Samson vs. NLRC

A worker repeatedly rehired for the same tasks necessary or desirable to the employer’s usual business is a regular employee, and the employer’s non-compliance with the project-employment reporting requirement under Policy Instruction No. 20 confirms that status; Department Order No. 19 cannot be given retroactive effect to defeat the employee’s security of tenure.

Ismael Samson worked for Atlantic Gulf and Pacific Co., Manila, Inc. (AG&P), a construction company, in various construction projects since April 1965, essentially as a rigger, rising from laborer to rigger foreman, with overseas assignments in Kuwait and Saudi Arabia from 1977 to 1985. The dispute implicated DOLE Policy Instruction No. 20, which required employers to report the termination of project employees to the nearest Public Employment Office, and Department Order No. 19, Series of 1993, which superseded Policy Instruction No. 20 and listed indicators of project employment. The case required the Court to determine whether the newer issuance could be applied retroactively to the prejudice of the employee.

Ismael Samson was employed by Atlantic Gulf and Pacific Co., Manila, Inc. (AG&P) in various construction projects since April 1965. He worked essentially as a rigger, from laborer to rigger foreman, and from 1977 to 1985 was assigned to overseas projects in Kuwait and Saudi Arabia. His employment was under project employment contracts that were renewed several times. A certification issued by AG&P showed that after a particular project was accomplished, Samson would be rehired immediately the following day, save for a gap of one day to one week from the last project to the succeeding one. The Solicitor General observed that between 1965 and 1977, there were at least fifty occasions on which AG&P hired Samson for a continuous period.

On November 5, 1989, Samson filed a complaint for conversion of his employment status from project employee to regular employee. The complaint was later amended to include claims for underpayment, non-payment of premium pay for holiday and rest day, refund of reserve fund, and 10% thereof as attorney’s fees. Samson alleged that on the basis of his considerable and continuous length of service with AG&P, he should already be considered a regular employee and entitled to the benefits and privileges appurtenant thereto.

The labor arbiter found that AG&P had not shown that it made the corresponding report to the nearest Public Employment Office every time a project in which Samson was assigned had been completed and his employment contract terminated, as required under DOLE Policy Instruction No. 20. The labor arbiter also found that Samson was not free to leave anytime and offer his services to other employers, and that he was a member of a work pool from which AG&P drew its project employees; hence, completion of a project did not mean termination of the employer-employee relationship. The labor arbiter further found no evidence that AG&P had at any point failed to secure a contract and that Samson had continuously rendered service in the corporation since 1965 up to the date of the decision.

On appeal, the NLRC found that the evidence showed Samson was engaged for a fixed and determinable period, making him a project employee. It found no evidence or allegation by Samson to support the labor arbiter’s finding that he was not free to leave and offer his services to other employers. The NLRC also ruled that Policy Instruction No. 20 had been superseded by Department Order No. 19, Series of 1993, which provided that non-compliance with the required report to the nearest Public Employment Office no longer affixed a prescription of regular employment, and that repeated or constant rehiring of project workers for subsequent projects was permitted without such workers being considered regular employees. It reasoned that length of service does not apply to workers in the construction industry, particularly to project employees, because construction companies must hire workers for a particular project as the need arises and it would be financially disadvantageous to retain workers whose services are no longer required.

The record included AG&P’s certification showing that Samson’s services were engaged on a continuing basis since 1965 and that he was rehired after each project with only brief gaps. The Supreme Court noted that Samson had been working for AG&P for approximately twenty-eight years as of the NLRC adjudication and that his project-to-project employment was renewed several times, with Samson performing virtually the same kind of work as rigger throughout his employment.

• Employment Status: Petitioner argued that the NLRC gravely erred in declaring him merely a project employee, invoking the ruling in Caramol vs. National Labor Relations Commission. He maintained that his regular status was supported by evidence, such as his project employment contracts, which showed that he performed the same kind of work as rigger throughout his employment and that his task was necessary and desirable to AG&P’s usual trade or business.
• Continuous Service and Work Pool: Petitioner alleged that on the basis of his considerable and continuous length of service with AG&P, he should already be considered a regular employee and entitled to the benefits and privileges appurtenant thereto.
• Retroactivity of Department Order No. 19: The Solicitor General, fully agreeing with petitioner, observed that after a particular project was accomplished, petitioner would be rehired immediately the following day save for a gap of one day to one week, and that between 1965 and 1977 there were at least fifty occasions on which petitioner was hired for a continuous period. The Solicitor General added that Department Order No. 19, which purportedly superseded Policy Instruction No. 20, cannot be given retroactive effect because at the time petitioner’s complaint was filed, Policy Instruction No. 20 was still in force.

