Spraycrete Corp. v. Dugang

FIRST DIVISION

[G.R. No. 238710. February 8, 2023.]

SPRAYCRETE CORPORATION, petitioner,vs.MARIO DUGANG, JOSE RAMOS, HERMENEJILDO 1 FELIX REMOTO, JR., MICHAEL PAJARES and JONATHAN CANALES, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedFebruary 8, 2023 which reads as follows: HTcADC

"G.R. No. 238710 (Spraycrete Corporation v. Mario Dugang, Jose Ramos, HermenejildoTac-an, Jr., Vicente Remoto, Bernabe Rellesiva, Felix Remoto, Jr., Michael Pajares and Jonathan Canales). — Challenged in this Petition for Review on Certiorari2 under Rule 45 of the Rules of Court are the January 31, 2018 Decision 3 and the April 13, 2018 Resolution 4 of the Court of Appeals (CA) in CA-G.R. SP No. 149170. The CA held that respondents Mario Dugang (Dugang), Jose Ramos (Ramos), Hermenejildo Tac-an, Jr. (Tac-an), Vicente Remoto, (Remoto), and Bernabe Rellesiva (Rellesiva) were regular employees of petitioner Spraycrete Corporation (Spraycrete). HTcADC

The Parties

Petitioner Spraycrete is a domestic corporation engaged in the construction business. 5 Spraycrete specializes in structural and architectural concrete walls mostly for high-rise buildings. 6 It performs its concreting jobs mainly as a sub-contractor for general contractors in different large construction projects in and outside Metro Manila. 7 As a construction company, Spraycrete employs construction workers for its different construction projects. 8

Respondents Dugang, Ramos, Tac-an, Remoto, and Rellesiva (collectively, respondents) were hired as finishing masons on various dates to work in Spraycrete's construction business. Summarized below are the details of their employment with Spraycrete, as follows: 9 HTcADC

 

Respondents	Position	Date of Employment
Dugang	Finishing Mason	March 27, 2007-April 1, 2015
Ramos	Finishing Mason	May 1, 2004-April 1, 2015
Tac-an	Finishing Mason	October 23, 2006-April 1, 2015
Remoto	Finishing Mason	May 1, 2004-April 6, 2015
Rellesiva	Finishing Mason	May 5, 2011-March 31, 2015 10

 

The Antecedents

The instant case stems from the illegal dismissal complaint filed in 2015 by the respondents before the National Labor Relations Commission (NLRC). HTcADC

Spraycrete's Version

Spraycrete alleged that respondents were hired as project employees for their subcontracted work at the Shang Salcedo Project and World Hotel & Residences mostly in 2014. 11 The respondents were hired for an average of three months, but their employment was extended to April 15, 2015. 12

To support its contention on the project employment of the respondents, Spraycrete presented various documents titled "Personnel Endorsements," "Contract of Project Employment," and "Certification," among others. According to Spraycrete, the same documents clearly established the following: (1) the duration of the projects; (2) that the respondents were assessed as qualified to work on their respective projects sometime after the projects commenced; (3) that the respondents signed and executed their respective Contracts of Project Employment subsequent to or on the same day that they were assessed to be qualified for project work, and not belatedly; and (4) that the continuous rehiring of the respondents as project employees did not change the nature of their employment as project employees. 13

At around February 2015, Spraycrete encountered financial problems due to its client's inability to pay their billings despite several follow-ups. 14 Spraycrete then "decided to put a portion of their employees on leave/floating status because to retain them without having funds to pay them was unfair and illegal." 15 Thus, Spraycrete alleged that they could not pay their project employees, including respondents. 16 In other words, Spraycrete argued that there was no termination of work and no illegal dismissal of the respondents. HTcADC

