The Supreme Court ruled that an employee in the construction industry, repeatedly rehired for specific projects with defined durations, is considered a project employee, not a regular one. This means their employment lawfully ends with each project’s completion. This decision clarifies the rights of construction workers and the obligations of employers, emphasizing the importance of clearly defined project terms at the start of employment.

Construction’s Contract Maze: Project or Permanent Job?

Dionisio Dacles filed a complaint for illegal dismissal against Millenium Erectors Corporation (MEC), claiming he was a regular employee since 1998. MEC countered that Dacles was a project employee, hired for specific construction projects with fixed terms. The Labor Arbiter (LA) sided with MEC, but the National Labor Relations Commission (NLRC) reversed, declaring Dacles a regular employee. Ultimately, the Court of Appeals (CA) reinstated the LA’s decision, leading to this Supreme Court review. The central issue is determining Dacles’ employment status: project-based or regular.

The Supreme Court began by emphasizing the high standard for granting a writ of certiorari. It requires demonstrating that a lower court or quasi-judicial body gravely abused its discretion, meaning its actions were capricious, whimsical, or a virtual refusal to perform its duty. In labor disputes, the NLRC can be found to have gravely abused its discretion if its findings lack support from substantial evidence – that is, the amount of relevant evidence a reasonable mind would accept as adequate to justify a conclusion. The court found the CA correctly granted the certiorari petition, as the NLRC acted with grave abuse of discretion.

The court turned to Article 294 of the Labor Code, which distinguishes between project-based and regular employees. This article states that an employment is deemed regular when the employee performs activities that are usually necessary or desirable in the employer’s business. However, this does not apply when the employment has been fixed for a specific project or undertaking with a predetermined completion date. To be considered project-based, the employer must prove that the employee was assigned to a specific project and that the project’s duration and scope were specified at the time of engagement. This distinction is critical for determining when an employee’s services can be lawfully terminated.

Art. 294. Regular and casual employment. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are 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 or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

The Court emphasized the importance of informing the employee of their project-based status. Records showed Dacles was aware of his status as a project employee for both the NECC and RCB-Malakas Projects. His employment contracts clearly stated that he was hired as a project employee and that his employment would end upon the completion or phase of the project. The contracts sufficiently informed Dacles that his tenure with MEC would last only as long as the specific project to which he was assigned. Therefore, his termination upon project completion was valid.

Further supporting MEC’s case was their compliance with Department Order No. 19, which provides guidelines for employing workers in the construction industry. MEC submitted Establishment Employment Reports to the DOLE, regarding the permanent termination of Dacles from both projects. This submission, as the CA pointed out, is a strong indicator of project employment. The Supreme Court quoted Tomas Lao Construction v. NLRC to underscore this point:

The fact is that Department Order No. 19 superseding Policy Instruction No. 20 expressly provides that the report of termination is one of the indicators of project employment.

Dacles claimed continuous re-hiring for 22 years, arguing this should grant him regular employment status. However, he provided no substantial evidence to support his claim of employment with MEC since 1998. Allegations alone, without supporting evidence, are insufficient to prove continuous employment. The Supreme Court has consistently held that a party alleging a critical fact must support their allegation with substantial evidence. There was no evidence of an employer-employee relationship between Dacles and MEC before his engagement as a project employee in the NECC Project.

The Supreme Court addressed the issue of repeated rehiring of project employees. Length of service alone does not determine employment tenure. The controlling factor is whether the employment was fixed for a specific project, with its completion determined at the time of engagement. While length of service can indicate when a temporary employee becomes permanent, this does not fairly apply to the construction industry. Construction firms cannot guarantee work beyond the life of each project, as they lack control over project funding and decisions. Therefore, requiring employers to maintain employees on payroll after project completion would be unjust.

Ultimately, MEC presented substantial evidence that Dacles was engaged for specific projects with defined durations and scopes, and that he was informed of his project employee status from the outset. Thus, the NLRC gravely abused its discretion in ruling that Dacles was a regular employee. The Supreme Court affirmed the CA’s decision, highlighting the importance of clearly defined project terms and the limitations of relying solely on length of service to determine employment status in the construction industry.

FAQs

What was the key issue in this case?	The central issue was whether Dionisio Dacles was a project employee or a regular employee of Millenium Erectors Corporation, particularly in the context of the construction industry. This distinction determines his rights regarding termination and security of tenure.
What is a project employee?	A project employee is hired for a specific project or undertaking, with the duration and scope of employment defined at the time of engagement. Their employment lawfully ends upon the project’s completion.
What is a regular employee?	A regular employee is hired to perform activities that are usually necessary or desirable in the employer’s business. They have a higher degree of job security compared to project employees.
What evidence did the employer provide to show Dacles was a project employee?	Millenium Erectors Corporation provided employment contracts stating Dacles was hired for specific projects, and that his employment would end upon project completion. They also submitted Establishment Employment Reports to the DOLE, regarding Dacles’ termination from each project.
Why was Dacles’ claim of continuous employment since 1998 rejected?	Dacles failed to provide substantial evidence to support his claim of continuous employment with Millenium Erectors Corporation since 1998. Allegations alone are not sufficient to prove employment history.
Does repeated rehiring automatically make a project employee a regular employee?	No, repeated rehiring alone does not automatically qualify a project employee as regular. The key factor is whether the employment was fixed for a specific project with its completion determined at the time of engagement.
What is the significance of Department Order No. 19?	Department Order No. 19 provides guidelines for employing workers in the construction industry. Compliance with this order, such as submitting termination reports to the DOLE, is an indicator of project employment.
What was the Court of Appeals’ ruling in this case?	The Court of Appeals annulled the NLRC’s decision and reinstated the Labor Arbiter’s ruling, finding that Dacles was a project employee. The Supreme Court affirmed this ruling.
What is grave abuse of discretion in the context of labor disputes?	In labor disputes, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

This case highlights the critical importance of clearly defining the terms of employment at the outset, especially in the construction industry where project-based employment is common. Employers must ensure that employees are fully aware of their employment status and the specific duration of their projects to avoid future disputes.

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: Dacles v. Millenium Erectors Corporation, G.R. No. 209822, July 08, 2015