EMPLOYEE IS DEEMED REGULAR, AND NOT PROJECT, IF CONTINUOUSLY REHIRED BY FOR THE SAME TASKS, WHICH ARE VITAL, NECESSARY AND INDISPENSABLE TO THE USUAL BUSINESS OR TRADE OF THE EMPLOYER

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Employee who has been: (1) continuously, as oppose to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee.

Thus, the SC held in the following case:

Pacific Metals C., Ltd. vs. Tamayo
G.R. No. 226920, December 5, 2019

Project employment; Project completion; Work of employee on time-bound projects does not automatically characterize him as project employee; Nature of work is determinative of project employment; Regular employment; Being continuously rehired and performing vital, necessary and indispensable duties to the usual business or trade of the employer, the employee shall be deemed as regular employee

Facts:

Petitioner Pacific Metals Co., Ltd., (PAMCO) is a foreign company engaged in the importation of nickel ore mined in the Philippines. Saprolite Ore refers to nickel ore suitable for smelting into ferronickel, the main raw material for production of stainless steel which is now widely used in manufacturing kitchen equipment, bathtubs, table and cookware, and medical and laboratory equipment, among others.

PAMCO is registered in Japan and opened a Philippine Representative Office in April 2008. Chitaru Okamura is PAMCO’s general manager and liaison officer for its Philippine office.

PAMCO entered into an exploration agreement with Eramen Minerals, Inc. (ERAMEN) for the development of a target area covered by the latter’s Mineral Production and Sharing Agreement (MPSA). PAMCO’s target area is within the area covered by ERAMEN’s MPSA in Sta. Cruz and Candelaria, Zambales.

In preparation for its joint venture business with ERAMEN, PAMCO engaged the services of respondent Edgar Allan Tamayo, a licensed and registered geologist. Tamayo signed up for a two-month employment contract, commencing September 2010. According to PAMCO, Tamayo’s two-month engagement was extended for another two (2) months, or until January 31, 2011.

On January 17, 2011, PAMCO and ERAMEN entered into an Exploration Agreement wherein PAMCO shall provide financial and technical assistance to ERAMEN in the exploration project while PAMCO shall have the exclusive option to participate in the subsequent mining project for the purpose of purchasing saprolite ore which had been identified and exploited in the target area.

Tamayo was designated manager for the ERAMEN/PAMCO Exploration Project. As such, he was in charge of preparing the project reports and updates, and budget requests for approval of Fernandez, ERAMEN’s president. There is no showing, however, that Tamayo’s engagement with the ERAMEN/PAMCO Exploration Project was covered by an employment contract.

Subsequently, by letter dated November 29, 2011, Tamayo was informed that his services as exploration manager was terminated effective December 31, 2011 in view of the completion of the exploration aspect of the project. In response, Tamayao sent an email to ERAMEN/Fernandez to clarify the requirements for his clearance. He sent two more e-mails thereafter one of which he stated that there had been connivance among some of the technical people involved in the exploration project. In his second email he expressed his intention to file a complaint before the NLRC.

Thereafter, Tamayo filed a complaint for illegal dismissal against PAMCO and ERAMEN. He argued that he was a regular employee of PAMCO and/or of the ERAMEN/PAMCO Exploration Project, having rendered work directly related, nay, necessary and desirable, to the main business of the company and the exploration project. He should not be considered a project employee because of the duration of his employment was not determined at the time of his engagement and his termination had not been reported to the Department of Labor and Employment (DOLE) in accordance with law.

PAMCO argued that it hired Tamayo as exploration manager under a two-month employment contract. The contract was extended for another two (2) months and it ended on January 31, 2011. Thereafter, Tamayo was hired by ERAMEN and it (PAMCO) was not a party thereto. Tamayo cannot claim to be its regular employee because it was clear in the service contract that he was hired as a consultant. Thus, he cannot demand payment for service he no longer rendered, more so, if he sought to collect the same under the guise of being illegally dismissed.

ERAMEN, on the other hand, countered that PAMCO initially hired Tamayo and later recommended him to the joint venture as exploration manager. Tamayo was not illegally dismissed because he was a project employee whose services were deemed co-terminus with the project for which he was hired. Thus, he may be terminated as soon as the exploration project was completed. Further, due process was observed in his termination. He was sent the written notice a month before the intended termination.

LA Ruling:

The Labor Arbiter (LA) held that Tamayo was not a regular employee but a project employee of the ERAMEN/PAMCO Exploration Project.

