Magante vs. NLRC

An employee who performs work usually necessary or desirable in the employer's usual business or trade, under continuous assignment and not on a genuine project-to-project basis, is a regular employee regardless of successive fixed-term or project contracts; the nature of the work performed and the place of assignment determine employment status. The employer's failure to submit termination reports to the public employment office for each supposed project completion negates a claim of project employment.

Constress Philippines, Inc. was engaged in the concrete structural business at Ortigas Avenue, Pasig, Metro Manila, and Telesforo Magante worked for it as a carpenter. The dispute implicated Article 281 of the Labor Code, which deems employment regular where the employee performs activities usually necessary or desirable in the employer's usual business or trade, except where employment is fixed for a specific project or undertaking whose completion or termination was determined at the time of engagement, and Policy Instructions No. 20, which addresses project employment in the construction industry.

Constress Philippines, Inc., a concrete structural business at Ortigas Avenue, Pasig, Metro Manila, employed Telesforo Magante as a carpenter from April 17, 1980 until his dismissal on March 6, 1982. He earned about P300.00 a week, excluding allowance, and rendered about fourteen hours of work daily from 7:00 in the morning to 10:00 in the evening. His work involved making molds (forma or siding of cement post) for bridges, buildings, charcoal builder sea file, and others, and he was apparently never assigned to work outside Constress's plant.

Every three months, Magante was made to fill up and sign an employment contract relating to a particular phase of work in a specific project. The contracts were written in English, which he allegedly did not understand and which were not explained to him. The last hiring agreement was entered into on December 7, 1981, effective that date, with an agreed compensation of P21.36 a day.

On March 6, 1982, Constress posted a notice of termination on its bulletin board to take effect the following day, March 7, 1989, as stated in the decision, including Magante and other employees among those whose services were being terminated. Magante was told that he could not work anymore because he was already old, that his contract had expired, and that it was not renewed because he was a project employee. The termination of Magante and his fellow workers was reported to the Ministry of Labor. Consequently, Magante filed a complaint with the then Ministry (now Department) of Labor and Employment for illegal dismissal.

After the parties filed their respective position papers, Labor Arbiter Domingo V. del Rosario rendered a decision on June 22, 1983. He found that the terms of the contract stating that complainant was a project worker were not the determining factor of status; the work performed and the place where the assignment was performed controlled. He further found that the contract entered into by Constress and Magante was more of a scheme to evade liability or obligation under the law. He directed Constress to reinstate Magante to his position with full backwages and all the rights and benefits granted by law and by the company.

Constress appealed to the NLRC on the ground that the termination was occasioned by the completion of the phase of work in the project for which Magante was specifically hired and that he was duly notified in compliance with law. The NLRC found merit in the appeal, held that Magante's employment fell within Policy Instructions No. 20 for the construction industry, and concluded that project employees are not entitled to termination pay if terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. It found that upon completion of a particular phase of work, Magante's termination was for cause, set aside the Labor Arbiter's decision, and dismissed the complaint for lack of merit. Magante's motion for reconsideration was denied.

• Fixed-Period Contract as Scheme to Evade Liability: Petitioner asserted that private respondent's argument that petitioner was only hired for a fixed period of time cannot escape the factual finding of the Labor Arbiter's decision that the contract entered into by private respondent with petitioner is more of a scheme to evade its liability or obligation under the law by making it appear that said petitioner is a project-to-project employee.
• Grave Abuse of Discretion: Petitioner came before the Supreme Court by way of certiorari to set aside the NLRC decision promulgated on August 1, 1984 for having been issued with grave abuse of discretion.

• Project Employment under Article 281: Public respondent defended its decision in line with Article 281 of the Labor Code, which provides the exception to regular and casual employment when the employment 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 employment.
• Policy Instructions No. 20 and the Construction Industry: Public respondent contended that petitioner's case falls within the exception; Article 281 is intended for all industries except the construction industry; Policy Instruction No. 20 was promulgated because problems of regularity of employment in the construction industry continued to plague it, and the policy merely implements the exception to Article 281.
• Fequirin vs. National Labor Relations Commission Not on All Fours: Public respondent contended that the Fequirin vs. National Labor Relations Commission case relied upon by petitioner does not stand on all fours because the complainants in said case had lengths of service for nine, eight, and six years, the shortest being three years, while petitioner worked only for over a year, his last contract lasting only a span of four months.
• Completion of Phase and Due Notice: Private respondent appealed before the NLRC on the ground that the termination of petitioner's employment was occasioned by the completion of the phase of work in the project for which he was specifically hired and that he was duly notified thereof in compliance with the requirements of law.

• Regular or Project Employment: Whether petitioner Telesforo Magante was a regular employee or a project employee whose employment terminated upon completion of the project or phase for which he was hired.
• Grave Abuse of Discretion: Whether public respondent National Labor Relations Commission committed grave abuse of discretion in reversing and setting aside the Labor Arbiter's decision and dismissing petitioner's complaint for illegal dismissal.

• Regular or Project Employment: Regular employee. The nature of the work performed and the place of assignment, not the project-worker label in successive contracts, determine status; petitioner performed carpentry work usually necessary or desirable in Constress's usual business and was continuously assigned, not on a genuine project-to-project basis.
• Grave Abuse of Discretion: Yes. The NLRC gravely abused its discretion in disregarding the evidence and the Labor Arbiter's factual findings and in treating petitioner as a project employee despite the absence of the required termination reports for each supposed project completion.

