Violeta vs. NLRC

A worker is a regular employee, not a project employee, unless both requisites of Article 280 of the Labor Code are strictly met: (1) the worker was hired for a specific project or undertaking, and (2) the completion or termination of that project was determined at the time of engagement. An employment contract that fixes no definite duration and makes the worker’s tenure contingent on “progress accomplishment” or the employer’s future determination of need does not satisfy the second requirement, and the worker is deemed a regular employee entitled to security of tenure.

Isabelo Violeta and Jovito Baltazar worked for Dasmariñas Industrial and Steelworks Corporation (DISC), a construction company, and its sister corporation CDCP. Both performed manual trades — Violeta as Erector II and Handyman, Baltazar as Lead Carpenter and Leadman II. Over spans of about ten years, they were assigned to successive infrastructure projects. Their final assignments were on the NSC ETL #3 Civil Works project. Upon completion of the specific work items to which they were assigned, DISC terminated their services. Petitioners then signed quitclaims and received clearance. They subsequently filed complaints for illegal dismissal, asserting they were regular employees who could not be dismissed on the ground of project completion.

• Employment History and Nature of Work: Petitioner Isabelo Violeta was originally employed by CDCP, a sister company of private respondent DISC, from December 15, 1980 to February 15, 1981. DISC then hired him as Erector II for its Philphos project in Isabel, Leyte from November 10, 1982 until December 3, 1984. He was reassigned to the Five Stand TCM Project and later designated as a regular project employee at DISC’s NSC project in Iligan City. He received a salary adjustment and was again hired on June 6, 1989 as Handyman for the civil works of an NSC construction project. On February 10, 1992, he was appointed for project employment as Handyman for the NSC ETL #3 Civil Works. His services were terminated on March 15, 1992 upon completion of the particular work item to which he was assigned. Petitioner Jovito Baltazar began working for CDCP on June 23, 1980. DISC hired him as Lead Carpenter for Project Agua VII on October 1, 1981. Like Violeta, he was transferred from one project to another as a regular project employee. On November 28, 1991, he was hired as Leadman II for the ETL #3 Civil Works and was separated on December 20, 1991 upon completion of that item of work.

• The Appointments for Project Employment: Both petitioners executed “Appointments for Project Employment” stating their employment was for the NSC ETL #3 Civil Works. The appointments contained a clause providing that the appointment would be “co-terminus with the need of ___ as it will necessitate personnel in such number and duration contingent upon the progress accomplishment from time to time. The company shall determine the personnel and the number as work progresses.” The spaces for the specific work item and for “DATE OF COVERAGE” were left blank. The words used tied the duration of employment to the employer’s “need” rather than to a fixed project completion date.

• Termination and Quitclaims: Upon separation, both petitioners signed clearance certificates containing a printed quitclaim declaring that they had no further claims against DISC and releasing the company from any liability. Petitioners alleged these were pro forma documents required to obtain clearance.

• Prior Service and Reports of Termination: DISC had repeatedly rehired petitioners for new projects after the completion of previous ones. Violeta served from 1982 to 1992, and Baltazar from 1981 to 1991, each rendering more than one year of continuous or broken service. DISC reported to the nearest Public Employment Office only the final termination of each petitioner, not the completion of earlier projects or phases of work.

• Grave Abuse of Discretion by NLRC: Petitioners contended that the NLRC’s November 15, 1994 resolution reversing its earlier favorable ruling was rendered with grave abuse of discretion amounting to lack of jurisdiction because it disregarded applicable labor laws and settled jurisprudence on the classification of project employees in the construction industry.

• Regular Employment Status: Petitioners argued that they were regular employees who could not be dismissed solely on the ground of completion of a particular project. They maintained that their repeated rehiring and transfer from one project to another proved their services were necessary and desirable to DISC’s usual business, and that their employment contracts failed to fix a definite period for the completion of the projects to which they were assigned.

• Invalidity of Quitclaims: Petitioners asserted that the quitclaims they signed were pro forma, obtained as a condition for clearance, and did not bar their claims for the full measure of their legal rights.

• Project Employee Classification: Private respondent DISC maintained that both petitioners were project employees based on their written Appointments for Project Employment, which expressly stated that their employment was for a specific project and period. DISC further pointed to petitioners’ own admissions in their pleadings that they were “regular project employees,” and argued that such status rendered their employment coterminous with the project for which they were engaged.

• Validity of Termination: DISC contended that petitioners’ separation was valid because their services ended upon completion of the specific work items for which they had been hired. It further argued that even if petitioners were “regular project employees,” their employment was not permanent but coterminous with the projects assigned to them.

