RESTATEMENT OF WHO ARE PROJECT EMPLOYEES: THE SUPREME COURT CASE OF
ENGINEERING CONSTRUCTION AND CORPORATION OF ASIA (FIRST BALFOUR, INC.) VS. PALLE, ET AL.
The Supreme Court’s Second Division issued a Decision dated 13 July 2020 in G.R. No. 201247 entitled Engineering Construction and Corporation of Asia (First Balfour, Inc.) vs. Palle, et al. which restates who are the so-called project employees as compared to those regular employees. This case stemmed from a complaint for illegal dismissal filed by six construction workers against their employer, Engineering Construction and Corporation of Asia, which would later enter a merger and will be renamed First Balfour, Inc. (“Company”).
On the one hand, the Company argued that: (1) they were hired as project employees to work at its various construction projects; (2) they were informed of the scope and duration of their work at the time they were engaged in each of the construction projects; (3) their project employment contract expired upon completion of the specific project. On the other hand, the workers asserted that: (1) they are deemed to be regular employees since they were made to perform tasks and functions which are necessary and desirable to a construction company; (2) while they signed an initial agreement, they were assigned from one project to another without the benefit of another contract; and (3) the Company did not comply with the reportorial requirement to the Department of Labor and Employment for every culmination of a project, or consequently, the end of every project employment.
The Labor Arbiter ruled in favor of the workers and held that they are deemed as regular employees. However, the National Labor Relations Commission (NLRC) reversed the ruling of the Labor Arbiter. The workers filed a petition before the Court of Appeals to question the reversal of the ruling of the Labor Arbiter by the NLRC. The Court of Appeals ruled in favor of the workers, reversed and set aside the ruling of the NLRC and reinstated the decision of the Labor Arbiter. Hence, the Company filed a petition before the Supreme Court in turn questioning the ruling of the Court of Appeals.
Penned by Justice Ramon Paul Hernando, the Supreme Court first restated who are deemed as regular employees, to wit: (1) the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, subject to exceptions, such as when one is a fixed, project or seasonal employee; or (2) the employee has been engaged for at least a year, with respect to the activity he or she is hired, and the employment of such employee remains while such activity exists. The Supreme Court then restated who are those considered as project employees, i.e. one whose 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. The Supreme Court also held that the “services of project-based employees are co-terminous with the project and may be terminated upon the end or completion of the project or a phase thereof for which they were hired.”
Otherwise stated, even if a worker is performing a task or function necessary, desirable and essential to a construction business, the Labor Code allows him to be engaged as a project employee for a particular project since after the same, it is not certain if the employer will still have another project. Hence, the construction company is not forced to engage workers without any project at hand. Nonetheless, the law provides for stringent standards which, in the case of Engineering Construction and Corporation of Asia vs. Palle, et al., supra, the Company failed to comply. The Supreme Court held:
“We find that ECCA failed to present substantial evidence to show that it informed respondents of the duration and scope of their work at the time of their hiring. Upon careful review of the company’s respective contracts of employment with respondents, this Court holds that the employment contracts were lacking in details to prove that respondents had been duly informed of the duration and scope of their work, and of their status as project employees at the time of their hiring. The respective contracts of respondents may have been dated at the time of their issuance, but nowhere did said contracts show as to when respondents supposedly signed or received the same or were informed of the contents thereof. This gives rise to the distinct possibility that respondents were not informed of their status as project employees, as well as the scope and duration of the projects that were assigned to them at the time of their engagement. Therefore, ECCA failed to persuasively show that the respondents herein were informed at the time of their engagement that their work was only for the duration of the project.
x x x x x x x x x
In addition, We likewise note that the company did not submit a report with the DOLE of the termination of respondents’ employment every time a project is completed, which is an indication that the workers were not project employees but regular ones.”
The lesson that construction companies can learn from Engineering Construction and Corporation of Asia vs. Palle, et al., supra, is to always cover every project with project employment contract complete with details and specifics. This is the usual Achilles’ Heel of construction companies especially that they have very skilled and trusted workers that they want to pull-out from one project and deploy to another. This may pose a problem later as can be gleaned from the above-cited case. The requirements of a project employment may not be complied with if the worker will be transferred to another project without the previous project being concluded. Certainly, there are ways and means to meet the cost-efficiency objective of the company and at the same time, meet the ends of justice by not circumventing the law and oppressing labor. It is always better to consult a labor lawyer.