G.R. No. 160506 June 6, 2011 P&G argues that there is no employment relationship between it and petitioners.
p;G argues that there is no employment relationship between it and petitioners. It was Promm-Gem or
JOEB M. ALIVIADO,et. Al vs PROCTER & GAMBLE PHILS., INC., and PROMM-GEM
INC., Respondents
Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or
as late as June 1991, to either May 5, 1992 or March 11, 1993.
They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more
or less five months at a time.5 They were assigned at different outlets, supermarkets and stores where
they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.
SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as
habitual absenteeism, dishonesty or changing day-off without prior notice.7
P&G is principally engaged in the manufacture and production of different consumer and health
products, which it sells on a wholesale basis to various supermarkets and distributors. 8 To enhance
consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem
and SAPS for the promotion and merchandising of its products.9
In December 1991, petitioners filed a complaint10 against P&G for regularization, service incentive leave
pay and other benefits with damages. The complaint was later amended 11 to include the matter of their
subsequent dismissal.
The Labor Arbiter dismissed the complaint there was no employer-employee relationship between
petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of
their wages, the power of dismissal and control with respect to the means and methods by which their
work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent job contractors.
The NLRC and CA, AFFIRMED.
ISSUES:
(a) whether P&G is the employer of petitioners;
(b) whether petitioners were illegally dismissed;
PETITIONER ARGUMENT:
They claim that they were recruited by the salesmen of P&G and were engaged to undertake
merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS. Petitioners
further assert that Promm-Gem and SAPS are labor-only contractors providing services of manpower to
their client. They claim that the contractors have neither substantial capital nor tools and equipment to
undertake independent labor contracting. Petitioners insist that since they had been engaged to
perform activities which are necessary or desirable in the usual business or trade of P&G, then they are
its regular employees.
RESPONDENT ARGUMENT:
SAPS that (1) selected petitioners and engaged their services; (2) paid their salaries; (3) wielded the
power of dismissal; and (4) had the power of control over their conduct of work.
RULLING:
In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first
determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors.
In the instant case, the financial statements26 of Promm-Gem show that it
has authorized capital stock of ₱1 million . Promm-Gem has also proven that it maintained its own
warehouse and office It also had under its name three registered vehicles which were used for its
promotional/merchandising business.29Promm-Gem also has other clients30 aside from P&G.31 Under
the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be
performed. These factors negate the existence of the element specified in Section 5(i) of DOLE
Department Order No. 18-02. (prohibition against labor only contracting)
The records also show that Promm-Gem supplied its complainant-workers with the relevant materials. It
is also relevant to mention that Promm-Gem already considered the complainants working under it as
its regular, not merely contractual or project, employees.
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it
is a legitimate independent contractor.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only
₱31,250.00. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, we find that the former
is engaged in "labor-only contracting".
Consequently, those petitioners, having been recruited and supplied
by SAPS were engaged in labor-only contracting. The those petitioners, having worked under, and
been dismissed by Promm-Gem, are considered the employees of Promm-Gem, not of P&G.
b) whether petitioners were illegally dismissed.
In the instant case, the termination letters given by Promm-Gem to its employees uniformly specified
the cause of dismissal as grave misconduct and breach of trust. Loss of trust and confidence, as a
cause for termination of employment, is premised on the fact that the employee concerned holds a
position of responsibility or of trust and confidence.
In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying
positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are
unfit to continue to work as merchandisers for Promm-Gem.
All told, we find no valid cause for the dismissal of petitioners-employees of Promm-Gem.
 Parenthetically, unlike Promm-Gem which dismissed its employees for grave misconduct and breach
of trust due to disloyalty, SAPS dismissed its employees upon the initiation of P&G. It is evident that
SAPS does not carry on its own business because the termination of its contract with P&G
automatically meant for it also the termination of its employees’ services. It is obvious from its act that
SAPS had no other clients and had no intention of seeking other clients in order to further its
merchandising business. From all indications SAPS, existed to cater solely to the need of P&G for the
supply of employees in the latter’s merchandising concerns only. Under the circumstances prevailing in
the instant case, we cannot consider SAPS as an independent contractor. P&G also failed to discharge
the burden of proving the legality and validity of the dismissals of those petitioners who are considered
its employees. Hence, the dismissals necessarily were not justified and are therefore illegal.

