Gadia vs. Sykes Asia, Inc.

An employee hired under a written contract expressly stating that the position is "project-based and co-terminus to the project" is a project-based employee whose services may be lawfully terminated upon completion or cessation of that project, provided the employer proves both that the employee was assigned to a specific project or undertaking and that the duration and scope of such project were specified at the time of engagement.

Sykes Asia, Inc. is a corporation engaged in Business Process Outsourcing (BPO), providing support services to international clients across various sectors pursuant to service contracts. On September 2, 2003, Alltel Communications, Inc., 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, known as the Alltel Project. Sykes Asia hired the petitioners on different dates as customer service representatives, team leaders, and trainers for the Alltel Project, with their employment contracts indicating their positions were "project-based" and "co-terminus to the project."

Sykes Asia, Inc. is a corporation engaged in Business Process Outsourcing (BPO), providing support to international clients across various sectors — technology, telecommunications, and retail services — pursuant to service contracts it enters into with them. On September 2, 2003, Alltel Communications, Inc., 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, an undertaking referred to as the Alltel Project. On different dates, Sykes Asia hired the 24 petitioners as customer service representatives, team leaders, and trainers for the Alltel Project. Their respective employment contracts expressly indicated that their positions were "project-based" and "as such is co-terminus to the project."

Services for the Alltel Project proceeded without incident until Alltel sent two letters to Sykes Asia dated August 7, 2009 and September 9, 2009, 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. Aggrieved, petitioners filed separate complaints for illegal dismissal against respondents Sykes Asia, Chuck Sykes (President and Chief Operating Officer of Sykes Enterprise, Inc.), and Mike Hinds and Michael Henderson (President and Operations Director, respectively, of Sykes Asia), praying for reinstatement, backwages, 13th month pay, service incentive leave pay, night shift differential, moral and exemplary damages, and attorney's fees. Petitioners alleged that their dismissal was effected without substantive and procedural due process.

In their defense, respondents averred that petitioners were not regular employees but merely project-based employees, and that the termination of the Alltel Project served as a valid ground for dismissal. Respondents pointed to the employment contracts, which expressly stated that the positions were "project-based" and "co-terminus to the project." Respondents further maintained that they complied with procedural due process by furnishing each petitioner a notice of termination at least thirty days prior to the respective dates of dismissal. The Labor Arbiter found petitioners to be project-based employees, concluding that the cessation of the Alltel Project naturally resulted in the termination of their employment. The NLRC reversed this characterization, finding that while petitioners knew their employment was co-terminus with the Alltel Project, it was neither determined nor made known to them at the time of hiring when the project would end, and thus deemed them regular employees — though validly terminated due to redundancy. The Court of Appeals annulled the NLRC ruling and reinstated the Labor Arbiter's decision, holding that the employment contracts sufficiently established project-based status and that an actual end date need not be stated so long as it was determinable.

• Project Employment Status: Petitioners maintained that they were regular employees of Sykes Asia, arguing that they had been engaged to perform activities necessary or desirable in the usual business or trade of the BPO employer, and thus could not be validly dismissed except for just or authorized causes under the Labor Code.
• Lack of Determinable Project Duration: Petitioners argued that at the time of their hiring, it was neither determined nor made known to them when the Alltel Project would end, be terminated, or be completed, which precluded proper characterization as project-based employees.
• Illegal Dismissal: Petitioners alleged that their dismissal was effected without substantive and procedural due process, warranting reinstatement, backwages, and damages.

• Project-Based Employment Status: Respondents countered that petitioners were not regular employees but merely project-based employees, as expressly indicated in their respective employment contracts, which provided that their positions were "project-based" and "co-terminus to the project."
• Valid Ground for Termination: Respondents argued that the cessation of the Alltel Project served as a valid ground for the dismissal of project-based employees, whose services may be lawfully terminated upon completion of the project.
• Procedural Due Process Compliance: Respondents maintained that they complied with the requirements of procedural due process by furnishing each petitioner a notice of termination at least thirty days prior to the respective dates of dismissal.

• Project vs. Regular Employment: Whether the Court of Appeals correctly granted respondents' petition for certiorari, setting aside the NLRC's ruling that petitioners were regular employees and reinstating the Labor Arbiter's ruling that petitioners were project-based employees validly dismissed upon cessation of the Alltel Project.

• Project vs. Regular Employment: Yes. The Court of Appeals correctly granted the certiorari petition, the NLRC having gravely abused its discretion in disregarding substantial evidence — the employment contracts and DOLE reports — establishing that petitioners were project-based employees whose services were lawfully terminated upon cessation of the Alltel Project.

