Employment Contract as Contract of Adhesion and the Dangers of Default Interpretations in Favor of Employees
A contract of adhesion, wherein one party imposes a ready-made form of contract on the other, is not strictly against the law. A contract of adhesion is as binding as ordinary contracts, the reason being that the party who adheres to the contract is free to reject it entirely. (Cabanting vs. BPI Family Savings Bank, Inc., February 17, 2016, G.R. No. 201927)
Further, in labor context, a contract of adhesion is defined as one in which one of the parties imposes a ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify. One party prepares the stipulation in the contract, while the other party merely affixes his signature or his “adhesion” thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. Nevertheless, these types of contracts have been declared as binding as ordinary contracts, the reason being that the party who adheres to the contract is free to reject it entirely. (Apelanio vs. Arcany’s Inc., G.R. No. 227098. November 14, 2018)
Jurisprudence is replete with circumstances stating that an employer may unilaterally prepare an employment contract, stating the terms and conditions required of a potential employee, and that a potential employee had only to adhere to it by signing it. [Villanueva v. NLRC, 356 Phil. 638 (1998)]
Such contract is known as a contract of adhesion, which is allowed by law albeit construed in favor of the employee in case of ambiguity.
In contracts of adhesion, one party prepares the stipulation in the contract, while the other party merely affixes his signature or his ‘adhesion’ thereto. Besides, the one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent.”
In the case, however, where the retainership agreements, purportedly as proof, the signature or
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“adherence” is absent, said retainership agreements remain ineffectual and cannot be used as evidence against the party.
Further, in the case of Price vs. Innodata Phils. Inc. (G.R. No. 178505, September 30, 2008), the Supreme Court (SC) scrutinized the employment contracts with INNODATA. However, it failed to reveal any mention therein of what specific project or undertaking petitioners were hired for.
Although the contracts made general references to a “project,” such project was neither named nor described at all therein. The conclusion by the Court of Appeals that the employees were hired for the Earthweb project is not supported by any evidence on record.
The one-year period for which the employees were hired was simply fixed in the employment contracts without reference or connection to the period required for the completion of a project. More importantly, there is also a dearth of evidence that such project or undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, the employees alleged – and the company failed to dispute that they did not work on just one project, but continuously worked for a series of projects for various clients of INNODATA.
Even assuming that the employees’ length of employment is material, given the employers’ muddled 
assertions, the SC adhered to its pronouncement in Villanueva v. National Labor Relations Commission, to the effect that where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The Court is, thus, compelled to conclude that employees’ contracts of employment became effective on 16 February 1999, and that they were already working continuously for INNODATA for a year.
Hence, considering the risks of misinterpretation of the true intent of the parties in executing a specific employment agreement, it is worth noting that skills in drafting of said contracts should be acquired. Any ambiguity will always be resolved in favor of labor under Art. 4 of the Labor Code, as amended.
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