G.R. No.

209499               January 28, 2015

MA. CHARITO C. GADIA, ERNESTO M. PENAS, GEMMABELLE B. REMO,

LORENA S. QUESEA, MARIE JOY FRANCISCO, BEVERLY A.
CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA 0. BORJA, MARIE
JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS, CAREN C.
ENCANTO, EIDEN BALDOVINO, JACQUELINE B.
CASTRENCE,MA.ESTRELLA V. LAPUZ, JOSELITO L. LORD, RAYMOND
G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C. ACOSTA, FRANCIS JAN
S. BAYLON, ERIC 0. PADIERNOS, MA. LENELL P. AARON, CRISNELL P.
AARON, and LAWRENCE CHRISTOPHER F. PAPA, Petitioners, 
vs.
SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL
HENDERSON, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated April

29, 2013 and the Resolution3 dated October 3, 2013 of the Court of Appeals
(CA) in CA-G.R. SP No. 120433, which annulled and set aside the
Decision4 dated November 15, 2010 and the Resolution5 dated May 10, 2011
of the National Labor Relations Commission (NLRC), in NLRC LAC No. 07-
001583-10, and reinstated the Decision6 dated June 23, 2010 of the Labor
Arbiter (LA), holding that herein petitioners Ma. Charito C. Gadia7 (Gadia),
Ernesto M. Peñas,8 Gemmabelle B. Remo (Remo), Lorena S. Quesea
(Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U.
Balingit9(Balingit), Roma Angelica O. Borja, Marie Joan Ramos, Kim
Guevarra, Lynn S. De Los Santos, Caren C. Encanto, Eiden Baldovino,
Jacqueline B. Castrence (Castrence), Ma. Estrella V.Lapuz (Lapuz), Joselito
L. Lord (Lord), Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C.
Acosta10 (Acosta), Francis Jan S. Baylon,Eric O. Padiernos, Ma. Lenell P.
Aaron, Crisnell P. Aaron, and Lawrence Christopher F.Papa (petitioners) are
project employees of respondent Sykes Asia, Inc. (Sykes Asia), and thus,
were validly terminated from employment.

The Facts

Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO)

which provides support to its international clients from various sectors (e.g.,
technology, telecommunications, retail services) by carrying on some of their
operations, governed by service contracts that it enters with them.11 On
September 2, 2003,12 Alltel Communications, Inc. (Alltel), a United States-
based telecommunications firm, contracted Sykes Asia’s services to
accommodate the needs and demands of Alltel clients for its postpaid and
prepaid services (Alltel Project). Thus, on different dates, Sykes Asia hired
petitioners as customer service representatives, team leaders, and trainers for
the Alltel Project.13

Services for the said project went on smoothly until Alltel sent two (2) letters to
Sykes Asia dated August 7, 200914and September 9, 200915 informing the
latter that it was terminating all support services provided by Sykes Asia
related to the Alltel Project. In view of this development, Sykes Asia sent each
of the petitioners end-of-life notices,16informing them of their dismissal from
employment due to the termination of the Alltel Project. Aggrieved, petitioners
filed separate complaints17 for illegal dismissal against respondents Sykes
Asia, Chuck Sykes, the President and Chief Operating Officer of Sykes
Enterprise, Inc., and Mike Hinds and Michael Henderson, the President and
Operations Director, respectively, of Sykes Asia (respondents), praying for
reinstatement, backwages, 13th month pay, service incentive leave pay, night
shift differential, moral and exemplary damages, and attorney’s fees. In their
complaints, petitioners alleged that their dismissal from service was unjust as
the same was effected without substantive and procedural due process.18

In their defense,19 respondents averred that petitioners were not regular

employees but merely project-based employees, and as such, the termination
of the Alltel Project served as a valid ground for their dismissal.20 In support of
their position, respondents noted that it was expressly indicated in petitioners’
respective employment contracts that their positions are "project-based" and
thus, "co-terminus to the project."21 Respondents further maintained that they
complied with the requirements of procedural due process in dismissing
petitioners by furnishing each of them their notices of termination at least thirty
(30) days prior to their respective dates of dismissal.22

The LA Ruling

In a Decision23 dated June 23, 2010 the LA ruled in favor of respondents, and

accordingly, dismissed petitioners’ complaints for lack of merit.24 It found that
petitioners are merely project-based employees, as their respective
employment contracts indubitably provided for the duration and term of their
employment, as well as the specific project to which they were assigned, i.e.,
the Alltel Project.25 Hence, the LA concluded that the cessation of the Alltel
Project naturally resulted in the termination of petitioners’ employment in
Sykes Asia.26 Dissatisfied, petitioners appealed27 to the NLRC.

The NLRC Ruling

In a Decision28 dated November 15, 2010, the NLRC modified the LA
Decision, ruling that petitioners are regular employees but were validly
terminated due to redundancy.29 Accordingly, petitioners, except Viloria and
Acosta whose complaints were dismissed without prejudice for failure to
prosecute,30 were awarded their separation pay with interest of 12% per
annum reckoned from the date of their actual dismissal until full payment, plus
attorney’s fees amounting to 10% of the total monetary award. In addition, the
NLRC awarded nominal damages in the amount of ₱10,000.00 each to
petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and Lord for
respondents’ failure to furnish them the required written notice of termination
within the prescribed period.31

Contrary to the LA’s finding, the NLRC found that petitioners could not be
properly characterized as project-based employees, ratiocinating that while it
was made known to petitioners that their employment would be co-terminus to
the Alltel Project, it was neither determined nor made known to petitioners, at
the time of hiring, when the said project would end, be terminated, or be
completed.32 In this relation, the NLRC concluded that inasmuch as petitioners
had been engaged to perform activities which are necessary or desirable in
respondents’ usual business or trade of BPO, petitioners should be deemed
regular employees of Sykes Asia.33 This notwithstanding, and in view of the
cessation of the Alltel Project, the NLRC found petitioners’ employment with
Sykes Asia to be redundant; hence, declared that they were legally dismissed
from service and were only entitled to receive their respective separation
pay.34
Respondents moved for reconsideration,35 which was, however, denied in a
Resolution36 dated May 10, 2011. Unconvinced, Sykes Asia37 elevated the
case to the CA on certiorari.38

The CA Ruling

In a Decision39 dated April 29, 2013, the CA annulled and set aside the ruling
of the NLRC, and accordingly, reinstated that of the LA.40 It held that a perusal
of petitioners’ respective employment contracts readily shows that they were
hired exclusively for the Alltel Project and that it was specifically stated therein
that their employment would be project-based.41 The CA further held that
petitioners’ employment contracts need not state an actual date as to when
their employment would end, opining that it is enough that such date is
determinable.42

Petitioners moved for reconsideration,43 which was, however, denied in a

Resolution44 dated October 3, 2013, hence, this petition.

The Issue Before the Court

The primordial issue for the Court’s resolution is whether or not the CA
correctly granted respondents’ petition for certiorari, thereby setting aside the
NLRC’s decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.

The Court’s Ruling

The petition is without merit.

At the outset, it must be stressed that to justify the grant of the extraordinary
remedy of certiorari, petitioners must satisfactorily show that the court or
quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes judgment exercised in a capricious and
whimsical manner that is tantamount to lack of jurisdiction. To be considered
"grave," discretion must be exercised in a despotic manner by reason of
passion or personal hostility, and must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform the duty enjoined
by or to act at all in contemplation of law.45

In labor disputes, grave abuse of discretion may be ascribed to the NLRC

when, inter alia, its findings and the conclusions reached thereby are not
supported by substantial evidence. This requirement of substantial evidence is
clearly expressed in Section 5, Rule 133 of the Rules of Court which provides
that "in cases filed before administrative or quasi-judicial bodies, a fact may be
deemed established if it is supported by substantial evidence, or that amount
of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."46

Tested against these considerations, the Court finds that the CA correctly
granted respondents’ certiorari petition before it, since the NLRC gravely
abused its discretion in ruling that petitioners were regular employees of
Sykes Asia when the latter had established by substantial evidence that they
were merely project-based.

