The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code: ART.

280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are 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 the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.7 The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer"; (b) project employees or those "whose employment has been fixed for a specific project or undertaking[,] the completion or termination of which has been determined at the time of the engagement of the employee"; (c) seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the duration of the season; See Phil. Tobacco Flue-Curing & Redrying Corp. v. NLRC, 360 Phil. 218 (1998). and (d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind a fixed-term employee. Asia World Recruitment Inc. v. NLRC, 371 Phil. 745, 755-756 (1999); Palomares v.
NLRC, (5TH Division), G.R. No. 120064, August 15, 1997, 277 SCRA 439, 447-449; Brent School, Inc. v. Zamora, 260 Phil. 747, 758-762 (1990). Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless of any contract expressing otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life the policy enshrined in the Constitution to "afford full protection to labor." Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. Thus, labor contracts are placed on a higher plane than ordinary contracts; these are imbued with public interest and therefore subject to the police power of the State. See Articles 1700 and 1702 of the Civil Code; Villa v. NLRC, 348 Phil. 116, 140-141 (1998) However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking remain valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employers interest is equally important as that of the employee[s] for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount. Villa v. NLRC, supra, at 141. However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking remain valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employers interest is equally important as that of the employee[s] for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount. Villa v. NLRC, supra, at 141. In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts indicating the specific project or phase of work for which they were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A deeper examination also shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and voluntarily. No evidence was presented by [petitioner] Union to prove improper pressure or undue influence when they entered, perfected and consummated [the employment] contracts. In fact, it was clearly established in the course of the trial

of this case, as explained by no less than the President of [petitioner] Union, that the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x. xxxx As clearly shown by [petitioner] Unions own admission, both parties had executed the contracts freely and voluntarily without force, duress or acts tending to vitiate the worker[s] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein. x x x.13

The termination of their employment cannot and should not constitute an illegal dismissal.

The Court of Appeals noted that there was no indication of force, duress, or improper pressure exerted on petitioners when they signed the contracts. Further, there was no proof that respondents were regularly engaged in hiring workers for work for a minimum period of five months to prevent the regularization of their employees. Petitioners Employment is akin to Probationary Employment At most, petitioners employment for less than six months can be considered probationary. Article 281 of the Labor Code provides: Art. 281. Probationary Employment. - Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Petitioners were hired on 11 May 1999, initially for three months. After the expiration of their contracts, petitioners were hired on a month-to-month basis. Their contracts of employment ended on 8 October 1999. Hence, they were employed for a total of five months. Their employment did not even exceed six months to entitle them to become regular employees. We cannot accept petitioners bare allegations that Caparoso was hired on 8 November 1998 while Quindipan was hired on intermittent basis since 1997. Petitioners failed to substantiate their allegations. The payslips submitted by petitioners to prove their prior employment with respondents are handwritten and indicate only the date and amount of pay. They do not even indicate the name

of the employer. The printed payslips during the period of the contracts indicate not only the name of the employer but also the breakdown of petitioners net pay. Petitioners were not Illegally Dismissed from Employment Petitioners terms of employment are governed by their fixed-term contracts. Petitioners fixed-term employment contracts had expired. They were not illegally dismissed from employment. This Court has ruled that "if from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy."11In this case, it was not established that respondents intended to deny petitioners their right to security of tenure. Besides, petitioners employment did not exceed six months. Thus, the Court of Appeals did not err in sustaining petitioners dismissal from employment.

In Biboso v. Victorias Milling Co., Inc., 166 Phil. 717 (1977).we made the following pronouncement: This is, by no means, to assert that the security of tenure protection of the Constitution does not apply to probationary employees. x x x During such period, they could remain in their positions and any circumvention of their rights, in accordance with the statutory scheme, is subject to inquiry and thereafter correction by the Department of Labor. The ruling in Biboso simply signifies that probationary employees enjoy security of tenure during the term of their probationary employment. As such, they cannot be removed except for cause as provided by law, or if at the end of every yearly contract during the three-year period, the employee does not meet the reasonable standards set by the employer at the time of engagement. But this guarantee of security of tenure applies only during the period of probation. Once that period expires, the constitutional protection can no longer be invoked. Escudero v. Office of the President, supra note 20, at 793 G.R. No. 57822, April 26, 1989, 172 SCRA 783. All these principles notwithstanding, we do not discount the validity of fixed-term employment where the fixed period of employment 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. Brent School, Inc. v. Zamora, G.R. No. 48494, February 5, 1990, 181 SCRA 702. It does not necessarily follow that where the duties of the employees consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. St. Theresas School of Novaliches Foundation v. NLRC, 351 Phil. 1038, 1043 (1998). Thus, in St. Theresas School of Novaliches Foundation v. NLRC,32 we held that a contractual stipulation providing for a fixed term of nine (9) months, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected, as it is the contract of employment that governs the relationship of the parties.

Petitioners claim that the fixed contract of employment which private respondent entered into was read, translated to, comprehended and voluntarily accepted by him. No evidence was presented to prove improper pressure or undue influence when he entered, perfected and consummated said contract. And even if private respondent's services were necessary and desirable in petitioner's business, nevertheless private respondent's term was limited, citing as authority Brent School v. Zamora. 181 SCRA 702 (1990).

Much can be learned from the leading case of Brent School v. Zamora, supra. In this case, the Court analyzed the development of Article 280 from its first version as Article 319 and its amendments under PD 850 and BP 130 and made the following observation:
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment 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. Unless thus limited in its purview. the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. 181 SCRA 702 (1990). (Emphasis supplied)

As can be gleaned from the said case, the two guidelines, by which fixed contracts of employments can be said NOT to circumvent security of tenure, are either: 1. The fixed period of employment was knowingly and voluntarily agreed upon 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: 2. 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 on the latter. G.R. No. 97747 March 31, 1993 PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION/FRANCIS PALAFOX,petitioners,

vs. NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO MATA