Innodata Philippines, Inc. vs. Quejada-Lopez

G.R. No. 162839. October 12, 2006


Natividad and Quejada’s employment were terminated by Innodata since the employment contract had expired which is effective for a fixed period of one (1) year. They filed a complaint for illegal dismissal and for damages. Claiming that their job was necessary and desirable to the usual business of the company which is data processing/conversion and that their employment is regular pursuant to Article 280 of the Labor Code.

Petitioner contends that the regularity of the employment of respondents does not depend on whether their task may be necessary or desirable in the usual business of the employer. It argues that the use of fixed-term employment contracts has long been recognized by this Court.

The Labor Arbiter rendered a judgment in favor of the complainants – Natividad and Quejada to have been illegally dismissed by Innodata and ordered to reinstate them to their former position without loss of seniority rights, and to pay them backwages computed from the time they were illegally dismissed up to the date of the decision.

National Labor Relations Commission, which reversed and set aside the Labor Arbiter’s decision and declared that the contract between [respondents] and [petitioner] company was for a fixed term and therefore, the dismissal of [respondents], at the end of their one year term agreed upon, was valid.

The CA ruled that respondents were regular employees in accordance with Section 280 of the Labor Code. It said that the fixed-term contract prepared by petitioner was a crude attempt to circumvent respondents’ right to security of tenure.


WON the alleged fixed-term employment contracts entered into by petitioner and respondents are valid.


The Court has recognized the validity of fixed-term employment contracts in a number of cases, it has consistently emphasized that when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary to law, morals, good customs, public order or public policy.

A close scrutiny of the provisions of the employment contracts show that the double-bladed scheme to block the acquisition of tenurial security still exists.

A contract of employment is impressed with public interest. For this reason, provisions of applicable statutes are deemed written into the contract. Hence, 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.”

Clearly, to avoid regularization, petitioner has again sought to resort alternatively to probationary employment and employment for a fixed term.

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