Article 29447 of the Labor Code,48 as amended, distinguishes a project-based

employee from a regular employee as follows:
Art. 294. 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.

x x x x (Emphasis and underscoring supplied)

In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed how

to determine whether an employee may be properly deemed project-based or
regular, to wit:

A project employee is assigned to a project which begins and ends at

determined or determinable times.1âwphi1 Unlike regular employees who
may only be dismissed for just and/or authorized causes under the Labor
Code, the services of employees who are hired as "project[-based]
employees" may be lawfully terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether

particular employees are properly characterised as "project[-based]
employees" as distinguished from "regular employees," is whether or not the
employees were assigned to carry out a "specific project or undertaking," the
duration (and scope) of which were specified at the time they were engaged
for that project. The project could either be (1) a particular job or undertaking
that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not
within the regular business of the corporation. In order to safeguard the rights
of workers against the arbitrary use of the word "project" to prevent
employees from attaining a regular status, employers claiming that their
workers are project[-based] employees should not only prove that the duration
and scope of the employment was specified at the time they were engaged,
but also, that there was indeed a project.50 (Emphases and underscoring
supplied)

Verily, for an employee to be considered project-based, the employer must

show compliance with two (2) requisites, namely that: (a) the employee was
assigned to carry out a specific project or undertaking; and (b) the duration
and scope of which were specified at the time they were engaged for such
project.

In this case, records reveal that Sykes Asia adequately informed petitioners of
their employment status at the time of their engagement, as evidenced by the
latter’s employment contracts which similarly provide that they were hired in
connection with the Alltel Project, and that their positions were "project-based
and as such is co-terminus to the project." In this light, the CA correctly ruled
that petitioners were indeed project-based employees, considering that: (a)
they were hired to carry out a specific undertaking, i.e., the Alltel Project; and
(b) the duration and scope of such project were made known to them at the
time of their engagement, i.e., "co-terminus with the project."

As regards the second requisite, the CA correctly stressed that "[t]he law and
jurisprudence dictate that ‘the duration of the undertaking begins and ends at
determined or determinable times’" while clarifying that "[t]he phrase
‘determinable times’ simply means capable of being determined or fixed."51 In
this case, Sykes Asia substantially complied with this requisite when it
expressly indicated in petitioners’ employment contracts that their positions
were "co-terminus with the project." To the mind of the Court, this caveat
sufficiently apprised petitioners that their security of tenure with Sykes Asia
would only last as long as the Alltel Project was subsisting. In other words,
when the Alltel Project was terminated, petitioners no longer had any project
to work on, and hence, Sykes Asia may validly terminate them from
employment. Further, the Court likewise notes the fact that Sykes Asia duly
submitted an Establishment Employment Report52 and an Establishment
Termination Report53 to the Department of Labor and Employment Makati-
Pasay Field Office regarding the cessation of the Alltel Project and the list of
employees that would be affected by such cessation. As correctly pointed out
by the CA, case law deems such submission as an indication that the
employment was indeed project-based.54

In sum, respondents have shown by substantial evidence that petitioners were

merely project-based employees, and as such, their services were lawfully
terminated upon the cessation of the Alltel Project.

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated April

29, 2013 and the Resolution dated October 3, 2013 of the Court of Appeals in
CA-G.R. SP No. 120433 are hereby AFFIRMED.

G.R. No. 202015, July 13, 2016

ANTONIO VALEROSO AND ALLAN

LEGATONA, Petitioners, v. SKYCABLE CORPORATION, Respondent.

DECISION
DEL CASTILLO, J.:

By this Petition for Review on Certiorari,1 Antonio Valeroso and Allan

Legatona (petitioners) assail the November 11, 2011 Decision2 and May 18,
2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116296,
which reversed the May 24, 2010 Decision4 of the National Labor Relations
Commission (NLRC) and consequently dismissed their Complaint for illegal
dismissal and money claims against Skycable Corporation (respondent).

Antecedent Facts

This case arose from a Complaint5 for illegal dismissal, non-payment of

13th month pay, separation pay and illegal deduction filed by petitioners
against respondent on February 25, 2009 before the Labor Arbiter, docketed
as NLRC NCR Case No. 02-03439-09. The Complaint was subsequently
amended to include regularization and payment of moral and exemplary
damages as additional causes of action.6ChanRoblesVirtualawlibrary

Petitioners Valeroso and Legatona alleged that they started working on

November 1, 1998 and July 13,1998, respectively, as account executives
tasked to solicit cable subscriptions for respondent, as evidenced by
Certifications7 issued by Michael T. De la Cuesta (De la Cuesta), respondent's
Sales Territory Manager. As shown in their payslips8 for the years 2001 to
2006, they received commissions ranging from P15,000.00 to 530,000.00
each upon reaching a specific quota every month and an allowance of
P6,500.00 to P7,000.00 per month. From being direct hires of respondent,
they were transferred on January 1, 2007 to Skill Plus Manpower Services
sans any agreement for their transfer. In February 2009, they were informed
that their commissions would be reduced due to the introduction of prepaid
cards sold to cable subscribers resulting in lower monthly cable subscriptions.
Dismayed, they notified their manager, Marlon Pasta (Pasta), of their intention
to file a labor case with the NLRC, which they did on February 25, 2009.
Pasta then informed them that they will be dropped from the roster of its
account executives, which act, petitioners claimed, constitutes unfair labor
practice.

Further, petitioners claimed that they did not receive 13th month pay for 2006
and were underpaid of such benefit for the years 2007 and 2008; and that in
January 2008, petitioner Legatona signed a Release and Quitclaim9 in
consideration of the amount of P25,000.00 as loyalty bonus from respondent.

Respondent, on the other hand, claimed that it did not terminate the services
of petitioners for there was never an employer-employee relationship to begin
with. It averred that in 1998, respondent (then Central CATV, Inc.) engaged
petitioners as independent contractors under a Sales Agency Agreement.10In
2007, respondents decided to streamline its operations and instead of
contracting with numerous independent account executives such as
petitioners, respondent engaged the services of an independent contractor,
Armada Resources & Marketing Solutions, Inc. (Armada, for brevity; formerly
Skill Plus Manpower Services) under a Sales Agency Agreement.11 As a
result, petitioners' contracts were terminated but they, together with other
sales account executives, were referred for transfer to Armada. Petitioners
then became employees of Armada. In 2009, respondent and Armada again
entered into a Sales Agency Agreement,12 wherein petitioners were again
tasked to solicit accounts/ generate sales for respondent. 
Respondent insisted that in hiring petitioners and Armada as independent
contractors, it engaged in legitimate job contracting where no employer-
employee relation exists between them. In an affidavit,13De la Cuesta stated
that the certifications he issued are not employment certifications but are mere
accommodations, requested by petitioners themselves, for their credit card
and loan applications. Moreover, Armada's President, Francisco Navasa
(Navasa), in his affidavit,14 verified that Armada is an independent contractor
which selected and engaged the services of petitioners, paid their
compensation, exercised the power to control their conduct and discipline or
dismiss them. Therefore, when petitioners filed their Complaint in February
2009, they were employees of Armada and as such, had no cause of action
against respondent.

Petitioners, however, assailed the allegation that they were employees of

Armada, claiming that they were directly hired, paid and dismissed by
respondent. They cited the following as indicators that they are under the
direct control and supervision of respondent: 1) respondent's officers
supervise their area of work, monitor them daily, update them of new promos
and installations they need to work on, inform them of meetings and penalize
them for non-attendance, ask them to train new agents/account executives,
and inform them of new prices and expiration dates of product promos; 2)
respondent's supervisors delegate to them authority to investigate, campaign
against and legalize unlawful cable connections; 3) respondent's supervisors
monitor their quota production and impose guaranteed charges as penalty for
failing to meet their quota; and 4) respondent consistently gives trophies to
award them of their outstanding performance.

Ruling of the Labor Arbiter

In a Decision15 dated August 26, 2009, the Labor Arbiter dismissed the
Complaint since petitioners failed to establish by substantial evidence that
respondent was their employer. The Labor Arbiter observed that petitioners
failed to identify and specify the person who allegedly hired them, paid their
wages and exercised supervision and control over the manner and means of
performing their work. There was neither any evidence to prove that Pasta,
who allegedly dismissed them, is an officer of respondent with an authority to
dismiss them. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the complaint filed in the instant case is

dismissed as discussed in the body hereof.

SO ORDERED.16

Ruling of the National Labor Relations Commission

Petitioners filed an appeal with the NLRC attributing reversible error on the
Labor Arbiter in dismissing their Complaint on the ground of no employer-
employee relationship.

In a Decision17 dated May 24, 2010, the NLRC reversed the Labor Arbiter's
ruling. It found that petitioners are regular employees of respondent having
performed their job as account executives for more than one year, even if not
continuous and merely intermittent, and considering the indispensability and
continuing need of petitioners' tasks to the business. The NLRC observed that
there was no evidence that petitioners have substantial capitalization or
investment to consider them as independent contractors. On the other hand,
the certifications and the payslips presented by petitioners constitute
substantial evidence of employer-employee relationship. The NLRC held that
upon termination of the Sales Agency Agreement with Armada in 2009,
petitioners were considered dismissed without just cause and due process.
The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED and the

assailed Decision of Labor Arbiter Gaudencio P. Demaisip, Jr. dated August
26, 2009, is REVERSED and SET ASIDE, and a new one entered declaring
complainants to have been illegally dismissed. Accordingly, respondent
Skycable Corporation/Central CATV Inc. is hereby directed to immediately
reinstate complainants to their former positionfs] and to pay each of the
complainants their full backwages reckoned from February 25,2009 up to the
actual payroll reinstatement, (tentatively computed at P607,200.00), in
addition to the amount of P58,500.00 representing 13th month pay differentials
and pro-ratal 3th month pay for 2009.

