SOUTHERN COTABATO DEVELOPMENT AND CONSTRUCTION, INC. OR  SODECO/LIBERTY  CONSTRUCTION JOINT VENTURE/ELLA G. DEMANDANTE, PETITIONERS, VS. NATIONAL LABOR RELATION COMMISSION, FOUR…

Southern Cotabato Development and Construction versus National Labor Relations Commission

The Case

This is a special civil action for certiorari under Rule 65 of the Rules of Court. The petitioners are Southern Cotabato Development and Construction, Incorporated, also called SODECO, its joint venture partner Liberty Construction, and Ella G. Demandante, who was SODECO's Managing Director. They ask the Supreme Court to annul the decision and resolution of the National Labor Relations Commission, which had found that the private respondents, the workers hired for an Asian Development Bank funded road project, were illegally dismissed and were entitled to back wages. The case matters because it gathers in one decision the rules on project employees, the burden of proving a lawful dismissal, the relaxed rules of evidence in labor proceedings, and the limits of an award of back wages.

Procedural History

The workers filed complaints for illegal dismissal and money claims before the Regional Arbitration Branch of the National Labor Relations Commission in Dumaguete City. The Labor Arbiter dismissed the complaints of those who did not submit affidavits or substantiate their claims, found that the complainants were project employees who were not illegally dismissed, gave full faith to the payroll sheets, and ordered payment of premium pay, holiday pay, and overtime pay to seven named watchmen, with attorney's fees. The workers appealed to the National Labor Relations Commission. The Commission first dismissed the appeal as filed out of time, but on motion for reconsideration it set aside the dismissal in the interest of justice. On the merits, the Commission reversed the Labor Arbiter, found the workers illegally dismissed, and ordered payment of back wages, directing the Labor Arbiter to determine the completion of the project and of the phases to which particular complainants were assigned. The Commission denied the petitioners' motion for reconsideration. The petitioners then came to the Supreme Court by petition for certiorari under Rule 65.

Facts

SODECO and Liberty Construction entered into a joint venture to build a road funded by the Asian Development Bank, connecting the municipality of Sibulan in Negros Oriental and Bais City. The private respondents were hired as watchmen, survey aides, laborers, and carpenters for that project. They claimed that they were dismissed by Demandante when they asked for salary increases, and they sued for illegal dismissal, reinstatement, wage differentials, overtime pay, premium pay for rest days and holidays, thirteenth month pay, and damages.

Of the original forty-six complainants, only thirty-four submitted affidavits, and only fifteen of those testified. Five complainants filed a verified motion to dismiss their own complaints. The workers claimed they were underpaid, and that they signed payrolls in triplicate, with the first page showing the actual amount received and the second and third pages left blank. The petitioners denied illegal dismissal and insisted that the workers were project employees whose work ended with the phases of the project to which they were assigned. The petitioners presented only one witness, SODECO's paymaster, who offered nine payroll sheets but could not account for thirteen others.

The Labor Arbiter found the workers to be project employees who were not illegally dismissed, and awarded money only to the watchmen. The National Labor Relations Commission reversed, holding that the petitioners failed to prove any just cause and failed to observe the twin requirements of notice and hearing, and that the watchmen were illegally dismissed when they were replaced by licensed and armed guards. The petitioners brought the matter to the Supreme Court.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in giving due course to the appeal of the private respondents despite its earlier finding that the appeal was filed beyond the ten-day reglementary period.
• Whether or not the private respondents, as project employees, were illegally dismissed.
• Whether or not the National Labor Relations Commission erred in awarding back wages to all the complainants, including those who did not submit affidavits, did not appear at the hearing, or moved to dismiss their own complaints.
• Whether or not the affidavits of complainants who did not testify may be admitted as evidence in labor proceedings.

Applicable Provisions

Article 277, paragraph (b) of the Labor Code, as amended by Section 33 of Republic Act Number 6715, provides:

Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

This is the provision the Commission applied in holding that the petitioners failed to prove a just cause and failed to observe notice and hearing.

Policy Instruction Number 20, which the Court quotes in part, provides:

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.

This provision defines the rights of project employees and explains why the completion of a phase, not of the whole project, ends their employment.

Article 279 of the Labor Code, which the Court cites as the basis of the back wages, provides for security of tenure and for reinstatement without loss of seniority rights and other privileges, and for full back wages, inclusive of allowances, and other benefits or their monetary equivalent, to an employee unjustly dismissed.

Article 221 of the Labor Code provides that the rules of evidence prevailing in courts of law or equity shall not control proceedings before Labor Arbiters and the Commission, which may use every and all reasonable means to ascertain the facts speedily and objectively, without regard to technicalities of law and procedure, all in the interest of due process.

Ruling

On the first issue, the Court held that the Commission did not err in allowing the appeal. The petitioners did not oppose the motion for reconsideration, and the motion showed that the appeal was posted within the reglementary period, as evidenced by the certification of the postmaster of Dumaguete City and the return card. Having instead argued their defenses and asked for affirmative relief from the Commission, the petitioners are now in estoppel to claim that the Commission lacked jurisdiction to decide the appeal.

On the second issue, the Court held that the private respondents were project employees, but that this did not strip them of security of tenure for the duration of the project or of the phases to which they were assigned. The employer bears the burden of proving that a project employee was dismissed with just cause, and the same burden applies where the worker is dismissed before the completion of the project or phase. The petitioners relied only on the paymaster's testimony and incomplete payroll sheets, and failed to present the best evidence, which would have been the service contract of each complainant and the schedule of completion of the various phases. No credible evidence therefore supported their claim of completion, and the Commission correctly found an illegal dismissal.

On the third issue, the Court modified the award. As to those who moved to dismiss their complaints, or who did not submit affidavits and did not appear at the hearing, and in whose favor no independent evidence was adduced, no award of back wages could validly be made for want of factual basis. The affidavits of the thirty-four complainants were never offered as evidence for those who did not submit their own, and the position paper did not help them.

On the fourth issue, the Court held that the affidavits of complainants who did not testify were admissible. Under Article 221 of the Labor Code, the rules of evidence are not strictly observed in proceedings before administrative bodies such as the Commission, and under the New Rules of Procedure of the National Labor Relations Commission, cases may be submitted on verified position papers with supporting documents, including affidavits which stand in place of direct testimony.

Doctrine

A project employee enjoys security of tenure for the duration of the project, or of the phase of the project to which he is assigned, and his employment ends upon the completion of that task. The employer who claims that a project employee was dismissed before completion, or who dismisses him for cause, carries the burden of proving a just or authorized cause, and must present the service contract and the schedule of completion of the phases. The twin requirements of notice and hearing under Article 277, paragraph (b) of the Labor Code cannot be dispensed with. The rules of evidence are not strictly applied in labor proceedings, so affidavits may stand in place of direct testimony under Article 221 of the Labor Code. Back wages under Article 279 of the Labor Code may be awarded only to those with a factual basis, and not to complainants who abandoned their claims or presented no evidence.

Disposition

The petition was dismissed, and the decision of the National Labor Relations Commission was modified so that the award of back wages would not apply to the five complainants who moved to dismiss their complaints and to the others who did not submit affidavits and did not appear at the hearing, with the Labor Arbiter directed to resolve the referred issues promptly.

Remember This

Memorize this line: a project employee has security of tenure until the phase for which he was hired is completed, and the employer who says it is finished must prove it with the service contract and the schedule of completion. Examiners use this case for the burden of proof in dismissals of project employees, for the relaxation of evidence rules in labor cases, and for the rule that back wages require a factual basis.