Price v. Innodata
Price v. Innodata
Price v. Innodata
Facts: Innodata Philippines Inc. was a domestic corporation engaged in the data encoding and
data conversion business. Cherry Price, Stephanie Domingo, and Lolita Arbilera (petitioners)
were employed as formatters by Innodata. They entered into a contract denominated as a
Contract of Employment for a Fixed Period stipulating that the contract shall be for a period of
one year (February 16, 1999 to February 16, 2000). During their employment, petitioners were
assigned to handle jobs for various clients of Innodata and once they finished the job for one
client, they were immediately assigned to do a new job for another client.
On February 16, 2009, the Human Resource Manager of Innodata wrote to petitioners informing
them of their last day of work (February 16, 2000). According to Innodata, this was due to the
end of their contract. Petitioners then filed a complaint for illegal dismissal claiming 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. They also invoked the decisions in Villanueva v. NLRC and Servidad v. NLRC in
which the Court already purportedly ruled that the nature if employment at Innodata is regular.
They were also neither considered project employees since their employment was not
coterminous with any project or undertaking. On the other hand, respondents contended that
Innodata was engaged in the business of data processing, type-setting, indexing and abstracting
for its foreign clients and the bulk of the work was data processing, which involved data
encoding, which half of its employees did. Due to the wide range of services, Innodata was
constrained to hire new employees for a fixed period not more than one year like the petitioners
whose contracts of employment were for a limited period only. Moreover, they claimed that the
petitioners were estopped since they entered into the contracts knowingly and voluntarily.
The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary,
desirable and indispensable to the data processing and encoding business and should be
considered regular employees who were entitled to security of tenure. NLRC, on appeal,
reversed finding that petitioners were not regular employees but fixed-term employees as
stipulated in their contracts. CA affirmed the NLRC ruling.
Issue: Whether or not petitioners were illegally dismissed - YES
Held/Ratio: This issue is ultimately dependent on the question of whether petitioners were hired
by Innodata under valid fixed-term employment contracts. The Court found that there were no
valid fixed-term employment contracts, and petitioners were regular employees of Innodata who
could not dismiss them 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. Based on Art. 280, 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.
Petitioners belong to the first type. The applicable test to determine whether an employment