In Inocentes v. R. Syjuco Construction, Inc., the Supreme Court held that construction workers initially hired as project employees were, in fact, regular employees due to the employer’s failure to prove that the employees were informed of their project-based employment status at the time of hiring. This ruling underscores the employer’s responsibility to clearly communicate the terms and conditions of employment, particularly the specific nature and duration of a project-based job, to avoid the presumption of regular employment. Employers must provide substantial evidence, such as employment contracts and DOLE reports, to support claims of project employment; otherwise, employees are deemed regular and entitled to corresponding rights and benefits.

Burden of Proof: When Construction Jobs Lead to Regular Status

Dominic Inocentes, Jeffrey Inocentes, Joseph Cornelio, and Reymark Catangui filed a complaint against R. Syjuco Construction, Inc. (RSCI), alleging illegal dismissal and seeking various monetary claims. The central legal question revolved around whether the petitioners were project employees, as claimed by RSCI, or regular employees entitled to greater job security and benefits. The Labor Arbiter initially sided with RSCI, but the National Labor Relations Commission (NLRC) reversed this decision, finding the workers to be regular employees who were illegally dismissed. The Court of Appeals (CA) then reinstated the Labor Arbiter’s ruling, leading to the Supreme Court review.

The Supreme Court emphasized the distinction between regular and project employees, referencing Article 295 of the Labor Code, which defines a regular employee as one engaged to perform tasks usually necessary or desirable in the employer’s business, without falling into the categories of fixed, project, or seasonal employment. Conversely, a project employee’s employment is fixed for a specific project, the completion of which is made known at the time of engagement. The Court cited Dacuital vs. L.M. Camus Engineering Corp., stressing that the key determinant is whether the employee was assigned to a particular project with a specified duration made known upon hiring.

A crucial element in determining project employment is the notice given to employees at the time of hiring, informing them that their employment is tied to a specific project. In this case, the Supreme Court found that RSCI failed to provide such prior notice. The ‘summary of project assignments’ presented by RSCI was deemed insufficient as it merely listed past projects without indicating that the employees were informed of their project-based status at the time of engagement. This distinction is vital because it highlights the employer’s responsibility to clearly communicate the terms of employment upfront.

The Court noted that the summary only listed projects after the employees were assigned, failing to demonstrate that they were informed at the time of engagement that their work was project-specific. The absence of a clear employment contract specifying the project’s duration and scope further weakened RSCI’s case. It was only in their Rejoinder that RSCI claimed employees were briefed about the nature of their work, but this claim lacked substantial supporting evidence.

Moreover, the nature of the employees’ tasks supported the argument for regular employment. RSCI’s admission that employees were informed about potential future projects after completing previous ones indicated the necessity and desirability of their work to the company’s usual business. The fact that RSCI coordinated with and notified the employees about upcoming projects suggested that their services were consistently required.

The Supreme Court also highlighted RSCI’s failure to submit a report to the Department of Labor and Employment (DOLE) regarding the termination of the employees’ employment due to alleged project completion. Quoting Freyssinet Filipinas Corp. vs. Lapuz, the Court stated:

the failure on the part of the employer to file with the DOLE a termination report every time a project or its phase is completed is an indication that the workers are not project employees but regular ones.

This requirement reinforces the importance of adhering to labor regulations and providing proper documentation to support claims of project-based employment. Compliance with DOLE reporting requirements is a key factor in determining whether employees are genuinely project-based.

The burden of proof lies with the employer to demonstrate that the employee is a project employee. The employer must establish that (a) the employee was assigned to carry out a particular project or undertaking; and (b) the duration and scope of which was specified at the time of engagement. In this case, RSCI failed to meet this burden, as they did not adequately prove that the employees were informed of their project-based employment status at the time of hiring.

The absence of a written contract specifying the project’s duration and scope, while not automatically making one a regular employee, serves as critical evidence that employees were informed of their work’s nature and duration at the start of their engagement. The Supreme Court reiterated that in the absence of such evidence, the presumption favors regular employment. Since RSCI did not discharge their burden of proof, the NLRC’s finding that the employees were regular employees was upheld.

As regular employees, the petitioners could only be dismissed for a just or authorized cause and with due process. The failure to observe these requirements led the Court to affirm the NLRC’s finding of illegal dismissal. Even if the employees’ termination was due to the completion of a project, this would not constitute a valid cause for dismissing regular employees. Furthermore, the lack of notice of termination violated their right to due process.

The Court also sustained the NLRC’s award of service incentive leave pay, backwages, and separation pay to the employees. Separation pay was deemed appropriate due to strained relations between the parties and the possibility that the employees’ former positions were already filled. Finally, the Court upheld the award of attorney’s fees, as the employees were compelled to litigate to protect their rights and imposed a 6% per annum interest on all monetary awards from the finality of the decision until fully paid.

FAQs

What was the key issue in this case?	The central issue was whether the petitioners were project employees or regular employees, and whether they were illegally dismissed. The court focused on whether the employer adequately informed the employees of their project-based employment at the time of hiring.
What is the difference between a regular and project employee?	A regular employee performs tasks usually necessary or desirable in the employer’s business, while a project employee is hired for a specific project with a known completion date. The key distinction lies in the nature and duration of the employment.
What is the employer’s responsibility in project-based employment?	The employer must clearly inform the employee at the time of hiring that the employment is project-based and specify the project’s duration and scope. Failure to do so can result in the employee being considered a regular employee.
What evidence is needed to prove project employment?	Evidence includes employment contracts specifying the project’s duration and scope, and reports filed with the DOLE regarding the termination of employment upon project completion. Without this documentation, the presumption is that the employee is regular.
What happens if an employer fails to prove project employment?	If the employer fails to prove that the employee was informed of their project-based employment at the time of hiring, the employee is presumed to be a regular employee with corresponding rights and benefits. This includes protection against illegal dismissal.
Can regular employees be dismissed due to project completion?	No, regular employees cannot be dismissed solely due to project completion. Termination must be for a just or authorized cause, and with due process, as required by the Labor Code.
What are the consequences of illegal dismissal?	Employees who are illegally dismissed are entitled to backwages, separation pay (if reinstatement is not feasible), service incentive leave pay, and attorney’s fees. These remedies aim to compensate the employee for the unlawful termination.
What is the significance of DOLE reports in determining employment status?	Filing termination reports with DOLE after project completion is a crucial indicator that employees were indeed project-based. Absence of these reports can suggest that employees were treated as regular staff, regardless of project assignments.
Why was separation pay awarded in this case?	Separation pay was awarded because reinstatement was deemed no longer feasible due to strained relations between the parties and the possibility that the employees’ positions had already been filled. This is a common remedy in illegal dismissal cases.

This case serves as a crucial reminder for employers in the construction industry to meticulously document and communicate the terms of employment, especially for project-based positions. Failing to do so can lead to costly legal battles and the recognition of employees as regular staff, with all the attendant rights and benefits. This ruling not only protects workers’ rights but also promotes transparency and fairness in employment practices.

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: Inocentes, et al. v. R. Syjuco Construction, Inc., G.R. No. 237020, July 29, 2019