SO ORDERED.18cralawred

With the NLRC s ruling in favor of petitioners, respondent filed a motion for
reconsideration. This motion was, however, denied by the NLRC in its
Resolution19 of July 27, 2010.

Riding of the Court of Appeals

Respondent filed a Petition for Certiorari20 with the CA, attributing grave abuse

of discretion on the part of the NLRC in holding it liable for the alleged illegal
dismissal of petitioners. 
The CA rendered a Decision21 on November 11, 2011 granting respondent's
Petition for Certiorari and reversing the NLRC Decision. The CA sustained the
Labor Arbiter's finding that there was no evidence to substantiate the bare
allegation of employer-employee relationship between the parties. The
dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the instant petition is GRANTED and

the Decision dated May 24, 2010 of the National Labor Relations Commission
in NLRC NCR Case No. 02-03439-09 is hereby REVERSED and SET ASIDE.

SO ORDERED.22cralawred

Petitioners moved for reconsideration which was denied by the CA in its

Resolution23 dated May 18, 2012.

Issues

Hence, this Petition raising the following issues:

I.

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RENDERING

ITS DECISION DATED NOVEMBER 11, 2011.

II.

WHETHER THE PETITIONERS WERE RESPONDENT'S REGULAR

EMPLOYEES, WHOSE DISMISSAL FROM EMPLOYMENT WAS
ILLEGAL.24cralawred
Petitioners maintain that respondent failed to discharge the burden of
disproving the employer-employee relationship through competent evidence
of independent contractorship. They assert that the nature of their work and
length of service with respondent made them regular employees as defined in
Article 28025 of the Labor Code. Consequently, the CA gravely erred in
dismissing their Complaint for illegal dismissal against respondent. 

Our Ruling

The Petition has no merit.

The pivotal issue to be resolved in this case is whether petitioners were

employees of respondent.

Well-entrenched is the doctrine that the existence of an employer-employee

relationship is ultimately a question of fact and that the findings thereon by the
Labor Arbiter and NLRC shall be accorded not only respect but even finality
when supported by substantial evidence.26 However, considering the
conflicting findings of fact by the Labor Arbiter, the NLRC and the CA, the
Court is impelled to re-examine the records and resolve this factual issue.

To prove the claim of an employer-employee relationship, the following should

be established by competent evidence: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the employer's power to control the employee with respect to the means and
methods by which the work is to be accomplished.27 Among the four, the most
determinative factor in ascertaining the existence of employer-employee
relationship is the "right of control test."28 Under this control test, the person for
whom the services are performed reserves the right to control not only the end
to be achieved, but also the means by which such end is
reached.29ChanRoblesVirtualawlibrary

We rule that an employer-employee relationship is absent in this case. The

evidence presented by petitioners did not prove their claim that they were
employees of respondent. The certifications issued by De la Cuesta are not
competent evidence of employer-employee relation as these merely certified
that respondent had engaged the services of petitioners without specifying the
true nature of such engagement. These documents did not certify that
petitioners were employees but were only issued to accommodate petitioners'
request for loan applications, which fact was not refuted by petitioners. As for
the payslips presented, it appears that only the payslips for the years 2001 to
2006 were submitted. No payslips for the years material to this case (2007 to
2009) were submitted. It is undisputed that petitioners were transferred to
Armada in 2007, thus, we cannot give much credence to the payslips issued
before this period.

We, further, find no merit in petitioners' assertion that respondent's control

over them was demonstrated. "[Guidelines indicative of labor law 'control' do
not merely relate to the mutually desirable result intended by the contractual
relationship; they must have the nature of dictating the means and methods to
be� employed in attaining the result."30 Here, we find that respondent's act of
regularly updating petitioners of new promos, new price listings, meetings and
trainings of new account executives; imposing quotas and penalties; and
giving commendations for meritorious performance do not pertain to the
means and methods of how petitioners were to perform and accomplish their
task of soliciting cable subscriptions. At most, these indicate that respondent
regularly monitors the result of petitioners' work but in no way dictate upon
them the manner in which they should perform their duties. Absent any
intrusion by respondent into the means and manner of conducting petitioners'
tasks, bare assertion that petitioners' work was supervised and monitored
does not suffice to establish employer-employee relationship.

Reliance by petitioners on the case of Francisco v. National Labor Relations

Commission31 is misplaced. In that case, the Court adopted a two-tiered test in
order to determine the true relationship between the employer and employee.
This two-tiered test, which involves: "(1) the putative employer's power to
control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the
activity or relationship," has been made especially appropriate in cases where
there is no written agreement to base the relationship on and where the
various tasks performed by the worker brings complexity to the relationship
with the employer.32 Thus, in addition to the control test, the totality of the
economic circumstances of the worker is taken into light to determine the
existence of employment relationship.

In the present case, there is a written contract, i.e., the Sales Agency

Agreement, which served as the primary evidence of the nature of the parties'
relationship. In this duly executed and signed agreement, petitioners and
respondent unequivocally agreed that petitioners' services were to be
engaged on an agency basis as sales account executives and that no
employer-employee relationship is created but an independent contractorship.
It is therefore clear that the intention at the time of the signing of the
agreement is not to be bound by an employer-employee relationship. At any
rate, even if we are to apply the two-tiered test pronounced in
the Francisco case, there can still be no employer-employee relationship
since, as discussed, the element of control is already absent.

Indeed, "[t]he presence of [the] power of control is indicative of an

employment relationship while the absence thereof is indicative of
independent contractorship."33 Moreover, evidence on record reveal the
existence of independent contractorship between the parties. As mentioned,
the Sales Agency Agreement provided the primary evidence of such
relationship. "While the existence of� employer-employee relationship is a
matter of� law, the characterization made by the parties in their contract as to
the nature of their juridical relationship cannot be simply ignored, particularly
in this case where the parties' written contract unequivocally states their
intention"34 to be strictly bound by independent contractorship. Petitioner
Legatona, in fact, in his Release and Quitclaim, acknowledged that he was
performing sales activities as sales agent/independent contractor and not an
employee of respondent. In the same token, De la Cuesta and Navasa, made
sworn testimonies that petitioners are employees of Armada which is an
independent contractor engaged to provide marketing services for
respondent.

Neither can we subscribe to petitioners' contention that they are considered

regular employees of respondent for they perform functions necessary and
desirable to the business operation of respondent in consonance with Article
280 of the Labor Code. We have held that "Article 280 is not the yardstick for
determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and
casual employees, for purposes of determining [their rights] to certain
benefits, [such as] to join or form a union, or to security of tenure. Article 280
does not apply where the existence of an employment relationship is in
dispute,"35 as in this case.

Evidently, the legal relation of petitioners as sales account executives to

respondent can be that of an independent contractor. There was no showing
that respondent had control with respect to the details of how petitioners must
conduct their sales activity of soliciting cable subscriptions from the public. In
the case of Abante, Jr. v. Lamadrid Bearing & Parts
Corporation,36 Empermaco Abante, Jr., a commission salesman who pursued
his selling activities without interference or supervision from respondent
company and relied on his own resources to perform his functions, was held
to be an independent contractor. Similarly, in Sandigan Savings & Loan Bank,
Inc. v. National Labor Relations Commission,37 Anita Javier was also held to
be an independent contractor as the Court found that Sandigan Realty
Development Corporation had no control over her conduct as a realty sales
agent since its only concern or interest was in the result of her work and not in
how it was achieved.

All told, we sustain the CA's factual findings and conclusion and accordingly,
find no cogent reason to overturn the dismissal of petitioners' Complaint
against respondent.

WHEREFORE, the Petition is DENIED. The November 11, 2011 Decision and

May 18, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 116296
are AFFIRMED.
[G.R. No. 149440. January 28, 2003]

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS

and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION
OF SUGARCANE WORKERS-FOOD AND GENERAL
TRADE, respondents.