• Gaps in Employment: The NLRC, adopting DISC’s position, argued that the gaps between projects showed petitioners could not have been regular employees under the employer’s control and that they could have sought other employment during those intervals.

• Quitclaims and DOLE Order No. 19: DISC relied on the quitclaims executed by petitioners as a bar to their claims. It also invoked Department of Labor and Employment Order No. 19, Series of 1993, which provides guidelines on project employment, to support its position.

• Proper Employee Classification: Whether petitioners Isabelo Violeta and Jovito Baltazar were project employees whose employment could be terminated upon completion of the project, or regular employees entitled to security of tenure under Article 280 of the Labor Code.

• Effect of the Employment Contract’s Duration Clause: Whether the stipulation that employment was “co-terminus with the need … contingent upon the progress accomplishment” satisfied the legal requirement that the completion or termination of the specific project be determined at the time of engagement.

• Evidentiary Weight of Repeated Rehiring and Failure to Report Terminations: Whether the employer’s repeated rehiring of petitioners for successive projects over approximately ten years, coupled with the failure to report each project completion to the Public Employment Office, established that petitioners were regular employees.

• Validity of Quitclaims: Whether the quitclaims signed by petitioners barred their claims for illegal dismissal and monetary relief.

• Retroactive Application of DOLE Order No. 19: Whether DOLE Order No. 19, Series of 1993, which took effect after petitioners’ termination and the filing of their complaints, could be applied to support DISC’s classification of petitioners as project employees.

• Proper Employee Classification: Petitioners were regular employees, not project employees. Their work as Handyman and Erector II, and as Lead Carpenter and Leadman II, was necessary and desirable to the construction business of private respondent. The continuous and successive assignments to different projects confirmed this. The principal test for project employment — whether the workers were assigned to carry out a specific project whose duration and scope were specified at the time of engagement — was not satisfied.

• Effect of the Employment Contract’s Duration Clause: The appointments failed to meet the second statutory requirement that the completion or termination of the project be determined at the time of engagement. The duration was made “contingent upon the progress accomplishment,” and the employer retained the liberty to “determine the personnel and the number as the work progresses.” Such language made the employment subject to a condition rather than a definite term. The phrase “co-terminus with the need” further distinguished the engagement from one coterminous with project completion; it allowed the employer to terminate services even before the work was finished. Following De Jesus v. PNCC, this contractual wording did not exempt the employer from Article 280.

• Evidentiary Weight of Repeated Rehiring and Failure to Report Terminations: The failure of DISC to report the completion of each project and the corresponding termination of petitioners’ services to the nearest Public Employment Office, as required by Policy Instruction No. 20, was a strong indication that petitioners were not true project employees. Only the final termination was reported. Moreover, the fact that petitioners rendered more than one year of service — continuous or broken — at the time of their dismissal reinforced their status as regular employees under Article 280. The brief gaps between projects did not negate regularity; Article 280 expressly contemplates both continuous and broken service, and no evidence showed petitioners sought outside employment during those intervals.

• Validity of Quitclaims: The quitclaims did not bar petitioners’ claims. They were pro forma provisions printed on the clearance certificates that petitioners were required to obtain, functioning as a compulsory general release without any stated consideration. Such quitclaims are frowned upon as contrary to public policy and are ineffective to bar claims for the full measure of workers’ legal rights.

• Retroactive Application of DOLE Order No. 19: DOLE Order No. 19, Series of 1993, could not be retroactively applied because both the termination of petitioners’ services and the filing of their complaints occurred before its effectivity on April 1, 1993. Even if applicable, the order would not aid private respondent because the essential indicia of project employment — a reasonably determinable duration of the specific undertaking defined in an employment agreement and made clear to the employee at the time of hiring — were absent.

• Principal Test for Project Employment — Under Article 280 of the Labor Code, an employee is a project employee only if both requisites are met: (1) the worker was hired for a specific project or undertaking, and (2) the completion or termination of that project or undertaking was determined at the time of the worker’s engagement. The burden rests on the employer to prove that both conditions are strictly satisfied.

• Definition of “Period” in Project Employment — The term “period” in the context of project employment denotes a definite length of existence or duration — a point of time marking a termination, an end, a limit, or a bound; a time of definite length or the period from one fixed date to another fixed date. An undertaking whose duration is contingent upon “progress accomplishment” or the employer’s ongoing determination of need is not a period fixed at the time of engagement.

