G.R. No.
239622, June 21, 2021
RUBEN CARPIO, Petitioner, v. MODAIR MANILA CO. LTD., INC., Respondent.
FACTS: A Certificate of Employment dated May 23, 2013 issued by Modair's Deputy General
Manager indicates that Carpio has been employed as a "contractor's employee (per project
basis)," designated as "Electrician 3," from October 27, 1998 to April 10, 2013. Apart from
the Certificate of Employment, the evidence provides no further information regarding
Carpio's employment between 1998 to 2008, only providing details from 2008 onwards.
In a Memorandum dated August 1, 2008, Modair informed Carpio that the "IBIDEN BACK
END EXPANSION Project” will soon cease operation due to its project completion" (Back
End Expansion Project) for which Carpio's "services will be terminated effective August 15,
2008" and that he will be "notified accordingly for re-contract if his services will again be
needed."
Identical language is found in a Memorandum dated November 30, 2009, terminating his
services for the "PIL GREEN CONSTRUCTION Project" (PIL Green Project) effective
December 15, 2009; and a
Memorandum dated September 25, 2010, terminating his services for the "FAC D. UTIL.
WORKS Project" (UTIL. Works Project) effective October 9, 2010.
Modair also engaged Carpio for the "IBIDEN CPU S3 Project" (Ibiden CPU Project), for
which Modair issued a Memorandum dated July 25, 2012, terminating his services effective
August 10, 2012.
Modair again hired Carpio for the "NYK TECH PARK project" (NYK Project), with his
engagement covered by a Project Agreement dated August 8, 2012 (NYK Project
Agreement), notably indicating that: Carpio would be hired "as the ELECTRICIAN 3 for the
duration of the project undertaken by the company x x x effective August 26, 2012 with
scheduled date of completion on March 25, 2013 or upon the completion of the phase of the
work for which he is assigned"; that Carpio "shall work for the duration of the project unless
he/she is terminated"; that the contract "is deemed terminated upon the completion of the
project," among other eventualities; and that "two weeks prior to project completion, Carpio
will receive a notice of project completion x x x to remind [Carpio] that the phase of the
said project where he is assigned will soon be finished and therefore his services with the
company will also be cessated."
Modair issued a Memorandum dated March 25, 2013, with language similar to those above-
enumerated, informing Carpio of the termination of his services effective April 10, 2013.
Modair also submitted an Establishment Employment Report to the DOLE Makati City Field
Office, informing such office of the completion of the NYK Project. Subsequently, Carpio
signed his Final Release of Pay dated April 25, 2013, which incorporated a Quit Claim
whereby he waived any claims against Modair and confirmed the full payment of everything
due him from the NYK Project. He also executed an Affidavit of Release and Quitclaim dated
May 24, 2013, similar to that for the Ibiden CPU Project.
Despite executing the above instruments, Carpio filed against Modair a Complaint for illegal
dismissal and regularization before Regional Arbitration.
What remains uncontroverted, however, are the existence of:
(1) a Project Employment Agreement dated December 11, 2013 (FUNAI Project
Agreement), the terms of which are identical to the NYK Project Agreement, except
with Carpio being engaged for the "FUNAI" Project from December 16, 2013 to
March 31, 2014;
(2) two (2) Petty Cash Vouchers, one dated December 5, 2013, for P1,000.00
particularized as "cash advance," and another dated December 11, 2013, for
P10,000.00, particularized as "for the death of his brother";
(3) an Affidavit of Desistance dated December 11, 2013, signed by Carpio, relative to
NLRC Case No. RAB-IV-10-01443-13-L; and
(4) a Quitclaim and Release dated December 11, 2013, signed by Carpio, stating
therein that he is withdrawing his Complaint in exchange for his acceptance of a new
contract for project-based employment.
Carpio argued that he had attained regular status owing to his repeated re-hiring by Modair
for various construction projects; and that he was illegally dismissed since, despite other
available projects, he was not given any work following completion of the NYK Project;
ultimately praying for regularization, a finding of illegal dismissal, reinstatement with
backwages, damages, and attorney's fees.