DECISION

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that
was seasonal in nature, they failed to prove that the latter worked only for the
duration of one particular season. In fact, petitioners do not deny that these
workers have served them for several years already. Hence, they are regular
-- not seasonal -- employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of
Court, seeking to set aside the February 20, 2001 Decision of the Court of
Appeals[1] (CA) in CA-GR SP No. 51033. The dispositive part of the Decision
reads:

WHEREFORE, premises considered, the instant special civil action

for certiorari is hereby DENIED. [2]

On the other hand, the National Labor Relations Commission (NLRC)

Decision,[3] upheld by the CA, disposed in this wise:
WHEREFORE, premises considered, the decision of the Labor Arbiter is
hereby SET ASIDE and VACATED and a new one entered declaring
complainants to have been illegally dismissed. Respondents are
hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona
Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay
full backwages from September 1991 until reinstated. Respondents being
guilty of unfair labor practice are further ordered to pay complainant union the
sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages.
[4]

The Facts

The facts are summarized in the NLRC Decision as follows:

Contrary to the findings of the Labor Arbiter that complainants [herein

respondents] refused to work and/or were choosy in the kind of jobs they
wanted to perform, the records is replete with complainants persistence and
dogged determination in going back to work.

Indeed, it would appear that respondents did not look with favor workers
having organized themselves into a union. Thus, when complainant union was
certified as the collective bargaining representative in the certification
elections, respondents under the pretext that the result was on appeal,
refused to sit down with the union for the purpose of entering into a collective
bargaining agreement. Moreover, the workers including complainants herein
were not given work for more than one month. In protest, complainants staged
a strike which was however settled upon the signing of a Memorandum of
Agreement which stipulated among others that:
a) The parties will initially meet for CBA negotiations on the 11th day of
January 1991 and will endeavor to conclude the same within thirty (30) days.

b) The management will give priority to the women workers who are members
of the union in case work relative x x x or amount[ing] to gahit and [dipol]
arises.

c) Ariston Eruela Jr. will be given back his normal work load which is six (6)
days in a week.

d) The management will provide fifteen (15) wagons for the workers and that
existing workforce prior to the actual strike will be given priority. However, in
case the said workforce would not be enough, the management can hire
additional workers to supplement them.

e) The management will not anymore allow the scabs, numbering about
eighteen (18) workers[,] to work in the hacienda; and

f) The union will immediately lift the picket upon signing of this agreement.

However, alleging that complainants failed to load the fifteen wagons,

respondents reneged on its commitment to sit down and bargain
collectively. Instead, respondent employed all means including the use of
private armed guards to prevent the organizers from entering the premises.

Moreover, starting September 1991, respondents did not any more give work
assignments to the complainants forcing the union to stage a strike on
January 2, 1992. But due to the conciliation efforts by the DOLE, another
Memorandum of Agreement was signed by the complainants and respondents
which provides:
Whereas the union staged a strike against management on January 2, 1992
grounded on the dismissal of the union officials and members;

Whereas parties to the present dispute agree to settle the case amicably once
and for all;

Now therefore, in the interest of both labor and management, parties herein
agree as follows:

1. That the list of the names of affected union members hereto attached and
made part of this agreement shall be referred to the Hacienda payroll of 1990
and determine whether or not this concerned Union members are hacienda
workers;

2. That in addition to the payroll of 1990 as reference, herein parties will use
as guide the subjects of a Memorandum of Agreement entered into by and
between the parties last January 4, 1990;

3. That herein parties can use other employment references in support of their
respective claims whether or not any or all of the listed 36 union members are
employees or hacienda workers or not as the case may be;

4. That in case conflict or disagreement arises in the determination of the

status of the particular hacienda workers subject of this agreement herein
parties further agree to submit the same to voluntary arbitration;

5. To effect the above, a Committee to be chaired by Rose Mengaling is

hereby created to be composed of three representatives each and is given
five working days starting Jan. 23, 1992 to resolve the status of the subject 36
hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as,
Ariston Arulea Jr.)

Pursuant thereto, the parties subsequently met and the Minutes of the
Conciliation Meeting showed as follows:

The meeting started at 10:00 A.M. A list of employees was submitted by Atty.
Tayko based on who received their 13th month pay. The following are deemed
not considered employees:

1. Luisa Rombo

2. Ramona Rombo

3. Bobong Abrega

4. Boboy Silva

The name Orencio Rombo shall be verified in the 1990 payroll.

The following employees shall be reinstated immediately upon availability of

work:

1. Jose Dagle 7. Alejandro Tejares

2. Rico Dagle 8. Gaudioso Rombo

3. Ricardo Dagle 9. Martin Alas-as Jr.

4. Jesus Silva 10. Cresensio Abrega

5. Fernando Silva 11. Ariston Eruela Sr.

6. Ernesto Tejares 12. Ariston Eruela Jr.

When respondents again reneged on its commitment, complainants filed the

present complaint.

But for all their persistence, the risk they had to undergo in conducting a strike
in the face of overwhelming odds, complainants in an ironic twist of fate now
find themselves being accused of refusing to work and being choosy in the
kind of work they have to perform.[5] (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in

nature, they were considered to be merely on leave during the off-season and
were therefore still employed by petitioners. Moreover, the workers enjoyed
security of tenure. Any infringement upon this right was deemed by the CA to
be tantamount to illegal dismissal.

The appellate court found neither rhyme nor reason in petitioners

argument that it was the workers themselves who refused to or were choosy
in their work. As found by the NLRC, the record of this case is replete with
complainants persistence and dogged determination in going back to work.[6]

The CA likewise concurred with the NLRCs finding that petitioners were
guilty of unfair labor practice.

Hence this Petition.[7]

Issues
 Petitioners raise the following issues for the Courts consideration:

A. Whether or not the Court of Appeals erred in holding that

respondents, admittedly seasonal workers, were regular employees,
contrary to the clear provisions of Article 280 of the Labor Code,
which categorically state that seasonal employees are not covered
by the definition of regular employees under paragraph 1, nor
covered under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.

B. Whether or not the Court of Appeals erred in rejecting the ruling

in Mercado, xxx, and relying instead on rulings which are not directly
applicable to the case at bench, viz, Philippine Tobacco, Bacolod-
Murcia, and Gaco, xxx.

C. Whether or not the Court of Appeals committed grave abuse of

discretion in upholding the NLRCs conclusion that private
respondents were illegally dismissed, that petitioner[s were] guilty of
unfair labor practice, and that the union be awarded moral and
exemplary damages.[8]

Consistent with the discussion in petitioners Memorandum, we shall take

up Items A and B as the first issue and Item C as the second.

The Courts Ruling

The Petition has no merit.

First Issue:
Regular Employment
 At the outset, we must stress that only errors of law are generally reviewed
by this Court in petitions for review on certiorari of CA decisions.[9] Questions
of fact are not entertained.[10] The Court is not a trier of facts and, in labor
cases, this doctrine applies with greater force.[11] Factual questions are for
labor tribunals to resolve.[12] In the present case, these have already been
threshed out by the NLRC. Its findings were affirmed by the appellate court.

Contrary to petitioners contention, the CA did not err when it held that
respondents were regular employees.

Article 280 of the Labor Code, as amended, states:

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 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 activity exist.(Italics
supplied)
 For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are
seasonal in nature. They must have also been employed only for the duration
of one season. The evidence proves the existence of the first, but not of the
second, condition. The fact that respondents -- with the exception of Luisa
Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -- repeatedly
worked as sugarcane workers for petitioners for several years is not denied by
the latter. Evidently, petitioners employed respondents for more than one
season. Therefore, the general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission,[13] the Court issued

this clarification:

[T]he test of whether or not an employee is a regular employee has been laid
down in De Leon v. NLRC, in which this Court held:

The primary standard, therefore, of determining regular employment is the

reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test
is whether the former is usually necessary or desirable in the usual trade or
business of the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such
activity exists.
 x x x x x x x x x

x x x [T]he fact that [respondents] do not work continuously for one whole year
but only for the duration of the x x x season does not detract from considering
them in regular employment since in a litany of cases this Court has already
settled that seasonal workers who are called to work from time to time and are
temporarily laid off during off-season are not separated from service in said
period, but merely considered on leave until re-employed.[14]

The CA did not err when it ruled that Mercado v. NLRC[15] was not

applicable to the case at bar. In the earlier case, the workers were required to
perform phases of agricultural work for a definite period of time, after which
their services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and
off for any single phase thereof. On the other hand, herein respondents,
having performed the same tasks for petitioners every season for several
years, are considered the latters regular employees for their respective
tasks. Petitioners eventual refusal to use their services -- even if they were
ready, able and willing to perform their usual duties whenever these were
available -- and hiring of other workers to perform the tasks originally assigned
to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CAs dismissal of what petitioners
claim was their valid exercise of a management prerogative. The sudden
changes in work assignments reeked of bad faith. These changes were
implemented immediately after respondents had organized themselves into a
union and started demanding collective bargaining. Those who were union
members were effectively deprived of their jobs. Petitioners move actually
amounted to unjustified dismissal of respondents, in violation of the Labor
Code.

