Title
ALU-TUCP vs. National Labor Relations Commission
Case
G.R. No. 109902
Decision Date
Aug 2, 1994
Petitioners, hired for NSC's FAYEP projects, sought regularization and benefits. SC ruled them as project employees, not regular, despite long service.

Case Summary (G.R. No. 164845)

Procedural History

Petitioners filed separate consolidated complaints for unfair labor practice, regularization, and monetary benefits before the Labor Arbiter. The Labor Arbiter (7 June 1991) characterized petitioners as “regular project employees” who would continue in service for as long as the project existed and awarded them salary parity and differentials pursuant to the collective bargaining agreement. Both parties appealed to the NLRC. The NLRC, by resolution dated 8 January 1993, affirmed that petitioners were project employees but set aside the award of regular‑employee benefits. The NLRC denied reconsideration (15 February 1993). Petitioners petitioned the Supreme Court for certiorari, alleging grave abuse of discretion by the NLRC.

Facts Material to Classification

Petitioners were hired at various dates between 1981 and 1985 to perform work related to NSC’s Five Year Expansion Program (FAYEP I & II). Their recorded functions included engineers, engineering assistants, survey aides, chainman, utilityman, warehouseman, survey party head, and machine operator. NSC’s FAYEP consisted of component projects (e.g., Cold Rolling Mill Expansion, Billet Steel‑Making Plant, Five Stand TDM acquisition/installation, Cold Mill Peripherals). NSC executed these component projects “in house” rather than contracting them out; the work performed by petitioners was limited to specific component projects and was not shown to include ordinary steel‑manufacturing operations like operating or maintaining existing plant machinery or selling finished steel products.

Issue Presented

Whether the petitioners are properly characterized as project employees of NSC (whose tenure is co‑terminous with the project) or as regular employees entitled to continued employment and the protections attendant to regular status under Article 280 of the Labor Code.

Statutory Standard (Article 280)

Article 280 provides that employment is regular where the employee performs activities “usually necessary or desirable in the usual business or trade of the employer,” except where the employment has been fixed for a specific project or undertaking whose completion or termination has been determined at the time of engagement, or where the work is seasonal. It further provides that an employee who has rendered at least one year of service shall be considered regular “with respect to the activity in which he is employed,” subject to the proviso’s applicable scope.

Legal Analysis: Principal Test for Project Classification

The controlling test under Article 280 is whether employees were engaged to perform a “specific project or undertaking” the completion or termination of which was determined at the time of hiring. If the employment was fixed for such a specific, determinable project, the employees qualify as project employees irrespective of service duration. The Court emphasized that a valid project classification requires that the project be identifiable, its scope and duration specified at engagement, and the assignment of employees to that project be made in good faith rather than as a subterfuge to evade labor laws.

Distinct Types of “Project” and Their Relevance

The Court described two typical kinds of “projects”: (1) projects that are within the employer’s ordinary business but are discrete and time‑limited (e.g., discrete construction jobs undertaken by a construction firm), and (2) projects that are outside the employer’s ordinary business (e.g., an atypical undertaking distinct from the company’s regular operations). In either type, the project must be distinguishable, begin and end at determined or determinable times, and have been specified when the employees were engaged.

Application to the Present Case

NSC’s Five Year Expansion Program comprised identifiable component projects that were separate from NSC’s ordinary steel‑manufacturing operations and had predetermined scopes and durations at the time petitioners were engaged. NSC executed these projects internally rather than as part of its ordinary production or as a contractor for outside clients. The record showed petitioners were assigned specifically to component projects and not to the ongoing operation, maintenance, or marketing functions of NSC’s steel‑making business. The NLRC and Labor Arbiter properly found the engagement to have been for specific activities whose duration had been determined at hiring, thereby meeting Article 280’s test for project employment.

Good Faith Requirement and Avoidance of Evasion

The Court reiterated that designation as project employees must be bona fide and not a device to evade labor laws. The N

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