PROJECT EMPLOYMENT CANNOT BE ESTABLISHED FOR FAILURE OF EMPLOYER TO PROVE THAT THE EMPLOYEE IS ENGAGED ON PROJECT BASIS

Project employment requires 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. The employer has the burden to prove these requisites.

Thus, the SC held in the following case:

Inocentes vs. R. Syjuco Construction, Inc. (RSCI)

G.R. No. 237020, July 29, 2019

Project employment; Regular vs. project employment; Principal test that an employee is a project employee; The principal test to determine if an employee is a project employee is –   whether he or she is assigned to carry out a  particular project or undertaking, which duration or scope was specified at the time of engagement; Report to DOLE upon termination of project; The failure of the employer to file with the DOLE a termination report every time a project or its phase is completed is an indication that the workers are not project employees but regular ones; Burden of proof in project employment; The employer has the burden to prove that the employee is indeed a project ernployee;

Facts:

Inocentes, et al. Dominic Inocentes (Dominic), Reymark Catangui (Reymark), Jeffrey lnocentes (Jeffrey), and Joseph Cornelio (Joseph) (Inocentes, et al.) filed a Complaint against RSCI, et al. R. Syjuco Construction, Inc. (RSCI) and its owner, Ryan Syjuco (RSCI, et al.). They claimed that RSCI, a construction corporation, employed them as construction workers. They added that for more than a year, they worked for RSCI, et al. on a no-work-no-pay basis.

Inocentes, et al. denied having to work for RSCI, et al. on a project basis. They claimed that RSCI, et al. did not present any employment contract evidencing that Inocentes, et al.’ work was coterminous with any project that RSCI, et al. contracted. They also stressed that RSCI, et al. did not report to the DOLE the termination of their supposed project employment. In sum, Inocentes, et al. remained firm that they were regular employees and that they were terminated without any valid cause and without observance of due process of law.

RSCI, et al. countered that they engaged Inocentes, et al. in 2009 (Dominic and Reymark), 2010 (Jeffrey), and 2012 (Joseph) as carpenters. They asserted that Inocentes, et al. were under project employment and that they did not work continuously because their assignments depended on the availability of projects.

RSCI, et al. maintained that they did not constructively dismiss Inocentes, et al.. They explained that in September 2015, Inocentes, et al. were separated from work due to the completion of their respective project assignments. They stressed that RSCI was not a large construction company and most of its projects involved small structures that could be finished in a few months. They added that per the summary 12 of project assignments and length of service, Inocentes, et al.’s work was not continuous and the rule that no-project-no-work applied to them.

Additionally, RSCI, et al. contended in their Reply that RSCI was just a construction company generally engaged in repair or renovation. They added that a few days or months after a repair or renovation project, they would inform the employees that they would be just called upon when a new project commences but for the time being, they could work or offer their services to other companies. They maintained that on the dates that Inocentes, et al. were allegedly dismissed, Inocentes, et al. were waiting for new project assignment. RSCI, et al. stressed that Inocentes, et al. were not terminated but that they were the ones who declared their own dismissal.

RSCI, et al. further argued that the absence of their report on the termination of project employment to the DOLE did not remove Inocentes, et al.’s employment in the category of a project employment because at the time of their engagement, Inocentes, et al. were briefed as to the nature of their work.

LA Ruling:

The Labor Arbiter (LA) rendered a Decision dismissing the complaint for illegal dismissal but nevertheless ordered RSCI to pay all Inocentes, et al. the underpayment of salaries, overtime pay as well as 13th month pay; and, to also pay Dominic and Joseph holiday premium pay. The LA likewise granted nominal damages in favor of Inocentes, et al.

According to the LA, Inocentes, et al. did not refute RSCI, et al.’s allegation that RSCI was not a big construction company and that most of its projects involved small structures that could be finished in a few months. Given this situation, the LA lent credence to the assertion of RSCI, et al. that Inocentes, et al. were project employees whose employment was coterminous with a specific project and subject to the availability of contracts.

The LA stressed that Inocentes, et al. failed to specifically allege and prove that RSCI, et al. made them work uninterruptedly from one project to another while on the contrary, RSCI, et al. were able to specify the periods of time and particular projects where they assigned Inocentes, et al.

Hence, the LA decreed that Inocentes, et al. were project employees and that they were not illegally dismissed from work. Inocentes, et al. appealed.

NLRC Ruling:

The NLRC partly granted the appeal ruling that Inocentes, et al. were regular employees and that RSCI illegally dismissed them.

Consequently, it ordered RSCI to pay Inocentes, et al. backwages, separation pay, service incentive leave pay and attorney’s fees. It nonetheless affirmed the LA Decision relative to the underpayment of Inocentes, et al.’s salaries, 13th month pay, overtime pay, and holiday premium pay for Dominic and Joseph.

The NLRC ratiocinated that Policy Instruction No. 20 requires the employer of project employees to report to the DOLE certain matters including the duration and specific work to be done by the employee which must be made clear at the time of hiring as well as the dismissal of employees upon the completion of every project.