• Propriety of Remedy and Exhaustion: Private respondent averred that the petition for review under Rule 45 was not the proper remedy from an NLRC decision. Even if treated as a special civil action under Rule 65, respondent argued that the petition must fail for petitioner’s failure to exhaust administrative remedies in not filing a motion for reconsideration, as required under Section 14, Rule VII of the Implementing Rules. Respondent also claimed that the judgment became final and executory on January 13, 1994 pursuant to the Entry of Judgment dated February 9, 1994.
• Conclusiveness of NLRC Factual Findings: Respondent insisted that petitioner was merely a project employee because the factual findings of the NLRC, supported by substantial evidence, are conclusive and binding and entitled to respect by the Court.
• Department Order No. 19: Respondent argued that Department Order No. 19 amended Policy Instruction No. 20 by doing away with the required notice of termination upon completion of the project. Hence, non-compliance with the required report, which is only one of the indicators for project employment, no longer affixed a prescription of regular employment, and the doctrine in Caramol no longer applied. Respondent added that Department Order No. 19 allows the rehiring of employees without making them regular employees, and that the word “rehiring” connotes new employment.
• Project Employment Contracts: Respondent maintained that petitioner’s project employment contracts engaged his services for a fixed and determinable period, making each employment for every project separate and distinct. Consequently, the labor arbiter erred in taking into account petitioner’s various employments in the past in determining his length of service, because upon completion of a project, the services of the project employee are deemed terminated, his employment being coterminous with each project or phase to which he is assigned.
• Article 280 Exception: Respondent claimed that petitioner should be considered a project employee since he falls under the exception in Article 280 of the Labor Code, which 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 of the employee.

• Employment Status: Whether petitioner Ismael Samson is a project employee or a regular employee of private respondent AG&P.
• Retroactivity of Department Order No. 19: Whether Department Order No. 19, Series of 1993, may be given retroactive effect so as to dispense with the notice-of-termination requirement under Policy Instruction No. 20.
• Exhaustion of Administrative Remedies: Whether petitioner’s failure to file a motion for reconsideration of the NLRC decision before filing the petition bars relief.

• Employment Status: Yes, petitioner is a regular employee. AG&P’s failure to report the termination of petitioner’s services after completion of every project or phase was a clear indication that he was not a project employee, and his repeated rehiring and continuing rigger work made his services necessary and desirable to AG&P’s business.
• Retroactivity of Department Order No. 19: No. Department Order No. 19 cannot be given retroactive effect; Policy Instruction No. 20 governed when the complaint was filed and during petitioner’s prior employment, and retroactive application would prejudice employees and run counter to social justice and protection to labor.
• Exhaustion of Administrative Remedies: No. Failure to file a motion for reconsideration was not fatal; the exhaustion doctrine does not apply where the issue is purely legal, and procedural lapses may be disregarded in the interest of substantial justice, especially in cases involving workers’ rights.