Where there is no showing of clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was
for a valid and authorized cause.[16] In the case at bar, petitioners failed to
prove any such cause for the dismissal of respondents who, as discussed
above, are regular employees.

Second Issue:
Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It
ruled as follows:

Indeed, from respondents refusal to bargain, to their acts of economic

inducements resulting in the promotion of those who withdrew from the union,
the use of armed guards to prevent the organizers to come in, and the
dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their haciendaa clear interference in the
right of the workers to self-organization.[17]

We uphold the CAs affirmation of the above findings. Indeed, factual

findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdictions, are generally accorded not only
respect but even finality. Their findings are binding on the Supreme Court.
[18]
 Verily, their conclusions are accorded great weight upon appeal, especially
when supported by substantial evidence.[19] Consequently, the Court is not
duty-bound to delve into the accuracy of their factual findings, in the absence
of a clear showing that these were arbitrary and bereft of any rational basis.[20]

The finding of unfair labor practice done in bad faith carries with it the
sanction of moral and exemplary damages.[21]

WHEREFORE, the Petition is hereby DENIED and the assailed

Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

HERRY J. PRICE, STEPHANIE G.   G.R. No. 178505

DOMINGO AND LOLITA
Present:
ARBILERA, Petitioners,

YNARES-SANTIAGO, J.,
- versus -
Chairperson,
INNODATA PHILS. INC.,/ INNODATA
AUSTRIA-MARTINEZ, 
CORPORATION, LEO RABANG AND
CHICO-NAZARIO,
JANE NAVARETTE, Respondents.
NACHURA, and 
REYES, JJ.

Promulgated:
September 30, 2008

x------------------------------------------------x

DECISION

CHICO-NAZARIO, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court
assails the Decision1 dated 25 September 2006 and Resolution2 dated 15
June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed
the Decision dated 14 December 2001 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that
petitioners were not illegally dismissed by respondents.

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA)

was a domestic corporation engaged in the data encoding and data
conversion business. It employed encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and
accomplish the job orders of its clients. Respondent Leo Rabang was its
Human Resources and Development (HRAD) Manager, while respondent
Jane Navarette was its Project Manager. INNODATA had since ceased
operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were

employed as formatters by INNODATA. The parties executed an employment
contract denominated as a "Contract of Employment for a Fixed Period,"
stipulating that the contract shall be for a period of one year,3 to wit:

CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

xxxx

WITNESSETH: That
WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and
in the course thereof and represented himself/herself to be fully qualified and
skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is

desirous of engaging that the (sic) services of the EMPLOYEE for a fixed
period;

NOW, THEREFORE, for and in consideration of the foregoing premises, the

parties have mutually agreed as follows:

TERM/DURATION

The EMPLOYER hereby employs, engages and hires the EMPLOYEE and
the EMPLOYEE hereby accepts such appointment as FORMATTER effective
FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.

xxxx

TERMINATION

6.1 In the event that EMPLOYER shall discontinue operating its business, this
CONTRACT shall also ipso facto terminate on the last day of the month on
which the EMPLOYER ceases operations with the same force and effect as is
such last day of the month were originally set as the termination date of this
Contract. Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing, this
contract maybe pre-terminated by the EMPLOYER upon giving of three (3)
days notice to the employee.

6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the
completion of the project, this contract shall automatically terminate.

6.3 COMPANY’s Policy on monthly productivity shall also apply to the

EMPLOYEE.

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT,

with or without cause, by giving at least Fifteen – (15) notice to that effect.
Provided, that such pre-termination shall be effective only upon issuance of
the appropriate clearance in favor of the said EMPLOYEE.

6.5 Either of the parties may terminate this Contract by reason of the breach
or violation of the terms and conditions hereof by giving at least Fifteen (15)
days written notice. Termination with cause under this paragraph shall be
effective without need of judicial action or approval.4

During their employment as formatters, petitioners were assigned to handle

jobs for various clients of INNODATA, among which were CAS, Retro,
Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for
one client, they were immediately assigned to do a new job for another client.

On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners

informing them of their last day of work. The letter reads:

RE: End of Contract

Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the
close of business hours on February 16, 2000.5

According to INNODATA, petitioners’ employment already ceased due to the

end of their contract.

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and

damages against respondents. Petitioners claimed that they should be
considered regular employees since their positions as formatters were
necessary and desirable to the usual business of INNODATA as an encoding,
conversion and data processing company. Petitioners also averred that the
decisions in Villanueva v. National Labor Relations Commission7 and
Servidad v. National Labor Relations Commission,8 in which the Court already
purportedly ruled "that the nature of employment at Innodata Phils., Inc. is
regular,"9 constituted stare decisis to the present case. Petitioners finally
argued that they could not be considered project employees considering that
their employment was not coterminous with any project or undertaking, the
termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in

the business of data processing, typesetting, indexing, and abstracting for its
foreign clients. The bulk of the work was data processing, which involved data
encoding. Data encoding, or the typing of data into the computer, included
pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost
half of the employees of INNODATA did data encoding work, while the other
half monitored quality control. Due to the wide range of services rendered to
its clients, INNODATA was constrained to hire new employees for a fixed
period of not more than one year. Respondents asserted that petitioners were
not illegally dismissed, for their employment was terminated due to the
expiration of their terms of employment. Petitioners’ contracts of employment
with INNODATA were for a limited period only, commencing on 6 September
1999 and ending on 16 February 2000.10 Respondents further argued that
petitioners were estopped from asserting a position contrary to the contracts
which they had knowingly, voluntarily, and willfully agreed to or entered into.
There being no illegal dismissal, respondents likewise maintained that
petitioners were not entitled to reinstatement and backwages.

On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding

petitioners’ complaint for illegal dismissal and damages meritorious. The
Labor Arbiter held that as formatters, petitioners occupied jobs that were
necessary, desirable, and indispensable to the data processing and encoding
business of INNODATA. By the very nature of their work as formatters,
petitioners should be considered regular employees of INNODATA, who were
entitled to security of tenure. Thus, their termination for no just or authorized
cause was illegal. In the end, the Labor Arbiter decreed:

FOREGOING PREMISES CONSIDERED, judgment is hereby rendered

declaring complainants’ dismissal illegal and ordering respondent INNODATA
PHILS. INC./INNODATA CORPORATION to reinstate them to their former or
equivalent position without loss of seniority rights and benefits. Respondent
company is further ordered to pay complainants their full backwages plus ten
percent (10%) of the totality thereof as attorney’s fees. The monetary awards
due the complainants as of the date of this decision are as follows:

A. Backwages

1. Cherry J. Price

2/17/2000 – 10/17/2000 at 223.50/day

 P5,811.00/mo/ x 8 mos. P46,488.00

2. Stephanie Domingo 46,488.00

(same computation)

3. Lolita Arbilera 46,488.00

(same computation)

Total Backwages P139,464.00

B. Attorney’s fees (10% of total award) 13,946.40

Total Award P153,410.40

Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC.

The NLRC, in its Decision dated 14 December 2001, reversed the Labor
Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the
charge of illegal dismissal.

The NLRC found that petitioners were not regular employees, but were fixed-
term employees as stipulated in their respective contracts of employment. The
NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of
Novaliches Foundation v. National Labor Relations Commission,14 in which
this Court upheld the validity of fixed-term contracts. The determining factor of
such contracts is not the duty of the employee but the day certain agreed
upon by the parties for the commencement and termination of the
employment relationship. The NLRC observed that the petitioners freely and
voluntarily entered into the fixed-term employment contracts with INNODATA.
Hence, INNODATA was not guilty of illegal dismissal when it terminated
petitioners’ employment upon the expiration of their contracts on 16 February
2000.

The dispositive portion of the NLRC Decision thus reads:

WHEREFORE, premises considered, the decision appealed from is hereby

REVERSED and SET ASIDE and a new one entered DISMISSING the instant
complaint for lack of merit.15

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution

dated 28 June 2002.16

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the
Court of Appeals, petitioners prayed for the annulment, reversal, modification,
or setting aside of the Decision dated 14 December 2001 and Resolution
dated 28 June 2002 of the NLRC.lawphil.net

On 25 September 2006, the Court of Appeals promulgated its Decision

sustaining the ruling of the NLRC that petitioners were not illegally dismissed.

