G.R. No. 127448 September 10, 1998
JUANITO VILLANUEVA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, (Second Division) HON. COMMISSIONERS: ROGELIO AYALA, RAUL T. AQUINO, INNODATA PHILS. INC. / INNODATA PROCESSING CORP. and TODD SOLOMON, respondents.

FACTS

Petitioner Juanito M. Villanueva was hired by respondent Innodata Philippines, Inc./Innodata Processing Corporation as an “abstractor.” His contract of employment stipulated a period of effectivity of “one year commencing on Feb. 21, 1994, until Aug. 21, 1995.” It further provided that from February 21, 1994, to August 21, 1994, his employment would be “contractual” and terminable by mere notice. However, should his employment continue beyond August 21, 1994, he would become a regular employee upon demonstration of sufficient skill. If he failed to demonstrate the required skill during the first six months, he could be placed on probation for another six months. His services were terminated on February 21, 1995, due to “end of contract.” Three weeks later, he was rehired as a data encoder from March 13, 1995, to August 15, 1995, at a lower daily wage. He was again separated on August 13, 1995, due to “end of contract.” Villanueva filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, declaring him a regular employee illegally dismissed and ordering his reinstatement with back wages. The National Labor Relations Commission (NLRC) reversed this decision, upholding the termination as valid due to the expiration of a fixed-term contract.

ISSUE

Whether the NLRC committed grave abuse of discretion in reversing the Labor Arbiter’s decision and in ruling that petitioner was a fixed-term employee whose contract had simply expired, and not a regular employee illegally dismissed.

RULING

Yes, the NLRC committed grave abuse of discretion. The Supreme Court set aside the NLRC decision and reinstated the Labor Arbiter’s ruling. The Court held that the employment contract could not be strictly construed as one for a fixed term. The provision stating that the employee would become regular upon continued employment beyond August 21, 1994, upon demonstration of sufficient skill, established that the initial six-month period was a probationary period under Article 281 of the Labor Code. Since the respondent company allowed Villanueva to work beyond August 21, 1994, and never placed him on a further probationary period, it meant he had demonstrated sufficient skill and had thereby become a regular employee by contract and by operation of law (Article 280 of the Labor Code, as his activities were necessary and desirable in the company’s usual business). His termination on February 21, 1995, and subsequent rehiring under a new contract were devious attempts to circumvent his security of tenure. The termination constituted illegal dismissal without valid cause. The contract, being one of adhesion, was construed strictly against the respondent company and in favor of the laborer.