Dong Yun v. Montecastro (G.R. No. 229121. August 23, 2017)


Before the Court is a Petition for Review under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision[1] dated July 13, 2016 and the Resolution[2] dated November 24, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 142605. There, the CA ruled that there was no grave abuse of discretion, amounting to lack or excess of jurisdiction, on the part of the National Labor Relations Commission (NLRC) when it ruled that respondents Victor F. Montecastro, Elizalde M. Llorera, Pablito C. Guillar, and Melvin L. Malvar are regular employees of Philippines Dong Yun Plate-Making Corporation (Dong Yun).
The facts, as found by the CA, are as follows:

[Respondents] worked as carpenters, electricians, plumbers, masons, and welders at Dong Yun. They reported for work every Mondays to Saturdays from 8:00 o'clock in the morning until 5:00 o'clock in the afternoon. The company, however, failed to give their holiday pay, premium [pay] for rest day, and benefits under the Social Security System (SSS), Pag-ibig, and Philhealth. According to Human Resource Manager Reden Quiling, part-time employees like them are not entitled to holiday pay. Except for some kilos of rice, [respondents] likewise did not receive their 13 th month pay.

On April 27, 2013, Louie promised to pay [respondents] the amount of Php10,000.00 as bonus every month. [Respondents] then signed an employment contract for three (3) months upon the company's instructions and even threatened them not to file a complaint. The company then dismissed them on separate dates for no apparent reason.

[Petitioners] vehemently denied dismissing [respondents] who were project employees. The company engaged [respondents'] services for its so-called 'construction project' sometime in April 2012. The construction project consisted of renovation of walls, transfer of machines, construction of water canals, and all other similar activities. Pursuant to a Project Plan Form, [respondents] performed and completed their assigned tasks on particular dates within a specified period. The company submitted its termination report before the Department of Labor and Employment (DOLE) after completion of the project.

On May 2, 2013, individual [respondents] executed another project employment contract with the company. This was pursuant to [petitioners'] promise to hire [respondents] in case there were additional works to be done after the construction project. After completing the project, [petitioners] again made the same promise to [respondents] and submitted a termination report before the DOLE.

Thus, on January 6, 2014, the parties entered into another project employment contract. In June 2014, however, [respondents] suddenly abandoned their employment after Quiling denied their request for regularization because this would run counter to their contracts.

In reply, [respondents] maintained that they were full time workers performing activities that were necessary and desirable to Dong Yun's construction business. The execution of the project employment contracts likewise was a mere ploy of [petitioners] to limit their security of tenure as regular employees. In any event, they have already acquired regular status due to their continued re-hiring and performance of the same activities. The termination report notice filed before the DOLE on July 5, 2013, on the other hand, appeared suspect because their dismissals happened on separate dates.

[Petitioners]x xxx [contended] that [c]ontrary x x x to appellants' [respondents'], the company is not a construction company but a company engaged in the manufacture of gravure cylinder. The company hired [respondents] as carpenters, masons, construction workers, electricians, and plumbers, precisely because of their skills which are totally foreign to that of its regular factory workers. [Respondents] also cannot feign ignorance about the real status of their employment when they executed not one (1) but three (3) employment contracts denominated as 'KONTRATAPARA SA PART-TIME NA MANGGAGAWA.'

At any rate, [respondents] failed to prove the fact of dismissal. Other than their bare allegations of illegal dismissal, [respondents] neither offered in evidence a notice of dismissal nor made allegations of having been prevented from entering the company premises by [petitioners].[3]
In a Decision[4] dated January 26, 2015, Labor Arbiter Renell Joseph R. Dela Cruz (LA Dela Cruz) dismissed the complaint for illegal dismissal filed by respondents, after concluding that they were project employees of Dong Yun and that their employment already ended upon the completion of the construction works which they were hired for. LA Dela Cruz explained that the respondents fall into the second category of project employees or those that perform jobs that are not within the regular and ordinary business operations of the employer and whose jobs begin and end at a predetermined time. Being carpenters, electricians, plumbers, masons and welders, respondents' works are, by their nature, distinct from Dong Yung's main line of business which is industrial printing. As the constructions and renovations on Dong Yung's premises were already completed, it would be burdensome for it to accommodate respondents as permanent employees and pay them salaries even when there were no more projects available to them. With regard to the monetary benefits being claimed, LA Dela Cruz awarded service incentive leave pay subject to the one-year service requirement and 13th month pay.