Modair prayed that the Complaint be dismissed, and argued that Carpio remained a project-
based employee despite recurrent re-hiring; that he was not illegally dismissed as his
engagement was co-terminus with each project; and that, at any rate, Carpio freely and
knowingly executed the Affidavit of Desistance and the Quitclaim and Release, both dated
December 11, 2013. Modair also presented a Resignation Letter dated February 14, 2000
(Resignation Letter), showing that Carpio voluntarily resigned effective February 19, 2000.
The Labor Arbiter dismissed Carpio's Complaint in a Decision for lack of merit.
The NLRC reversed the Labor Arbiter, declaring Carpio to be a regular employee of Modair
Manila Co. Ltd., Inc., and ORDERING the said Respondent to immediately reinstate the
Complainant to his former position, without loss of seniority rights, but without back wages,
and to assign him to its future projects, if warranted under the circumstances.
The Court of Appeals reversed and set aside the findings of the NLRC and reinstated the
decision of the LA.
The Court of Appeals ruled that Carpio is a project employee, considering that he signed the
NYK Project Agreement knowing that it covered only a specific project for a definite
duration; that Modair had duly submitted the Establishment Employment Reports, indicative
of project based employment; and, despite successive re-hiring, length of time is not
decisive on whether an employee is project-based or regular. While Carpio moved for
reconsideration, the Court of Appeals, in its Resolution35 dated April 30, 2018, upheld its
Decision dated December 27, 2017.
ISSUE: (1) whether Carpio is a project-based or regular employee of Modair; and (2)
whether Carpio was illegally dismissed.
RULING:
An employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in me 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 service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, that 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.
Regular employment exists when the employee is: (a) engaged to perform activities that
are usually necessary or desirable in the usual business or trade of the employer; or (b) a
casual employee whose activities are not usually necessary or desirable in the employer's
usual business or trade, and has rendered at least one year of service, whether continuous
or broken, with respect to the activity in which he is employed;
While project employment exists when the employee is hired under a contract which
specifies that the employment will last only for a specific project or undertaking, the
completion or termination of which is determined at the time of engagement.
As regards security of tenure, regular employment may be terminated for just or authorized
causes; whereas, for project employment, lawful dismissal is brought about by the
completion of the project or contract for which the employee was engaged, unless
terminated during the life of the project, in which case, only just or authorized causes may
be invoked.
Upon the employer lies the burden of proof to establish project employment by
showing that:
(1) the employee was assigned to carry out a specific project or undertaking;
and
(2) the duration and scope of which were specified at the time the employee
was engaged for such project.
Moreover, the employer must also prove that there was indeed a project
undertaken. Failing these, the worker will be presumed a regular employee.
For the instant controversy, the foregoing concepts must be contextualized within the
construction industry, the governing rule being DOLE Department Order (D.O.) No. 19-
93, Series of 1993 (D.O. 19-93), the "Guidelines Governing the Employment of
Workers in the Construction Industry". D.O. 19-93 provides for two employment
categories: project-based, pertaining to "those employed in connection with a particular
construction project or phase thereof and whose employment is co-terminus with each
project or phase of the project to which they are assigned"; and non-project based, "are
those employed without reference to any particular construction project or phase of a
project," particularly, probationary, casual, and regular employees.
Moreover, Section 2.2 of D.O. 19-93 lays down indicators of project employment, which,
while phrased in permissive language, must still be read in relation to Article 295 of the
Labor Code and the distinctions afore discussed:
2.2 Indicators of project employment. Either one or more of the following
circumstances, among others, may be considered as indicators that an employee is a
project employee.
(a) The duration of the specific/identified undertaking for which the worker is
engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in
an employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his
services to any other employer.
(e) The termination of his employment in the particular project/undertaking is
reported to the Department of Labor and Employment (DOLE) Regional Office having
jurisdiction over the workplace within 30 days following the date of his separation
from work, using the prescribed form on employees'
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion
bonus to the project employee as practiced by most construction companies.