Respondents' Version

For their part, respondents asserted that they were regular employees of Spraycrete. 17 They claimed that they were hired to perform works that were vital, necessary, and indispensable to Spraycrete's construction business. 18 As finishing masons, they worked from 7:00 a.m. onwards without overtime pay. 19 They were also not paid service incentive leave, 13th month pay, night shift differential, and other benefits under the law. 20

Respondents asserted that while they had executed written employment contracts and were assigned to work on particular projects of Spraycrete, the duration of said projects was not specified and not made known to them at the time that they were engaged. 21 Moreover, the respondents contended that their continuous rehiring as finishing masons for several projects allowed them to attain the status of regular employees. 22 Thus, when the respondents were not allowed to report for work without a valid reason, there was illegal dismissal. 23

Aggrieved, the respondents filed a Complaint 24 for illegal dismissal, among others, before the Labor Arbiter (LA). HTcADC

Ruling of the Labor Arbiter

The LA rendered a Decision 25 dated February 29, 2016 declaring that the respondents were project employees of Spraycrete, but were not illegally dismissed. 26 The respondents' monetary claims were denied for their failure to state the relevant facts of the labor standard benefits claimed. 27 However, by Spraycrete's own admissions, the labor tribunal granted certain monetary awards to the respondents. 28

Hence, the dispositive portion of the LA's Decision states:

WHEREFORE, premises considered, judgment is hereby rendered finding [Spraycrete] liable to pay [respondents] the following corresponding amounts:

1. [Dugang] — P2,839.89

2. [Ramos] — P1,141.59

3. [Tac-an] — P859.72

4. [Remoto] — P1,550.31

5. x x x

6. [Rellesiva] — P3,030.16

All other claims not herein otherwise provided are dismissed for lack of merit. HTcADC

SO ORDERED. 29

Ruling of the National Labor Relations Commission

The NLRC, in its Decision 30 dated August 31, 2016, ruled that the respondents were regular employees of Spraycrete. 31 The NLRC gave credence to the written employment contracts and certifications issued by Spraycrete to deduce and conclude that the respondents were not informed of the duration and scope of the projects at the time they were engaged for the project. 32

The NLRC concurred in the LA's finding that there was no illegal dismissal. 33 However, since the respondents are regular employees, they are entitled to service incentive leave under the law. 34 HTcADC

Thus, the dispositive portion of the NLRC's Decision reads:

WHEREFORE, [respondents]' Appeal is hereby PARTIALLY GRANTED. The Decision of Labor Arbiter Clarissa G. Beltran-[Lerios] dated 29 February 2016 is hereby MODIFIED.

Accordingly, the finding that there was no dismissal, the denial of the claims for damages and attorney's fees, as well as the grant of such amounts provided below based on [Spraycrete's] own admission [is] hereby SUSTAINED.

1. [Dugang] — P2,839.89

2. [Ramos] — P1,141.59

3. [Tac-an] — P859.72

4. [Remoto] — P1,550.31

5. x x x

6. [Rellesiva] — P3,030.16

By way of modification, We rule that [respondents] are entitled to Service Incentive Leave Pay to be computed based on the periods provided above. HTcADC

Furthermore, the finding that [respondents] are mere project employees is hereby SET ASIDE as they are hereby declared regular employees.

For lack of abandonment and dismissal on the part of the [respondents] and [Spraycrete], respectively, [respondents] are directed to return to work within ten (10) days from receipt of a copy of this Decision and [Spraycrete] [is] required to accept them back and provide them with the same or similar work they used to perform. [Spraycrete] [is] further directed to submit to [NLRC] proof of written compliance to this directive within ten (10) days from the time [respondents] present themselves for work.

SO ORDERED. 15

Spraycrete filed a Motion for Partial Reconsideration 36 of the NLRC's Decision. However, the NLRC denied the motion for lack of merit in a Resolution 37 dated November 14, 2016. The dispositive portion of the NLRC's Resolution states:

WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED for lack of merit. The Decision dated 31 August 2016 STANDS.

