SUBIC DRYDOCK CORP., PETITIONER, VS. GERONIMO MARIANO, HON. LABOR ARBITER LEANDRO JOSE, AND NATIONAL LABOR RELATIONS COMMISSION (NLRC), RESPONDENTS.

Subic Drydock versus Mariano

The Case

This is a petition for certiorari brought by Subic Drydock Corporation against its former worker, Geronimo Mariano, together with the Labor Arbiter and the National Labor Relations Commission. The company asks the Supreme Court to overturn the labor tribunals' finding that Mariano was a regular employee who was illegally dismissed, and that he was not a project employee whose contract simply expired. The case matters because it is a compact illustration of how the Court tests a claim of project employment, and of the narrow gate through which a Rule 65 petition must pass when it attacks the factual findings of a labor tribunal.

Procedural History

Mariano filed a complaint for illegal dismissal before the Labor Arbiter, praying for reinstatement with full backwages. Labor Arbiter Leandro Jose ruled in his favor, declaring him a regular employee who had been illegally dismissed, and ordering his reinstatement without loss of seniority rights and other privileges, with full backwages. The company appealed to the National Labor Relations Commission, which affirmed the Labor Arbiter in a Resolution dated December 19, 2012. The company moved for reconsideration, and the Commission denied it in a Resolution dated March 20, 2013. The company then came to the Supreme Court by a Petition for Certiorari under Rule 65, faulting the Commission with grave abuse of discretion.

Facts

On June 2, 2008, Subic Drydock Corporation, a company engaged in ship repair, hired Geronimo Mariano as carpenter, shipbuilder, and garbage disposal officer. The company later claimed that from the very start he was hired on a project to project basis, and it produced eleven separate Appointment Papers and two Personnel Action Notices to prove it. Its last engagement, it said, was for the rehabilitation of a building that began on November 7, 2011 and ended on February 2, 2012.

On February 3, 2012, Mariano was denied entry to work because the biometric machine no longer recognized his fingerprints. When he inquired, the company's Human Resources Officer told him he had been terminated due to alleged end of contract. He begged for reconsideration, but to no avail.

Mariano then filed his complaint for illegal dismissal. The company answered that he was never dismissed, since his project employment merely expired on February 2, 2012, as shown by his Appointment Paper, a letter of that date, and an Employment Establishment Report submitted to the Department of Labor and Employment. The Labor Arbiter found that the company's defense rested solely on the alleged expiration of the contract and never addressed any just cause, and that it failed to discharge its burden. The Commission affirmed, noting that only one termination report was ever filed, and that it was filed long after the complaint had been lodged.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion amounting to lack or excess of jurisdiction in holding that Mariano was a regular employee and not a project employee.
• Whether or not the National Labor Relations Commission committed grave abuse of discretion in holding that Mariano was illegally dismissed and in awarding him monetary relief.

Applicable Provisions

Rule 133, Section 5 of the Rules of Court defines the quantum of evidence that binds a reviewing court to the findings of a labor tribunal:

Section 5. Substantial evidence. — 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.

This standard is why the Court declines to reweigh the evidence before the Commission, and confines itself to asking whether grave abuse of discretion attended its ruling.

Ruling

On the first issue, the Court held that the Commission did not gravely abuse its discretion in finding Mariano a regular employee. A project employee is one assigned to carry out a specific project or undertaking whose duration and scope are specified at the time of engagement, and the project must be distinct, separate, and identifiable from the usual or regular undertakings of the company. Here, the records showed that Mariano was rehired by the company several times, thirteen times in all, supposedly as a project employee. That repeated rehiring was itself an indication that his work was necessary and indispensable to the company's regular business, since ship repair involves carpentry in the making and repairing of cabinets, flooring, quarters, ceilings, windows, doors, and kitchens of a vessel. His employment also ceased to be coterminous with specific projects because of the demands of the business. The Court applied its ruling in PLDT versus Ylagan: once an employee has been continuously, as opposed to intermittently, rehired by the same employer for the same tasks, and those tasks are vital, necessary, and indispensable to the usual business or trade of the employer, the employee must be deemed regular. The Court also treated the limited periods written into the contracts as a subterfuge to defeat the right to security of tenure, and struck them down as contrary to public policy or morals.

The Court added that the company's documentary defense was suspect. Although it offered eleven Appointment Papers and two Personnel Action Notices, it submitted only one Employment Establishment Report to the Department of Labor and Employment, when the rule requires a termination report every time an employee's employment is terminated by completion of a project. The Commission had correctly observed that if Mariano were truly a project employee, there would have been as many termination reports as there were projects finished. Worse, the lone report was filed only on June 1, 2012, after Mariano had already filed his complaint on April 19, 2012, and his name appeared merely inserted into a list of workers separated later. The Court agreed that the report was an afterthought.

On the second issue, the Court held that the dismissal was illegal. In illegal dismissal cases the burden of proof is on the employer to show that the employee was dismissed for a valid and just cause, and the employer must stand on the merits of its own defense rather than on the weakness of the employee's evidence. The company adduced no evidence, testimonial or documentary, to prove any just cause. Lack of just cause renders the dismissal illegal, and entitles the employee to the monetary award. The Court, however, absolved the company's General Manager from personal liability, because there was no allegation or showing that he acted in bad faith, and bad faith imports a dishonest purpose or some moral obliquity and conscious doing of wrong, not mere bad judgment or negligence. Absent bad faith, the corporation's separate personality stood.

Doctrine

First, the test for distinguishing a project employee from a regular employee is whether the employee was assigned to carry out a specific project or undertaking, with the duration and scope of the engagement specified at the time the service was contracted. Second, length of service is not the controlling test, but it is vital in determining whether the employee was hired for a specific undertaking or tasked to perform functions vital, necessary, and indispensable to the usual business or trade of the employer. Third, continuous rehiring for the same tasks, where those tasks are vital, necessary, and indispensable to the employer's business, makes the employee regular. Fourth, the practice of imposing a limited period in an employment contract to circumvent the constitutional guarantee on security of tenure is struck down as contrary to public policy or morals. Fifth, the employer's failure to file a termination report with the Department of Labor and Employment after every completion of a project indicates that the employee is not a project employee. Sixth, in illegal dismissal cases the burden of proof rests on the employer to show a valid and just cause. Seventh, a corporate officer may be held solidarily liable only upon a showing of bad faith.

Disposition

The petition was dismissed, the application for a temporary restraining order and writ of preliminary injunction was denied, and the Commission's Resolution was affirmed with modification, absolving the company's corporate officer from personal liability.

Remember This

Memorize this line: continuous rehiring for tasks that are vital, necessary, and indispensable to the employer's business makes the worker regular, and a limited period written into the contract to defeat security of tenure is struck down. Examiners use this case to test project employment against regular employment, the employer's burden of proof in illegal dismissal, and the narrow scope of certiorari against factual findings of the National Labor Relations Commission.