THE TERMINATION OF RELATIONSHIP “UPON COMPLETION OF THE PHASE OF WORK” OF A PROJECT EMPLOYEE IS DEFINITE AS THERE IS CERTAINTY OF COMPLETION

Ganzon, Inc. (EGI) vs. Fortunato B. Ando, Jr.
G.R. No. 214183, February 20, 2017

Facts:

Fortunato B. Ando, Jr. (Ando) filed a complaint against petitioner E. Ganzon, Inc. (EGI) and its President, Eulalio Ganzon, for illegal dismissal and money claims for underpayment of salary, overtime pay, and 13th month pay; non-payment of holiday pay and service incentive leave; illegal deduction; and attorneys fees.

He alleged that he was a regular employee working as a finishing carpenter in the construction business of EGI; he was repeatedly hired from January 21, 2010 until April 30, 2011 when he was terminated without prior notice and hearing; his daily salary of F292.00 was below the amount required by law; and wage deductions were made without his consent, such as rent for the barracks located in the job site and payment for insurance premium.

EGI countered that, as proven by the three (3) project employment contracts, Ando was engaged as a project worker (Formworker-2) in Bahay Pamulinawen Project in Laoag, Ilocos Norte from June 1, 2010 to September 30, 20107 and from January 3, 2011 to February 28, 20118 as well as in EGI-West Insula Project in Quezon City, Metro Manila from February 22, 2011 to March 31, 2011.

He was paid the correct salary based on the Wage Order applicable in the region. That he already received the 13th month pay for 2010 but the claim for 2011 was not yet processed at the time the complaint was filed; and he voluntarily agreed to pay F500.00 monthly for the cost of the barracks, beds, water, electricity, and other expenses of his stay at the job site.

LA Ruling:

The Labor Arbiter declared Ando a project employee of EGI but granted some of his money claims.

Both parties elevated the case to the NLRC.

NLRC Ruling:

The NLRC dismissed the appeals filed and affirmed in toto the Decision of the Labor Arbiter.

Ando filed a motion for reconsideration, but it was denied. Still aggrieved, he filed a Rule 65 petition before the CA.

CA Ruling:

The CA granted the petition. EGI’s motion for reconsideration was denied.

Hence, EGI’s petition with the Supreme Court (SC).

Issue/s:

Whether or not Ando was a regular employee and not project employee

SC Ruling:

The SC held that the terms regular, project, seasonal and casual employment are taken from Article 280 of the Labor Code, as amended. In addition, Brent School, Inc. vs. Zamora ruled that fixed-term employment contract is not per se illegal or against public policy.

Under Art. 280, project employment is one which “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.” To be considered as project-based, the employer has the burden of proof to show that: (a) the employee was assigned to carry out a specific project or undertaking and (b) the duration and scope of which were specified at the time the employee was engaged for such project or undertaking. It must be proved that the particular work/service to be performed as well as its duration are defined in the employment agreement and made clear to the employee who was informed thereof at the time of hiring.

The activities of project employees may or may not be usually necessary or desirable in the usual business or trade of the employer. In ALU-TUCP vs. National Labor Relations Commission, two (2) categories of project employees were distinguished:

In the realm of business and industry, “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. 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.

As the assigned project or phase begins and ends at determined or determinable times, the services of the project employee may be lawfully terminated at its completion.

A project employment contract is valid under the law. By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employer’s interest is equally important as that of the employee’s for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.

It would be extremely burdensome for EGI as an employer if it would have to carry them as permanent employees and pay them wages even if there are no projects for them to work on.

Project employment should not be confused and interchanged with fixed-term employment. While the former requires a project as restrictively defined above, the duration of a fixed-term employment agreed upon by the parties may be any day certain, which is understood to be “that which must necessarily come although it may not be known when.” The decisive determinant in fixed-term employment is not the activity that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of the employment.

Although the employment contract of Ando provided that the stated date may be “extended or shortened depending on the work phasing,” it specified the termination of the parties’ employment relationship on a “day certain,” which is “upon completion of the phase of work for which [he was] hired for.” Ando’s tenure as a project employee remained definite because there was certainty of completion or termination of the Bahay Pamulinawen and the West Insula Projects. The project employment contracts sufficiently apprised him that his security of tenure with EGI would only last as long as the specific projects he was assigned to were subsisting. When the projects were completed, he was validly terminated from employment since his engagement was coterminous thereto.

Learn How to Draft a Valid Project Employment Contract

The fact that Ando was required to render services necessary or desirable in the operation of EGI’s business for more than a year does not in any way impair the validity of his project employment contracts. The SC held that the length of service through repeated and successive rehiring is not the controlling determinant of the employment tenure of a project employee. The rehiring of construction workers on a project-to-project basis does not confer upon them regular employment status as it is only dictated by the practical consideration that experienced construction workers are more preferred.

Related: In the absence of contract for project employment the employee is deemed regular

Finally, the second paragraph of Article 280, stating that an employee who has rendered service for at least one (1) year shall be considered a regular employee, is applicable only to a casual employee and not to a project or a regular employee referred to in paragraph one thereof.