(prom gem – indepent, saps – labor only. They both dismissed their employees illegally.)
G.R. No. 170054 January 21, 2013
GOYA, INC., Petitioner,
vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
FACTS:
petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture, importation, and
wholesale of top quality food products, hired contractual employees from PESO Resources
Development Corporation (PESO) to perform temporary and occasional services in its factory .This
prompted respondent Goya, Inc. Employees Union–FFW (Union) to request for a grievance conference
on the ground that the contractual workers do not belong to the categories of employees stipulated in
the existing Collective Bargaining Agreement (CBA).5 When the matter remained unresolved, the
grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary
arbitration.
The Union asserted that the hiring of contractual employees from PESO is not a management
prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the
contractual workers engaged have been assigned to work in positions previously handled by regular
workers and Union members.
In countering the Union’s allegations, the Company argued that: (a) the law expressly allows
contracting and subcontracting arrangements through Department of Labor and Employment (DOLE)
Order No. 18-02; (b) the engagement of contractual employees did not, in any way, prejudice the
Union, since not a single employee was terminated and neither did it result in a reduction of working
hours nor a reduction or splitting of the bargaining unit; and (c) Section 4, Article I of the CBA merely
provides for the definition of the categories of employees and does not put a limitation on the
Company’s right to engage the services of job contractors or its management prerogative to address
temporary/occasional needs in its operation.
VA Laguesma dismissed the Union’s charge of ULP for being purely speculative and for lacking in
factual basis, but the Company was directed to observe and comply with its commitment under the
CBA. The VA opined:
We examined the CBA provision Section 4, Article I of the CBAallegedly violated by the Company and
indeed the agreement prescribes three (3) categories of employees in the Company and provides for
the definition, functions and duties of each. Material to the case at hand is the definition as regards the
functions of a casual employee described as follows:
Casual Employee – One hired by the COMPANY to perform occasional or seasonal work directly
connected with the regular operations of the COMPANY, or one hired for specific projects of limited
duration not connected directly with the regular operations of the COMPANY.
While the foregoing agreement between the parties did eliminate management’s prerogative of
outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it involves
functions or duties specified under the aforequoted agreement. It is clear that the parties agreed that in
the event that the Company needs to engage the services of additional workers who will perform
"occasional or seasonal work directly connected with the regular operations of the COMPANY," or
"specific projects of limited duration not connected directly with the regular operations of the
COMPANY", the Company can hire casual employees which is akin to contractual employees. If we
note the Company’s own declaration that PESO was engaged to perform "temporary or occasional
services" (See the Company’s Position Paper, at p. 1), then it should have directly hired the services of
casual employees rather than do it through PESO.
It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the
CBA provision in question. It must, however, be stressed that the right of management to outsource
parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing, the
Company’s engagement of PESO for the given purpose is indubitably a violation of the CBA
The Company immediately filed a petition for review9 before the Court of Appeals (CAo set aside the
directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees
when necessitated by business circumstances.
CA dismissed the petition.
The CBA of the parties has already provided for the categories of the employees in the
Company’sestablishment. These categories of employees particularly with respect to casual employees
serve as limitation to the Company’s prerogative to outsource parts of its operations especially when
hiring contractual employees. As stated earlier, the work to be performed by PESO was similar to that
of the casual employees. With the provision on casual employees, the hiring of PESO contractual
employees, therefore, is not in keeping with the spirit and intent of their CBA, the Company should have
tapped the services of casual employees instead of engaging PESO.
ISSUE:
"Whether or not the Company is guilty of unfair labor practice in engaging the services of PESO, a third
party service provider, under existing CBA, laws, and jurisprudence."
