CISELL A. KIAMCO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (4TH DIVISION), PHILIPPINE NATIONAL OIL COMPANY (PNOC) AND PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC), …

Kiamco versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Cisell Kiamco against the National Labor Relations Commission, the Philippine National Oil Company, and the PNOC Energy Development Corporation. Kiamco asks the Supreme Court to annul the Resolution of the National Labor Relations Commission which declared him a project employee rather than a regular employee, and which awarded him back wages for only six months instead of full back wages with reinstatement. The case matters because it settles two questions every labor practitioner must know: how a project employee is distinguished from a regular employee under Article 280 of the Labor Code, and whether a project employee may nonetheless be illegally dismissed and entitled to reinstatement and full back wages.

Procedural History

Kiamco filed a complaint for illegal suspension and dismissal before the Sub-Regional Arbitration Branch of the National Labor Relations Commission in Dumaguete City. The Labor Arbiter dismissed the complaint for lack of merit, holding that the three employment contracts were freely and voluntarily signed and plainly stated that Kiamco was hired for a specific project and a fixed term. Kiamco appealed to the National Labor Relations Commission. The Commission reversed the Labor Arbiter and declared Kiamco a regular employee who had been illegally dismissed, ordering his reinstatement without loss of seniority rights and privileges with back wages from dismissal until actual reinstatement. The private respondents moved for reconsideration. The Commission modified its own decision, declaring Kiamco a project employee and awarding back wages for six months only, and deleting the order of reinstatement with full back wages. Kiamco then filed this petition for certiorari before the Supreme Court, assailing the modified Resolution on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

On the first of July 1992, the Philippine National Oil Company, through its Energy Research and Development Division which was later incorporated as the PNOC Energy Development Corporation, hired Cisell Kiamco as a project employee in its Geothermal Agro-Industrial Plant Project in Valencia, Negros Oriental. The first Contract of Employment engaged him as a technician for five months, from the first of July 1992 to the thirtieth of November 1992, or until the completion of the project, whichever came first, at a monthly salary of 3,500 pesos. A second contract followed on basically the same terms, except that work time was reduced to twenty-two days per month, covering the first of December 1992 to the thirtieth of April 1993. A third contract was then signed for six months, from the first of May 1993 to the thirtieth of November 1993, with an increased salary of 3,850 pesos per month.

On the twentieth of October 1993, Kiamco received a Memorandum from the administration department demanding an explanation for alleged infractions: misconduct for having replaced the stereo of a vehicle without permission; absence without official leave on the thirteenth and fifteenth of October 1993; non-compliance with the administrative reporting procedure on accidents; and unauthorized use of company vehicles. Kiamco explained his side in a letter dated the twenty-second of October 1993, but the private respondents found the explanation unsatisfactory. On the twenty-eighth of October 1993, he received another Memorandum placing him under preventive suspension from the first of November 1993 to the thirtieth of November 1993 pending further investigation. No investigation was ever conducted. The private respondents took the position that no investigation was necessary because Kiamco had ceased to be an employee upon the expiration of his contract on the thirtieth of November 1993.

On the first of December 1993, Kiamco reported back to work but was prevented by security guards from entering the company premises. On the twenty-seventh of May 1994, the PNOC Energy Development Corporation reported to the Department of Labor and Employment that Kiamco had been terminated on the first of November 1993 due to the expiration of his employment contract and the abolition of his position. Kiamco had already filed his complaint for illegal suspension and dismissal on the twenty-fifth of April 1994, praying for reinstatement and back wages.

Issues

• Whether or not the petition should be dismissed for Kiamco's failure to file a motion for reconsideration of the assailed Resolution before the National Labor Relations Commission.
• Whether or not Kiamco is a regular employee or a project employee.
• Whether or not Kiamco is entitled to reinstatement without loss of seniority rights and privileges and to the payment of full back wages.
• Whether or not Kiamco is entitled to moral and exemplary damages.

Applicable Provisions

Article 280 of the Labor Code, as quoted in the decision, provides:

Article 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.

This provision supplies the very test the Court applies: employment is regular unless it falls within the exception for a specific project or undertaking whose completion or termination was determined at the time of engagement.