• Condition versus Term — An employment made contingent on a condition (e.g., “progress accomplishment”) rather than a definite term does not satisfy the requirement of a predetermined completion or termination date under Article 280. The employee is thus deemed a regular employee.

• Effect of Continuous or Broken Service — Article 280 expressly covers both continuous and broken service. 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, and his employment shall continue while such activity exists.

• Reporting Requirement under Policy Instruction No. 20 — The employer’s failure to report to the nearest Public Employment Office the termination of workers’ services every time a project or a phase thereof is completed indicates that the workers are not project employees but regular employees.

• Quitclaims as Contrary to Public Policy — Quitclaims executed by laborers are generally frowned upon as contrary to public policy, and are ineffective to bar claims for the full measure of the workers’ legal rights, especially where they are pro forma, printed on clearance forms, and given without consideration or under compulsion.

• Non-Retroactivity of Administrative Orders — DOLE administrative orders on project employment do not apply retroactively to terminations and complaints that arose before their effectivity.

• “The principal test for determining whether particular employees are properly characterized as ‘project employees,’ as distinguished from ‘regular employees,’ is whether or not the ‘project employees’ were assigned to carry out a ‘specific project or undertaking,’ the duration (and scope) of which were specified at the time the employees were engaged for that project.”

• “Without question, the petitioner, a carpenter, performs work ‘necessary, or desirable’ in the construction business, the corporation’s field of activity. The fact however that he had been involved in project works will not alter his status because the law requires ‘specific project or undertaking the completion or termination of which has been determined at the time of engagement’ in order to make a project employee a true project employee. … we can not say that the petitioner’s engagement has been predetermined because the duration of the work is ‘contingent upon the progress accomplishment’ and secondly, the company, under the contract, is free to ‘determine the personnel and the number as the work progresses.’ Clearly, the employment is subject to no term but rather, a condition, that is, ‘progress accomplishment.’ It can not therefore be said to be definite that will therefore exempt the respondent company from the effects of Article 280.” (Quoting De Jesus v. PNCC, applied to the identical stipulations in this case.)

• “To be exempted from the presumption of regularity of employment, therefore, the agreement between a project employee and his employer must strictly conform with the requirements and conditions provided in Article 280. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of or a clear agreement on the completion or termination of the project at the time the employee is engaged.”

• “Jurisprudence abounds with the consistent rule that the failure of an employer to report to the nearest Public Employment Office the termination of its workers’ services every time a project or a phase thereof is completed indicates that said workers are not project employees.”

• De Jesus v. Philippine National Construction Corp., G.R. No. 89990, March 20, 1991, 195 SCRA 468 — Directly controlling precedent. Involved an identical employment contract clause making tenure “co-terminus with the need … contingent upon the progress accomplishment.” The Court ruled that such language made employment subject to a condition, not a definite term, and the worker was a regular employee. The present case followed De Jesus in all material respects.

• ALU-TUCP v. NLRC, G.R. No. 109902, August 2, 1994, 234 SCRA 678 — Cited for the principal test of project employment and the rule that the services of project employees are coterminous with the specific project for which they were hired.

• Philippine National Construction Corp. v. NLRC, G.R. No. 85323, June 20, 1989, 174 SCRA 191; Magante v. NLRC, G.R. No. 74969, May 7, 1990, 185 SCRA 21; Phesco, Inc. v. NLRC, G.R. Nos. 104444-49, December 27, 1994, 239 SCRA 446 — Cited as the consistent line of authority that failure to report project completions to the Public Employment Office indicates regular employment.

• Samson v. NLRC, G.R. No. 113166, February 1, 1996, 253 SCRA 112 — Ruled that DOLE Order No. 19, Series of 1993, has no retroactive effect.

• Article 280, Labor Code of the Philippines — Defines regular and casual employment. Provides that an employment is deemed regular where the employee performs activities usually necessary or desirable in the employer’s business, 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, or where the work is seasonal. Stipulates 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. The Court applied this provision to hold that both the nature of petitioners’ work and their length of service rendered them regular employees, and that the exception for project employment was not satisfied.

• Policy Instruction No. 20 of then Labor Secretary Blas F. Ople — Requires employers in the construction industry to report to the nearest Public Employment Office the termination of workers’ services every time a project or phase thereof is completed. The Court used DISC’s non-compliance as evidence that petitioners were not genuine project employees.

• DOLE Order No. 19, Series of 1993 — Provides guidelines on project employment. The Court held that this issuance could not be applied retroactively to terminations that occurred before its effectivity.

Justices Puno, Mendoza, and Torres, Jr., concurred.