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

Project employment contracts are valid even if the completion date is subject to extension or shortening depending on work phasing, provided the employee is informed at the time of hiring that his employment is coterminous with the specific project; repeated rehiring and length of service do not automatically convert project employment into regular employment under Article 280 of the Labor Code.

Standard labor dispute regarding the classification of construction workers under Article 280 of the Labor Code, specifically whether workers engaged through successive project employment contracts acquire regular employment status by virtue of repeated rehiring and long service.

• Filed before the Labor Arbiter (LA) on May 16, 2011.
• Dec. 29, 2011: LA Decision — Declared Ando a project employee, dismissed the illegal dismissal complaint for lack of merit, but granted money claims (underpayment of salary, holiday pay, service incentive leave pay, and proportionate 13th month pay).
• Both parties appealed to the NLRC.
• May 25, 2012 and July 17, 2012: NLRC Resolutions — Dismissed the appeals and affirmed the LA decision in toto.
• Ando filed a Motion for Reconsideration; denied.
• Ando filed a Rule 65 petition before the CA (CA-G.R. SP No. 126624).
• Feb. 28, 2014: CA Decision — Granted the petition, annulled the NLRC resolutions regarding illegal dismissal, declared Ando illegally dismissed, and ordered EGI to pay full backwages and separation pay (sustained the money claims).
• Sept. 4, 2014: CA Resolution — Denied EGI's Motion for Reconsideration.
• EGI filed this Petition for Review on Certiorari under Rule 45 before the SC.
• Feb. 20, 2017: SC Decision — Granted the petition, reversed the CA, and reinstated the LA Decision.

• Ando worked as a finishing carpenter (Formworker-2) for EGI, a corporation engaged in construction and residential projects.
• He signed three separate project employment contracts for distinct projects:
  • Bahay Pamulinawen Project (Laoag): June 1, 2010 to Sept. 30, 2010 (extended to Dec. 31, 2010).
  • Bahay Pamulinawen Project (Laoag): Jan. 3, 2011 to Feb. 28, 2011 (shortened to Feb. 15, 2011).
  • EGI-West Insula Project (Quezon City): Feb. 22, 2011 to March 31, 2011 (extended to April 30, 2011).
  • The contracts explicitly stated that Ando was engaged as a "Project Worker" and that his services would end "upon completion of the phase of work," subject to extension or shortening "depending on the work phasing."
  • Ando was paid through payrolls specific to each project.
  • EGI submitted Establishment Employment Reports to the DOLE-NCR regarding Ando's "temporary lay-off" (Feb. 16, 2011) and "permanent termination" (May 2, 2011).
  • Ando claimed he was a regular employee repeatedly hired from Jan. 21, 2010 to April 30, 2011, and was dismissed without prior notice and hearing.
  • EGI countered that Ando was a project employee whose employment automatically terminated upon project completion.

• Ando was a project employee, not a regular employee, under Article 280 of the Labor Code.
• The project employment contracts validly stipulated that employment was coterminous with specific projects; the "extension/shortening" clause does not negate project employment status.
• The nature of EGI's business (dependent on contract availability) makes it economically burdensome to employ construction workers permanently; project employment is the industry standard.
• Prior notice of termination is not required for project employees when termination is due to completion of the project/phase; only a report to DOLE is required, which EGI complied with.
• The CA committed grave abuse of discretion by conducting a review on the merits (as if on appeal) instead of limiting itself to determining whether the NLRC committed grave abuse of discretion in affirming the LA.

• (As reflected in the CA decision and the SC's discussion): Ando was a regular employee because his work as a carpenter was necessary and desirable to EGI's construction business.
• The project employment contracts were invalid because they did not specify a fixed duration; the tentative dates subject to extension/shortening rendered his tenure indefinite and contrary to the essence of project employment.
• His repeated rehiring and continuous service for more than one year (Jan. 2010 to April 2011) converted him into a regular employee under the second paragraph of Article 280.
• His dismissal was illegal because he was not afforded prior notice and hearing (procedural due process).

• Procedural: Whether the CA committed grave abuse of discretion in annulling the NLRC resolutions and reversing the LA's finding that Ando was a project employee.
• Substantive:
  • Whether Ando was a project employee or a regular employee under Article 280 of the Labor Code.
  • Whether the project employment contracts were valid despite the clause allowing extension or shortening of the term depending on work phasing.
  • Whether prior notice of termination was required for Ando's dismissal.