• Employment Status: The Court agreed with the labor arbiter that AG&P’s failure to report the termination of petitioner’s services to the nearest Public Employment Office, after completion of every project or phase thereof, was a clear indication that petitioner was not and is not a project employee. Policy Instruction No. 20, in force when the complaint was filed and during the entire period of petitioner’s prior employment, required the employer to report the fact of termination of a project employee as a result of the completion of the project or any phase thereof. Contrary to respondent’s claim, Department Order No. 19 did not totally dispense with the notice requirement; Section 2.2(e) considered the report of termination to the DOLE Regional Office within 30 days as one of the indicators of project employment, and Section 6.1 retained the requirement of submitting reports on employees’ terminations, dismissals, or suspensions. The Court also applied Article 281 of the Labor Code, which provides that employment is deemed regular where the employee is engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, and that an employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed. Petitioner had worked for AG&P for approximately twenty-eight years, his project-to-project employment was renewed several times, and he performed virtually the same kind of work as rigger throughout. The repeated rehiring and continuing need for his services were sufficient evidence of the necessity and indispensability of such services to AG&P’s business or trade. Where periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs, or public order. The certification issued by AG&P showed that petitioner’s services were engaged on a continuing basis since 1965 and that he was rehired immediately the following day, save for a gap of one day to one week. Thus, petitioner is a regular employee.
• Retroactivity of Department Order No. 19: When the action for regularization was filed on November 5, 1989, and during the entire period of petitioner’s employment prior to that date, the rule in force was Policy Instruction No. 20. Department Order No. 19 was issued only on April 1, 1993. Although Department Order No. 19 expressly superseded Policy Instruction No. 20, it cannot be given retroactive effect because such application would be prejudicial to employees and would run counter to the constitutional mandate on social justice and protection to labor. This interpretation is more in accord with the avowed purpose of Department Order No. 19 to ensure the protection and welfare of workers employed in the construction industry, and with Section 7 thereof, which provides that nothing therein shall be construed to authorize the diminution or reduction of benefits being enjoyed by employees at the time of issuance. In carrying out and interpreting the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration. Article 4 of the Labor Code provides that all doubts in the implementation and interpretation of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor.
• Exhaustion of Administrative Remedies: The failure of petitioner to file a motion for reconsideration of the NLRC decision before coming to the Court was not a fatal omission. The exhaustion of administrative remedies doctrine is not a hard and fast rule and does not apply where the issue is purely a legal one. A motion for reconsideration as a prerequisite for the filing of an action under Rule 65 may be dispensed with where the issue is purely of law, as in the present case. At all events, and in the interest of substantial justice, especially in cases involving the rights of workers, procedural lapses, if any, may be disregarded to enable the Court to examine and resolve the conflicting rights and responsibilities of the parties. This liberality is warranted especially since the intervention of the Court is necessary for the protection of petitioner.

• Project Employment vs. Regular Employment — Under Article 281 of the Labor Code, as cited in the decision, employment is deemed regular where the employee is engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding contrary written or oral agreements, 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 engagement. An employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed. The Court applied this rule to petitioner because his rigger work was necessary or desirable to AG&P’s business and his repeated rehiring showed the indispensability of his services.
• Indicators of Project Employment under Department Order No. 19 — Department Order No. 19, Section 2.2, lists indicators of project employment, including: (a) the duration of the specific undertaking is reasonably determinable; (b) the duration and specific work are defined in an employment agreement and made clear to the employee at the time of hiring; (c) the work performed is in connection with the particular project; (d) the employee, while not employed and awaiting engagement, is free to offer his services to any other employer; (e) the termination of employment is reported to the DOLE Regional Office within 30 days following separation using the prescribed form; and (f) the employer undertakes to pay a completion bonus. The Court held that Department Order No. 19 did not totally dispense with the notice requirement; the report of termination is one indicator, and Section 6.1 retains the requirement of submitting termination reports. Failure to report termination is a clear indication that the worker is not a project employee.
• Non-Retroactivity of Labor Regulations and Protection to Labor — Labor regulations cannot be applied retroactively if such application would be prejudicial to employees. At the time the complaint was filed and during the prior employment, Policy Instruction No. 20 governed. Retroactive application of Department Order No. 19 would run counter to the constitutional mandate on social justice and protection to labor and to Section 7’s non-diminution clause. Article 4 of the Labor Code requires that all doubts in the implementation and interpretation of the Labor Code and its implementing rules be resolved in favor of labor.
• Repeated Rehiring and Tenurial Security — Repeated rehiring and the continuing need for an employee’s services are sufficient evidence of the necessity and indispensability of those services to the employer’s business or trade. Where periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs, or public order.
• Exhaustion of Administrative Remedies; Pure Question of Law — The exhaustion of administrative remedies doctrine is not a hard and fast rule and does not apply where the issue is purely a legal one. A motion for reconsideration as a prerequisite for a Rule 65 action may be dispensed with where the issue is purely of law. Procedural lapses may be disregarded in the interest of substantial justice, especially in cases involving workers’ rights.