The Court of Appeals ratiocinated that although this Court declared in

Villanueva and Servidad that the employees of INNODATA working as data
encoders and abstractors were regular, and not contractual, petitioners
admitted entering into contracts of employment with INNODATA for a term of
only one year and for a project called Earthweb. According to the Court of
Appeals, there was no showing that petitioners entered into the fixed-term
contracts unknowingly and involuntarily, or because INNODATA applied force,
duress or improper pressure on them. The appellate court also observed that
INNODATA and petitioners dealt with each other on more or less equal terms,
with no moral dominance exercised by the former on latter. Petitioners were
therefore bound by the stipulations in their contracts terminating their
employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the

stipulated period of employment is governing and not the nature thereof.
Consequently, even though petitioners were performing functions that are
necessary or desirable in the usual business or trade of the employer,
petitioners did not become regular employees because their employment was
for a fixed term, which began on 16 February 1999 and was predetermined to
end on 16 February 2000.

The appellate court concluded that the periods in petitioners’ contracts of

employment were not imposed to preclude petitioners from acquiring security
of tenure; and, applying the ruling of this Court in Brent, declared that
petitioners’ fixed-term employment contracts were valid. INNODATA did not
commit illegal dismissal for terminating petitioners’ employment upon the
expiration of their contracts.

The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution

dated December 14, 2001 of the National Labor Relations Commission
declaring petitioners were not illegally dismissed is AFFIRMED.17

The petitioners filed a Motion for Reconsideration of the afore-mentioned

Decision of the Court of Appeals, which was denied by the same court in a
Resolution dated 15 June 2007.

Petitioners are now before this Court via the present Petition for Review
on Certiorari, based on the following assignment of errors:
 I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR OF LAW AND GRAVE ABUSE OF DISCRETION WHEN IT
DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF
NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT OF
RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN
AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.

II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR OF LAW IN RULING THAT THE STIPULATION OF
CONTRACT IS GOVERNING AND NOT THE NATURE OF
EMPLOYMENT AS DEFINED BY LAW.

III.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD
SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW
ON SECURITY OF TENURE THROUGH CONTRACT
MANIPULATION.18

The issue of whether petitioners were illegally dismissed by respondents is

ultimately dependent on the question of whether petitioners were hired by
INNODATA under valid fixed-term employment contracts.
After a painstaking review of the arguments and evidences of the parties, the
Court finds merit in the present Petition. There were no valid fixed-term
contracts and petitioners were regular employees of the INNODATA who
could not be dismissed except for just or authorized cause.

The employment status of a person is defined and prescribed by law and not
by what the parties say it should be.19 Equally important to consider is that a
contract of employment is impressed with public interest such that labor
contracts must yield to the common good.20 Thus, provisions of applicable
statutes are deemed written into the contract, and the 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.21

Regular employment has been defined by Article 280 of the Labor Code, as
amended, which reads:

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
engagement of the employee or where the work or services to be performed is
seasonal in nature and 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 activity exists.
(Underscoring ours).

Based on the afore-quoted provision, the following employees are accorded

regular status: (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer,
regardless of the length of their employment; and (2) those who were initially
hired as casual employees, but have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are
employed.

Undoubtedly, petitioners belong to the first type of regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether
an employment should be considered regular or non-regular is the reasonable
connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer.22

In the case at bar, petitioners were employed by INNODATA on 17 February

1999 as formatters. The primary business of INNODATA is data encoding,
and the formatting of the data entered into the computers is an essential part
of the process of data encoding. Formatting organizes the data encoded,
making it easier to understand for the clients and/or the intended end users
thereof. Undeniably, the work performed by petitioners was necessary or
desirable in the business or trade of INNODATA.

However, it is also true that while certain forms of employment require the
performance of usual or desirable functions and exceed one year, these do
not necessarily result in regular employment under Article 280 of the Labor
Code.23 Under the Civil Code, 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 predetermined dates of completion; they
also include those to which the parties by free choice have assigned a specific
date of termination.24

The decisive determinant in term employment is 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. Seasonal employment and
employment for a particular project are instances of employment in which a
period, where not expressly set down, is necessarily implied.25

Respondents maintain that the contracts of employment entered into by

petitioners with INNDOATA were valid fixed-term employment contracts which
were automatically terminated at the expiry of the period stipulated
therein, i.e., 16 February 2000.

The Court disagrees.

While this Court has recognized the validity of fixed-term employment

contracts, it has consistently held that this is the exception rather than the
general rule. More importantly, a fixed-term employment is valid only under
certain circumstances. In Brent, the very same case invoked by respondents,
the Court identified several circumstances wherein a fixed-term is
anessential and natural appurtenance, to wit:

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 with all that it implies does not appear ever to have been applied,
Article 280 of the Labor Code notwithstanding; 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 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, "x x 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 reelect
them."26

As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a
stern admonition that where, from the circumstances, it is apparent that the
period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy.27

After considering petitioners’ contracts in their entirety, as well as the

circumstances surrounding petitioners’ employment at INNODATA, the Court
is convinced that the terms fixed therein were meant only to circumvent
petitioners’ right to security of tenure and are, therefore, invalid.

The contracts of employment submitted by respondents are highly suspect for

not only being ambiguous, but also for appearing to be tampered with.
Petitioners alleged that their employment contracts with INNODATA became
effective 16 February 1999, and the first day they reported for work was on 17
February 1999. The Certificate of Employment issued by the HRAD Manager
of INNODATA also indicated that petitioners Price and Domingo were
employed by INNODATA on 17 February 1999.

However, respondents asserted before the Labor Arbiter that petitioners’

employment contracts were effective only on 6 September 1999. They later on
admitted in their Memorandum filed with this Court that petitioners were
originally hired on 16 February 1999 but the project for which they were
employed was completed before the expiration of one year. Petitioners were
merely rehired on 6 September 1999 for a new project. While respondents
submitted employment contracts with 6 September 1999 as beginning date of
effectivity, it is obvious that in one of them, the original beginning date of
effectivity, 16 February 1999, was merely crossed out and replaced with 6
September 1999. The copies of the employment contracts submitted by
petitioners bore similar alterations.

The Court notes that the attempt to change the beginning date of effectivity of
petitioners’ contracts was very crudely done. The alterations are very obvious,
and they have not been initialed by the petitioners to indicate their assent to
the same. If the contracts were truly fixed-term contracts, then a change in the
term or period agreed upon is material and would already constitute a
novation of the original contract.

Such modification and denial by respondents as to the real beginning date of

petitioners’ employment contracts render the said contracts ambiguous. The
contracts themselves state that they would be effective until 16 February 2000
for a period of one year. If the contracts took effect only on 6 September 1999,
then its period of effectivity would obviously be less than one year, or for a
period of only about five months.

Obviously, respondents wanted to make it appear that petitioners worked for

INNODATA for a period of less than one year. The only reason the Court can
discern from such a move on respondents’ part is so that they can preclude
petitioners from acquiring regular status based on their employment for one
year. Nonetheless, the Court emphasizes that it has already found that
petitioners should be considered regular employees of INNODATA by the
nature of the work they performed as formatters, which was necessary in the
business or trade of INNODATA. Hence, the total period of their employment
becomes irrelevant.

Even assuming that petitioners’ length of employment is material, given

respondents’ muddled assertions, this Court adheres to its pronouncement in
Villanueva v. National Labor Relations Commission,28 to the effect that where
a contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who prepared
it. The Court is, thus, compelled to conclude that petitioners’ contracts of
employment became effective on 16 February 1999, and that they were
already working continuously for INNODATA for a year.

Further attempting to exonerate itself from any liability for illegal dismissal,
INNODATA contends that petitioners were project employees whose
employment ceased at the end of a specific project or undertaking. This
contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,29 the Court

defined "project employees" as those workers hired (1) for a specific project or
undertaking, and wherein (2) the completion or termination of such project has
been determined at the time of the engagement of the employee.

Scrutinizing petitioners’ employment contracts with INNODATA, however,

failed to reveal any mention therein of what specific project or undertaking
petitioners were hired for. Although the contracts made general references to
a "project," such project was neither named nor described at all therein. The
conclusion by the Court of Appeals that petitioners were hired for the
Earthweb project is not supported by any evidence on record. The one-year
period for which petitioners were hired was simply fixed in the employment
contracts without reference or connection to the period required for the
completion of a project. More importantly, there is also a dearth of evidence
that such project or undertaking had already been completed or terminated to
justify the dismissal of petitioners. In fact, petitioners alleged - and
respondents failed to dispute that petitioners did not work on just one project,
but continuously worked for a series of projects for various clients of
INNODATA.

In Magcalas v. National Labor Relations Commission,30 the Court struck down

a similar claim by the employer therein that the dismissed employees were
fixed-term and project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in
favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases,
the employer has the burden of proof. This burden was not discharged in the
present case.

