De Ocampo vs. NLRC

Project employees separated before completion of the project in which they are employed, despite expiration of their fixed-term contracts, are illegally separated and entitled to separation pay equivalent to one month salary for every year of service.

Luis De Ocampo, Jr., Jose Rodrigo, Eugenio Esquejo, Victorino Tabernero, Rizalo Daliva, Francisco Acosta and 87 others were employees of private respondent Makati Development Corporation, a construction company, and members of the Philippine Transport and General Workers Association. Their employment consisted of two classifications material to the dispute: regular employees and project employees engaged under fixed-term contracts tied to specific construction projects. At the time, PD No. 823 as amended by PD No. 849 strictly limited lawful strikes and prescribed a 30-day notice grounded only on unresolved economic issues.

Petitioners were among the workers employed by Makati Development Corporation, with many rendering long years of service under successive project contracts that were retained or renewed as long as the project they were working on remained unfinished. On September 30, 1980, MDC terminated 65 employees on the ground of expiration of their contracts. The terminated employees filed a complaint for illegal dismissal against MDC the following day, October 1, 1980.

Thereafter, on October 8, 1980, the Philippine Transport and General Workers Association, to which complainants belonged, filed a notice of strike on grounds of union-busting, subcontracting of projects which could have been assigned to the dismissed employees, and unfair labor practice. Six days later, on October 14, 1980, the union declared a strike and established picket lines in the perimeter of the MDC premises.

When the strike commenced, MDC moved against the strikers. On November 4, 1980, it filed with the Bureau of Labor Relations a motion to declare the strike illegal and restrain continuation of the strike. On that same day and several days thereafter, it filed applications for clearance to terminate the employment of 90 striking workers whom it had meanwhile preventively suspended. Of those workers, 74 were project employees under contract with fixed terms.

The labor arbiter denied the applications for clearance and ordered reinstatement with two months backwages. On appeal, the NLRC modified that ruling by allowing dismissal of union officers, treating project employees as severed by expiration of contracts rather than illegality of the strike, and ordering reinstatement without backwages of regular employees except union officers, with the option of separation pay equivalent to one month's pay or one-half month's pay for every year of service, whichever was greater. The record showed the project at New Alabang Village where the project workers were assigned was still on-going and still required their services at the time of separation, with no showing of unsatisfactory service.

• Timeliness of Reconsideration: Petitioner maintained that the motion for reconsideration was not filed out of time, the reglementary period having commenced only upon receipt of the NLRC decision on June 13, 1984.
• Legality of Strike: Petitioner argued that the public respondent acted arbitrarily in ruling the strike illegal.
• Separation of Project Employees: Petitioner maintained that the separation of the project employees was unjustified and erroneously sustained by the NLRC.

• Timeliness of Reconsideration: Respondent countered through the Solicitor General that the motion for reconsideration was filed late on June 26, 1984, 19 days after the NLRC decision rendered on June 7, 1984, beyond the then-applicable fifteen-day reglementary period.
• Legality of Strike and Expiration of Contracts: Respondent maintained, as reflected in its motion before the Bureau of Labor Relations and applications for clearance, that the strike was illegal and that the project employees were severed due to expiration of their employment contracts.

• Timeliness: Whether the motion for reconsideration of the NLRC decision was filed out of time.
• Legality of Strike: Whether the strike declared on October 14, 1980 was illegal under PD No. 823 as amended by PD No. 849.
• Project Employment: Whether the separation of the project employees was justified by expiration of their contracts.

• Timeliness: No. The motion was timely, filed only 13 days after receipt on June 13, 1984, within the then-applicable fifteen-day period, Rule X of the Revised Rules of the NLRC being inapplicable as it took effect only on November 29, 1986.
• Legality of Strike: Yes. The strike was illegal for being based on non-economic grounds and declared only six days after notice, before the 30-day cooling-off period required by law.
• Project Employment: No. The separation was unjustified; although contracts had expired, the project was still on-going and services were still needed, rendering the termination retaliatory and illegal, with separation pay due instead of reinstatement.