It stressed that failure of the employer to comply with such reporting would establish that the employees are not project employees. It ruled that for the non-compliance by RSCI, et al. with the reportorial requirement, Inocentes, et al. were proved to be regular employees and may not be dismissed without valid cause and observance of the due process of law. Thereafter, the NLRC denied RSCI, et al.’s motion for reconsideration prompting them to file a Petition for Certiorari with the CA.

CA Ruling:

The CA annulled and set aside the NLRC Decision and Resolution and concomitantly, reinstated the LA Decision.

The CA ruled that the principal test to determine whether employees were project, not regular, employees, was to ascertain if they were assigned to carry out a specific project or undertaking, the scope and duration of which was specified and made known to the employees at the time of engagement.

According to the CA, as evidenced by the summary of their project assignments, Inocentes, et al. were project employees because they were informed of the nature and duration of their work and the project at the time of their engagement. Like the LA, it found no evidence establishing that Inocentes, et al. worked for respondent continuously and without interruption.

The CA denied the motion for reconsideration on the assailed Decision.

Issue/s:

Whether or not for failure to prove project employment the employee is deemed as a regular employee

Whether or not for failure to inform the employee of the specific project and duration at the time of the engagement the employee cannot be considered as project employee

SC Ruling:

The SC found merit in the petition.

The SC held that Article 295 of the Labor Code, as amended and renumbered, defines a regular employee as (a) one that has been engaged to perform tasks usually necessary or desirable in the employer’s usual business or trade –  without falling within the category of either a fixed, a project, or a seasonal employee; or (b) one that has been engaged for a  least a year, with respect to the activity he or she is engaged, and the work of the employee remains while such activity exists.

On the other hand, a project employee is one whose employment has been fixed for a specified project or undertaking, the completion or termination of which is made known at the time of the engagement of the employee.

In Dacuital vs. L.M Camus Engineering Corp., the Court stressed that a project employee is assigned to a project that starts and ends at a determined or determinable time. The Court elucidated therein that the principal test to determine if an employee is a project employee is –   whether he or she is assigned to carry out a  particular project or undertaking, which duration or scope was specified at the time of engagement. In this case, no such prior notice was given by RSCI, et al.

The Court notes  that the summary of project assignments relied by the CA cannot be considered as the needed notice because it  only listed down the projects from where Inocentes, et al. were previously assigned but nowhere did it indicate that Inocentes, et al. were informed or were aware that they were hired for a  project or undertaking only.

Stated differently, the summary only listed the projects after Inocentes, et al. were assigned to them but it did not reflect that Inocentes, et al. were infonned at the time of engagement that their work was only for the duration of a project. Notably, it was only in their Rejoinder (filed with the LA) that RSCI, et al. stated that at the time of their engagement, Inocentes, et al. were briefed as to the nature of their work but RSCI, et al. did not fully substantiate this claim.

Moreover, the summary of project assignments even worked against RSCI, et al. as it established the necessity and desirability of Inocentes, et al.’s tasks on the usual business of RSCI, et al.. It is worth noting that RSCI, et al. themselves admitted to such essentiality of the work because in their Reply (also submitted with the LA), RSCI, et al. confirmed that days or a  few months after a  repair or renovation project, they would inform Inocentes, et al. that they would be called upon when a new project commences. This matter only shows that Inocentes, et al.’s work for RSCI, et al. did not end by the supposed completion of a project because RSCI, et al. coordinated with and notified them that their services would still be necessary for RSCI, et al.

Also, the fact that RSCI, et al. did not submit a report with the DOLE (anent the termination of Inocentes, et al.’s employment due to alleged project completion) further bolsters that Inocentes, et al. were not project employees. In Freyssinet Filipinas Corp. vs. Lapuz, the Court explained that the failure on the part of the employer to file with the DOLE a termination report every time a project or its phase is completed is an indication that the workers are not project employees but regular ones.

Equally important to stress that the employer has the burden to prove that the employee is indeed a project employee. On this, 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.

RSCI, et al. did not prove that they informed Inocentes, et al., at the time of engagement, that they were being engaged as project employees. The duration and scope of their work was without prior notice to Inocentes, et al.. While the lack of a written contract does not necessarily make one a regular employee, a written contract serves as proof that employees were informed of the duration and scope of their work and their status as project employee at the commencement of their engagement. There being none that was adduced here, the presumption that the employees are regular employees prevails.

Notably, considering that RSCI, et al. failed to discharge their burden to prove that Inocentes, et al. were project employees, the NLRC properly found them to be regular employees. It thus follows that as regular employees, Inocentes, et al. may only be dismissed for a just or authorized cause and upon observance of due process of law. As these requirements were not observed, the Court also sustains the finding of the NLRC that Inocentes, et al. were illegally dismissed.

That Inocentes, et al. ceased to work at the end of their purported project contract is not a valid cause to terminate regular employees. This is in addition to the fact that there was no showing that Inocentes, et al. were given notice of their termination, an evident violation of their right to due process.