The Supreme Court has clarified that project employees, whose employment ends upon completion of a specific project or phase, are not entitled to prior notice of termination. This ruling distinguishes such terminations from dismissals for cause, where due process mandates notice and hearing. The decision reinforces the unique nature of project-based employment in the Philippines, providing employers in industries like construction with clear guidelines regarding termination procedures.

Construction’s End: When Is Notice Required for Project-Based Employment?

This case, D.M. Consunji, Inc. v. Antonio Gobres, et al., revolves around the termination of several carpenters employed by D.M. Consunji, Inc. (DMCI) on a project basis. These carpenters, including Antonio Gobres, Magellan Dalisay, Godofredo Paragsa, Emilio Aleta, and Generoso Melo, were hired for specific phases of construction projects. Their employment contracts stipulated that their tenure would last until the completion of their assigned tasks. The central legal question is whether these project employees were entitled to prior notice of termination when their respective phases of work concluded.

The respondents filed a complaint for illegal dismissal, claiming they were terminated without prior notice, violating their right to due process. DMCI countered that as project employees, their employment naturally ceased upon project completion, and no prior notice was required under prevailing labor regulations. The Labor Arbiter and the National Labor Relations Commission (NLRC) initially sided with DMCI, but the Court of Appeals (CA) partially reversed, awarding nominal damages to the employees for lack of advance notice, citing the Supreme Court’s decision in Agabon v. NLRC. DMCI then elevated the matter to the Supreme Court, questioning the CA’s award of nominal damages.

The Supreme Court began its analysis by reiterating the definition of a project employee under Article 280 of the Labor Code. This article distinguishes project employment from regular employment, specifying that project employment is tied to a particular project or undertaking, the completion of which is determined at the time of the employee’s engagement. Building on this, the court emphasized the significance of Department Order No. 19, series of 1993, which provides guidelines for determining project employment status.

The Court addressed the critical issue of due process in the context of project employment terminations. The Court distinguished this case from Agabon v. NLRC, explaining that Agabon involved regular employees dismissed for cause (abandonment of work), necessitating compliance with procedural due process requirements—notice and hearing. Since the employees in the DMCI case were terminated due to project completion, a different set of rules applied. The Supreme Court then quoted Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:

Section 2. Standard of due process: requirements of notice. — In all cases of termination of employment, the following standards of due process shall be substantially observed.

III. If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required.

The Supreme Court emphasized that project employees’ termination is governed by Section 1 (c) and Section 2 (III), Rule XXIII (Termination of Employment), Book V of the Omnibus Rules Implementing the Labor Code. Section 1 (c) clarifies that project employees cannot be dismissed before project completion unless for just or authorized cause or completion of their phase of work.

The court also referred to the case of Cioco, Jr. v. C.E. Construction Corporation, which reiterated that no prior notice of termination is required if the termination results from the completion of the contract or project phase for which the worker was engaged. The Supreme Court noted that this is because project completion automatically terminates the employment, obliging the employer only to report the termination to the DOLE. Thus, the Court reasoned that since the employees’ termination resulted from project completion, DMCI was not obligated to provide prior notice. This approach contrasts with terminations for cause, where strict adherence to due process is paramount.

The Supreme Court also addressed the argument that the respondents were entitled to nominal damages for lack of advance notice of their termination, which the Court of Appeals granted based on Agabon v. NLRC. The Supreme Court stated that Agabon v. NLRC is not applicable to this case because the respondents were not terminated for just cause under Article 282 of the Labor Code. Dismissal based on just causes are acts or omissions attributable to the employee. Instead, the respondents were terminated due to the completion of the phases of work for which their services were engaged.

To further clarify the contrasting requirements, a comparison of the applicable rules for terminating regular employees for cause versus terminating project employees upon project completion is useful:

Termination Type	Due Process Requirements	Legal Basis
Regular Employees – Termination for Cause	Written notice specifying grounds for termination, opportunity to explain, hearing or conference, written notice of termination.	Article 282 of the Labor Code; Section 2, Rule 1, Book VI of the Omnibus Rules
Project Employees – Completion of Project/Phase	No prior notice required.	Section 2 (III), Rule XXIII, Book V of the Omnibus Rules

The Supreme Court’s decision provides clarity and reinforces the specific nature of project-based employment. The ruling confirms that employers in the construction industry are not required to provide prior notice to project employees when their employment ends due to project completion. Building on this principle, the Court held that the appellate court erred in awarding nominal damages to the respondents for lack of advance notice of their termination. Because the termination was brought about by the completion of the contract or phase thereof for which the worker was hired, the respondents are not entitled to nominal damages for lack of advance notice of their termination.

FAQs

What was the key issue in this case?	The key issue was whether project employees are entitled to prior notice of termination when their employment ends due to the completion of the project or a phase of it. The Supreme Court clarified that no prior notice is required in such cases.
Are project employees entitled to termination pay?	Project employees are generally not entitled to termination pay if their employment ends due to the completion of the project or phase for which they were hired. This is regardless of how many projects they have worked on for the same company.
What is the main difference between terminating a regular employee and a project employee?	Terminating a regular employee requires strict adherence to due process, including notice and hearing, as specified in the Labor Code. Terminating a project employee upon project completion does not require prior notice.
What does the Labor Code say about project employees?	Article 280 of the Labor Code defines project employees as those whose employment is fixed for a specific project or undertaking, the completion of which is determined at the time of their engagement.
What is the employer’s responsibility when terminating a project employee?	Upon terminating a project employee due to project completion, the employer is primarily responsible for reporting the termination to the Department of Labor and Employment (DOLE). This report serves statistical purposes.
What was the basis for the Court of Appeals’ decision to award nominal damages?	The Court of Appeals initially awarded nominal damages based on the precedent set in Agabon v. NLRC, which involved the illegal dismissal of regular employees due to lack of due process. The Supreme Court overturned this, finding Agabon inapplicable.
What is the significance of Department Order No. 19, series of 1993?	Department Order No. 19 provides guidelines for determining project employment status. It outlines indicators such as the determinable duration of the project and the reporting of terminations to the DOLE.
What happens if a project employee is dismissed before the completion of the project?	If a project employee is dismissed before project completion, the dismissal must be for just or authorized cause, and the employer must comply with due process requirements. This includes providing notice and an opportunity to be heard.

This decision reinforces the distinct treatment of project employees under Philippine labor law. It clarifies that employers are not obligated to provide prior notice of termination when the employment ends due to the completion of the project or phase. Employers in the construction industry can rely on this ruling to ensure compliance with labor regulations while managing project-based workforces effectively.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: D.M. Consunji, Inc. vs. Antonio Gobres, G.R. No. 169170, August 08, 2010