Associates and Alfredo L. Bentulan for private

respondents.

NOCON, J.:

This is a petition for certiorari under Rule 65 of the Rules of

court with a prayer for the issuance of a temporary
1
restraining
order to annul and set aside the decision promulgated on
November 7, 1991 by the National Labor Relations Commission
(NLRC) of Manila reversing the decision dated December 19,
1989 of the Labor Arbiter Cornelio L. Linsangan.
It appears on record that private respondents Juanito Acuin,
Mamerta Mangubat, Raul Sonon, Elgar Pemis, Orlando
Paraguison, Ferdinand Velasco, Mike Astulero, Magno Decalso,
Nenita Orosea, Jose Timing, Antonio Manalili, Rodelio Queria
and Reynaldo Santos were employees of petitioner Philippine

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Village Hotel. However, on May 19, 1986, petitioner had to

close and totally discontinue its operations due to serious
financial and business reverses resulting in the termination of
the services of its employees.
Thereafter, the Philippine Village Hotel Employees and
Workers Union filed against petitioner a complaint for
separation pay, unfair labor practice and illegal lock-out.
On May 27, 1987, the Labor Arbiter issued an Order finding
the losses suffered by petitioner to be actual, genuine and of
such magnitude as to validly terminate the services of private
respondents but directed petitioner “to give priority to the
complainants (herein private respondents) in [the] hiring of
personnel
2
should they resume their business operations in the
future.”
On appeal, the NLRC affirmed the validity of the closure of
petitioner but ordered petitioner to pay private respondents
separation pay at the rate of 1/2 month pay for every year of
service. However, there is nothing in the records to show that
private respondents received their separation pay as the
decision

________________

1 Penned by Commissioner Edna Bonto-Perez with the concurrence of

Commissioner Domingo H. Zapanta and Commissioner Rustico L. Diokno.

2 Rollo, p. 24.

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Philippine Village Hotel vs. NLRC

of the NLRC remained unenforced as of this date.

On February 1, 1989, petitioner decided to have a one (1)
month dry-run operation to ascertain the feasibility of
resuming its business operations. In order to carry out its dry-
run operation, petitioner hired causal workers, including
private respondents, for a one (1) month period, or from
February 1, 1989 to March 3
1, 1989, as evidenced by the latter’s
Contract of Employment.
After evaluating the individual performance of all the
employees and upon the lapse of the contractual one-month
period or on March 2, 1989, petitioner terminated the services
of private respondents.
On April 6, 1989, private respondents and Tupas Local
Chapter No. 1362 filed a complaint against petitioner for illegal
dismissal and unfair labor practice with the NLRC-NCR
Arbitration Branch in NLRC Case No. 00-04-01665-89.
On December 19, 1989, the Labor Arbiter rendered a
decision, the dispositive portion of which reads, as follows:

“WHEREFORE, finding the above entitled complaint to be without

factual and legal basis, judgment is hereby rendered dismissing the
4
same.”

Thereafter, private respondents appealed to the public

respondent NLRC.
On November 7, 1991, public respondent NLRC reversed the
decision of the Labor Arbiter, the dispositive portion of which
reads, as follows:

“WHEREFORE, under the premises, let the decision appealed from

be, as it is hereby reversed, and a new judgment rendered, hereby
ordering the respondent Philippine Village Hotel to reinstate the
above-named complainants to their former or substantially equivalent

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positions without loss of seniority rights plus full backwages from the
time they were actually dismissed on 02 March 1989 up to the time of
their actual reinstatement, but which period of time should not exceed
three (3) years.

__________________

3 Id., at pp. 35-41, Annex “C”-“I”.

4 Id., at p. 45.

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Philippine Village Hotel vs. NLRC

“The complaint for unfair labor practice is hereby dismissed for lack of
5
adequate factual basis.”

On March 5, 1992, petitioner’s Motion for Reconsideration was

denied for lack of merit.
Hence, this petition alleging grave abuse of discretion on the
part of the public respondent NLRC in finding that private
respondents are regular employees of petitioner considering
that the latter’s services were already previously terminated in
1986 and that their employment contracts specifically provided
only for a temporary one-month period of employment.
The petition is impressed with merit.
An examination of the contents of the private respondents’
contracts of employment shows that indeed private
respondents voluntarily and knowingly agreed to be employed
only for a period of one (1) month or from February 1, 1989 to
March 1, 1989.
The fact that private respondents were required to render
services usually necessary or desirable in the operation of
petitioner’s business for the duration of the one (1) month
dryrun operation period does not in any way impair the validity
of the contractual nature of private respondents’ contracts of
employment which specifically stipulated that the employment
of the private respondents was only for one (1) month.
In upholding the validity of a contract of employment with a
fixed or specific period, we have held that 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. The term period was
further defined to be the 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
6
or the period from one fixed date to another
fixed date. This ruling is

________________

5 Id., at pp. 32-33.

6 Escareal vs. National Labor Relations Commission, 213 SCRA

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only in consonance with Article 280 of the Labor Code which

provides:

“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 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 private 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.”

