Gadia, et.al. vs. Sykes Asia

G.R. No. 209499, 28 January 2015

Facts of the case:

Sykes Asia is a corporation engaged in BPO which provides support to its international clients from various sectors by carrying on some of their operations, governed by service contracts that it enters with them. Alltel, a US-based telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and demands of Alltel clients. Thus, on different dates, Sykes Asia hired petitioners as customer service representatives, team leaders, and trainers for the Alltel Project.

On August 7, 2009 and September 9, 2009, Alltel sent 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, informing them of their dismissal from employment due to the termination of the Alltel Project.

In their defense, respondents averred that petitioners were project-based employees, and as such, the termination of the Alltel Project served as a valid ground for their dismissal. 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." Respondents further maintained that they complied with the requirements of procedural due process in dismissing petitioners by furnishing each of them their notices of termination at least 30 days prior to their respective dates of dismissal.

The LA ruled in favor of respondents and pronounced that petitioners are 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, i.e., the Alltel Project. The NLRC modified the LA decision, ruling 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. 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 reinstated the ruling of the LA and held that based on petitioners’ respective employment contracts it 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. 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 petitioners are project-based employees.

Ruling of the Court:

The Court declared that petitioners are project-based employees.

Citing the case of Omni Hauling Services, Inc. v. Bon, the Court extensively discussed how to determine whether an employee may be properly deemed project-based or regular, to wit: 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.

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 "the law and jurisprudence dictate that ‘the duration of the undertaking begins and ends at determined or determinable times’" while clarifying that "the phrase ‘determinable times’ simply means capable of being determined or fixed." 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 Report and an Establishment Termination Report 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.

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.

Good notes on this case:

Project-based Employment

- 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.

- 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.

Rules of Court

- To justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction. To be considered "grave," discretion must be exercised in a despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law.

- In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and the conclusions reached thereby are not supported by substantial evidence. This requirement of substantial evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that "in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion."