Phesaco, Inc. v. The National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioner Phesco, Inc. (Phesco) was engaged in construction and undertook hydroelectric plant projects. To supply aggregates for the Agus I project, Phesco established an aggregate processing plant in Iligan City, headed by petitioner Carlos Ganzon. Private respondents were hired between 1975 and 1977 for the Agus I project. Due to a strike in June 1986, they were periodically reassigned to the aggregate processing plant. The construction of Agus I was in its final stage, requiring only maintenance services. When the strike was resolved in August 1988, Phesco ceased extending the appointments of the private respondents. Procedural History: Private respondents filed a complaint for illegal dismissal, separation pay, and damages. Petitioners argued that the termination was valid as their services as project employees were no longer needed and that project employees are not entitled to separation pay. The Labor Arbiter ruled that private respondents were regular employees, not project employees, and were entitled to separation pay due to the cessation of the plant's business. The NLRC reversed the Labor Arbiter's decision, finding petitioners guilty of illegal dismissal and ordering reinstatement or separation pay, back wages, and attorney's fees. The NLRC denied petitioners' motion for reconsideration. The Petition: Petitioners filed a petition for certiorari with the Supreme Court, charging the NLRC with grave abuse of discretion in finding them guilty of illegal dismissal and ruling that private respondents were regular employees entitled to separation pay, back wages, and attorney's fees.
Issue(s)
Whether private respondents, who were hired for the Agus I project and later reassigned to an aggregate processing plant, are project employees or regular employees. Whether the termination of private respondents' services constituted illegal dismissal. Whether private respondents are entitled to separation pay, back wages, and attorney's fees.
Ruling
The petition is dismissed. The Supreme Court affirmed the decision of the National Labor Relations Commission (NLRC), finding that the private respondents were regular employees and were illegally dismissed. Petitioners were ordered to pay separation pay (if reinstatement is not feasible), back wages, and attorney's fees.
Ratio Decidendi
On the status of private respondents as project employees versus regular employees: The Court held that private respondents could not be considered project employees due to their length of service and the nature of their employment, which was necessary for petitioners' business. Significantly, the NLRC found that the aggregate processing plant supplied aggregates not only to the Agus I project but also to the general public. The Court considered this a question of fact best left to the NLRC. Furthermore, the fact that private respondents were continuously employed from 1986 to 1988, long after the Agus I project was allegedly in its final stage, lent credence to their claim that the plant served the public. The Court reiterated the ruling in Capitol Industrial Construction Groups v. National Labor Relations Commission that where the employment of project employees is extended long after the supposed project had finished, they are considered regular employees. Additionally, petitioners failed to submit a report of termination to the nearest public employment office upon the project's completion, as required by Policy Instruction No. 20, which further indicated that the private respondents were not project employees. On the issue of illegal dismissal: The Court reiterated the NLRC's finding that petitioners failed to present proof that private respondents Ermac and Ramirez received notices to return to work, which was the basis for their alleged dismissal for failure to report. This failure to prove proper notice supported the finding of illegal dismissal. On entitlement to separation pay, back wages, and attorney's fees: Given the finding that private respondents were regular employees and were illegally dismissed, their entitlement to separation pay (or reinstatement), back wages, and attorney's fees, as awarded by the NLRC, was affirmed.
Main Doctrine
Employees who render service for a period longer than the completion of a supposed project, and whose employment is repeatedly extended, are considered regular employees, not project employees, especially when the employer's business extends beyond the specific project.