RULING:
What the VA and the CA correctly ruled was that the Company’s act of contracting out/outsourcing is
within the purview of management prerogative. Both did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the
Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of
contractual employees. Indeed, the VA opined that "the right of the management to outsource parts of
its operations is not totally eliminated but is merely limited by the CBA," while the CA held that "this
management prerogative of contracting out services, however, is not without limitation. x x x These
categories of employees particularly with respect to casual employees serve as limitation to the
Company’s prerogative to outsource parts of its operations especially when hiring contractual
employees."
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they
are obliged to comply with its provisions.
In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the
Union must be read in conjunction with its Section 1, Article III (on union security). Both are
interconnected and must be given full force and effect. Also, these provisions are clear and
unambiguous. The terms are explicit and the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise of
management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice25 Evidently, this case has one of
the restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees
Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and
Serrano v. NLRC29cited by the Company. To reiterate, the CBA is the norm of conduct between the
parties and compliance therewith is mandated by the express policy of the law.

(compliance of CBA; contracting employees job were same as casual = violative)

G.R. No. 177592 June 9, 2014
AVELINO S. ALILIN, TEODORO CALESA, CHARLIE HINDANG, EUTIQUIO GINDANG, ALLAN
SUNGAHID, MAXIMO LEE, JOSE G. MORA TO, REX GABILAN, AND EUGEMA L.
LAURENTE, Petitioners,
vs.
PETRON CORPORATION, Respondent.
FACTS;
Petron is a domestic corporation engaged in the oil business. In 1968, Romualdo D.Gindang
Contractor, owned and operated by Romualdo D. Gindang, started recruiting laborers for fielding to
Petron’s Mandaue Bulk Plant. When Romualdo died in 1989, his son Romeo, through Romeo D.
Gindang Services (RDG), took over and continued to provide manpower services to Petron.
9
Petron and RDG entered into a Contract for Services for the period from June 1, 2000 to May 31,
2002, whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving,
packaging and other utility services in its Mandaue Bulk Plant. This contract was extended on July 31,
2002 and further extended until September 30, 2002. Upon expiration thereof, no further renewal of the
service contract was done.
Alleging that they were barred fromcontinuing their services on October 16, 2002, petitioners Alilin,
Calesa, Hindang, Gindang, Sungahid, Lee, Morato and Gabilan filed a Complaint 10 for illegal dismissal.
Petitioners did not deny that RDG hired them and paid their salaries. They, however, claimed that the
latter is a labor-only contractor, which merely acted as an agent of Petron, their true employer. They
asseverated that their jobs, which are directly related to Petron’s business, entailed them to work inside
the premises of Petron using the required equipment and tools furnished by it and that they were
subject to Petron’s supervision. Claiming to be regular employees, petitioners thus asserted that their
dismissal allegedly in view of the expiration of the service contract between Petron and RDG is illegal.
RDG corroborated petitioners’ claim that they are regular employees of Petron. It alleged that Petron
directly supervised their activities; they performed jobs necessary and desirable to Petron’s business;
Petron provided petitioners with supplies, tools and equipment used in their jobs; and that petitioners’
workplace since the start of their employment was at Petron’s bulk plant in Mandaue City. RDG denied
liability over petitioners’ claim of illegal dismissal and further argued that Petron cannot capitalize on the
service contract to escape liability.
Petron, on the other hand, maintained that RDG is an independent contractor and the real employer of
the petitioners. It was RDG which hired and selected petitioners, paid their salaries and wages, and
directly supervised their work. Petron argued that with the expiration of the service contract it entered
with RDG, petitioners’ term of employment has concomitantly ended. And not being the employer,
Petron cannot be held liable for petitioners’ claim of illegal dismissal.
The Labor Arbiter ruled that petitioners are regular employees of Petron. It found that their jobs were
directly related to Petron’s business operations; they worked under the supervision of Petron’s foreman
and supervisor; and they were using Petron’s tools and equipment in the performance of their works.
The Labor Arbiter also found that Petron merely utilized RDG in its attempt to hide the existence of
employee-employer relationship between it and petitioners and avoid liability under labor laws.