• Regular or Project Employment: Article 281 provides that an employment shall be deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement, or where the work is seasonal. The Solicitor-General's position that Magante was a regular employee was sustained. Since the inception of his employment in 1980, Magante was never deployed from project to project but was regularly assigned to perform carpentry work under the supervision of Bernardo Padaon, who worked for Constress as supervisor of its Carpentry Department from 1964 until his resignation on January 2, 1982. This established that Magante performed tasks usually necessary or desirable in Constress's usual business or trade and that his assignments did not end on a project-to-project basis, although Constress made the contrary appear through separate employment contracts allegedly for different projects; Magante continued to perform the same kind of work throughout his employment. Although he had rendered almost two years of service, this did not detract from his regular status because the determining factor is the nature of the work performed and the place where the assignment was performed. Fequirin vs. National Labor Relations Commission was re-examined and, although the facts were not on all fours because of a work pool, its doctrine was applied because the nature of the work involved carpentry and there was continuous assignment of similar workload from project to project; in Fequirin, employment for several years despite shorter employment periods specified in notices, performing activities usually necessary or desirable in the usual business of the company, showed regular employment. Moreover, if Magante were a project employee, Constress should have submitted a report of termination to the nearest public employment office every time his employment was terminated due to completion of each construction project, as required by Policy Instructions No. 20; throughout his employment, there should have been as many reports of termination as there were construction projects actually finished if he were truly a project worker.
• Grave Abuse of Discretion: The NLRC gravely abused its discretion in closing its eyes to the evidence on record and the factual findings of the Labor Arbiter in setting aside the latter's decision. Construing the employment contract signed by Magante with Constress solely on its face without considering the surrounding circumstances served to defeat the purpose for which the Labor Code and its implementing rules were enacted. The Labor Arbiter's decision was therefore affirmed and reinstated.

• Regular Employment under Article 281 — Employment is deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding written or oral agreements to the contrary, except where employment is fixed for a specific project or undertaking whose completion or termination was determined at the time of engagement, or where the work is seasonal. An employee who has rendered at least one year of service, whether continuous or broken, is considered a regular employee with respect to the activity in which he is employed. The Court applied this to Magante because his carpentry work was necessary or desirable in Constress's usual business and his assignments were continuous, not genuinely project-based.
• Project Employment in the Construction Industry under Policy Instructions No. 20 — Project employees are those employed in connection with a particular construction project. They are not entitled to termination pay if terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company, and the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination; what is required is a report to the nearest Public Employment Office for statistical purposes. The Court held that Constress's failure to file as many termination reports as there were construction projects actually finished negated its claim that Magante was a project worker.
• Nature of Work and Place of Assignment Test — The status of an employee is determined by the nature of the work performed and the place where the assignment is performed, not by the label or terms of the employment contract. The Court applied this test to hold that Magante was a regular employee despite successive contracts describing him as a project worker.
• Continuous Assignment of Similar Workload — The doctrine in Fequirin vs. National Labor Relations Commission, applied by analogy, treats continuous assignment of similar workload from project to project, performing work usually necessary or desirable in the employer's business, as indicative of regular employment, notwithstanding shorter employment periods specified in notices of employment. The Court applied this because Magante performed the same carpentry work throughout his employment.

• "The terms of the contract that complainant is a project worker is not the determining factor of the status of complainant or any worker but the work performed by him and the place where he performed his assignment." — This is the Labor Arbiter's formulation, quoted and adopted by the Supreme Court, that status is determined by the nature of the work and place of assignment rather than the contract label.
• "Although petitioner had only rendered almost two years of service, nevertheless this should not detract from his status of being a regular employee because as correctly stated by the labor arbiter, the determining factor of the status of complainant-petitioner or any worker is the nature of the work performed by the latter and the place where he performed his assignment." — This states the ratio decidendi rejecting the NLRC's reliance on the brevity of Magante's service.
• "What is required of the company is a report to the nearest Public Employment Office for statistical purposes." — Quoted from Policy Instructions No. 20, this supports the Court's holding that Constress's failure to file termination reports for each supposed project completion undermined its project-employment defense.
• "Construing the employment contract signed by petitioner with private respondent solely on its face without considering the surrounding circumstances in this case serves to defeat the purpose for which the Labor Code and its implementing rules were enacted." — This is the Court's closing rationale for reversing the NLRC and affirming the Labor Arbiter.

• Fequirin vs. National Labor Relations Commission, 120 SCRA 910 — Cited by the Solicitor-General and re-examined by the Court; although the facts were not on all fours because the employees there belonged to a work pool, the Court applied its doctrine because the work involved carpentry and there was continuous assignment of similar workload from project to project.
• Ochoco vs. National Labor Relations Commission, 120 SCRA 774 — Cited in connection with Policy Instructions No. 20 and the requirement that the company report termination to the nearest Public Employment Office for statistical purposes.

• Article 281, Labor Code — Provides the regular and casual employment rule: employment is regular where the employee performs activities usually necessary or desirable in the employer's usual business or trade, except where fixed for a specific project or undertaking whose completion or termination was determined at the time of engagement or where the work is seasonal; an employee who has rendered at least one year of service, continuous or broken, is considered regular with respect to the activity in which employed. The Court used this to classify Magante as regular and to reject the project-employment exception.
• Policy Instructions No. 20 — A regulation for stabilizing employer-employee relations in the construction industry, defining project employees and providing that project employees are not entitled to termination pay if terminated due to completion of the project or any phase thereof, regardless of the number of projects, and that the company must report termination to the nearest Public Employment Office for statistical purposes. The Court applied it to find that Constress's failure to file termination reports for each project completion negated project employment.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.