On appeal, the NLRC reversed LA Dela Cruz' findings that respondents were project employees and ruled that they were Dong Yun's regular employees. In its June 30, 2015 Resolution,[5] the NLRC explained that the "Kontrata Para sa Part-Time ng Manggagawa" entered into between respondents and Dong Yun failed to mention any particular project and a predetermined period of its completion, such omission being crucial in determining respondents' status of employment. The NLRC also noted that the Project Plan Forms given to respondents bear the signature of an officer from Dong Yun's Maintenance Department who had the authority to re¬ assign respondents to activities other than their supposed specialized skills. This, coupled with the fact that they were repeatedly hired for almost two (2) years, made the NLRC conclude that respondents could already be considered members of Dong Yun's Maintenance Department, and are thus its regular employees. As to the issue of illegal dismissal, the NLRC said that the purported completion of the projects which they were hired for lend credence to the claim that they were illegally dismissed. A motion for reconsideration was filed but was denied for lack of merit in a Resolution dated August 28, 2015.

Aggrieved by the NLRC decision, petitioner filed a petition for certiorari before the CA maintaining that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the findings of the labor arbiter that respondents are project employees and were not illegally dismissed.

The Ruling of the CA

The CA dismissed the petition and ruled that the decision of the NLRC has not been attended by grave abuse of discretion amounting to lack or excess of jurisdiction. Furthermore, it ruled that the "Kontrata Para sa Part-Time na Manggagawa" that the respondents signed failed to indicate the specific project or undertaking they would be working at. To further bolster the absence of such proviso, the contract even stated that Dong Yun may relegate respondents to do other tasks, regardless of the nature of their position, when the need for such services arises. Further, the contract is also silent as to the scope and duration of the renovations to be performed. Prescinding therefrom, the CA concluded that respondents clearly do not fit the characterization of project employees. Instead, they can be considered as casual employees whom the law presumed to have acquired regular status after having performed the same activities for at least one (1) year, except Rod Matanguihan who admittedly rendered service for only 11 months and 27 days.[6]

As to the issue of respondents'[7] illegal dismissal, the CA ruled that by Dong Yung's submission of an Establishment Notice Report with the DOLE pertaining to the alleged completion of the project, the fact of dismissal was sufficiently established. Dong Yun, however, has the burden of proving that the dismissal was done legally. This, it failed to do since the alleged cause of respondents' dismissal (completion of project) is not among the valid causes of dismissal under Articles 282 and 283 of the Labor Code. Accordingly, the CA held that respondents are entitled to reinstatement and full backwages computed from the time the compensation was withheld from them up to the time of their actual reinstatement.

The CA granted the award of service incentive leave pay and 13th month pay as there was no evidence on record showing that respondents were already paid such benefits. The CA also awarded attorney's fees consisting of 10% of the total monetary award. However, the award of holiday pay was deleted for respondents' failure to provide sufficient factual basis to support it. The fallo of the CA decision reads:
WHEREFORE, premises considered, the petition is DENIED. The Resolutions dated June 30, 2015 and August 28,2015 issued by the National Labor Relations Commission in NLRC LACNO. 04-001004-15 RAB IV No. 07-01160-14 are hereby AFFIRMED with the following MODIFICATIONS:

1. The portion declaring respondents regular employees of Phil Dong Yun Plate Making Corporation and ordering it to reinstate and pay them backwages should exclude respondent ROD MATANGUIHAN; and

2. The award for holiday pay is DELETED. All other monetary awards are sustained.

The Motion for Reconsideration was denied in a Resolution dated November 24, 2016. Dong Yun thus filed a petition for review on certiorari before this Court.