Tthe NLRC ruled that petitioners are Petron’s regular employees because they are performing job
assignments which are germane to its main business.
the CA found no employer-employee relationship between the parties. According to it, the records of
the case do not show that petitioners were directly hired, selected or employed by Petron; that their
wages and other wage related benefits were paid by the said company; and that Petron controlled the
manner by which they carried out their tasks. On the other hand, RDG was shown to be responsible for
paying petitioners’ wages. In fact, SSS records show that RDG is their employer and actually the one
remitting their contributions thereto. Also, two former employees of RDG who were likewise assigned in
the Mandaue Bulk Plant confirmed by way of a joint affidavit that it was Romeo and his brother
Alejandre Gindang who supervised their work, not Petron’s foreman or supervisor. This was even
corroborated by the Terminal Superintendent of the Mandaue Bulk Plant.
The CA also found RDG to be an independent labor contractor with sufficient capitalization and
investment as shown by its financial statement for year-end 2000. In addition, the works for which RDG
was contracted to provide were menial which were neither directly related nor sensitive and critical to
Petron’s principal business.
ISSUE:
whether RDG is a legitimate job contractor. Upon such finding hinges the determination of whether an
employer-employee relationship exists between the parties as to make Petron liable for petitioners’
dismissal
RULLING:
Petron failed to discharge the burden of
proving that RDG is a legitimate
contractor. Hence, the presumption that
RDG is a labor-only contractor stands.
while Petron was able to establish that RDG was financially capable as a legitimate contractor at the
time of the execution of the service contract in 2000, it nevertheless failed to establish the financial
capability of RDG at the time when petitioners actually started to work for Petron in 1968, 1979, 1981,
1987, 1990,1992 and 1993.
Hence, the presumption that RDG is a labor-only contractor stands due to the failure of Petron to
discharge the burden of proving the contrary.
The Court also finds, that the works performed by petitioners were directly related to Petron’s business,
another factor which negates Petron’s claim that RDG is an independent contractor.
One manifestation of the power of control is the power to transfer employees from one work assignment
to another.55 Here, Petron could order petitioners to do work outside of their regular
"maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk plant,
observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as
prescribed by the safety and security measures being implemented within the bulk plant. All these imply
control. In an industry where safety is of paramount concern, control and supervision over sensitive
operations, such as those performed by the petitioners, are inevitable if not at all necessary. Indeed,
Petron deals with commodities that are highly volatile and flammable which, if mishandled or not
properly attended to, may cause serious injuries and damage to property and the environment.
Naturally, supervision by Petron is essential in every aspect of its product handling in order not to
compromise the integrity, quality and safety of the products that it distributes to the consuming public.
Petitioners already attained regular
status as employees of Petron.

while it may be true that any able-bodied individual can perform the tasks assigned to petitioners, the
Court notes the undisputed fact that for many years, it was the same able-bodied individuals
(petitioners) who performed the tasks for Petron. The engagement of petitioners for the same works for
a long period of time is a strong indication that such works were indeed necessary to Petron’s business.
In view of these, and considering further that petitioners’ length of service entitles them to become
regular employees under the Labor Code, petitioners are deemed by law to have already attained the
status as Petron’s regular employees.

In sum, the Court finds that RDG is a labor-only contractor. As such, it is considered merely as an agent
of Petron. Consequently, the employer-employee relationship which the Court finds to exist in this case
is between petitioners as employees and Petron as their employer. Petron therefore, being the principal
employer and RDG, being the labor-only contractor, are solidarily liable for petitioners' illegal dismissal
and monetary claims
 G.R. No. 184262**, April 24, 2017
UNIVERSITY OF SANTO TOMAS (UST), Petitioner, v. SAMAHANG MANGGAGAWA NG UST,
FERNANDO PONTESOR,* RODRIGO CLACER, SANTIAGO BUISA, JR., AND JIMMY
NAZARETH, Respondents.
FACTS:
The instant case stemmed from a complaint7 for regularization and illegal dismissal filed by respondents
Samahang Manggagawa ng UST and Pontesor, et al. (respondents) against petitioner before the
NLRC. Respondents alleged in view of Pontesor, et al.'s performance of such maintenance tasks
throughout the years, they should be deemed regular employees of petitioner.
