PENTA-SHIMIZU-TOA JOINT VENTURE, ISAO MICHISHITA, PROJECT MANAGER, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND JOMAR LEE, RESPONDENTS.
PERALTA, JR., E. B., J.:
The labor dispute between petitioners and Mr. Lee commenced when Mr. Lee initiated a Complaint for illegal dismissal against petitioners. It was premised on the idea that petitioners were engaged in a joint venture with Penta-Ocean Construction Co. Ltd. and TOA Corporation for the construction and completion of the Subic Bay Port Development Project inside the Subic Bay Freeport Zone.
The joint project was divided into three stages and in the course of the venture, petitioners hired employees which included private respondent Lee.
On February 10, 2006, Lee was hired as a laboratory technician by petitioners and was asked to sign a “Project Employment Contract” as a project employee. According to Mr. Lee, he was continuously employed by petitioners during the completion of the project at Subic Bay Freeport Zone as reflected on the “Extension Contracts”[4] he signed and certificates of employment.[5]
On September 2, 2008, petitioners required Mr. Lee to work as an alternate radiological safety officer and on January 31, 2010, Mr. Lee was allegedly informed by petitioners that he will no longer be a laboratory technician but would be working as service driver and radiological safety officer at the same time. Thereafter, in April, 2010, Mr. Lee’s employment was terminated as he was not required to work by petitioners. At that time, Mr. Lee was receiving P11,000.00 monthly salary.
Consequently, Mr. Lee instituted a Complaint for illegal dismissal and insisted that he was a regular employee and he performed tasks which were usually necessary and desirable in the usual business or trade of petitioners. Mr. Lee further averred that his continuous rehiring by petitioners and the length of periods he was employed by petitioners accorded him the status of a regular employee.
By contrast, petitioners claimed that during implementation of the construction work of Subic Port Development Project, it employed Mr. Lee as laboratory technician and later on as radiological health safety officer. At the outset, petitioners informed Mr. Lee that he was a project employee and his employment was contingent upon the completion of the Subic Port Development Project. However, the project was not completed on its target date due to some variables, and the employment of Mr. Lee was extended through “Extension Contracts”. Per the “Extension Contracts,” Mr. Lee’s services will only be retained for the duration of the specific contract for which he was employed. Petitioners, thus, asserted that Mr. Lee can hardly be classified as a regular employee.
On January 27, 2012, Labor Arbiter Reynaldo V. Abdon dismissed Mr. Lee’s Complaint against petitioners and opined that Mr. Lee was a project employee and was not entitled to separation pay.
Aggrieved by the judgment of the labor arbiter, Mr. Lee elevated his case before the NLRC.
Sans the project employment contract, the NLRC modified the findings of the labor arbiter and concluded that Mr. Lee was a regular employee who was entitled to P46,420.00 as separation pay.
Thereafter, petitioners ventilated grievances in the form of the current remedial measure under Rule 65 before Us to resolve the dichotomy of rulings on the status of Mr. Lee as a regular or project employee.
Article 280 of the Labor Code distinguishes a “project employee” from a “regular employee”:
“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 services to be performed is seasonal in nature and the employment is for the duration of the season.
xxx (Emphasis Supplied)”
In Wilfredo Aro, et al., v. NLRC,[6] citing Hanjin Heavy Industries and Construction Co. Ltd. v. Ibanez,[7] the concepts referred to in Article 280 of the Labor Code were extensively discussed in this wise:
“x x x [T]he principal test for determining whether particular employees are properly characterized as “project employees” as distinguished from “regular employees” is whether or not the project employees were assigned to carry out a “specific project or undertaking,” the duration and scope of which were specified at the time the employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees.”
To echo what was relayed in Aro, a project employee is therefore one who is hired for a specific project or undertaking, and the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.[8]
Based on synthesis of the factual backdrop, it appeared that Mr. Lee was hired as a laboratory technician in the construction of the Subic Port project of petitioners at the Subic Bay Freeport Zone. While there was no indication of the project employment contract[9] itself before the NLRC and the copy of the contract was attached in the current Petition, the absence of the covenant at the level of the NLRC did not automatically confer a regular status of employment upon Mr. Lee.[10] Verily, there were other pertinent documents adduced before the NLRC which indicated that Mr. Lee was a project employee, such as the extension contracts and certificates of his employment.
Also, the extension contracts with the conformity of Mr. Lee specifically provided that his employment was for a fixed period, and every time his employment will be extended pending completion of the project, he was duly informed at the initial stage on how long his services will be needed by petitioners.
Moreover, Mr. Lee’s continuous re-hiring in the identical undertaking will not bestow upon him the status of a regular employee. In the first place, his re-hiring was but a natural consequence of his coterminous employment with the project, and the tasks he performed as laboratory technician and radiological health safety officer were not vital, necessary and indispensable to the construction business of petitioners.[11] Neither was there any indication, too, that the period fixed on the extension contracts was imposed to preclude Mr. Lee’s acquisition of security of tenure.