In the first strand of jurisprudence, despite the employer's claims of project-based
employment, the workers were deemed regular employees from the beginning because:
(a) despite the execution of employment contracts for certain projects, the workers
were actually engaged to work in-house, for services vital and necessary to the
employer's usual trade or business; or
(b) the employer failed to substantiate the allegations of project-based employment,
even if for just a fraction of the employee's service.
Despite the employer's claims of project-based employment, the workers were
still deemed regular employees to begin with because: (1) despite the execution
of employment contracts for certain projects, the workers were actually engaged
to work in-house, for services vital and necessary to the employer's usual trade or
business; or (2) the employer failed to substantiate the allegations of project-
based employment, even if for just a fraction of the employee's service.
Thus, benefitting from the accumulated wisdom of subsequent jurisprudence, the earlier
cases of Tomas Lao Construction and Brahm Industries must be understood in that, while
not explicitly ruling as such, therein workers were deemed regular employees from
the start for failure of the employer to substantiate the project-based
engagements. Consequently, discussions in these cases on the ripening of project-based to
regular status must properly be appraised as a secondary argument; no ripening would be
necessary if the employees were conferred regular status to begin with.
Under the second strand of jurisprudence, workers initially engaged as project
employees may attain regular status. Notably, however, despite factual similarity with the
latter set of cases, a sub-strand of jurisprudence held that therein project employees
remained as such.
While initially engaged as a project employee, his status ripened into regular
employment.
A common thread in all the foregoing is that a project employee may attain regular status if
he performs functions usually necessary or desirable to the employer's usual trade or
business. Indeed, a "project" may pertain to (a) "a particular job or undertaking that is
within the regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company" or (b) "a
particular job or undertaking that is not within the regular business of the corporation."
Only project employment of the first type may ripen into regularity, while project employees
of the second type, e.g., engineers and surveyors hired to construct structures only to
augment the capacity of a steel manufacturing firm, and a bricklayer who was engaged
specifically to repair and upgrade a glass manufacturer's plant may not do so, relative to
such employer.
As an added layer of analysis, the Court would also disregard the project contracts,
even if the same clearly set forth the nature and limited duration of employment,
if the same were mere pretenses to hinder the project employee from obtaining
the tenurial security endowed to a regular employee.
Ultimately, the most prominent circumstance from the above cases is the
employee's repeated and successive re-hiring for the same nature of work, such
that the focal point for his engagement ceases to be with respect to particular
projects with specific durations, but shifts towards his continuing vitality and
indispensability to the ongoing business of the employer.
To ground the foregoing in the language of D.O. 19-93, the construction worker who
remains project-based is one who is employed in connection with a particular construction
project or phase thereof and whose employment is co-terminus therewith. Yet, the same
project-based construction worker may graduate into a regular employee if, due to the
contractor's continuous reliance on such worker, his engagement ceases to be with
reference to any particular construction project or phase thereof, but is pegged to the
employer's ongoing business.
Thus, synthesizing all the above-discussed jurisprudence, and to obviate further confusion
regarding the nature of employment for workers in the construction industry, the Court
articulates the following principles for the guidance of workers, employers, labor
tribunals, the bench, bar, and public:
First, a worker is presumed a regular employee, unless the employer establishes that (1)
the employee was hired under a contract specifying that the employment will last only for a
specific undertaking, the termination of which is determined at the time of engagement; (2)
there was indeed a project undertaken; and (3) the parties bargained on equal terms, with
no vices of consent.
Second, if considered a regular employee at the outset, security of tenure already
attaches, and the subsequent execution of project employment contracts cannot
undermine such security, but will simply be considered a continuation in the regular
engagement of such employee.
Third, even if initially engaged as a project employee, such nature of employment may
ripen into regular status if (1) there is a continuous rehiring of project employees even
after cessation of a project; and (2) the tasks performed by the alleged "project employee”
are vital, necessary and indispensable to the usual business or trade of the employer.