• Timeliness: The ten-day period under oath under Rule X, Section 9 of the Revised Rules of the NLRC was promulgated only on November 5, 1986 and effective November 29, 1986, and therefore not in force when the 1984 resolution was rendered. Applying the then-applicable fifteen-day period from receipt, and reckoning from receipt on June 13, 1984 as shown by Annex C, the June 26, 1984 filing was made within 13 days and thus on time.
• Legality of Strike: Under PD No. 823 as amended by PD No. 849, strikes in establishments not covered by General Order No. 5 were allowed only on grounds of unresolved economic issues in collective bargaining and only after filing notice at least 30 days before the intended strike. The strike failed both requisites, having been based on union-busting, subcontracting and unfair labor practice and declared after only six days. Dismissal of leaders who instigated a strike they knew or should have known was illegal was proper, while reinstatement without backpay of mere followers reflected their lesser responsibility and disallowed compensation for services not rendered during the illegal strike.
• Project Employment: Ordinarily contract workers are not regular employees since services are needed only for specific projects, and requiring retention after completion would unjustly maintain stand-by workers at management expense. That rationale was inapplicable because the project itself was still on-going and continued to require the workers' services, which were not shown to be unsatisfactory, and past practice was retention or rehiring until project completion. The real reason for discontinuance was retaliation for the illegal dismissal complaint and strike participation, rendering the workers persona non grata. Liberally construed in favor of labor, Policy Instruction No. 20 entitles project employees to separation pay when terminated before project completion; computed under Art. 283 of the Labor Code at one month for every year of service up to project completion, separation pay rather than reinstatement being ordered as the project was assumed completed by the time of decision.

• Illegal strike — leaders vs. followers — Leaders who instigate an illegal strike with knowledge, actual or imputed, of its illegality are properly punished with dismissal, while mere followers bearing lesser responsibility are properly ordered reinstated without backpay, as they are not to be compensated for services not rendered during the illegal strike. Applied to sustain clearance to dismiss union officers but reinstate regular strikers without backwages.
• Project employment — expiration vs. completion — Contract or project workers are not regular employees, their services being needed only while there are projects to be undertaken; retention after project completion cannot be required. Held inapplicable where, although fixed-term contracts had expired, the project itself remained on-going and required the workers' continued services, with satisfactory performance and a history of retention until completion.
• Retaliatory dismissal of project workers — Termination ostensibly for contract expiration is illegal where services are still needed for an uncompleted project and the real motive is retaliation for filing a complaint and participating in a strike. Applied to declare the MDC project workers illegally separated before expiration of the New Alabang Village project.
• Separation pay of project employees under Policy Instruction No. 20 — Project employees are not entitled to separation pay if terminated upon completion of the project or phase in which employed; liberally construed in favor of labor, they are entitled to separation pay if terminated before such completion even if contracts expired, on the theory contracts would have been renewed as services were still needed. Applied to award one month salary for every year of service up to completion, in lieu of reinstatement assumed moot by project completion.

• "only on grounds of unresolved economic issues in collective bargaining, in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30 days before the intended strike or lockout." — States the statutory requisites under PD No. 823 as amended that rendered the October 14, 1980 strike illegal for non-economic grounds and six-day notice.
• "These were the acts that rendered them persona non grata to the management." — Characterizes the filing of the complaint and strike participation as the real retaliatory motive for discontinuing project workers whose services were still needed.
• "An exploited working class is a discontented working class. It is a treadmill to progress and a threat to freedom." — Articulates the constitutional policy of protection to labor underlying the liberal award of separation pay despite the strike's illegality.

• Cartagenas vs. Romago Electric Co., G.R. No. 82973, September 15, 1989 — Cited as authority for the rule that contract workers are not regular employees as services are needed only when there are projects to be undertaken; distinguished as inapplicable because the project in this case remained on-going.

• Section 1, PD No. 823 as amended by PD No. 849 — Provides state policy limiting strikes and allowing strike or lockout in establishments not covered by General Order No. 5 only on unresolved economic issues with at least 30-day notice; applied to declare the strike illegal for non-economic grounds and six-day notice.
• Section 9, Rule X, Revised Rules of the NLRC — Requires motions for reconsideration under oath within ten calendar days based on palpable or patent errors; held inapplicable as promulgated November 5, 1986 and effective November 29, 1986, after the 1984 NLRC resolution.
• Policy Instruction No. 20, Department of Labor, dated February 15, 1977 — Provides project employees are not entitled to separation pay if terminated upon completion of the project or phase; liberally interpreted to entitle workers terminated before completion to separation pay even if contracts expired.
• Article 283, Labor Code — Cited as basis for computing separation pay at one month for every year of service of each dismissed employee up to completion of the project.

Narvasa (Chairman), J., Gancayco, J., Medialdea, J.