SO ORDERED. 38 HTcADC

Aggrieved, Spraycrete sought recourse to the CA citing grave abuse of discretion on the part of the NLRC in issuing its Decision and Resolution.

Ruling of the Court of Appeals

The CA rendered its Decision 39 dated January 31, 2018 upholding both the Decision and Resolution of the NLRC.

The CA concluded that the respondents were regular employees of Spraycrete. Spraycrete did not prove compliance with the reportorial requirement of the Department of Labor and Employment (DOLE) on the termination of project employees. 40 Moreover, there was an absence of project employment contracts for previous projects despite Spraycrete's repeated and continuous rehiring of the respondents. 41 HTcADC

With regard to the issue on illegal dismissal and/or abandonment of employment, the CA concurred in the findings of the labor tribunals. The appellate court held that "the labor tribunals were (sic) correct in ordering [respondents] to be reinstated without any backwages bearing in mind [Spraycrete's] good faith in laying them off or placing them on floating status." 42

Finally, the CA upheld the NLRC's award of service incentive leave pay to respondents in accordance with Article 95 of the Labor Code of the Philippines (Labor Code). 43

Hence, the dispositive portion of the CA's Decision reads:

WHEREFORE, in view of the foregoing, the instant petition is hereby DENIED.

The assailed Decision and Resolution of the [NLRC] are UPHELD.

SO ORDERED. 44

Spraycrete sought reconsideration of the CA's Decision. However, the appellate court denied the Motion for Reconsideration in a Resolution 45 dated April 13, 2018. HTcADC

Aggrieved, Spraycrete brought this present petition 46 before Us. Spraycrete essentially argues that the NLRC committed grave abuse of discretion in ruling that: (1) respondents are its regular employees; (2) as such, they are entitled to reinstatement and payment of service incentive leave pay. 47

Issue

The main issue for Our resolution is whether the respondents are regular employees or project employees of Spraycrete.

Our Ruling

We find no merit in Spraycrete's petition. Thus, We uphold the findings of the CA. The respondents are regular employees of Spraycrete who were not illegally dismissed, but are entitled for reinstatement and payment of service incentive leave pay. HTcADC

The distinction between

Under the Labor Code, regular and project employees are generally distinguished by the duration or length of service, as well as due process in terms of termination of employment. Art. 295 [280] of the Labor Code provides the following definition of regular and project employees:

ARTICLE 295. [280] 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 regular where the employee has been engaged to perform activities which are usually necessary or desirable in the 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. HTcADC

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 [or she] is employed and his employment shall continue while such activity exists. (Emphasis supplied.)

Based on the definition in the Labor Code, regular employment entails the following: (i) the performance of work or service that is usually necessary or desirable in the usual business or trade of the employer, subject to exceptions, such as when one is a fixed, project or seasonal employee; or (ii) the duration or length of service for at least a year, with respect to the activity the employee is hired, and the employment of such employee remains while such activity exists. 48 For this reason, regular employees enjoy security of tenure and are legally entitled to remain in the service of the employer and to hold on to their work or position until their services are terminated by any of the modes of termination of service under the Labor Code. 49

On the other hand, project employment refers to employment that 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 nature of the work or service to be performed is seasonal in nature and the employment is for the duration of the season. 50 The services of a project employee are coterminous with the project or any phase thereof for which they are hired. 51 Thus, a report must be submitted to the nearest DOLE Regional Office regarding the termination of the services of the project employee every time a project is completed. 52 HTcADC

However, a project employee may acquire the status of a regular employee when the following concur: (i) there is a continuous rehiring of project employees even after the cessation of the project; and (ii) the tasks performed by the alleged project employee are vital, necessary, and indispensable to the usual business or trade of the employer. 53

The distinction between regular and project employees is not always straightforward, more so in the construction industry. DOLE Department Order No. 19, series of 1993 (D.O. No. 19), otherwise known as the Guidelines Governing the Employment of Workers in the Construction Industry, is instructive. DOLE D.O. No. 19 provides:

Section 2. EMPLOYMENT STATUS. —

2.1 Classification of employees. — The employees in the construction industry are generally categorized as a.) project employees and b.) non-project employees. Project employees are 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.

xxx xxx xxx

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. HTcADC

(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 [DOLE] Regional Office having jurisdiction over the workplace within 30 days following the date of his [or her] separation from work, using the prescribed form on employees' terminations/dismissals/suspensions. HTcADC

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.