Conversely, project-based employment will not ripen into regularity if the construction
worker was truly engaged as a project-based employee, and between each successive
project, the employer made no manifestations of any intent to treat the worker as a
continuing resource for the main business.
Fourth, regularized construction workers are subject to the "no work, no pay"
principle, such that the employer is not obligated to pay them a salary when "on leave." In
case of an oversupply of regularized construction workers, then the employer can exercise
management prerogative to decide whom to engage for the limited projects and whom to
consider as still "on leave."
Finally, submission of termination reports to the DOLE Field Office "may be considered" only
as an indicator of project employment; conversely, non-submission does not automatically
grant regular status. By themselves, such circumstances do not determine the nature of
employment.
Applying the principles just laid down, the Court finds that Carpio was a regular
employee of Modair, from the time of his engagement in 1998 until the completion
of the NYK Project in 2013.
While conclusive details on the nature of Carpio's engagement from 1998 to 2008 are
unavailable, the existence of an employer-employee relationship during such period stood
unrebutted. The Certificate of Employment indicated that Carpio served as Modair's
Electrician 3 since 1998, which Modair did not deny. Also, Carpio presented regular payslips
from 2001 to 2010. Since Modair failed to present evidence showing his purported project
employment during such time, he is presumed to be Modair's regular employee.
The Memoranda between 2008 and 2013, providing notices of completion of the Back End
Extension Project, PIL Green Project, UTIL. Works Project, Ibiden CPU Project and NYK
Project, do not establish that Carpio was hired under a contract specifying that his
employment would last only for such specific undertakings, the completion of which were
determined at the time of his engagement These Memoranda were mere notices issued in
anticipation of the completion of the pertinent projects, and did not embody the
agreements, if any, covering Carpio's purported project-based engagements.
True, Modair managed to present project employment contracts covering the tail-end of
Carpio's engagement. Still, the Court finds that, by this time, Carpio's successive service as
Electrician 3 in numerous construction projects manifested the vitality and indispensability
of his work to the construction business of Modair. Very revealing also are the terms of
Modair's Memoranda, which state that Carpio will be "notified accordingly for re-contract if
his services will again be needed." Such language discloses Modair's continuing reliance on
Carpio's services, for which he would naturally make himself available at Modair's disposal.
In sum, Carpio's engagement, if it were at all project-based at the outset; had
already ripened to regular status.
Finally, the Court lends no evidentiary weight to the Resignation Letter since a resignation
without acceptance produces no legal effect. While Modair presented the Resignation Letter,
it did not prove its assent thereto. The Resignation Letter dated February 14, 2000 is
contradicted by the Certificate of Employment, attesting to Carpio's engagement from
October 27, 1998 to April 10, 2013.
While the Court accords Carpio's regular employment status the Court finds that
he was not illegally dismissed.
The evidence provides no further details regarding Carpio's possible abandonment, most
damning of which would have been a return-to-work order that deliberately went unheeded.
In the absence of any evidence to the contrary, Carpio remains to be Modair's regular
employee.
Lastly, the Court clarifies that Carpio has no outstanding money claims against Modair. Upon
completing the NYK Project, Carpio signed his Final Release of Pay dated April 25, 2013,
which incorporated a Quit Claim whereby he waived any claims against Modair and
confirmed the full payment of everything due him from the NYK Project. He also executed
an Affidavit of Release and Quitclaim dated May 24, 2013, acknowledging cessation of his
employment upon termination of the project, stating that he had no claims against Modair,
and that a Modair official explained the affidavit to him.
Once an employee resigns and executes a quitclaim in favor of the employer, he is thereby
estopped from filing any further money claims against the employer arising from his
employment Such money claims may be given due course only when the voluntariness of
the execution of the quitclaim or release is put in issue, or when it is established that there
is an unwritten agreement between the employer and employee which would entitle the
employee to other renumeration or benefits upon his or her resignation. Tellingly, Carpio
never renounced his Final Release of Pay dated April 25, 2013, with Quit Claim, and Affidavit
of Release and Quitclaim dated May 24, 2013.
