ALU-TUCP, REPRESENTING MEMBERS: ALAN BARINQUE, WITH 13 OTHERS, NAMELY: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACU…

In this Petition for Certiorari, petitioners assail the
Resolution of the National Labor Relations Commission (“NLRC”) dated
8 January 1993 which declared petitioners to be project employees of private
respondent National Steel Corporation (“NSC”), and the NLRC’s
subsequent Resolution of 15 February 1993, denying petitioners’ motion for
reconsi­deration.

Petitioners plead that they had been
employed by respondent NSC in connection with its Five Year Expansion Program
(FAYEP I & II)^[1]
for varying lengths of time when they were separated from NSC’s service:

On 5 July 1990, petitioners filed
separate complaints for unfair labor practice, regularization and monetary
benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The complaints were consolidated and after hearing, the Labor
Arbiter in a Decision dated 7 June 1991, declared petitioners “regular project employees who
shall continue their employment as such for as long as such [project] activity
exists,” but entitled to the salary of a regular employee
pursuant to the provisions in the collective bargaining agreement. It
also ordered payment of salary differentials.^[3]

Both parties appealed to the NLRC from that decision. Petitioners
argued that they were regular, not project, employees. Private respondent, on the other hand,
claimed that petitioners are project employees as they were employed to
undertake a specific project — NSC’s Five Year Expansion Program (FAYEP I
& II).

The NLRC in its questioned resolutions modified the Labor
Arbiter’s decision. It affirmed the Labor Arbiter’s holding that petitioners
were project employees since they were hired to perform work in a
specific undertaking – the Five Year Expansion Program, the completion of which
had been determined at the time of their engagement and which operation was not
directly related to the business of steel manufacturing. The NLRC, however, set
aside the award to petitioners of the same benefits enjoyed by regular
employees for lack of legal and factual basis.

Deliberating on the present Petition for Certiorari, the
Court considers that petitioners have failed to show any grave abuse of
discretion or any act without or in excess of jurisdiction on the part of the
NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February
1993.

The law on the matter is Article 280 of the Labor Code which
reads in full:

“Article 280. Regular
and Casual Employ­ment — The provisions of the 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.

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 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.” (Emphases supplied)

Petitioners argue that they are “regular” employees of
NSC because: (i) their jobs are
“necessary, desirable and work-related to private respondent’s main
business, steel­making”; and (ii) they have rendered service for six (6)
or more years to private respondent NSC.^[4]

The basic issue is thus whether or not petitioners are properly
characterized as “project employees” rather than “regular
employees” of NSC. This issue
relates, of course, to an important consequence: the services of project employees are co-terminous with the
project and may be terminated upon the end or completion of the project for
which they were hired.^[5]
Regular employees, in contrast, are legally entitled to remain in the service of
their employer until that service is terminated by one or another of the
recognized modes of termination of service under the Labor Code.^[6]

It is evidently important to become clear about the meaning and
scope of the term “project” in the present context. The “project” for the carrying out
of which “project employees” are hired would ordinarily have some
relationship to the usual business of the employer. Exceptionally, the
“project” undertaking might not have an ordinary or normal
relationship to the usual business of the employer. In this latter case, the
determination of the scope and parameters of the “project” becomes
fairly easy. It is unusual (but still
conceivable) for a company to undertake a project which has absolutely no
relationship to the usual business of the company; thus, for instance, it would
be an unusual steel-making company which would undertake the breeding and
production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of
undertaking fish culture or the production of vegetables as “project
employees,” as distinguished from ordinary or “regular employees,”
so long as the duration and scope of the project were determined or specified
at the time of engagement of the “project employees.”^[7]
For, as is evident from the provisions of Article 280 of the Labor Code, quoted
earlier, the 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 the realm of business and industry, we note that
“project” could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that
is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of
the company. Such job or undertaking
begins and ends at determined or determinable times. The typical example of this first type of project is a particular
construction job or project of a construction company. A construction company ordinarily carries
out two or more discrete identifiable construction projects: e.g., a twenty-five-storey hotel in Makati;
a residential condominium building in Baguio City; and a domestic air terminal
in Iloilo City. Employees who are hired
for the carrying out of one of these separate projects, the scope and duration
of which has been determined and made known to the employees at the time of
employment, are properly treated as “project employees,” and their
services may be lawfully terminated at completion of the project.

The term “project” could also refer to, secondly, a
particular job or undertaking that is not within the regular business of
the corporation. Such a job or
undertaking must also be identifiably separate and distinct from the ordinary
or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical
example of this kind of “project.”

NSC undertook the ambitious Five Year Expansion Program I and II
with the ultimate end in view of expanding the volume and increasing the kinds
of products that it may offer for sale to the public. The Five Year Expansion Program had a number of component
projects: e.g., (a) the setting up of a
“Cold Rolling Mill Expansion Project”; (b) the establishment of a
“Billet Steel-Making Plant” (BSP); (c) the acquisition and
installation of a “Five Stand TDM”; and (d) the “Cold Mill
Peripherals Project.”^[8]
Instead of contracting out to an outside or independent contractor the tasks of
constructing the buildings with related civil and
electrical works that would house the new machinery and equipment, the installation of the newly acquired mill or plant
machinery and equipment and the commissioning of such machinery and equipment, NSC
opted to execute and carry out its Five Year Expansion Projects “in
house,” as it were, by administration. The carrying out of the Five Year Expansion Program (or more precisely,
each of its component projects) constitutes a distinct undertaking identifiable
from the ordinary business and activity of NSC. Each component project, of
course, begins and ends at specified times, which had already been determined
by the time petitioners were engaged. We also note that NSC did the work here involved — the construction of
buildings and civil and electrical works, installation of machinery and
equipment and the commissioning of such machinery — only for itself. Private respondent NSC was not in the
business of constructing buildings and installing plant machinery for the
general business community, i.e., for unrelated, third party,
corporations. NSC did not hold
itself out to the public as a construction company or as an engineering
corporation.