2.3 Project completion and rehiring of workers. —

(a) x x x

(b) Upon completion of the project or a phase thereof, the project employee may be rehired for another undertaking provided, however, that such rehiring conforms with the provisions of law and this issuance. In such case, the last day of service with the employer in the preceding project should be indicated in the employment agreement. HTcADC

The case Engineering & Construction Corporation of Asia [now First Balfour, Incorporated] v. Palle54(ECCA), finds suitable application in the case at bar. ECCA involves a construction company that hired various employees for different construction projects on several dates. 55 The construction company treated their employees as project employees and terminated their employment on the ground of project completion. 56 The employees filed a complaint for illegal dismissal arguing that they had attained regular status and were thus entitled to security of tenure as well as other monetary benefits under the law. 57

In distinguishing between regular employees and project employees, We held in ECCA that the general standards in law and jurisprudence may not apply to the construction industry. 58 We ruled in the wise:

Generally, length of service is a measure to determine whether or not an employee who was initially hired on a temporary basis has attained the status of a regular employee who is entitled to security of tenure. However, such measure may not necessarily be applicable in a construction industry since construction firms cannot guarantee continuous employment of their workers after the completion stage of a project. 59 In addition, a project employee's work may or may not be usually necessary or desirable in the usual business or trade of the employer. Thus, the fact that a project employee's work is usually necessary and desirable in the business operation of his/her employer does not necessarily impair the validity of the project employment contract which specifically stipulates a fixed duration of employment. 60 (Emphasis supplied) HTcADC

Thus, We applied the test from Lopez v. Irvine Construction Corp.61(Lopez) to ECCA, and held that:

[T]he principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular 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." 62 x x x In order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent employees from attaining the status of regular employees, employers claiming that their workers are project employees should not only prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project. 63 HTcADC

The requirement of a specified duration and scope made known at the time of hiring is of paramount importance in characterizing an employee as a "project employee." Project employees should be informed of their status as such at the inception of the employment relationship. 64 For the proper characterization of the employment status, it is important to determine the fact of notice on the duration and scope of the project, which must have been made at the time of the hiring. Otherwise, the presumption that respondents are regular employees will apply. 65

In the case at bar, Spraycrete

Based on Our judicious review of the records and applying the principles on project employees, We find that Spraycrete failed to present substantial evidence to prove that the respondents were hired for project employment. Thus, the presumption that respondents are regular employees applies. HTcADC

The records establish that while the executed contracts of employment indicate the duration of the project and the specific project itself, the same lack necessary details as to when the respondents were informed of their employment status. Furthermore, Spraycrete continuously rehired respondents on various dates for several projects. The respective contracts of respondents may have been dated at the time of their execution, as Spraycrete argues; 66 however, nowhere did such contracts show when respondents supposedly signed, received, or were informed of the contents of the contracts.