Inasmuch as private respondents’ contracts of employment

categorically provided a fixed period and their termination had
already been agreed upon at the time of their engagement,
private respondents’ employment was one with a specific period
or day certain agreed upon by the parties. In Philippine
National
7
Oil Company-Energy Development Corporation vs.
NLRC, we held that:

“As can be gleaned from the said case (Brent School, Inc. v. Zamora,
181 SCRA 702), the two guidelines by which fixed contracts of
employments can be said NOT to circumvent security of tenure, are
either:

“1. 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
“2. 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 on the
latter.”

_________________

472 [1992].
7 G.R. No. 97747, promulgated on March 31, 1993.

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Philippine Village Hotel vs. NLRC

In the instant case, private respondents were validly

terminated by the petitioner when the latter had to close its
business due to financial losses. Following the directives of the
NLRC to give priority in hiring private respondents should it
resume its business, petitioner hired private respondents
during their one (1) month dry-run operation. However, this
does not mean that private respondents were deemed to have
continued their regular employment status, which they had
enjoyed before their aforementioned termination due to
petitioner’s financial losses. As stated by the Labor Arbiter in
his decision:

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“It should be borne in mind that when complainants were first
terminated as a result of the company’s cessation from operation in
May, 1986 the employer-employee relationships between the parties
herein was totally and completely severed. Such being the case,
respondent acted well within its discretion when in rehiring the
complainants (herein private respondents) it made them casual and
for a specific period. The complainants are no better than the new
employees of respondent (petitioner) for the matter of what status or
designation to be given them exclusively rests in the discretion of
8
management.”

Besides, the previous decision of the public respondent NLRC

in Case No. 8-3277-86 finding the termination of private
respondents’ employment to be valid has long become final and
executory. Public respondent NLRC cannot anymore argue that
the temporary cessation of the petitioner’s operation due to
financial reverses merely suspended private respondents’
employment. The employee-employer relationship had come to
an end when the employer had closed its business and ceased
operations. The hiring of new employees when it re-opened
after three (3) years is valid and to be expected. The prior
employment which was terminated cannot be joined or tacked
to the new employment for purposes of security of tenure.
While it is true that security of tenure is a constitutionally
guaranteed right of the employees, it does not, however, mean
perpetual employment for the employee because our law, while
affording protection to the employee, does not authorize
oppression or destruction of an employer. It is well settled that
the

_________________

8 Rollo, pp. 44-45.

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employer has the right or is at liberty to choose who will be

hired and who will be denied employment. The right of a
laborer to sell his labor to such persons as he may choose is, in
its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the
employee have an equality of right guaranteed by the
Constitution. If the employer can compel the employee to work
against the latter’s will, this is servitude. If the employee can
compel the employer to9 give him work against the employer’s
will, this is oppression.
Thus, public respondent NLRC had indubitably committed
grave abuse of discretion when it modified the final decision of
the NLRC Case No. 8-3277-86 which remain unenforced as of
this date. Private respondents’ remedy is to file a motion for
execution, if it is still within the reglementary 5-year period, or
to file an action to enforce said decision. (Article 224(a), Labor
Code)
WHEREFORE, this petition for certiorari is GRANTED and
the questioned decision of the public respondent NLRC is
hereby SET ASIDE thereby dismissing the complaint against
petitioner.
SO ORDERED.

     Narvasa (C.J., Chairman), Padilla, Regalado and Puno,

JJ., concur.

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Petition granted; questioned decision set aside.

Notes.—Casual employees who are converted to regular

status should be treated as such in every respect. They should
be allowed to retain the same rate they were enjoying at the
time of conversion. (Philippine American Management
Employees Association vs. Court of Industrial Relations, 160
SCRA 92 [1988])
An overseas contract worker having rendered more than one
year of service is a regular employee. (Land Housing
Development Corporation vs. National Labor Relations
Commission, 166 SCRA 291 [1988]).

——o0o——

__________________

9 International Catholic Migration Commission vs. NLRC, 169 SCRA 606,

January 30, 1989.

431

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