• Project vs. Regular Employment: Article 294 of the Labor Code (formerly Article 280) provides that employment shall be deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement. Drawing on Omni Hauling Services, Inc. vs. Bon, the Court identified two requisites for project-based status: (a) the employee was assigned to carry out a specific project or undertaking, and (b) the duration and scope of such project were specified at the time of engagement. Both requisites were satisfied: petitioners were hired exclusively for the Alltel Project, and their employment contracts expressly stated their positions were "project-based and as such is co-terminus to the project." The CA correctly clarified that the phrase "determinable times" means "capable of being determined or fixed," and that an actual end date need not be stated so long as the duration is determinable. The caveat "co-terminus with the project" sufficiently apprised petitioners that their security of tenure would last only as long as the Alltel Project subsisted. Additionally, Sykes Asia submitted an Establishment Employment Report and an Establishment Termination Report to the DOLE Makati-Pasay Field Office regarding the cessation of the Alltel Project and the affected employees, which case law deems an indication of project-based employment. Because respondents established by substantial evidence that petitioners were project-based employees, the NLRC's contrary finding constituted grave abuse of discretion, warranting the CA's annulment of the NLRC decision.

• Two-Requisite Test for Project-Based Employment — For an employee to be considered project-based, the employer must prove compliance with two requisites: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope of such project were specified at the time they were engaged for that project. The project may be either (1) a particular job or undertaking within the regular or usual business of the employer company but distinct and separate and identifiable from other undertakings, or (2) a particular job or undertaking not within the regular business of the corporation. In this case, both requisites were satisfied through the employment contracts and the nature of the Alltel Project.
• Determinable Duration Standard — The law requires that the duration of a project employment "begins and ends at determined or determinable times." The phrase "determinable times" simply means "capable of being determined or fixed." An employment contract need not state an actual end date; it is sufficient that the end of employment is determinable, as where the contract states the position is "co-terminus to the project."
• DOLE Reports as Indicia of Project Employment — Submission of an Establishment Employment Report and an Establishment Termination Report to the DOLE regarding the cessation of a project and the list of affected employees is deemed an indication that the employment was indeed project-based.
• Grave Abuse of Discretion in Labor Cases — In labor disputes, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence, defined under Section 5, Rule 133 of the Rules of Court as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion."

• "the principal test for determining whether particular employees are properly characterised 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." — This passage, quoting Omni Hauling Services, Inc. vs. Bon, articulates the canonical two-pronged test for distinguishing project-based from regular employment and is the analytical framework the Court applied to the facts.
• "The phrase 'determinable times' simply means capable of being determined or fixed." — This passage, drawn from the CA decision as quoted by the Supreme Court, defines the standard for the duration requisite of project employment, clarifying that an actual end date is not required so long as the duration is capable of ascertainment.
• "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." — This statement captures the ratio decidendi applying the project-employment doctrine to the facts: the cessation of the specific project rendered the termination of project-based employees lawful.

• Omni Hauling Services, Inc. vs. Bon, G.R. No. 199388, September 3, 2014 — Controlling authority. The Court relied on this case for the two-requisite test distinguishing project-based from regular employees and for the definition of grave abuse of discretion in the certiorari context.
• Goma vs. Pamplona Plantation Incorporated, 579 Phil. 402 (2008) — Cited for the proposition that submission of DOLE reports regarding project cessation and affected employees is an indication of project-based employment.
• Filsystems, Inc. vs. Puente, 493 Phil. 923 (2005) — Cited for the same proposition regarding DOLE report submissions as indicia of project employment.
• Association of Trade Unions vs. Hon. Abella, 380 Phil. 6 (2000) — Cited for the same proposition regarding DOLE report submissions as indicia of project employment.

• Article 294 (formerly Article 280), Labor Code (Presidential Decree No. 442), as amended by Republic Act No. 10151 — Defines regular and casual employment, providing that employment shall be deemed regular where the employee performs activities usually necessary or desirable in the employer's usual business or trade, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement. The Court applied this provision to hold that the "specific project" exception was satisfied by the Alltel Project engagement.
• Section 5, Rule 133, Rules of Court — Defines substantial evidence in administrative and quasi-judicial proceedings as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." Applied to assess whether the NLRC's findings were supported by substantial evidence and whether its disregard of such evidence constituted grave abuse of discretion.

Sereno, C.J. (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concurred.