G.R. No. 159350, March 09, 2016
ALUMAMAY O. JAMIAS, JENNIFER C. MATUGUINAS AND JENNIFER F. CRUZ, PETITIONERS, VS. 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.

FACTS

Petitioners Alumamay Jamias, Jennifer Matuguinas, and Jennifer Cruz, along with other individuals, were hired by respondent Innodata Philippines, Inc., a data processing and conversion company, under separate contracts for fixed periods of one year (e.g., August 7, 1995 to August 7, 1996; November 20, 1995 to November 20, 1996). After their contracts expired, they filed a complaint for illegal dismissal, claiming Innodata misrepresented them as project employees to prevent regularization. The Labor Arbiter dismissed the complaint, finding the petitioners knowingly signed fixed-term contracts, which are exceptions to Article 280 of the Labor Code. The NLRC affirmed, ruling that fixed-period contracts are valid if voluntarily entered into, and that the decisive factor is the agreed “day certain” for termination, not the nature of the duties. The Court of Appeals upheld the NLRC, noting Innodata’s operations depended on job orders from foreign clients, making the employments coterminous with projects. Only petitioners Jamias, Matuguinas, and Cruz appealed to the Supreme Court.

ISSUE

Were the petitioners regular employees or project/fixed-term employees of Innodata?

RULING

The Supreme Court DENIED the petition and upheld the petitioners’ status as project employees hired for a fixed period.
1. The doctrine of stare decisis is inapplicable. Petitioners argued that previous rulings (Villanueva v. NLRC and Servidad v. NLRC) which declared Innodata employees as regular should control under stare decisis. The Court held the doctrine does not apply because the factual circumstances are essentially different. The contracts in Servidad and Villanueva contained illegal “double probation” clauses, which prompted the Court to nullify them and declare regular employment. In contrast, the petitioners’ contracts contained no such stipulations and were voluntarily entered into with a clear fixed period.
2. The petitioners were project employees. The Court found that Innodata’s business as a service provider was contingent on job orders from foreign clients. The petitioners were hired for specific data encoding and processing tasks necessary for these discrete projects. The duration of their employment was made clear from the outset and was coterminous with the completion of the specific project or the period of the service contract with the foreign client. Their functions, though desirable to Innodata’s business, were not permanent but were tied to the existence of a particular project.
3. Fixed-term employment contracts are valid exceptions. Citing Brent School, Inc. v. Zamora, the Court reiterated that Article 280 of the Labor Code does not proscribe employment for a fixed term. Such contracts are valid exceptions to the security of tenure clause when: (a) the fixed period was knowingly and voluntarily agreed upon by the parties without force, duress, or vitiated consent; and (b) the nature of the engagement or the specific undertaking justifies a fixed period. Both conditions were met in this case. The petitioners knowingly signed their contracts, and the project-based nature of Innodata’s work justified the fixed-term engagements.
4. The contract stipulation governs. The Court emphasized that where the parties have freely agreed on a fixed period of employment, and no vitiation of consent is present, the stipulation in the contract should be respected. The law does not prohibit such agreements merely because the duties performed are necessary to the employer’s business, provided the employment is legitimately for a specific project with a foreseeable end.
Thus, the petitioners were not illegally dismissed but were validly separated upon the expiration of their fixed-term employment contracts.