On the other hand, while petitioner admitted that it repeatedly hired Pontesor, et al. in different
capacities throughout the aforesaid years, it nevertheless maintained that they were merely hired on a
per-project basis, as evidenced by numerous Contractual Employee Appointments (CEAs)9 signed by
them. In this regard, petitioner pointed out that each of the CEAs that Pontesor, et al. signed defined
the nature and term of the project to which they are assigned, and that each contract was renewable in
the event the project remained unfinished upon the expiration of the specified term.
The LA found that Pontesor, et al. should be deemed as petitioner's regular employees, considering
that: (a) they have rendered at least one (1) year of service to petitioner as its employees; (b) the
activities for which they were hired for are vital or inherently indispensable to the maintenance of the
buildings or classrooms where petitioner's classes were held; and (c) their CEAs were contrived to
preclude them from obtaining security of tenure. In this light and in the absence of any valid cause for
termination, the LA concluded that Pontesor, et al. were illegally dismissed by petitioner.13
Contrary to the LA's findings, the NLRC found that Pontesor, et al. cannot be considered regular
employees as they knowingly and voluntarily entered into fixed term contracts of employment with
petitioner. As such, they could not have been illegally dismissed upon the expiration of their respective
last valid and binding fixed term employment contracts with petitioner.
The CA reversed and set aside the NLRC ruling and, accordingly, reinstated that of the LA. 22 It held that
Pontesor, et al. cannot be considered as merely fixed term or project employees, considering that: (a)
they performed work that is necessary and desirable to petitioner's business, as evidenced by their
repeated rehiring and petitioner's continuous need for their services; and (b) the specific undertaking or
project for which they were employed were not clear as the project description set forth in their
respective CEAs were either too general or too broad. Thus, the CA classified Pontesor, et al. as
regular employees, who are entitled to security of tenure and cannot be terminated without any just or
authorized cause.23
ISSUE:
whether or not the CA correctly ruled that Pontesor, et al. are regular employees and, consequently,
were illegally dismissed by petitioner.
RULLING:
In the case at bar, a review of Pontesor, et al.'s respective CEAs36 reveal that petitioner repeatedly
rehired them for various positions in the nature of maintenance workers, such as laborer, mason,
painter, tinsmith, electrician, carpenter, and welder, for various periods spanning the years 1990-1999.
Akin to the situation of the employees in Kimberly, Pontesor, et al.'s nature of work are not necessary
and desirable to petitioner's usual business as an educational institution; hence, removing them from
the ambit of the first category of regular employees under Article 295 of the Labor Code. Nonetheless, it
is clear that their respective cumulative periods of employment as per their respective CEAs each
exceed one (1) year. Thus, Pontesor, et al. fall under the second category of regular employees under
Article 295 of the Labor Code. Accordingly, they should be deemed as regular employees but only with
respect to the activities for which they were hired and for as long as such activities exist.
In this relation, the Court clarifies that Pontesor, et al. were not project employees of petitioner, who
were validly terminated upon the completion of their respective projects/undertakings. In Gadia v. Sykes
Asia, Inc.,37 the Court discussed the requisites for a valid project employment, to
wit:chanRoblesvirtualLawlibrary
A project employee is assigned to a project which begins and ends at determined or determinable
times. Unlike regular employees who may only be dismissed for just and/or authorized causes under
the Labor Code, the services of employees who are hired as "project[-based] employees" may be
lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular employees are properly
characterized as "project[�-based] employees" as distinguished from "regular employees," is whether
or not the employees were assigned to carry out a "specific project or undertaking," the duration
(and scope) of which were specified at the time they were engaged for that project. The project could
either be (1) a particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. In order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining a regular status, employers claiming that their
workers are project[-based] employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also, that there was indeed a
project.38 (Emphases and underscoring supplied)
As aptly held by the CA, Pontesor, et al. could not be considered as project employees because the
specific undertakings or projects for which they were employed were not clearly delineated. This is
evidenced by the vagueness of the project descriptions set forth in their respective CEAs, 39 which
states that they were tasked "to assist" in various carpentry, electrical, and masonry work. In fact, when
the aforesaid CEAs are pieced together, it appears that during the years 1990 to 1999, Pontesor, et
al. were each engaged to perform all-around maintenance services throughout the various
facilities/installations in petitioner's campus. Thus, it seems that petitioner, through the CEAs, merely
attempted to compartmentalize Pontesor, et al.'s various tasks into purported "projects" so as to make it
appear that they were hired on a per-project basis. Verily, the Court cannot countenance this practice
as to do so would effectively permit petitioners to avoid hiring permanent or regular employees by
simply hiring them on a temporary or casual basis, thereby violating the employees' security of tenure
relative to their jobs.40
Lest it be misunderstood, there are instances when the validity of project 41 or fixed term42 employments
were upheld on the ground that it was "agreed upon knowingly and voluntarily by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever being exercised
by the former over the latter."43 However, if it is apparent from the circumstances of the case "that
periods have been imposed to preclude acquisition of tenurial security by the employee," such project
or fixed term contracts are disregarded for being contrary to public policy, 44 as in this case.