Withal, the length of service of the project employee is not the controlling test of employment of tenure but the fact that his engagement as project employee was fixed for a specific task and determinable as to its duration, and these facts were communicated to him at the time he was hired.[12]
With respect to the termination of his employment, it was legally ended by petitioners since the Port Project was completed and consequently, there was no more reason to retain the services of Mr. Lee considering that the duration of Mr. Lee’s employment was conditioned on the completion of the project or phase of the project, in conjunction with Section 1 (c), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:
Section 1. Security of tenure. — (a) In cases of regular employment, the employer shall not terminate the services of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process. xxx
(c) In cases of project employment or employment covered by legitimate contracting or sub-contracting arrangements, no employee shall be dismissed prior to the completion of the project or phase thereof for which the employee was engaged, or prior to the expiration of the contract between the principal and contractor, unless the dismissal is for just or authorized cause subject to the requirements of due process or prior notice, or is brought about by the completion of the phase of the project or contract for which the employee was engaged.
Again, Mr. Lee’s employment was terminated due to the completion of the project or phase of the project. Consequently, prior notice was not vital.
Furthermore, Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides:
Section 2. Standard of due process: requirements of notice. — In all cases of termination of employment, the following standards of due process shall be substantially observed.
- For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and
(c) A written notice [of] termination served on the employee indicating that upon due consideration of all the circumstance, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee’s last known address.
- For termination of employment as based on authorized causes defined in Article 283 of the Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department at least thirty (30) days before the effectivity of the termination, specifying the ground or grounds for termination.
- If the termination is brought about by thIf the termination is brought about by the completion of the contract or phase thereof, no prior notice is required.e failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.
Indeed, “[i]f the termination is brought about by the completion of the contract or phase thereof, no prior notice is required” because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE on the termination of the employment.[13]
In the current case, petitioners substantially complied with the termination report required by DOLE under the Department Order No. 19, series of 1993[14] (superseded Policy No. 20, series of 1977)[15] when it filed a report[16] with the Labor Center of SBMA regarding the completion of the Subic Port Development Project and reduction of its employees. Furthermore, as aptly pointed out by the Labor Arbiter, the report required under Department Order No. 19, series of 1993 is only one of the indicators of a project employee.[17]
WHEREFORE, in view of the foregoing discourse, the instant Petition for Certiorari is hereby GRANTED. Accordingly, the September 28, 2012 Resolution and July 19, 2012 Decision of the National Labor Relations Commission are SET ASIDE and the judgment rendered by Labor Arbiter Reynaldo V. Abdon on January 27, 2012 is hereby AFFIRMED.
SO ORDERED.
Reyes, Jr. J.C., Chairperson, and Acosta, F. P., JJ., concur.
* Per Office Order No. 15-15-ABR dated January 20, 2015 effective February 2, 2015.
[1] Petition for Certiorari dated December 17, 2012.
[2] Rollo, pages 32-41, “Decision” promulgated on July 19, 2012.
[3] Rollo, pages, 28-31.
[4] See Annexes “A to A-1”, Rollo, pages 123-124.
[5] See Annexes “B to B-1”, Rollo, pages 125-126.
[6] G.R. No. 174792, March 7, 2012.
[7] G.R. No. 170181, June 26, 2008, 555 SCRA 537, 550-552.
[8] D.M. Consunji Corp. vs. Rogelio P. Bello, G.R. No. 159371, July 29, 2013.
[9] See Annex “J”, Rollo, pages, 176-180.
[10] Dacuital v. L.M. Camus, et al., G.R. No. 176748, September 1, 2010; see also Veloso, Labor Law Reviewer, 2011 edition, page 136, citing Hanjin Heavy Industries and Construction v. Ibañez, 555 SCRA 537 (2008).
[11] See GMA Network, Inc. vs. Pabriga, et al., G.R. No. 176419, November 27, 2013.
[12] Concrete Solutions, Inc. vs. Arthur Cabusas, G.R. No. 177812, June 19, 2013.
[13] D.M. Consunji, Inc. v. Gobres, et al., G.R. No. 169170, August 8, 2010, citing Cioco v. C.E. Construction Corp., 481 Phil. 270 (2004).
[14] Guidelines Governing the Employment of Workers in the Construction:
x x x
2.2 Indicators of project employment. Either one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.
(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees’ terminations dismissals suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.
xxx
6.1. Requirements of labor and social legislations. (a) The construction company and the general contractor and/or subcontractor referred to in Sec. 2.5 shall be responsible for the workers in its employ on matters of compliance with the requirements of existing laws and regulations on hours of work, wages, wage related benefits, health, safety and social welfare benefits, including submission to the DOLE-Regional Office of Work Accident/Illness Report, Monthly Report on Employees’ Terminations/ Dismissals/Suspensions and other reports x x x. (Emphasis supplied.)
[15] Stabilizing Employer-Employee Relations in the Construction Industry:
In the interest of stabilizing employer-employee relations in the construction industry and taking into consideration its unique characteristics, the following policy instructions are hereby issued for the guidance of all concerned:
Generally, there are two types of employees in the construction industry, namely: a) Project employees, and 2) Non-Project employees.
Project employees are those employed in connection with a particular construction project. x x x
Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes.
[16] See Rollo, page 114.
[17] II Chan, The Labor Code of the Philippines, Annotated, 2005 Revised Edition, page 657.