• “Perforce, we agree with the labor arbiter that private respondent's failure to report the termination of petitioner's services to the nearest Public Employment Office, after completion of every project or a phase thereof to which he is assigned, is a clear indication that petitioner was not and is not a project employee.” — This states the ratio on why non-compliance with the reporting requirement negated project-employment status.
• “The repeated re-hiring and continuing need for his services are sufficient evidence of the necessity and indispensability of such services to private respondent's business or trade.” — This articulates the evidentiary basis for finding regular employment.
• “Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or public order.” — This defines the policy against artificial project periods intended to prevent regularization.
• “The exhaustion of administrative remedies doctrine is not a hard and fast rule and does not apply where the issue is purely a legal one.” — This states the exception allowing direct resort to the Court where the issue is purely legal.

• Caramol vs. National Labor Relations Commission, G.R. No. 102973, August 24, 1993, 225 SCRA 582 — Cited by petitioner and relied upon by the Court in finding regular employment; supports the principle that repeated rehiring and continuing need for services indicate regular status and that periods imposed to preclude tenurial security are struck down.
• Baguio Country Club Corporation vs. NLRC, G.R. No. 71664, February 28, 1992, 206 SCRA 643 — Cited for the principle that repeated rehiring and continuing need for an employee’s services are sufficient evidence of the necessity and indispensability of those services to the employer’s business or trade.
• International Travel Service vs. Minister of Labor, L-49526, August 13, 1990, 188 SCRA 456 — Cited in support of the rule that all doubts in the implementation and interpretation of the Labor Code and its implementing rules are resolved in favor of labor.
• Commissioner of Immigration vs. Vamenta, Jr., L-34030, May 31, 1972, 45 SCRA 342 — Cited for the exception to the exhaustion of administrative remedies doctrine where the issue is purely legal.
• Philippine Airlines Employees Association vs. Philippine Air Lines, Inc., L-31396, January 30, 1982, 111 SCRA 215 — Cited for the rule that a motion for reconsideration as a prerequisite for a Rule 65 action may be dispensed with where the issue is purely of law.
• Ranara vs. NLRC, G.R. No. 100969, August 14, 1992, 212 SCRA 631 — Cited for the liberality in disregarding procedural lapses in cases involving workers’ rights and substantial justice.

• Policy Instruction No. 20, fourth paragraph — Required the employer to report to the nearest Public Employment Office the fact of termination of a project employee as a result of the completion of the project or any phase thereof. It was in force when the complaint was filed and during petitioner’s prior employment; non-compliance indicated petitioner was not a project employee.
• Department Order No. 19, Series of 1993, Section 2.2 — Listed indicators of project employment, including the reporting of termination to the DOLE Regional Office within 30 days following separation using the prescribed form. The Court held it did not totally dispense with the notice requirement but considered it as one of the indicators.
• Department Order No. 19, Series of 1993, Section 6.1 — Retained the notice requirement; the construction company, general contractor, or subcontractor is responsible for compliance with existing laws and regulations, including submission to the DOLE Regional Office of Work Accident/Illness Report, Monthly Report on Employees’ Terminations/Dismissals/Suspensions, and other reports.
• Department Order No. 19, Series of 1993, Section 7 — Provided that nothing therein shall be construed to authorize the diminution or reduction of benefits being enjoyed by employees at the time of issuance; cited against retroactive application prejudicial to employees.
• Labor Code, Article 4 — All doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor. Applied to resolve the case in petitioner’s favor.
• Labor Code, Article 281 (as cited in the decision) — Provides that employment is deemed regular where the employee is engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding contrary written or oral agreements, and that an employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed. Applied to petitioner.
• Labor Code, Article 280 — Invoked by private respondent as the exception for employment fixed for a specific project or undertaking the completion or termination of which was determined at the time of engagement. The Court instead applied Article 281 to find petitioner a regular employee.
• Rule 65, Rules of Court — The petition for review on certiorari was treated as a special civil action for certiorari under Rule 65; a motion for reconsideration as a prerequisite may be dispensed with where the issue is purely legal.
• Section 14, Rule VII, Implementing Rules — Invoked by private respondent as requiring a motion for reconsideration from the NLRC decision; the Court held petitioner’s failure to file one was not fatal.

Romero, Puno and Mendoza, JJ., concur.