In view of the foregoing, Pontesor, et al. should, as discussed earlier, be considered regularized casual
employees who enjoy, inter alia, security of tenure. Accordingly, they cannot be terminated from
employment without any just and/or authorized cause, which unfortunately, petitioner was guilty of
doing in this case.
G.R. No. 209499 January 28, 2015
MA. CHARITO C. GADIA, ERNESTO M. PENAS, GEMMABELLE B. REMO, LORENA S. QUESEA,
MARIE JOY FRANCISCO, BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA 0.
BORJA, MARIE JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS, CAREN C.
ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE,MA.ESTRELLA V. LAPUZ,
JOSELITO L. LORD, RAYMOND G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C. ACOSTA,
FRANCIS JAN S. BAYLON, ERIC 0. PADIERNOS, MA. LENELL P. AARON, CRISNELL P. AARON,
and LAWRENCE CHRISTOPHER F. PAPA, Petitioners,
vs.
SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL HENDERSON, Respondents.
FACTS:
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO). On the other hand, Alltel
Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes Asia’s
services to accommodate the needs and demands of Alltel clients for its postpaid and prepaid services
(Alltel Project). Thus, on different dates, Sykes Asia hired petitioners as customer service
representatives, team leaders, and trainers for the Alltel Project.13
Services for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia informing the
latter that it was terminating all support services provided by Sykes Asia related to the Alltel Project. In
view of this development, Sykes Asia sent each of the petitioners end-of-life notices,16informing them of
their dismissal from employment due to the termination of the Alltel Project.
Aggrieved, petitioners filed separate complaints17 for illegal dismissal against respondents.
In their defense,19 respondents averred that petitioners were not regular employees but merely project-
based employees, and as such, the termination of the Alltel Project served as a valid ground for their
dismissal.20 In support of their position, respondents noted that it was expressly indicated in petitioners’
respective employment contracts that their positions are "project-based" and thus, "co-terminus to the
project.
The LA found that petitioners are merely project-based employees, as their respective employment
contracts indubitably provided for the duration and term of their employment, as well as the specific
project to which they were assigned.
Contrary to the LA’s finding, the NLRC found that petitioners could not be properly characterized as
project-based employees, ratiocinating that while it was made known to petitioners that their
employment would be co-terminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be terminated, or be completed.32 In
this relation, the NLRC concluded that inasmuch as petitioners had been engaged to perform activities
which are necessary or desirable in respondents’ usual business or trade of BPO, petitioners should be
deemed regular employees of Sykes Asia
the CA annulled and set aside the ruling of the NLRC, and accordingly, reinstated that of the LA. 40 It
held that a perusal of petitioners’ respective employment contracts readily shows that they were hired
exclusively for the Alltel Project and that it was specifically stated therein that their employment would
be project-based.41 The CA further held that petitioners’ employment contracts need not state an actual
date as to when their employment would end, opining that it is enough that such date is determinable.
ISSUE:
whether or not the CA correctly reinstated the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.
RULLING:
the Court finds that the CA correctly ruled that petitioners were regular employees of Sykes Asia when
the latter had established by substantial evidence that they were merely project-based.