The Issues
Dong Yun now submits the following for this Court's consideration:

The CA erred in ruling that respondents are its regular employees despite the presence of the project employment agreement and the fact that the construction project they were assigned to no longer exists;

The CA erred in ruling that respondents acquired regular status of employment after working for at least one (1) year even if its business is totally foreign to the works performed by respondents; and

The CA erred in ruling that respondents are entitled to reinstatement even if the construction works wherein they were previously assigned no longer exist.[9]
HELD: The petition is without merit. Respondents are not project employees as the nature of their employment is neither determined nor determinable.

A project employee is defined under Article 280 of the Labor Code as 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 or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

The principal test for determining whether particular employees are properly characterized as project employees is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employees were engaged for that project. Thus, a true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring. Such fixed-term agreement must be knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought upon the employee.

It is important the duration and scope of the project or undertaking the project employee is to perform. It is not enough that an employee is hired for a specific project or phase of work to qualify as one. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged. Failure to do so would be fatal to the claim that one is a project employee.

In this case, respondents were made to sign the "Kontrata Para sa Part-Time na Manggagawa" which, save for the date when the same was executed, the amount of salary, the job description and the name of the worker concerned, merely states common "house rules" or a list of certain conduct the employee must observe in performing their duty. None of the provisions of the contract state that they were hired for a specific project or undertaking. Neither was there a mention of the duration of their employment. Moreover, the Court agrees with the CA that the fact that respondents may be relegated by Dong Yun to other tasks, regardless of the nature of their position, when the need for such services arises, reinforces respondents' claim that they are not project employees.

The Court, similar to the CA and the NLRC, is also unconvinced of Dong Yun's argument that they did not specify the scope and duration of the renovations and constructions of projects as they allegedly come after the other or on per discovery basis. In this light, it should be noted that the company has a Maintenance Department, led by an officer who checks the work of the respondents. Most of the activities, consisting of simple repair and renovation of company properties such as windows and doorknobs, can be performed by the Maintenance Department of any given construction company. This, coupled with Dong Yun's authority to assign respondents to activities other than their supposed specialized skills, indicates that they could already be considered as members of Dong Yun's Maintenance Department. With these at hand, respondents clearly do not fit the characterization of project employees.

Respondents are casual employees made regular after having performed the same activities for at least one year

The Labor Code did not explicitly provide for a definition of casual employment. The Court, however, described an employment to be 'casual' when it is irregular, unpredictable, sporadic, brief in nature and outside the usual business of the employer. Under the present law, a casual employee is casual only for one year. His work is neither regular, nor project or seasonal, but if he has worked for at least one year, whether continuously or not, he becomes a regular employee. It is not his work but the passage of time that gives him regular status.

The foregoing characteristics of casual employment perfectly fit the situation of the respondents, i.e., 1.) they were hired only on the occasion of Dong Yun's renovation of its premises, making their employment not being related to its business, merely occasional and brief in nature; and 2.) other than Rod Matanguihan, the rest of the respondents' engagement lasted for more than one year. Being such, respondents already attained a regular status of employment.

Respondents are entitled to separation pay in lieu of reinstatement, their positions being no longer available

With regard to respondents' termination from the services, the Court believes that although they were not able to profoundly explain its circumstances, illegal dismissal was still effected when Dong Yun filed an Establishment Notice Report, asserting the completion of the alleged projects the respondents were hired for. Since respondents, as previously settled, are regular employees, Article 279 of the Labor Code applies to them, which provides that their services shall only be terminated for just or authorized causes. "Completion of projects," not being a just nor an authorized cause of dismissal of regular employees, makes respondents' termination illegal. As their right to security of tenure was defiled, respondents are entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages computed from the time the compensation was withheld from them up to the time of their actual reinstatement.