As a final observation, the Court also takes note of several other provisions in
petitioners’ employment contracts that display utter disregard for their security
of tenure. Despite fixing a period or term of employment, i.e., one year,
INNODATA reserved the right to pre-terminate petitioners’ employment under
the following circumstances:

6.1 x x x Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing, this
contract maybe pre-terminated by the EMPLOYER upon giving of three (3)
days notice to the employee.

xxxx

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT,

with or without cause, by giving at least Fifteen – (15) [day] notice to that
effect. Provided, that such pre-termination shall be effective only upon
issuance of the appropriate clearance in favor of the said EMPLOYEE.
(Emphasis ours.)

Pursuant to the afore-quoted provisions, petitioners have no right at all to

expect security of tenure, even for the supposedly one-year period of
employment provided in their contracts, because they can still be pre-
terminated (1) upon the completion of an unspecified project; or (2) with or
without cause, for as long as they are given a three-day notice. Such contract
provisions are repugnant to the basic tenet in labor law that no employee may
be terminated except for just or authorized cause.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to
assure the workers of security of tenure and free them from the bondage of
uncertainty of tenure woven by some employers into their contracts of
employment. This was exactly the purpose of the legislators in drafting Article
280 of the Labor Code – to prevent the circumvention by unscrupulous
employers of the employee’s right to be secure in his tenure by
indiscriminately and completely ruling out all written and oral agreements
inconsistent with the concept of regular employment.

In all, respondents’ insistence that it can legally dismiss petitioners on the

ground that their term of employment has expired is untenable. To reiterate,
petitioners, being regular employees of INNODATA, are entitled to security of
tenure. In the words of Article 279 of the Labor Code:

ART. 279. 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 other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

By virtue of the foregoing, an illegally dismissed employee is entitled to

reinstatement without loss of seniority rights and other privileges, with full
back wages computed from the time of dismissal up to the time of actual
reinstatement.

Considering that reinstatement is no longer possible on the ground that

INNODATA had ceased its operations in June 2002 due to business losses,
the proper award is separation pay equivalent to one month pay31 for every
year of service, to be computed from the commencement of their employment
up to the closure of INNODATA.
The amount of back wages awarded to petitioners must be computed from the
time petitioners were illegally dismissed until the time INNODATA ceased its
operations in June 2002.32

Petitioners are further entitled to attorney’s fees equivalent to 10% of the total
monetary award herein, for having been forced to litigate and incur expenses
to protect their rights and interests herein.

Finally, unless they have exceeded their authority, corporate officers are, as a
general rule, not personally liable for their official acts, because a corporation,
by legal fiction, has a personality separate and distinct from its officers,
stockholders and members. Although as an exception, corporate directors and
officers are solidarily held liable with the corporation, where terminations of
employment are done with malice or in bad faith,33 in the absence of evidence
that they acted with malice or bad faith herein, the Court exempts the
individual respondents, Leo Rabang and Jane Navarette, from any personal
liability for the illegal dismissal of petitioners.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The

Decision dated 25 September 2006 and Resolution dated 15 June 2007 of the
Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET
ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation
is ORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and
Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one
month pay for every year of service, to be computed from the commencement
of their employment up to the date respondent Innodata Philippines,
Inc./Innodata Corporation ceased operations; (b) full backwages, computed
from the time petitioners’ compensation was withheld from them up to the time
respondent Innodata Philippines, Inc./Innodata Corporation ceased
operations; and (3) 10% of the total monetary award as attorney’s fees. Costs
against respondent Innodata Philippines, Inc./Innodata Corporation.

G.R. No. 159350, March 09, 2016

ALUMAMAY O. JAMIAS, JENNIFER C. MATUGUINAS AND JENNIFER F.

CRUZ,*Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION
(SECOND DIVISION), HON. COMMISSIONERS: RAUL T. AQUINO,
VICTORIANO R. CALAYCAY AND ANGELITA A. GACUTAN; HON.
LABOR ARBITER VICENTE R. LAYAWEN; INNODATA PHILIPPINES,
INC., INNODATA PROCESSING CORPORATION, (INNODATA
CORPORATION), AND TODD SOLOMON, Respondents.

DECISION

BERSAMIN, J.:

The petitioners appeal the adverse judgment promulgated on July 31,

2002,1 whereby the Court of Appeals (CA) upheld the ruling of the National
Labor Relations Commission (NLRC) declaring them as project employees
hired for a fixed period.

Antecedents

Respondent Innodata Philippines, Inc. (Innodata), a domestic corporation

engaged in the business of data processing and conversion for foreign
clients,2 hired the following individuals on various dates and under the
following terms, to wit:
chanRoblesvirtualLawlibrary

Name Position Duration of Contract

 August 7, 1995 to August 7,
Alumamay Jamias Manual Editor
19963
Marietha V. Delos August 7, 1995 to August 7,
Manual Editor
Santos 19964
August 16, 1995 to August 16,
Lilian R. Guamil Manual Editor
19965
August 7, 1995 to August 7,
Rina C. Duque Manual Editor
19966
August 23, 1995 to August 23,
Marilen Agabayani Manual Editor
19967
Production September 1, 1995 to
Alvin V. Patnon
Personnel September 1, 19968
September 18, 1995 to
Analyn I. Beter Type Reader
September 18, 19969
Production September 18, 1995 to
Jerry O. Soldevilla
Personnel September 18, 199610
Ma. Concepcion A. Production September 18, 1995 to
Dela Cruz Personnel September 18, 199611
November 20, 1995 to
Jennifer Cruz Data Encoder
November 20, 199612
November 20, 1995 to
Jennifer Matuguinas Data Encoder
November 20, 199613
After their respective contracts expired, the aforenamed individuals filed a
complaint for illegal dismissal claiming that Innodata had made it appear that
they had been hired as project employees in order to prevent them from
becoming regular employees.14

Decision of the Labor Arbiter

On September 8, 1998, Labor Arbiter (LA) Vicente Layawen rendered his
decision dismissing the complaint for lack of merit.15 He found and held that
the petitioners had knowingly signed their respective contracts in which the
durations of their engagements were clearly stated; and that their fixed term
contracts, being exceptions to Article 280 of the Labor Code, precluded their
claiming regularization.

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the decision of LA Layawen,16 opining that

Article 280 of the Labor Codedid not prohibit employment contracts with fixed
periods provided the contracts had been voluntarily entered into by the
parties, viz.:
chanRoblesvirtualLawlibrary
[I]t is distinctly provided that complainants were hired for a definite period of
one year incidental upon the needs of the respondent by reason of the
seasonal increase in the volume of its business. Consequently, following the
rulings in Pantranco North Express, Inc. vs. NLRC, et al., G.R. No. 106654,
December 16, 1994, the decisive determinant in term of 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." Further,
Article 280 of the Labor Code does not prescribe or prohibit an employment
contract with a fixed period provided, the same is entered into by the parties,
without any force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstance vitiating consent. It does not
necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the
parties are forbidden from agreeing on a period of time for the performance of
such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee's duties. x x
x17ChanRoblesVirtualawlibrary

Judgment of the CA

As earlier mentioned, the CA upheld the NLRC. It observed that the

desirability and necessity of the functions being discharged by the petitioners
did not make them regular employees; that Innodata and the employees could
still validly enter into their contracts of employment for a fixed period provided
they had agreed upon the same at the time of the employees'
engagement;18 that Innodata's operations were contingent on job orders or
undertakings for its foreign clients; and that the availability of contracts from
foreign clients, and the duration of the employments could not be treated as
permanent, but coterminous with the projects.19

The petitioners moved for reconsideration,20 but the CA denied their motion on

August 8, 2003.21

Hence, this appeal by only three of the original complainants, namely

petitioners Alumamay Jamias, Jennifer Matuguinas and Jennifer Cruz.

Issues

The petitioners anchor their appeal on the following:

chanRoblesvirtualLawlibrary
I

THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS
OF JURISDICTION AS IT CANNOT REVERSE OR ALTER THE SUPREME
COURT DECISION

THE SUPREME COURT HAS RULED THAT THE NATURE OF

EMPLOYMENT AT RESPONDENTS IS REGULAR NOT FIXED OR
CONTRACTUAL IN AT LEAST TWO (2) CASES AGAINST INNODATA
PHILS., INC.