Tamayo was aware of such fact, This was clear when he inquired with Fernandez about the management’s plan for his career path in the company. Hence, he was not illegally dismissed and his termination was due solely to contract completion.

NLRC Ruling:

The National Labor Relations Commission (NLRC) affirmed the LA Decision.

The NLRC sustained the LA’s finding that Tamayo was not illegally dismissed, but was terminated due to project completion. Tamayo’s motion for reconsideration was denied. Thus, Tamayo elevated the case to the Court of Appeals (CA) via a petition for certiorari.

CA Ruling:

The CA reversed the NLRC.

The CA ruled that Tamayo was PAMCO’s regular employee who had been illegally dismissed. The CA ordered Tamayo’s reinstatement with backwages. The CA held that the extension of Tamayo’s employment with PAMCO did not have a specific duration. He was just required to render service until he got assigned to the ERAMEN/PAMCO Exploration Project.

When Tamayo was re-hired after the expiration of his service contract, he ceased to be a project employee. When he was re-hired by PAMCO for an unspecified period and continuously worked for the project for more than a year, he is deemed to have become a regular employee of PAMCO.

PAMCO’s motion for reconsideration was denied. Thus, the instant petition before the Supreme Court (SC).

Issue/s:

Whether or not an employee who signed a project employment contract which expired and was re-hired can be deemed as regular employee when he was performing work that is usually necessary and desirable to the employer’s business

Whether or not an employee who worked on projects that were time-bound can be automatically characterized as project employee

SC Ruling:

The SC denied the petition.

The SC held that Tamayo’s first engagement was in fact covered by a duly executed Service Contract, specifying the project for which he was hired and its two-month duration. But his is not the contested engagement in this case. The controversy hinges on Tamayo’s subsequent employment or his re-hiring and assignment as exploration manager for the ERAMEN/PAMCO Exploration Project. This engagement was not covered by any employment contract.

Be that as it may, the lack of an employment contract would not hinder the determination of the status of Tamayo’s employment. For while the appropriate evidence showing that a person is a project employee pertains to the employment contract specifying the project and its duration; the existence of such contract is not always conclusive of the nature of one’s employment.

In connection with Tamayo’s subsequent engagement for the ERAMEN/PAMCO Exploration Project, he rendered services therefor from January 2011 until December 2011 when he got terminated due to alleged project completion. That the exploration project was allegedly already completed does not suffice to convince that indeed the project had reached its conclusion. For no proof was adduced to substantiate this allegation. It is quite unconvincing that the exploration project was alleged to have already been completed or was even nearing completion, only one year after its commencement, considering that the project was actually good for five years. Surely, a project good for five years could not have been accomplished for such short period of one year.

Based on Article 295 of the Labor Code, one is deemed a regular employee if one: a) had been engaged to perform tasks which are usually necessary or desirable in the usual business or trade of the employer, unless the employment is one for a specific project or undertaking or where the work is seasonal and for the duration of the season; or b) has rendered at least one (1) year of service, whether such service is continuous or broken, with respect to the activity for which he is employed and his employment continues as long as such activity exists.

PAMCO is engaged in the business of nickel ore importation. It does not simply involve sourcing out suppliers of raw materials; for sure, mineral importation takes more effort. Nickel ore is not readily available. Areas where to find it must first be determined and studied. Too, extensive work to finally generate it would involve manpower and substantial financing. And since the mineral comes from naturalresources, there are environmental safety requirements that must be complied with.

To accomplish this step by step process, PAMCO must rely on the expertise of a geologist with knowledge of Philippine soil and its rich sources of minerals. The tasks ordinarily performed by a geologist, therefore, are necessary to the business with PAMCO was engaged in. It is, thus, undeniable that Tamayo is a regular employee of PAMCO, for he performs work that is usually necessary and desirable to PAMCO’s business.

The mere fact that employees worked on projects that were time-bound did not automatically characterize them as project employees. The nature of their work was determinative. Citing DM Consunji, Inc. vs. Jamin, the SC held that once a project or work pool employee has been: (1) continuously, as oppose to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee.

Here, although PAMCO persistently claims that Tamayo was only re-hired for two (2) more months following the expiration of his first two-month contract with the company, records bear that Tamayo rendered service much longer than two (2) months. He was made to stay on for a year for the work he rendered was in fact necessary and indispensable to PAMCO’s usual trade or business.