Although respondents are entitled to reinstatement, the Court should consider that, as per Dong Yun, the positions they were previously assigned to no longer exist. Given this, separation pay, instead of reinstatement is fitting so as not to unduly burden Dong Yun in filling positions that are not anymore necessary in its regular course of business.

In Bani Rural Bank, Inc. v. De Guzman, the Court settled that separation pay may be awarded to an illegally dismissed employee in lieu of reinstatement. Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides that one of the instances when the law permits the award of separation pay in lieu of reinstatement is when the dismissed employee's position is no longer available. In this instance, separation pay is the alternative remedy to reinstatement in addition to the award of backwages. The payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed.

Following the pronouncements of the Court in Sagales v. Rustan 's Commercial Corporation, separation pay is computed at one-month salary for every year of service, a fraction of at least six (6) months considered as one whole year. Backwages, on the other hand, shall be computed from the time of dismissal until the finality of the decision ordering separation pay.

As to the payment of service incentive leave and 13th month pay, the Court finds the same in order as Dong Yun failed to show that respondents were already paid such benefits. In illegal dismissal cases, the general rule is that the burden rests on the employer to prove payment rather than on the employee to prove non-payment of these money claims. The rationale for this is that the pertinent personnel files, payrolls, records, remittances and other similar documents, which will show that service incentive leave and other claims of workers have been paid, are not in the possession of the worker but are in the custody and control of the employer. It is different, however, with the payment of holiday pay wherein the burden of proving entitlement to such rests on the employee because these are not incurred in the normal course of business. Here, respondents merely alleged that they worked for eight (8) hours a day from Monday to Saturday and that Dong Yun required them to work on their scheduled rest days and holidays. These bare allegations alone, without any actual proof, would not entitle them to holiday pay.

The Court further holds that attorney's fees consisting of 10% of the total monetary claim should be awarded in favor of respondents as they were constrained to litigate.

WHEREFORE, the instant petition is DENIED. The Decision dated July 13, 2016 and the Resolution dated November 24, 2016 of the Court of Appeals in CA-G.R. SP No. 142605 are hereby AFFIRMED with the following MODIFICATIONS: 

1.  Philippines Dong Yun Plate-Making Corporation is ordered to pay separation pay in lieu of reinstatement computed at one-month salary for every year of service, a fraction of at least 6 months considered as one whole year.

2. The award of backwages shall be computed from the time of dismissal until the finality of herein decision. All other monetary awards are sustained.

The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the respondents in accordance herewith.

[1] D.M. Consunji, Inc. v. Gobres, G.R. No. 169170, August 8, 2010, 627 SCRA 145.
[2] G.R. No. 141464, September 21, 2005, 470 SCRA 461.
[3] Caseres v. Universal Robina Sugar Milling Corporation (URSUMCO), G.R. 159343, September 28, 2007, 534 SCRA 356.
[4] Brent School, Inc. v. Zamora, G.R. No. 48494, February 5, 1990, 181 SCRA 702.
[5] G.R. No. 176627, August 24, 2007, 531 SCRA 253.
[6] Caro v. Rilloraza and Workmen's Compensation Commission, 102 Phil 61 (1957).
[7] Article 280, paragraph 2 of the Labor Code provides: x x x x any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
[8] Bank of Lubao, Inc. v. Manabat, G.R. No. 188722, February 1, 2012, 664 SCRA 772.
[9] G.R. No. 170904, November 13, 2013, 709 SCRA 330.
[10] G.R. No. 166554, November 27, 2008, 572 SCRA 89.
[11] Loon v. Power Master, Inc., G.R. No. 189404, December 11, 2013, 712 SCRA 440.
[12] Article 111, Labor Code.