Spraycrete also failed to present other evidence or other written contracts to show that respondents were informed of the specific duration and scope of their work in the project at the time that they were engaged for such project. While the absence of a written contract does not, by itself, grant regular status to an employee, it is evidence that such employee was informed of his or her status as a project employee. 67 Thus, when no other evidence is offered, the absence of employment contracts raises a serious question of whether the employees were sufficiently apprised at the start of their employment of their status as project employees. 68

Finally, We likewise note that Spraycrete did not submit a report with the DOLE regarding the termination of respondents' employment every time a project is completed. This therefore indicates that the respondents are not project employees but regular employees. HTcADC

Since Spraycrete failed to establish that respondents were engaged in project employment, then the assumption of regular employment applies. HTcADC

Respondents were not illegally

Jurisprudence dictates that before employers are burdened to prove that they did not commit illegal dismissal, it is incumbent upon the employee to first establish by substantial evidence the fact of his or her dismissal. 69 HTcADC

The LA, NLRC, and CA were unanimous in their finding that there was no illegal dismissal in the case at bar. The labor tribunals observed that respondents failed to state relevant facts concerning their alleged illegal dismissal. 70 In fact, the records showed that: (1) Spraycrete exercised good faith in laying off or placing the respondents on floating status due to their financial difficulties; 71 (2) the respondents prematurely filed the complaint for illegal dismissal since they were on "floating status" for less than six months; 72 and (3) the respondents were able to report back to work in Spraycrete. 73

Based on the records, despite the premature filing of the complaint for illegal dismissal, respondents were still able to report back to work. 74 Therefore, We likewise rule that there was no illegal dismissal and no abandonment of employment. 75

The respondents are entitled to

Since the respondents are regular employees of Spraycrete, they are entitled to service incentive leave pay. Art. 95 of the Labor Code states, "every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." 76

In the case at bar, the NLRC and CA found that the respondents are entitled to service incentive leave pay. Summarized below is the respondents' respective periods of service, as follows: 77 HTcADC

 

Respondents	Period/s
Dugang	• March 6, 2014-July 31, 2014
	• February 28, 2011-March 7, 2012
Ramos	• August 16, 2013-December 31, 2014
Tac-an	• January 2, 2014-December 31, 2014
	• July 31, 2012-March 9, 2013
	• May 16, 2011-March 31, 2012
	• November 29, 2010-May 15, 2011
	• April 27, 2010-July 17, 2010
Remoto	• September 2, 2013-December 31, 2014
	• January 7, 2013-March 9, 2013
	• March 26, 2011-March 31, 2012
Rellesiva	• January 31, 2014-December 31, 2013
	• September 9, 2013-December 31, 2013 78

 

It is clear that respondents each served Spraycrete for at least one year. Thus, We concur that they are entitled to be paid service incentive leave for the respective periods. HTcADC

Finally, pursuant to prevailing jurisprudence, We hereby impose interest at the rate of six percent (6%) per annum on all the monetary awards from the finality of this Resolution until paid in full. 79

ACCORDINGLY, the instant Petition is DENIED. The January 31, 2018 Decision and the April 13, 2018 Resolution of the Court of Appeals in CA-G.R. SP No. 149170 are AFFIRMED with MODIFICATION that interest at the rate of six percent (6%) per annum is imposed on all monetary awards from the finality of this Resolution until fully paid. No pronouncement as to costs. HTcADC

SO ORDERED." Rosario, J., on official leave.

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

Footnotes

* Also spelled "Herminigildo," "Hermenuildo," and "Hemenijildo" in some parts of the rollo.

1. The National Labor Relations Commission is dropped as respondent pursuant to Section 2, Rule 45 of the Rules of Court.

2. Rollo, pp. 9-33.

3. Id. at 35-48. Penned by Associate Justice Priscilla J. Baltazar-Padilla (now a retired Member of the Court) and concurred in by Associate Justices Nina G. Antonio-Valenzuela and Germano Francisco D. Legaspi.

4. Id. at 50-53. Penned by Associate Justice Priscilla J. Baltazar-Padilla (now a retired Member of the Court) and concurred in by Associate Justices Nina G. Antonio-Valenzuela and Germano Francisco D. Legaspi.