Whichever type of project employment is found in a particular
case, a common basic requisite is that the designation of named employees as
“project employees” and their assignment to a specific project, are
effected and implemented in good faith, and not merely as a means of evading
otherwise applicable requirements of labor laws.

Thus, the particular component projects embraced in the Five Year
Expansion Program, to which petitioners were assigned, were distinguishable
from the regular or ordinary business of NSC which, of course, is the
production or making and marketing of steel products. During the time
petitioners rendered services to NSC, their work was limited to one or another
of the specific component projects which made up the FAYEP I and II. There is
nothing in the record to show that petitioners were hired for, or in fact assigned
to, other purposes, e.g., for operating or maintaining the old, or previously
installed and commissioned, steel-making machinery and equipment, or for
selling the finished steel products.

We, therefore, agree with the basic finding of the NLRC (and the Labor
Arbiter) that the petitioners were indeed “project employees:”

“It is well established by the facts and evidence on record
that herein 13 complainants were hired and engaged for specific activities or
undertaking the period of which has been determined at time of hiring or
engagement. It is of public knowledge
and which this Commission can safely take judicial notice that the expansion
program (FAYEP) of respondent NSC consist of various phases [of] project components
which are being executed or implemented independently or simultaneously from
each other. x x x.

In other words, the employment of each ‘project worker’ is
dependent and co-terminous with the completion or termination of the specific
activity or undertaking [for which] he was hired which has been pre-determined
at the time of engagement. Since, there
is no showing that they (13 complainants) were engaged to perform work-related
activities to the business of respondent which is steel-making, there is no
logical and legal sense of applying to them the proviso under the second
paragraph of Article 280 of the Labor Code, as amended.

x x x                                                              x
x x                                                                 x
x x

The present case therefore strictly falls under the definition of
‘project employees’ on paragraph one of Article 280 of the Labor Code, as
amended. Moreover, it has been held
that the length of service of a project employee is not the controlling test of
employment tenure but whether or not ‘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’. (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA
674 (1985).”^[9]

Petitioners next claim that their service to NSC of more than six
(6) years should qualify them as regular employees. We believe this claim is without legal basis. The simple fact
that the employment of petitioners as project employees had gone beyond one (1)
year, does not detract from, or legally dissolve, their status as project
employees.^[10]
The second paragraph of Article 280 of the Labor Code, quoted above, providing
that an employee who has served for at least one (1) year, shall be considered
a regular employee, relates to casual
employees, not to
project employees.

In the case of Mercado,
Sr. vs. National Labor Relations Commission,^[11] this Court ruled that the proviso in
the second paragraph of Article 280 relates only to casual employees and
is not applicable to those who fall within the definition of said Article’s
first paragraph, i.e., project
employees. The familiar grammatical rule is that
a proviso is to be construed with reference to the immediately preceding part
of the provision to which it is attached, and not to other sections thereof,
unless the clear legislative intent is to restrict or qualify not only the
phrase immediately preceding the proviso but also earlier provisions of the
statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has
been quoted earlier.

ACCORDINGLY, in view of the foregoing, the
Petition for Certiorari
is hereby DISMISSED for
lack of merit. The Resolutions of the
NLRC dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr.,
Romero, Melo, Quiason, Puno, Vitug, Kapunan, and
Mendoza, JJ., concur.

Bellosillo, J., on official
leave.

^[1]
NLRC Resolution, 8 January 1993, p. 7; Rollo, p. 75.

^[2]
Petition for Certiorari, 7 May 1993, pp. 3-11, Rollo, pp. 4-12.

^[3]
NLRC Decision, 7 June 1991, Rollo, pp. 48-49; underscoring and brackets
supplied.

^[4]
Petition for Certiorari, 7 May 1993, p. 15; Rollo, p. 16.

^[5]
Beta Electric Corporation v. National Labor Relations Commission, 182
SCRA 380 (1990); Cartagenas v. Romago Electric Co., Inc., 177 SCRA 637
(1989); Sandoval Shipyards, Inc. v. National Labor Relations Commission,
136 SCRA 674 (1985).

^[6]
Articles 281-286, Labor Code, as amended.

^[7]
Fortunato Mercado, Sr., et al. v. NLRC, et al. 201 SCRA 332 (1991);
Philippine National Construction Corp. v. NLRC, 174 SCRA 191 (1989);
Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985); Ochoco v.
NLRC, 120 SCRA 774 (1983).

^[8]
Petition for Certiorari, pp. 3-11; Rollo, pp. 4-12. NLRC Resolution of 8 January 1993, pp. 7-13;
Rollo, pp. 75-­81.

^[9]
NLRC Decision, Rollo, pp. 65-66.

^[10]
Rada v. National Labor Relations Commission, 205 SCRA 69 (1992).

^[11] 201 SCRA 332 (1991).