TELESFORO MAGANTE, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND CONSTRESS PHILIPPINES, INC., RESPONDENTS.

Magante versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Telesforo Magante against the National Labor Relations Commission and Constress Philippines, Incorporated. Magante asks the Supreme Court to set aside the Commission's decision dismissing his complaint for illegal dismissal and to restore the ruling of the labor arbiter who had ordered his reinstatement with full backwages. The case matters because it fixes the test for determining whether a worker in the construction industry is a regular employee or a mere project employee, and it warns employers that labels written on contracts cannot override the nature of the work actually performed.

Procedural History

Magante filed a complaint for illegal dismissal with the then Ministry of Labor and Employment. Labor Arbiter Domingo del Rosario ruled in his favor, directing Constress Philippines, Incorporated to reinstate him to his position with full backwages and all the rights and benefits granted by law. Constress appealed to the National Labor Relations Commission, which reversed the labor arbiter, held that Magante was a project employee whose employment ended upon completion of the phase of work for which he was hired, and entered a new judgment dismissing the complaint. Magante's motion for reconsideration was denied. He then came to the Supreme Court by way of certiorari, alleging grave abuse of discretion.

Facts

Constress Philippines, Incorporated is engaged in the concrete structural business. It employed Telesforo Magante as a carpenter from April 1980 until his dismissal in March 1982, paying him roughly three hundred pesos a week, excluding allowance, for about fourteen hours of work daily. His work involved making molds for bridges, buildings, and other structures. He was never assigned to work outside the company's plant.

Every three months, Magante was made to sign an employment contract relating to a particular phase of work in a specific project. The contracts were written in English, and it is alleged that their terms were neither understood by him nor explained to him. His last hiring agreement took effect in December 1981 at an agreed compensation of twenty-one pesos and thirty-six centavos a day.

In March 1982, Constress posted a notice of termination on its bulletin board, effective the following day, listing Magante and other employees. He was told he could not work anymore because he was already old, that his contract had expired, and that it was not renewed because he was a project employee. The termination was reported to the Ministry of Labor. Magante then filed his complaint for illegal dismissal.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in reversing the labor arbiter and holding that Magante was a project employee whose employment ended upon completion of the project.
• Whether or not Magante was a regular employee entitled to reinstatement with full backwages.

Applicable Provisions

Article 281 of the Labor Code provides:

Article 281. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements 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 test of regular employment and the project-undertaking exception that the Commission invoked.

The same Article continues:

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 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 actually exists.

This sentence anchors the rule that one year of service, continuous or broken, makes the employee regular as to the activity in which he is employed.

Policy Instruction Number 20, as quoted in the decision, 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. 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.

This regulation defines project employment in construction and imposes the reporting requirement whose breach the Court used against the employer.

Ruling

On the first issue, the Court held that the Commission gravely abused its discretion in closing its eyes to the evidence on record and to the factual findings of the labor arbiter. The Commission had relied on the separate contracts and on Policy Instruction Number 20, but the Court found that the contracts did not reflect reality.

On the second issue, the Court ruled that Magante was a regular employee. Since the very inception of his employment in 1980, he was never deployed from project to project; he was regularly assigned to carpentry work under a supervisor of the company's Carpentry Department. This showed that he performed tasks usually necessary or desirable in the usual business or trade of the employer, and that his assignments did not end on a project to project basis, although the contrary was made to appear through the signing of separate contracts. The Court stressed that the determining factor of the status of a worker is the nature of the work performed and the place where he performed his assignment, not the label in the contract. It also applied the doctrine of the earlier Fegurin case, where continuous assignment of similar carpentry work from project to project made the workers regular despite shorter periods stated in their notices of employment.

The Court added that if Magante were truly a project employee, the company should have submitted a report of termination to the nearest public employment office every time his employment ended upon completion of each project. No such reports were shown, and there should have been as many reports as there were projects finished. Finally, the Court held that construing the employment contract solely on its face, without considering the surrounding circumstances, defeats the purpose for which the Labor Code and its implementing rules were enacted.

Doctrine

The status of an employee is determined by the nature of the work performed and the place of assignment, not by the terms of a written contract. A worker engaged to perform activities usually necessary or desirable in the usual business or trade of the employer is a regular employee under Article 281 of the Labor Code, and the project-undertaking exception applies only where the employment has genuinely been fixed for a specific project whose completion or termination was determined at the time of engagement. Successive short-term contracts covering the same kind of work do not convert a regular employee into a project employee; they are a scheme that cannot defeat the security of tenure guaranteed by law. An employer claiming project employment in the construction industry must show compliance with the reporting requirement of Policy Instruction Number 20, and failure to file the required termination reports for each completed project belies that claim.

Disposition

The petition was granted; the decision of the National Labor Relations Commission was reversed and set aside, and the decision of the labor arbiter ordering reinstatement with full backwages was affirmed and reinstated. Magante won.

Remember This

Memorize the line that the determining factor of a worker's status is the nature of the work performed and the place of assignment, not the contract's label. Examiners use this case to test project employment in the construction industry, the one-year service rule under Article 281, and the reporting requirement of Policy Instruction Number 20.