The Supreme Court affirmed that construction workers hired for specific projects are considered project employees, not regular employees, provided they are clearly informed of the project’s scope and duration. This means their employment lawfully ends with the project’s completion, regardless of repeated rehiring or the necessity of their work to the business.

From Concrete Pourer to Project Employee: When Does Construction Work End?

The case of Mario Diesta Bajaro v. Metro Stonerich Corp. (G.R. No. 227982, April 23, 2018) delves into the employment status of construction workers repeatedly hired for different projects. Mario Bajaro, a concrete pump operator, claimed he was a regular employee due to his continuous service of six years with Metro Stonerich Corporation. He argued that his work was essential to the company’s business, entitling him to security of tenure and protection against illegal dismissal when he was eventually terminated. Metro Stonerich countered that Bajaro was a project employee, hired for specific construction projects with defined durations, thus justifying the termination of his employment upon project completion. The central legal question revolves around determining whether Bajaro’s repeated hiring converted his status to that of a regular employee.

The Labor Code of the Philippines distinguishes between various types of employment, including regular, project, seasonal, and casual. The key difference lies in the nature and duration of the work. Article 294 of the Labor Code defines a regular employee as one engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer. However, this does not apply “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.” This distinction is critical in determining the rights and obligations of both employer and employee.

In project-based employment, an employee is hired for a specific project with a defined beginning and end. The Supreme Court has consistently held that the services of a project employee may be lawfully terminated upon the completion of the project or phase for which they were hired. The employer must prove two key elements to establish project-based employment: first, that the employee was hired to carry out a specific project or undertaking; and second, that the employee was notified of the duration and scope of the project. This notification is crucial to prevent employers from arbitrarily labeling employees as project-based to avoid regularization.

The Court emphasized the unique nature of the construction industry in William Uy Construction Corp. and/or Uy, et al. v. Trinidad:

Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project.

In Bajaro’s case, the Court found that Metro Stonerich had sufficiently demonstrated that Bajaro was hired as a concrete pump operator for five distinct construction projects. Each project had a specified duration, and Bajaro signed contracts acknowledging his status as a project employee. These contracts clearly indicated the starting and ending dates of his employment, contingent upon the completion of each project. Furthermore, Metro Stonerich complied with Department Order No. 19, Series of 1993, by submitting Establishment Employment Reports to the DOLE, indicating the termination of Bajaro’s employment due to project completion.

Bajaro’s argument that his continuous rehiring and the essential nature of his work should have conferred regular employment status was rejected by the Court. The Court acknowledged that construction firms often hire project employees to perform work necessary and vital for their business. However, repeated rehiring does not automatically result in regularization. As highlighted in Caseres v. Universal Robina Sugar Milling Corporation, the controlling determinant is whether the employment was fixed for a specific project with its completion determined at the time of engagement.

The Court recognized that forcing construction companies to maintain employees on a permanent basis, even without available projects, would be unduly burdensome. It would create a situation where employees are paid for work not done, which the Court deemed unfair to employers. This principle aligns with the understanding that the construction industry operates on project-based cycles, where employment opportunities fluctuate with the availability of projects.

Despite being classified as a project employee, Bajaro was still entitled to certain benefits under the law. The Court affirmed the Labor Arbiter’s decision to award Bajaro overtime pay differentials, proportionate 13th-month pay, and service incentive leave (SIL) pay. Metro Stonerich failed to prove that it had fully compensated Bajaro for these benefits, and the burden of proof lies with the employer to demonstrate payment. The Court also awarded attorney’s fees, recognizing that Bajaro was compelled to litigate to protect his rights.

However, Bajaro’s claims for premium pay for holiday and rest day work were denied due to a lack of factual basis. The Court noted that Bajaro failed to specify the dates he worked during special days or rest days, and the burden of proof rests on the employee to demonstrate actual service rendered on such days. It is the employers responsibilty to prove payment of salary differential, SIL, holiday pay and 13th month pay.

FAQs

What was the key issue in this case?	The central issue was whether Mario Bajaro, a concrete pump operator, was a regular or project employee of Metro Stonerich Corp., and whether his termination was legal. The court needed to determine if his repeated rehiring converted him into a regular employee despite the nature of construction work.
What is a project employee?	A project employee is hired for a specific project or undertaking, with the duration and scope of employment determined at the time of engagement. Their employment lawfully ends upon completion of the project, as stated in the labor code.
How does the Labor Code define regular employment?	According to Article 294 of the Labor Code, a regular employee is engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer. This contrasts with project-based or seasonal employment.
What must an employer prove to classify an employee as a project employee?	The employer must prove that the employee was hired to carry out a specific project and that the employee was notified of the duration and scope of the project at the time of engagement. This prevents arbitrary classification to avoid regularization.
Does repeated rehiring automatically make a project employee a regular employee?	No, repeated rehiring does not automatically convert a project employee into a regular employee in the construction industry. The key determinant is whether the employment was fixed for a specific project with a completion date determined at the time of engagement.
What benefits are project employees entitled to?	Even as project employees, workers are entitled to benefits such as overtime pay differentials, proportionate 13th-month pay, and service incentive leave (SIL) pay, if not already fully compensated. Employers bear the burden of proving that these benefits were paid.
Why is the construction industry treated differently regarding employment status?	The construction industry is unique because companies cannot guarantee work beyond the life of each project. Construction firms depend on securing projects, which are subject to external decisions and funding, making permanent employment impractical.
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 Establishment Employment Reports to the DOLE, supports the claim of project employment.
What happens if an employer fails to prove payment of benefits?	If an employer fails to prove payment of benefits like overtime pay or SIL pay, the employee is entitled to receive those benefits. The burden of proof lies with the employer to demonstrate that payments were made.

This case reinforces the principle that construction workers can be legitimately employed on a project basis, provided that the terms of employment are clearly defined and communicated. Employers must ensure transparency in hiring practices and compliance with labor laws to avoid 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: Mario Diesta Bajaro v. Metro Stonerich Corp., G.R. No. 227982, April 23, 2018