5. Id. at 36.

6. Id. at 12.

7. Id.

8. Id.

9. Id. at 36.

10. Id.

11. Id. at 37.

12. Id.

13. Id. at 41.

14. Id. at 37.

15. Id.

16. Id.

17. Id.

18. Id.

19. Id. at 36.

20. Id.

21. Id. at 41-42.

22. Id.

23. Id. at 283.

24. Id.

25. Id. at 271-279. Penned by Labor Arbiter Clarissa G. Beltran-Lerios.

26. Id. at 275.

27. Id. at 277.

28. Id. at 278.

29. Id. at 279.

30. Id. at 280-296. Penned by Commissioner Gina F. Cenit-Escoto and concurred in by Presiding Commissioner Gerardo C. Nograles and Commissioner Romeo L. Go.

31. Id. at 285-289.

32. Id.

33. Id. at 290-291.

34. Id. at 292-293.

35. Id. at 294-295.

36. Id. at 299.

37. Id. at 297-301. Penned by Commissioner Gina F. Cenit-Escoto and concurred in by Presiding Commissioner Gerardo C. Nograles and Commissioner Romeo L. Go.

38. Id. at 301.

39. Id. at 35-48.

40. Id.

41. Id. at 44.

42. Id. at 47.

43. Id.

44. Id.

45. Id. at 49-53.

46. Id. at 9-33.

47. Id. at 15.

48. Engineering & Construction Corporation of Asia [now First Balfour, Incorporated] v. Palle, G.R. No. 201247, July 13, 2020.

49. Millennium Erectors Corporation v. Magallanes, 649 Phil. 199, 205 (2010), citing Equipment Technical Services v. Court of Appeals, 589 Phil. 116, 124 (2008).

50. Rollo, pp. 42-43; See Saberola v. Suarez, 580 Phil. 124, 130 (2008); D.M. Consunji, Inc. v. National Labor Relations Commission, 401 Phil. 635, 641 (2000); Association of Trade Unions v. Abella, 380 Phil. 6, 19 (2000).

51. Millennium Erectors Corporation v. Magallanes, supra; Equipment Technical Services v. Court of Appeals, supra.

52. Department Order No. 19-93 (1993), Section 2.2 (e); see rollo, p. 43, citing Liganza v. RBL Shipyard Corporation, 535 Phil. 662, 672 (2006).

53. Rollo, p. 43, citing Alcatel Philippines, Inc. v. Relos, 609 Phil. 307, 314-315 (2009).

54. Supra note 48.

55. Id.

56. Id.

57. Id.

58. Id.

59. Id., citing William Uy Construction Corp. v. Trinidad, 629 Phil. 185, 190 (2010).

60. Id., citing Herma Shipyard, Inc. v. Oliveros, 808 Phil. 668, 684-685 (2017).

61. 741 Phil. 728 (2014).

62. Id. at 737; see GMA Network, Inc. v. Pabriga, 722 Phil. 161, 176 (2013).

63. Id. at 738, citing GMA Network, Inc. v. Pabriga, supra.

64. DEPARTMENT ORDER NO. 19 (1993), SECTION 2.2, PAR. (B).

65. LABOR CODE, Article 295 [280].

66. Rollo, pp. 17-22.

67. Engineering & Construction Corporation of Asia [now First Balfour, Incorporated] v. Palle, supra note 48.

68. Id., citing Quebral v. Angus Construction, Inc., 798 Phil. 179, 192 (2016).

69. Rollo, p. 290, citing Noblejas v. Italian Maritime Academy Phils., Inc., 735 Phil. 713, 721 (2014).

70. Id. at 290.

71. Id. at 45.

72. Id. at 46.

73. Id. at 46-47.

74. Id.

75. Id. at 46.

76. Id. at 292.

77. LABOR CODE, Article 95, par. (a).

78. Rollo, pp. 292-293.

79. Engineering & Construction Corporation of Asia [now First Balfour, Incorporated] v. Palle, supra note 48, citing Inocentes v. R. Syjuco Construction, Inc., G.R. No. 237020, July 29, 2019.