• Procedural: The CA committed grave abuse of discretion. The CA improperly reviewed the case on the merits (assessing the correctness of the NLRC's factual findings) rather than limiting itself to the narrow scope of Rule 65—determining whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction. The NLRC's conclusion that Ando was a project employee was supported by substantial evidence; thus, the CA had no basis to disturb it.
• Substantive:
  • Ando was a project employee, not a regular employee. The contracts clearly stated his employment was for specific projects and was coterminous with the project phase. He was informed of this status at the time of hiring, and his consent was not vitiated.
  • The "extension or shortening" clause does not invalidate project employment. The decisive determinant in project employment is the activity (the specific project) the employee is called upon to perform, not a fixed calendar date. The completion of the project constitutes a "day certain" (that which must necessarily come, although the exact date may not be known).
  • Repeated rehiring and length of service do not convert project employment into regular employment in the construction industry. Rehiring is a practical necessity dictated by project availability and the preference for experienced workers.
  • Prior notice of termination is not required for project employees terminated due to completion of the project/phase. The employer need only report the termination to DOLE, which EGI did.

• Project Employment under Article 280 — Employment fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of engagement. Requisites: (a) the employee was assigned to carry out a specific project or undertaking; (b) the duration and scope were specified at the time of engagement; and (c) the employee was informed of the project nature and coterminous nature of his employment at the time of hiring.
• Two Categories of Project Employees (from ALU-TUCP v. National Labor Relations Commission) —
• A particular job/undertaking within the regular business of the employer but distinct and separate from other undertakings (e.g., specific construction projects of a construction company).
• A particular job/undertaking not within the regular business of the employer, identifiably separate from ordinary business operations.
• Project Employment vs. Fixed-Term Employment — In project employment, the decisive determinant is the activity (the project) the employee performs; in fixed-term employment, the decisive determinant is the day certain agreed upon by the parties for the commencement and termination of the relationship.
• Validity of Project Employment Contracts — Valid if the period was agreed upon knowingly and voluntarily, without force, duress, or improper pressure, and not imposed to preclude the acquisition of tenurial security. The unschooled status of construction workers does not automatically invalidate contracts they sign.
• Effect of Repeated Rehiring — Length of service and successive rehiring on a project-to-project basis do not confer regular employment status upon project employees. This is particularly true in the construction industry where work depends on the availability of contracts.
• Procedural Due Process for Project Employees — Prior notice (the two-notice rule) is not required for termination due to completion of the project/phase. The employer must only report the termination to the DOLE.
• Article 280, Second Paragraph (1-Year Rule) — The provision stating that an employee who has rendered at least one year of service shall be considered a regular employee applies only to casual employees, not to project employees.

• "In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65... we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct."
• "Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction."
• "The decisive determinant in project employment is the activity that the employee is called upon to perform and not the day certain agreed upon by the parties for the commencement and termination of the employment relationship."
• "A 'day' x x x is understood to be that which must necessarily come, although it may not be known exactly when."
• "Time and again, We have held that the length of service through repeated and successive rehiring is not the controlling determinant of the employment tenure of a project employee."
• "Prior notice of termination is not part of procedural due process if the termination is brought about by the completion of the contract or phase thereof for which the project employee was engaged."

• Montoya v. Transmed Manila Corporation — Explains the limited scope of Rule 45 review of CA decisions in labor cases; the SC examines whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC, not whether the NLRC decision on the merits was correct.
• ALU-TUCP v. National Labor Relations Commission — Distinguishes the two categories of project employees.
• Brent School, Inc. v. Zamora — Fixed-term employment contracts are not per se illegal.
• Filsystems, Inc. v. Puente — An employment contract that does not mention particular dates establishing specific duration does not preclude classification as a project employee.
• Villa v. NLRC — Project employment contracts are not lopsided agreements; the employer's interest is equally important.
• Caseres v. Universal Robina Sugar Milling Corp. (URSUMCO) — The nature of the employer's business (dependent on contracts) justifies project employment.
• Malicdem v. Marulas Industrial Corporation — Rationale for not converting project employees to regular status despite long service (burden on employer, unfair labor coddling).
• D.M. Consunji, Inc. v. Gorres — Prior notice is not required for project employees terminated upon project completion.

• Article 280 of the Labor Code — Definitions of regular, project, seasonal, and casual employment.
• Rule 45 of the Rules of Civil Procedure — Petition for Review on Certiorari; mode of appeal from the CA to the SC.
• Rule 65 of the Rules of Civil Procedure — Special civil action of certiorari; scope of review by the CA over NLRC decisions.
• DOLE Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry), Section 3.3(a) — Defines project completion/termination as the day originally agreed upon or the date indicated in the contract, or if extended, the date of termination of project extension.

• N/A (Carpio, Mendoza, Leonen, and Jardeleza, JJ., concurred with the majority opinion).