G.R. No. 178505. September 30, 2008.
Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera, Petitioners, vs. Innodata Phils. Inc./ Innodata Corporation, Leo Rabang and Jane Navarette, Respondents.

FACTS

Petitioners Cherry Price, Stephanie Domingo, and Lolita Arbilera were hired by respondent Innodata Philippines, Inc., a data encoding and conversion company, as formatters under a “Contract of Employment for a Fixed Period” stipulating a one-year term from February 16, 1999, to February 16, 2000. The contract contained provisions allowing pre-termination by the employer for causes such as lack of work or business losses. During their employment, petitioners were assigned to various client projects sequentially. Upon the contract’s expiry on February 16, 2000, they were notified that their employment had ceased.
Petitioners filed a complaint for illegal dismissal, arguing they were regular employees since their work as formatters was necessary and desirable to Innodata’s usual business. They invoked the principle of stare decisis, citing previous Supreme Court rulings involving the same company which declared similar employees as regular. They contended they were not project employees as their employment was not coterminous with any specific project.

ISSUE

Whether petitioners were illegally dismissed or whether their employment was validly terminated upon the expiration of a lawful fixed-term contract.

RULING

The Supreme Court ruled that petitioners were not illegally dismissed. Their employment was validly terminated upon the expiration of a lawful fixed-term contract. The Court emphasized that fixed-term employment is permissible under Article 280 of the Labor Code when the period is agreed upon knowingly and voluntarily by the parties, and the job itself is inherently temporary or seasonal. The contract in this case clearly stipulated a one-year period and was signed by the petitioners without any vitiation of consent, such as force or duress.
The Court distinguished this case from the earlier Innodata cases cited by petitioners. It held that the nature of employment must be determined by the specific terms of the contract and the circumstances of each case. Here, the fixed period was not used to circumvent the employees’ right to security of tenure but was an essential condition of their engagement. Since the contract legitimately expired, the dismissal was not illegal. The principle of stare decisis was found inapplicable as the factual circumstances, particularly the clear and agreed-upon fixed duration in the contract, were materially different. Consequently, petitioners were not entitled to reinstatement or backwages.