II

THE HON. COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW

WHEN IT DID NOT STICK TO PRECENDENT AS IT HAS ALREADY RULED
IN AN EARLIER CASE THAT THE NATURE OF EMPLOYMENT AT
INNODATA PHILS., INC. IS REGULAR AND NOT CONTRACTUAL

III

THE HON. COURT OF APPEALS PATENTLY ERRED IN LAW AND

COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN RULING THAT PETITIONERS' EMPLOYMENT IS FOR A
FIXED PERIOD CO-TERMINOUS WITH A PROJECT WHEN THERE IS NO
PROJECT TO SPEAK OF

IV
THE HON. COURT OF APPEALS PALPABLY ERRED IN LAW IN RULING
THAT THE STIPULATION IN CONTRACT IS GOVERNING AND NOT THE
NATURE OF EMPLOYMENT AS DEFINED BY
LAW.22ChanRoblesVirtualawlibrary

The petitioners maintain that the nature of employment in Innodata had been
settled in Villanueva v. National Labor Relations Commission (Second
Division)23 and Servidad v. National Labor Relations Commission,24 whereby
the Court accorded regular status to the employees because the work they
performed were necessary and desirable to the business of data encoding,
processing and conversion.25They insist that the CA consequently committed
serious error in not applying the pronouncement in said rulings, thereby
ignoring the principle of stare decisis in declaring their employment as
governed by the contract of employment; that the CA also erroneously found
that the engagement of the petitioners was coterminous with the project that
was nonexistent; that Innodata engaged in "semantic interplay of words" by
introducing the concept of "fixed term employment" or "project employment"
that were not founded in law;26 and that Article 280 of the Labor
Code guarantees the right of workers to security of tenure, which rendered the
contracts between the petitioners and Innodata meaningless.27cralawred

In refutation, Innodata insists that the contracts dealt with

in Villanueva and Servidad were different from those entered into by the
petitioners herein,28 in that the former contained stipulations that violated the
provisions of the Labor Code on probationary employment and security of
tenure,29 while the latter contained terms known and explained to the
petitioners who then willingly signed the same;30 that as a mere service
provider, it did not create jobs because its operations depended on the
availability of job orders or undertakings from its client;31 that Article 280 of
the Labor Code allowed "term employment" as an exception to security of
tenure; and that the decisive determinant was the day certain agreed upon by
the parties, not the activities that the employees were called upon to
perform.32

Were the petitioners regular or project employees of Innodata?

Ruling of the Court

We deny the petition for review on certiorari.

Stare decisis does not apply where the facts are essentially different

Contrary to the petitioners' insistence, the doctrine of stare decisis, by which

the pronouncements in Villanueva and Servidad would control the resolution
of this case, had no application herein.

The doctrine of stare decisis enjoins adherence to judicial precedents.33 When

a court has laid down a principle of law as applicable to a certain state of
facts, it will adhere to that principle and apply it to all future cases in which the
facts are substantially the same; but when the facts are essentially
different, stare decisis does not apply because a perfectly sound principle as
applied to one set of facts might be entirely inappropriate when a factual
variance is introduced.34
Servidad and Villanueva involved contracts that contained stipulations not
found in the contracts entered by the petitioners. The cogent observations in
this regard by the CA are worth reiterating:
chanRoblesvirtualLawlibrary
A cursory examination of the facts would reveal that while all the cases
abovementioned involved employment contracts with a fixed term, the
employment contract subject of contention in
the Servidad and Villanueva cases provided for double probation, meaning,
that the employees concerned, by virtue of a clause incorporated in their
contracts, were made to remain as probationary employees even if they
continue to work beyond the six month probation period set by law. Indeed,
such stipulation militates against Constitutional policy of guaranteeing the
tenurial security of the workingman. To Our mind, the provision alluded to is
what prodded the Supreme Court to disregard and nullify altogether the terms
of the written entente. Nonetheless, it does not appear to be the intendment of
the High Tribunal to sweepingly invalidate or declare as unlawful all
employment contracts with a fixed period. To phrase it differently, the said
agreements providing for a one year term would have been declared valid
and, consequently, the separation from work of the employees concerned
would have been sustained had their contracts not included any unlawful and
circumventive condition.

It ought to be underscored that unlike in the Servidad and Villanueva cases,

the written contracts governing the relations of the respondent company and
the petitioners herein do not embody such illicit
stipulation.35ChanRoblesVirtualawlibrary
We also disagree with the petitioners' manifestation36 that the Court struck
down in Innodata Philippines, Inc. v. Quejada-Lopez37 a contract of
employment that was similarly worded as their contracts with Innodata. What
the Court invalidated in Innodata Philippines, Inc. v. Quejada-Lopez was the
purported fixed-term contract that provided for two periods - a fixed term of
one year under paragraph 1 of the contract, and a three-month period under
paragraph 7.4 of the contract - that in reality placed the employees under
probation. In contrast, the petitioners' contracts did not contain similar
stipulations, but stipulations to the effect that their engagement was for the
fixed period of 12 months, to wit:
chanRoblesvirtualLawlibrary
1. The EMPLOYER shall employ the EMPLOYEE and the EMPLOYEE shall
serve the EMPLOYER in the EMPLOYER'S business as a MANUAL EDITOR
on a fixed term only and for a fixed and definite period of twelve months,
commencing on August 7, 1995 and terminating on August 7, 1996, x x
x.38ChanRoblesVirtualawlibrary

In other words, the terms of the petitioners' contracts did not subject them to a
probationary period similar to that indicated in the contracts struck down
in Innodata, Villanueva and Servidad.

II

A fixed period in a contract of employment does not by itself signify an

intention to circumvent Article 280 of the Labor Code

The petitioners argue that Innodata circumvented the security of tenure

protected under Article 280 of the Labor Code by providing a fixed term; and
that they were regular employees because the work they performed were
necessary and desirable to the business of Innodata.

The arguments of the petitioners lack merit and substance. 

Article 280 of the Labor Code provides:

chanRoblesvirtualLawlibrary
Art. 280. 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 service to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed 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 actuallv exists.

The provision contemplates three kinds of employees, namely: (a) regular

employees; (b) project employees; and (c) casuals who are neither regular nor
project employees. The nature of employment of a worker is determined by
the factors provided in Article 280 of the Labor Code, regardless of any
stipulation in the contract to the contrary.39 Thus, in Brent School, Inc. v.
Zamora,40 we explained that the clause referring to written contracts should be
construed to refer to agreements entered into for the purpose of circumventing
the security of tenure. Obviously, Article 280 does not preclude an agreement
providing for a fixed term of employment knowingly and voluntarily executed
by the parties.41

A fixed term agreement, to be valid, must strictly conform with the

requirements and conditions provided in Article 280 of the Labor Code. The
test to determine whether a particular employee is engaged as a project or
regular employee is whether or not the employee is assigned to carry out a
specific project or undertaking, the duration or scope of which was specified at
the time of his engagement.42 There must be a determination of, or a clear
agreement on, the completion or termination of the project at the time the
employee is engaged.43 Otherwise put, the fixed period of employment must
be 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 it must satisfactorily
appear that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatsoever being exercised by the
former on the latter.44

The contracts of the petitioners indicated the one-year duration of their

engagement as well as their respective project assignments (i.e., Jamias
being assigned to the CD-ROM project; Cruz and Matuguinas to the TSET
project).45 There is no indication that the petitioners were made to sign the
contracts against their will. Neither did they refute Innodata's assertion that it
did not employ force, intimidate or fraudulently manipulate the petitioners into
signing their contracts, and that the terms thereof had been explained and
made known to them.46 Hence, the petitioners knowingly agreed to the terms
of and voluntarily signed their respective contracts.

That Innodata drafted the contracts with its business interest as the overriding
consideration did not necessarily warrant the holding that the contracts were
prejudicial against the petitioners.47 The fixing by Innodata of the period
specified in the contracts of employment did not also indicate its ill-motive to
circumvent the petitioners' security of tenure. Indeed, the petitioners could not
presume that the fixing of the one-year term was intended to evade or avoid
the protection to tenure under Article 280 of the Labor Code in the absence of
other evidence establishing such intention. This presumption must ordinarily
be based on some aspect of the agreement other than the mere specification
of the fixed term of the employment agreement, or on evidence aliunde of the
intent to evade.48

Lastly, the petitioners posit that they should be accorded regular status
because their work as editors and proofreaders were usually necessary to
Innodata's business of data processing.

We reject this position. For one, it would be unusual for a company like
Innodata to undertake a project that had no relationship to its usual
business.49 Also, the necessity and desirability of the work performed by the
employees are not the determinants in term employment, but rather the "day
certain" voluntarily agreed upon by the parties.50 As the CA cogently observed
in this respect:
chanRoblesvirtualLawlibrary
There is proof to establish that Innodata's operations indeed rests upon job
orders or undertakings coming from its foreign clients. Apparently, its
employees are assigned to projects - one batch may be given a fixed period of
one year, others, a slightly shorter duration, depending on the estimated time
of completion of the particular job or undertaking farmed out by the client to
the company.51ChanRoblesVirtualawlibrary

In fine, the employment of the petitioners who were engaged as project

employees for a fixed term legally ended upon the expiration of their contract.
Their complaint for illegal dismissal was plainly lacking in merit.chanrobleslaw

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the

decision promulgated on July 31, 2002; and ORDER the petitioners to pay the
costs of suit