E. Ganzon, Inc. (EGI) vs. Ando, Jr.

An employee in the construction industry hired on a project-to-project basis is considered a project employee, and the repeated and successive rehiring of such an employee does not, by itself, confer regular employment status; the validity of the project employment is not impaired by a contractual provision allowing for the extension or shortening of the employment period, as long as the termination remains tied to the completion of the specific project or a phase thereof.

The case arose from the common employment practice in the construction industry where workers are hired for specific projects. E. Ganzon, Inc. (EGI), a construction company, engaged the services of Fortunato B. Ando, Jr. as a carpenter for two different construction projects under three separate project employment contracts. The dispute centered on whether Ando's repeated hiring for tasks necessary to EGI's business made him a regular employee entitled to security of tenure beyond the completion of the projects.

• Fortunato B. Ando, Jr. worked for E. Ganzon, Inc. (EGI) as a finishing carpenter from January 21, 2010, to April 30, 2011.
• Ando signed three separate project employment contracts for two specific projects: the Bahay Pamulinawen Project in Laoag, Ilocos Norte, and the EGI West Insula Project in Quezon City.
• The contracts explicitly stated that his engagement was as a "Project Worker" and that his services would end upon the completion of the phase of work for which he was hired, with a tentative date that could be "extended or shortened depending on the work phasing."
• During his employment, Ando's contracts were extended and shortened based on the projects' needs.
• After his last contract ended on April 30, 2011, Ando filed a complaint for illegal dismissal, underpayment of wages, and other money claims against EGI.
• EGI presented the signed project employment contracts as evidence of Ando's status and showed that it had filed the required termination reports with the Department of Labor and Employment (DOLE).

• EGI argued that Ando was a project employee, not a regular employee, as clearly evidenced by the three project employment contracts he knowingly and voluntarily signed.
• EGI contended that Ando's employment was coterminous with the specific projects to which he was assigned, and his termination upon the completion of these projects was valid.
• The company asserted that the nature of its construction business makes it extremely burdensome to retain workers as permanent employees, as work availability is dependent on securing new projects.
• EGI claimed that it paid Ando the correct wages based on the applicable regional wage order and that deductions for barracks accommodation were voluntarily agreed upon by Ando.

• Fortunato B. Ando, Jr. argued that he was a regular employee because he was repeatedly hired for over a year to perform work that was necessary and desirable to EGI's main business of construction.
• He claimed that the clause in his contracts allowing the employment period to be "extended or shortened" rendered the duration of his employment indefinite, thereby negating the character of project employment.
• Ando asserted that the extensions of his contracts and his continuous rehiring demonstrated that his work was indispensable to EGI, thus making him a regular employee under the Labor Code.
• He alleged that he was terminated without prior notice and hearing, which constitutes illegal dismissal.

• Procedural Issues:
  • Whether the Court of Appeals correctly determined that the National Labor Relations Commission (NLRC) committed grave abuse of discretion in upholding the Labor Arbiter's finding that Ando was a project employee.
• Substantive Issues:
  • Whether Ando was a regular employee or a project employee of EGI.
  • Whether Ando's termination from employment was valid.

• Procedural:
  • The Supreme Court held that the Court of Appeals erred in finding that the NLRC committed grave abuse of discretion. The Court clarified that in a Rule 45 review of a CA's Rule 65 decision in a labor case, the question is whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC. Since the NLRC's decision was supported by substantial evidence, specifically the project employment contracts, it did not act in a capricious or whimsical manner, and thus there was no grave abuse of discretion to correct.
• Substantive:
  • The Supreme Court ruled that Ando was a project employee. The contracts he signed clearly identified him as such, specifying the particular projects he was assigned to. The clause allowing for extensions or shortening of the employment period did not invalidate his project employment status because his tenure remained tied to a "day certain"—the completion of the project or phase thereof. The Court reiterated that in the construction industry, repeated rehiring does not convert a project employee into a regular one, as it is a practical necessity to re-engage experienced workers. The one-year service rule under Article 280 of the Labor Code applies to casual, not project, employees. Consequently, Ando's termination upon project completion was valid and did not require prior notice, as EGI fulfilled its legal obligation by submitting termination reports to the DOLE.

• Project Employment — This refers to an employment arrangement where an employee is hired for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement. The Court applied this doctrine by finding that Ando was hired for two specific, identifiable construction projects, and his employment contracts clearly stated that his service was coterminous with the completion of the work phase he was assigned to, thus classifying him as a project employee under Article 280 of the Labor Code.
• Grave Abuse of Discretion — This refers to a capricious and whimsical exercise of judgment that is tantamount to lack of jurisdiction. The Court used this doctrine to frame its review, stating that the CA's role was not to re-evaluate the evidence but to determine if the NLRC's findings were so unsupported by substantial evidence as to constitute grave abuse. The SC found no such abuse, as the NLRC's decision was based on the signed contracts.
• Regular Employment (One-Year Service Rule) — This principle, found in the second paragraph of Article 280 of the Labor Code, states that any employee who has rendered at least one year of service shall be considered a regular employee. The Court clarified that this rule applies only to casual employees and not to project employees. Therefore, Ando's employment for more than a year did not automatically make him a regular employee.

• "x x x It is widely known that in the construction industry, a project employee's work depends on the availability of projects, necessarily the duration of his employment. It is not permanent but coterminous with the work to which he is assigned. It would be extremely burdensome for the employer, who depends on the availability of projects, to carry him as a permanent employee and pay him wages even if there are no projects for him to work on. The rationale behind this is that once the project is completed it would be unjust to require the employer to maintain these employees in their payroll. To do so would make the employee a privileged retainer who collects payment from his employer for work not done. This is extremely unfair to the employers and amounts to labor coddling at the expense of management."

• Montoya v. Transmed Manila Corporation — Cited to establish the proper scope of a Rule 45 review of a Court of Appeals decision in a labor case that originated from a Rule 65 petition; the Supreme Court's task is to determine if the CA correctly found grave abuse of discretion by the NLRC, not to re-weigh the merits of the case.
• ALU-TUCP v. National Labor Relations Commission — Referenced to explain the two categories of project employees, including those whose work is within the regular business of the employer but for a distinct and separate project, which was the category Ando fell into.
• Filsystems, Inc. v. Puente — Cited to support the principle that an employment contract does not need to specify exact dates of completion to be considered a valid project employment contract, as long as the duration is determinable by the project's completion.
• Brent School, Inc. v. Zamora — Mentioned to distinguish project employment from fixed-term employment, clarifying that the decisive determinant in the former is the activity performed, while in the latter, it is the "day certain" agreed upon for termination.

• Rule 45, Rules of Civil Procedure — This rule provided the procedural basis for EGI's petition for review on certiorari filed before the Supreme Court to challenge the decision of the Court of Appeals.
• Rule 65, Rules of Civil Procedure — This rule was the basis for Ando's petition for certiorari before the Court of Appeals, where he alleged that the NLRC committed grave abuse of discretion in its ruling.
• Article 280 of the Labor Code — This was the central legal provision applied by the Court to determine Ando's employment status, as it defines and distinguishes regular, casual, seasonal, and project employment.
• DOLE Department Order No. 19, Series of 1993 — Cited by the Court to support the rule that the completion of a project, for purposes of terminating a project employee, is determined by the date originally agreed upon or the date of termination of a project extension.