Verily, for an employee to be considered project-based, the employer must show compliance with two
(2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking;
and (b) the duration and scope of which were specified at the time they were engaged for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners of their employment status
at the time of their engagement, as evidenced by the latter’s employment contracts which similarly
provide that they were hired in connection with the Alltel Project, and that their positions were "project-
based and as such is co-terminus to the project." In this light, the CA correctly ruled that petitioners
were indeed project-based employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made known to
them at the time of their engagement, i.e., "co-terminus with the project."
As regards the second requisite, the CA correctly stressed that "[t]he law and jurisprudence dictate that
‘the duration of the undertaking begins and ends at determined or determinable times’" while clarifying
that "[t]he phrase ‘determinable times’ simply means capable of being determined or fixed." 51 In this
case, Sykes Asia substantially complied with this requisite when it expressly indicated in petitioners’
employment contracts that their positions were "co-terminus with the project." To the mind of the Court,
this caveat sufficiently apprised petitioners that their security of tenure with Sykes Asia would only last
as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated,
petitioners no longer had any project to work on, and hence, Sykes Asia may validly terminate them
from employment. Further, the Court likewise notes the fact that Sykes Asia duly submitted an
Establishment Employment Report52 and an Establishment Termination Report53 to the Department of
Labor and Employment Makati-Pasay Field Office regarding the cessation of the Alltel Project and the
list of employees that would be affected by such cessation. As correctly pointed out by the CA, case law
deems such submission as an indication that the employment was indeed project-based.54
In sum, respondents have shown by substantial evidence that petitioners were merely project-based
employees, and as such, their services were lawfully terminated upon the cessation of the Alltel Project.
G.R. No. 192394 July 3, 2013 already replaced due to expiration of his contract. This prompted petitioner on February 18, 2003 to file
a complaint14 for illegal dismissal against PNCC he argued that he is deemed a regular employee of
PNCC due to his prolonged employment as a project employee as well as the failure on the part of
ROY D. P ASOS, Petitioner,
PNCC to report his termination every time a project is completed.
vs.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Respondent.
PNCC countered that petitioner was hired as a project employee in several projects with specific dates
of engagement and termination and had full knowledge and consent that his appointment was only for
FACTS:
the duration of each project. It further contended that it had sufficiently complied with the reportorial
requirements to the Department of Labor and Employment (DOLE). The submission of termination
Petitioner Roy D. Pasos started working for respondent petitioner was designated as "Clerk II reports by PNCC was however disputed by petitioner based on the verifications18 issued by the DOLE
(Accounting)" and was assigned to the "NAIA – II Project." It was likewise stated therein: NCR office that he was not among the affected employees listed in the reports filed by PNCC

According to the contract he maybe terminated at anytime for cause as provided for by law and/or The Labor Arbiter ruled that petitioner attained regular employment status with the repeated hiring and
existing Company Policy. rehiring of his services more so when the services he was made to render were usual and necessary to
PNCC’s business. The Labor Arbiter likewise found that from the time petitioner was hired in 1996 until
he was terminated, he was hired and rehired by PNCC and made to work not only in the project he had
Petitioner’s employment, however, did not end on July 25, 1996 but was extended until August 4, 1998,
signed to work on but on other projects as well, indicating that he is in fact a regular employee. He also
or more than two years . Based on PNCC’s "Appointment for Project Employment" petitioner was noted petitioner’s subsequent contracts did not anymore indicate the date of completion of the contract
rehired as "Accounting Clerk (Reliever)" and assigned to the "PCSO – Q.I. Project." It was stated and the fact that his first contract was extended way beyond the supposed completion date.
therein that his employment shall end on February 11, 1999 and may be terminated for cause or in
accordance with the provisions of Article 282 of the Labor Code, as amended. However, said
employment did not actually end on February 11, 1999 but was extended until February 19, 1999 based The NLRC reversed and set aside.
on the "Personnel Action Form-Project Employment" dated February 17, 1999.8
ISSUE:
On February 23, 1999, petitioner was again hired by PNCC as "Accounting Clerk" and was assigned to
the "SM-Project" based on the "Appointment for Project Employment 9 It did not specify the date when
Whether petitioner I a regular employee and not a mere project employee and thus can be dismissed
his employment will end but it was stated therein that it will be "co-terminus with the completion of the
for cause?
