Case Digest

G.R. 178505
Petitioners: Cherry Price, Stephanie Domingo, Lolita Arbilera
Respondents: Innodata Philippines, Inc.
Present: J. Ynares-Santiago, Chairperson
Promulgated: September 30, 2008

FACTS:

The Petitioners prayed for a review of the decision promulgated by the Court
of Appeals on June 15, 2007 which affirmed the decision of the NLRC on
December 14, 2001 in favour of the Respondent, which reversed the decision
of the Labor Arbiter on October 17, 2000.
The Respondent is a domestic corporation engaged in data encoding and
data conversion, therefore employing encoders, indexers, formatters,
programmers, quality/quantity staff, and others to perform its operations and
assignments from clients.
The Petitioners and Respondent engaged in an employment contract for a
fixed duration of one year, beginning on February 16, 1999 until February 16,
2000. The Petitioners were hired as Formatters.
The aforesaid Employment Contract indicated the following terms for
termination:
o If Innodata shall cease operations, the contract shall also be
terminated on the last day of that month
o If Innodata shall no longer need the services of the Petitioners and will
thus pre-terminate the contract (a) once the project has been
completed, (b) during business losses, (c) introduction of new
production processes and techniques
o Innodata or the Petitioners may pre-terminate the contract with or
without cause, with due notice of 15 days
o Innodata or the Petitioners may pre-terminate the contract by reason
of breach or violation of the terms and conditions of the contract
through 15 days written notice, without need of judicial action or
approval
Respondent through its HRAD Manager sent notice to Petitioners re their last
day of work on February 16, 2000, the end data stipulated in the contract

Petitioners filed a complaint for illegal dismissal and damages against

respondents on May 22, 2000 for the reason that they should be considered
as regular employees given that (1) their positions as formatters were
necessary and desirable to the usual business of Innodata and (2) they are
not project employees as there was no specific indication of the project upon
which their contract duration was co-terminous with
Respondents explained that (1) they were compelled to engage additional
employees for fixed durations to accommodate the wide range of services
requested by their clients (2) the contract was for a fixed term only, from
September 6, 1999 to February 16, 2000 (3) the Petitioners knowingly,
voluntarily, and wilfully entered into the contract
Respondents have ceased operations in June 2002
The Labor Arbiter ruled in favour of the Petitioners, which was reversed by
the NLRC and the Court of Appeals upon finding merit in the execution of the
contract which indicates the duration of the employment over the nature of
the services rendered.

ISSUE:
1.) Were the Petitioners regular employees of Innodata?
2.) Were the Petitioners illegally dismissed, therefore, subject to reinstatement
and payment of backwages?

HELD:
Yes.

While the Court renders fixed-term contracts as valid, these should not be
construed as a means for employers to circumvent the law on security of
tenure.
o The employment status of a person is provided for by the law and not
by what the Parties declare it to be, and as such, they should not
absolve themselves from the coverage of the law. Applicable
references are Art. 280 and Art. 270 of the Labor Code.
o Undoubtedly, the Petitioners are regular employees by the nature of
the work they render, such that they are desirable and necessary in
the usual operation of business of Innodata.
o Fixed-term employment is valid only for certain cases, such that these
are essential and natural undertakings, such as in (a) overseas
employment (b) positions in educational institutions where these are
undertaken in rotation among faculty members like deans and

principals (c) elective positions in companies of which durations are

fixed
The Employment Contract is highly suspicious as the document was clearly
tampered with: the beginning data, supposedly indicated to be on February
16, 1999, was crossed out to indicate September 6, 2000. This was due to the
completion of the project before the end of the one year term, and as such,
the Petitioners were re-hired in September. This would mean that they
engaged the Petitioners for a period of less than a year, which is an attempt
to circumvent security of tenure.
Petitioners could not be considered as Project Employees, defined as (1)
engaged for a specific project or undertaking (2) completion or termination of
the project has been predetermined at the time of engagement of the
employee. The contract did not indicate a specific project upon which the
Petitioners shall render services accordingly, and in fact the Petitioners have
rendered services for a number of clients of Innodata.
The contract has barred the Petitioners from claiming illegal dismissal upon
termination of the contract as it has indicated that they can be preterminated with or without cause provided they be given 15 days notice.
Since reinstatement is no longer possible, the Respondents shall pay
backwages from the start of illegal termination until its closure plus
attorneys fees.

The Labor Arbiter decided in favour of the Petitioners