Article 280 further provides:

An employee 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 activity exists.

This second paragraph completes the statutory framework on the classification of employment.

Article 282 of the Labor Code, cited in the decision, provides:

Article 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by his employee or duly authorized representative; (d) Commission of a crime or offense by his employee or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing.

This provision enumerates the just causes for termination, none of which the private respondents proved against Kiamco.

Ruling

On the first issue, the Court held that Kiamco's failure to file a motion for reconsideration was not fatal to his petition. The rule requiring a motion for reconsideration before certiorari is not rigid. When the questions raised before the Supreme Court are the same questions squarely raised in and passed upon by the tribunal below, a motion for reconsideration is no longer a prerequisite. Here, the issues Kiamco raised had already been submitted to and decided by the National Labor Relations Commission, and the assailed Resolution was itself already the product of a motion for reconsideration filed by the private respondents. A further motion would only be a rehash of arguments already considered.

On the second issue, the Court held that Kiamco was correctly labeled a project employee. The three Contracts of Employment clearly established this because he was specifically assigned to work for a particular project, the Geothermal Agro-Industrial Demonstration Plant Project, and the termination and completion of that project was determined and stipulated in the contract at the time of his employment. The contracts provided that he was hired as Technician for a period commencing on the first of May 1993 to the thirty-first of October 1993 or up to the completion of the project, whichever came first.

On the third issue, the Court held that Kiamco, though a project employee, was illegally dismissed and therefore entitled to reinstatement and full back wages. The normal consequences of an illegal dismissal are reinstatement to the former position without loss of seniority rights and payment of back wages. These rights do not depend on the status of employment before dismissal but on the legality and validity of the termination. The private respondents presented no proof of any just or authorized cause; they relied solely on the expiration of the contract, abandoning whatever valid cause they might have had. They also failed to comply with due process, which requires two written notices: one apprising the employee of the acts or omissions for which dismissal is sought, and a subsequent notice informing him of the decision to dismiss. The second notice was never given. The Court also rejected the arguments of abolition of position and strained relations. The employer bears the burden of proving that the project had been completed, and no such proof was shown. Strained relations cannot be applied indiscriminately, and no strained relations arise from the valid legal act of asserting one's rights.

On the fourth issue, the Court held that Kiamco was not entitled to moral and exemplary damages. Moral damages are recoverable only where the dismissal was attended with bad faith, fraud, or was oppressive to labor or contrary to morals, good customs, or public policy. Exemplary damages may be awarded only if the dismissal was effected in a wanton, oppressive, or malevolent manner. The evidence showed no fraud, malice, or bad faith on the part of the private respondents.

Doctrine

The principal test for determining whether an employee is a project employee rather than a regular employee is whether he was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time of his engagement. Project employees are those hired for a specific project or undertaking, and the completion or termination of that project or undertaking has been determined at the time of engagement. However, the fact that an employee is a project employee does not mean he may be dismissed at any time, even illegally, by his employer. The normal consequences of an illegal dismissal are reinstatement without loss of seniority rights and payment of full back wages, and these rights depend not on the status of employment but on the legality and validity of the termination. The employer bears the burden of proving just and valid cause for dismissal, and failure to do so renders the dismissal unjustified. Due process in termination requires two written notices. The principle of strained relations cannot be applied indiscriminately, and no strained relations arise from the valid legal act of asserting one's rights.

Disposition

The Supreme Court granted the petition, modified the assailed Resolution of the National Labor Relations Commission, and ordered the Philippine National Oil Company and the PNOC Energy Development Corporation to immediately reinstate Kiamco to his former position without loss of seniority rights and privileges, with full back wages from the date of his dismissal until his actual reinstatement, with costs against the private respondents.

Remember This

Memorize this line: a project employee may still be illegally dismissed, and the normal consequences of illegal dismissal, namely reinstatement and full back wages, do not depend on the status of employment but on the legality and validity of the termination. Examiners like to use this case to test the project employee versus regular employee distinction under Article 280, the two-notice due process requirement, and the burden of proof resting on the employer in termination cases.