SERVIDAD v.

NLRC, INNODATA GR: 128682

I.
Facts
Joaquin Servidad was employed on May 9, 1994 by INNODATA as a data
control clerk under a contract of employment.
The contract of employment stipulated the following:
- The contract of employment shall be effective for a period of 1 year
unless sooner terminated pursuant to the succeeding provisions.
1. For a period of 6 months the employee shall be contractual. During
which the employer can terminate the employees services by serving
written notice to that effect.
2. Should the employee continue his employment beyond 6 months, he
shall become a regular employee upon demonstration of sufficient skill
in the terms of his ability to meet the standards set by the employer.
3. If the employee fails to demonstrate the ability to master his task
during the first six months he can be placed on probation for another 6
months, after which he will be evaluated for promotion as a regular
employee.
After working for 6 months he was made to sign a 3 month probationary
employment and later an extended 3 month probationary employment.
In Servidads work evaluation, he was given an overall rating of 100 and 98
and a overall rating of 98.5 by the private respondent.
On May 9 1995, Servidad was dismissed from the service on the ground of
alleged termination of contract of employment.
II.
Case progression
Servidad brought up the case of illegal dismissal to the Labor arbiter who
ruled in his favor
The petitioner, INNODATA appealed to the NLRC who then reversed the Labor
Arbiters judgement. (It declared that the contract of the parties was for a
fixed term therefore dismissal at the end of his one year term as agreed upon
was valid.)
Servidad appealed the NLRCs decision to the SC.
III.

Doctrines and application of law

Note: according to the Supreme Court, the case at bar is just another scheme to
circumvent the constitutionally guaranteed right of employees to the security of
tenure. Although the NLRC found that the contract in question is for a fixed term, it
is noted by the SC that the said contract provides for two periods. The first was for 6
months terminable at the option of INNODATA while the 2 nd period was also for 6
months but probationary in nature. In both cased however INNODATA did not specify
the criteria for the termination or retention of services of Servidad. Such wide
leeway for the determination of the tenure of an employee is violative of the right of
the employee against unwarranted dismissal.
Art. 1377: The interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity.

SERVIDAD v. NLRC, INNODATA GR: 128682

If the contract was really for a fixed term, INNODATA should not have been
given discretion to dismiss the petitioner during the one year period of
employment for reasons other than the just and authorized causes under the
Labor code.
According to INNODATA, the 1 year stipulated in the contract was to enable
Servidad to acquire the skills necessary for the job thus INNODATA claimed
that the 1 year term was probationary. HOWEVER if the nature of the job
actually necessitate at least 1 year for the employee to acquire requisite
training and experience, still the same could not be valid as probationary
because it falls short of the requirement of Art. 281 of the Labor code:
Art. 281: Probationary employment shall not exceed 6 months
from the date the employee started working unless it is covered an
apprenticeship agreement stipulating a longer period. The services
of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
Cases Applied:
1. Brent School v. Zamora:
The court upheld the principle that where from the circumstances, it is
apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be disregarded for being contrary to
public policy.
2. Mariwasa v. Leogardo:
It is abundantly clear that the petitioner was hired as a regular employee. His
work as a data control clerk was directly related to the business of INNODATA
thus it is necessary and important to the business. Also, even if we assume
that his original employment was probationary, petitioner was permitted to
work beyond the first six months thus under Article 281 an employee
allowed to work beyond the probationary period is deemed a regular
employee.
Note: INNODATA cited and relied on the ruling on Mariwasa v. Leogarda to
justify the validity of Servidads dismissal but the SC said it was misplaced
and that the facts are not similar thus the application are not the same.
In the Mariwasa case the employment was expressly agreed upon as
probationary but in the case at hand, INNODATA sought to alternatively avail
of probationary employment and employment for a fixed term to preclude the
regularization of the status of Servidad.

SERVIDAD v. NLRC, INNODATA GR: 128682

**The private agreement of the parties cannot prevail over article
1700 of the Civil Code:
The relation between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to special laws on labor
unions, collective bargaining
NLRC gravely abused its discretion in finding that the petitioner failed
to eet the standards of the company. Its decision failed to look for
factual basis for such claims. NLRC further overlooked the undisputable
satisfactory ratings of Servidad that INNODATA gave.
Lastly, by the very provision of the faulty employment contract
Servidad has already become a regular employee after he was
permitted to work after 6 months.