Engineering & Construction Corporation of Asia v. Palle G.R. No. 201247, July 13, 2020, SECOND DIVISION, (Hernando, J.)

 

Engineering & Construction Corporation of Asia v. Palle

G.R. No. 201247, July 13, 2020, SECOND DIVISION, (Hernando, J.)

Doctrine:

It is necessary to note that an employer has the burden to prove that the employee is indeed a project employee. Thus, "the employer must establish that (a) the employee was assigned to carry out a particular project or undertaking; and (b) the duration and scope of which was specified at the time of engagement."

Facts:

Petitioner ECCA, now known as First Balfour Incorporated, is a domestic corporation engaged in the construction business.  Respondents Palle, Velosa, Pampanga, Galabo, Galapin and Felicitas (collectively, respondents) were hired by ECCA on various dates to work in its construction business.

The instant case stemmed from the illegal dismissal complaint filed in 2004 by the respondents with the National Labor Relations Commission (NLRC) against ECCA and its president, Oscar Lopez.

ECCA claimed that respondents, as project employees, were validly terminated in view of the project's completion. It pointed out that respondents were not regular employees, but merely project employees since they were hired for a specific project or undertaking, the termination of which was determined at the time they were hired. On the other hand, Respondents mainly argued that they were not project employees but were regular employees of ECCA. They claimed that ECCA hired them on different dates to perform tasks which were necessary and desirable in its construction business.

The Labor Arbiter held that respondents were regular employees of ECCA. The Labor Arbiter pointed out that the company has not presented any document showing that in every termination of the project, respondents' employment was also terminated. Furthermore, the Labor Arbiter also noted that respondents were hired by ECCA for one project but were later repeatedly rehired for more than 20 to 30 years in several other projects. Thus, this showed that respondents have become regular employees of ECCA. The Labor Arbiter emphasized that where the employment of project employees is extended long after the first project had been finished, the employees are removed from the scope of project employment and are considered regular employees.

Aggrieved, ECCA filed an appeal with the NLRC. In decision, the NLRC reversed the findings of the Labor Arbiter and granted ECCA's appeal.

Issues:

Whether or not respondents were illegally dismissed as regular employees or validly terminated in view of the completion of their contract as project employees.

Ruling: Yes. Respondents were regular employees who were illegally terminated.

The Supreme Court uphold the findings of the CA that respondents were regular employees who were illegally terminated.

Regular and Project Employees, distinguished.

Article 295 [280] of the Labor Code provides the following definition of regular and project employees:

ARTICLE 295. [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.

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 activity exists.

On the other hand, DOLE's Department Order No. 19, series of 1993 (D.O. No. 19), otherwise known as the Guidelines Governing the Employment of Workers in the Construction Industry, provides:

An employment is generally deemed regular where: (i) the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, subject to exceptions, such as when one is a fixed, project or seasonal employee; or (ii) the employee has been engaged for at least a year, with respect to the activity he or she is hired, and the employment of such employee remains while such activity exists.

On the other hand, a project employee "is one whose 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." Thus, the "services of project-based employees are co-terminous with the project and may be terminated upon the end or completion of the project or a phase thereof for which they were hired.

The Court find that ECCA failed to present substantial evidence to show that it informed respondents of the duration and scope of their work at the time of their hiring. Upon careful review of the company's respective contracts of employment with respondents, this Court holds that the employment contracts were lacking in detail to prove that respondents had been duly informed of the duration and scope of their work, and of their status as project employees at the time of their hiring. The respective contracts of respondents may have been dated at the time of their issuance, but nowhere did said contracts show as to when respondents supposedly signed or received the same or were informed of the contents thereof. This gives rise to the distinct possibility that respondents were not informed of their status as project employees, as well as the scope and duration of the projects that were assigned to them at the time of their engagement. Thus, ECCA failed to refute respondents' claim that they worked in new projects, or they were transferred to other existing projects without the benefit of their corresponding employment contracts. Therefore, ECCA failed to persuasively show that respondents herein were informed at the time of their engagement that their work was only for the duration of the project.

Moreover, ECCA failed to present other evidence or other written contracts to show that it informed respondents of the duration and scope of their work. Settled is the rule that "although the absence of a written contract does not by itself grant regular status to the employees, it is evidence that they were informed of the duration and scope of their work and their status as project employees at the start of their engagement. When no other evidence is offered, the absence of employment contracts raises a serious question of whether the employees were sufficiently apprised at the start of their employment of their status as project employees."

In addition, the Court also noted that the company did not submit a report with the DOLE of the termination of respondents' employment every time a project is completed, which is an indication that the workers were not project employees but regular ones.

In view of ECCA's indisputable failure to discharge its burden to prove that respondents were project employees, the Court finds that the CA properly found them to be regular employees. Therefore, respondents, as regular employees, may only be dismissed for just or authorized causes and upon compliance with procedural due process, i.e., notice and hearing. This Court notes that completion of a project is not a valid cause to terminate regular employees, such as respondents herein.