project." Said employment supposedly ended on August 19, 1999 per "Personnel Action Form – Project
Employment" However, it appears that said employment was extended per "Appointment for Project
employment" dated August 20, 199911 as petitioner was again appointed as "Accounting Clerk" for "SM Rulling:
Project (Package II)." It did not state a specific date up to when his extended employment will be, but it
provided that it will be "co-terminus with the x x x project." In "Personnel Action Form – Project
Duration of project employment
Employment" dated October 17, 2000,12 it appears that such extension would eventually end on
should be determined at the time of
October 19, 2000.
hiring

Despite the termination of his employment on October 19, 2000, petitioner claims that his superior
In the instant case, the appointments issued to petitioner indicated that he was hired for specific
instructed him to report for work the following day, intimating to him that he will again be employed for
projects. This Court is convinced however that although he started as a project employee, he eventually
the succeeding SM projects. For purposes of reemployment, he then underwent a medical examination
became a regular employee of PNCC.
which allegedly revealed that he had pneumonitis. Petitioner was advised by PNCC’s physician, Dr.
Arthur C. Obena, to take a 14-day sick leave.
Under Article 280 of the Labor Code, as amended, a project employee is one whose "employment has
been fixed for a specific project or undertaking the completion or termination of which has been
On November 27, 2000, after serving his sick leave, petitioner claims that he was again referred for
determined at the time of the engagement of the employee or where the work or services to be
medical examination where it was revealed that he contracted Koch’s disease. He was then required to
performed is seasonal in nature and the employment is for the duration of the season." Thus, the
take a 60-day leave of absence.13 The following day, he submitted his application for sick leave but
principal test used to determine whether employees are project employees is whether or not the
PNCC’s Project Personnel Officer, Mr. R.S. Sanchez, told him that he was not entitled to sick leave
employees were assigned to carry out a specific project or undertaking, the duration or scope of which
because he was not a regular employee.
was specified at the time the employees were engaged for that project.33

Petitioner still served a 60-day sick leave and underwent another medical examination on February 16,
2001. He was then given a clean bill of health and was given a medical clearance by Dr. Obena that he
was fit to work.
Petitioner claims that after he presented his medical clearance to the Project Personnel Officer on even
date, he was informed that his services were already terminated on October 19, 2000 and he was
In the case at bar, petitioner worked continuously for more than two years after the supposed three-
month duration of his project employment for the NAIA II Project. While his appointment for said project
allowed such extension since it specifically provided that in case his "services are still needed beyond
the validity of the contract, the Company shall extend his services," there was no subsequent contract
or appointment that specified a particular duration for the extension. His services were just extended
indefinitely until "Personnel Action Form – Project Employment" dated July 7, 1998 was issued to him
which provided that his employment will end a few weeks later or on August 4, 1998. While for first
three months, petitioner can be considered a project employee of PNCC, his employment thereafter,
when his services were extended without any specification of as to the duration, made him a regular
employee of PNCC. And his status as a regular employee was not affected by the fact that he was
assigned to several other projects and there were intervals in between said projects since he enjoys
security of tenure.

Failure of an employer to file

termination reports after every
project completion proves that an
employee is not a project employee

In this case, records clearly show that PNCC did not report the termination of petitioner’s supposed
project employment for the NAIA II Project to the DOLE. Department Order No. 19, or the "Guidelines
Governing the Employment of Workers in the Construction Industry," requires employers to submit a
report of an employee’s termination to the nearest public employment office every time an employee’s
employment is terminated due to a completion of a project. PNCC submitted as evidence of its
compliance with the requirement supposed photocopies of its termination reports, each listing petitioner
as among the employees affected. Unfortunately, none of the reports submitted pertain to the NAIA II
Project.

Policy Instruction No. 20 is explicit that employers of project employees are exempted from the
clearance requirement but not from the submission of termination report. We have consistently held that
failure of the employer to file termination reports after every project completion proves that the
employees are not project employees.