FIXED TERM PROJECT EMPLOYMENT

Innodata Phils., Inc. was a domestic corporation engaged in the data encoding and data conversion business. Cherry was employed as formatter by Innodata. An employment contract for a fixed term was executed for a specific project stipulating, among others, the following: x x x 6.1 x x x Further should the Company have no more need for the EMPLOYEE's services on accountof completionof the project , lack of work (sic) business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminatedby the EMPLOYER upon giving of three (3) days notice to the employee. x x x

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or withoutcause , by giving at least Fifteen - (15) [day] notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis ours.) During her employment she was assigned to handle jobs for various clients. Once she finished the job for one client, she was immediately assigned to do a new job for another client. On February 16, 2000, the HR Manager of Innodata wrote to inform her of her last day of work. According to Innodata, her employment ceased due to the end of her contract. Cherry filed a complaint for illegal dismissal. She claimed that she be considered a regular employee since her position as formatter was necessary and desirable to the usual business of Innodata. Innodata contended, among others, that Cherry was a project employee for a fixed term whose employment ceased at the end of a specific project or undertaking. In Philex Mining Corp. v. National Labor Relations Commission (312 SCRA 119 [1999]), the Court defined "project employees" as those workers hired (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project has been determined at the time of the engagement of the employee. Scrutinizing Cherry's employment contracts with INNODATA, however, failed to reveal any mention therein of what specific project or undertaking she was hired for. Although the contracts made general references to a "project," such project was neither named nor described at all therein. The one-year period for which Cherry was 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 her dismissal. As a final observation, the Court also takes note of several other provisions in Cherry's employment contracts that display utter disregard for her security of tenure. Despite fixing a period or term of employment, i.e., one year, INNODATA reserved the right to pre-terminate Cherry's employment under the contract. Pursuant to the afore-quoted provisions, Cherry has no right at all to expect security of tenure, even for the supposedly one-year period of employment provided in her contracts, because she can still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without cause, for as long as she is given a three-day notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be terminated except for just or authorized cause. In all, Innodata's insistence that it can legally dismiss Cherry on the ground that her term of employment has expired is untenable. Cherry, being a regular employee of INNODATA, is entitled to security of tenure. (Price vs. Innodata Phils., Inc., 567 SCRA 269 [2008].)

San Miguel Corp. vs. NLRC

G.R. No. 147566, December 6, 2006 (Labor Law, Employer-Employee Relationship)

Quotable Quote (Justice Garcia): The contrivances may be many and the schemes ingenious and imaginative. But this Court will not hesitate to put pen to a line and defend the workers right to be secure in his (or her) proprietary right to regular employment and his right to a secure employment..

FACTS San Miguel Corporation (SMC) seeks to reverse a Court of Appeals (CA) decision which affirmed an NLRC declaration that private respondent Rafael Maliksi (Maliksi) is a regular employee of SMC and must be reinstated with benefits. Maliksi in October 16, 1990 sued SMC-Magnolia Division and Philippine Software Services and Education Center (PHILSSEC) for them to recognize him as a regular employee. Later on the same case he included the charge of illegal dismissal when petitioners terminated his services later that month. Maliksis employment record shows he served SMC alternately as budget head, accounting clerk and acting clerk under Skillpower, Lipercon and PHILSSEC between 1981 up to February 1985 for periods spread apart, or for at least three years and seven months. Respondent Maliksi maintained that he is an employee of SMC-Magnolia and that Lipercon, Skillpower, Inc. and PHILSSEC are labor-only contractors, none being his employer. PHILSSEC meanwhile disclaimed liability as it catered only to computerized accounting needs of businesses like SMC-Magnolia, PHILSSECs principal function being that of manual control of data needed during the computerization. PHILSSEC added that it controlled Maliksis work, paid his salary and required him to report directly to it. Maliksi was terminated because the project was completed on October 31, 1990. SMC for its part basically asserted the same, contending that PHILSSEC exercised exclusive managerial prerogative over the complainant as to hiring, payment of salary, dismissal and the control over his work. It was interested only in the result of the work specified in the contract but not as to the means and methods of accomplishing the same. Also, PHILSSEC has substantial capital of its own. What it markets to clients are computer programs and training systems on computer technology and not the usual labor or manpower supply to establishment concerns. Further, SMC said, Maliksis service has no relation to the principal business of SMC, which is food and beverage. The Labor Arbiter declared Maliksi a regular employee of PHILSSEC and absolved SMC from liability. Maliksi appealed to the NLRC which in turn reversed the Labor Arbiters decision, ordering SMC-Magnolia Division to reinstate him without loss of seniority rights and with full benefits. When the case reached the CA, the latter affirmed in toto the NLRCs decision, finding Lipercon and Skillpower as mere conduits to circumvent Article 280 of the Labor Code, employing Maliksi as contractual or project employee through these entities, thereby undermining his right to gain regular employment status under the law. The CA agreed with the NLRC that Maliksis work was necessary or desirable in the business of SMC in its Magnolia Division, for more than the required one-year period, and that he became permanent and regular with SMC after the statutory period of one year of service. The CA also concluded that on account of his past employment contracts with SMC under Lipercon and Skillpower, Maliksi was already a regular employee of SMC when he entered into SMCs computerization project as part of the PHILSSEC project complement. ISSUE Whether or not Maliksi was a regular employee of SMC? HELD Petition DENIED. Maliksi is a regular employee of SMC. Lipercon and Skillpower are labor-only contractors providing as they do personnel services to the public for a fee. There is an employeremployee relationship and the Court gives due deference to this factual findings of both the NLRC and the CA. Having served SMC for an aggregate period of more than three (3) years through employment contracts with these Lipercon and Skillpower, Maliksi should be considered as SMCs

regular employee. The fact is that he was hired and re-hired by SMC to perform administrative and clerical work that was necessary to SMCs business on a daily basis. In Bustamante v. National Labor Relations Commission, the Court ruled that petitioners were employees engaged to perform activities necessary in the usual business of the employer. The contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status. They were hired and re-hired in a span of from two to four years to do the same type of work which conclusively shows the necessity of petitioners service to the respondent companys business. With respect to PHILSSEC, there was no need for Maliksi to be employed under the formers computerization program to be considered a regular employee of SMC at the time. Moreover, SMC itself admits that Maliksis work under the computerization program did not require the operation of a computer system, such as the software program being developed by PHILSSEC. Maliksis work under the PHILSSEC project was mainly administrative in nature and necessary to the development of SMCs business. Maliksi was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer making it liable to pay damages. The contrivances may be many and the schemes ingenious and imaginative. But this Court will not hesitate to put pen to a line and defend the workers right to be secure in his (or her) proprietary right to regular employment and his right to a secure employment, viz, one that is free from fear and doubt, that anytime he could be removed, retrenched, his contract not renewed or he might not be re-hired. Considering, however, the supervening event that SMCs Magnolia Division has been acquired by another entity, respondent Maliksis reinstatement it appears is no longer feasible. Instead, he should be awarded separation, in addition to the other monetary awards, pay as an alternative. Likewise, owing to petitioners bad faith in juggling the latter from one labor contractor to another, it should be held liable to pay nominal damages for causing undue injury and inconvenience to the private respondent in its contractual hiring-firing-rehiring scheme and for denying him his proprietary right to regular employment.