Case Summary (G.R. No. 170181)
Context and Procedural History
Respondents, employed in various positions from 1992 through 2000, filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC) arguing that they were regular employees unlawfully terminated by Hanjin. The Labor Arbiter ruled in favor of the respondents, declaring them regular employees and awarding full backwages, separation pay, moral damages, exemplary damages, and litigation expenses. The NLRC reversed this, categorizing them as project employees legally terminated due to project completion. Subsequently, the Court of Appeals reversed the NLRC, affirming the respondents’ status as regular employees but deleting the award of damages. The case eventually reached the Supreme Court as a petition for review.
Applicable Law and Framework
The decision is grounded on the 1987 Philippine Constitution and statutory labor laws, specifically Article 280 of the Labor Code and Department Order No. 19, Series of 1993, which govern the rights and classification of employees, including distinctions between regular, project, and casual employment.
Nature of Employment and Classification Issue
A central issue was whether the respondents were project employees hired for specific, time-bound construction undertakings or regular employees with security of tenure. Under Article 280 of the Labor Code, regular employees are those engaged in activities usually necessary or desirable in the employer's business, while project or casual employees have employment tied to a specific project or seasonal work, the scope and duration of which must be determined at the time of engagement.
Evidence on Employment Status and Contracts
Petitioners claimed respondents were project employees hired solely for the LRT/MRT Line 2 Package 2 and 3 projects under three-month renewable contracts. However, petitioners failed to present the alleged written employment contracts evidencing this status. Respondents denied signing any such contracts. The absence of these contracts undermined the petitioners' argument since a key indicator of project employment includes clear stipulation and employee knowledge of employment duration and project scope.
Continuous Employment and Work Assignment
Respondents asserted that they were assigned to multiple projects over an extended period—from 1992 to 2002—including North Harbor, Manila International Port, Batangas Port, Batangas Pier, and La Mesa Dam projects. Petitioners failed to deny or provide documentary evidence to refute these claims, such as payroll records or termination reports for each project. The only termination report they submitted was for the April 2002 dismissal, which the Court found insufficient to prove respondents’ employment was confined to a single project.
Indicators of Project Employment and Employer’s Burden of Proof
Under Department Order No. 19, indicators of project employment include a reasonably determinable project duration, clear definition of work and duration in the employment contract, freedom of the worker to accept other employment while not engaged, filing of termination reports with DOLE upon project completion, and employer's undertaking to pay a completion bonus. Petitioners asserted compliance with some indicators, particularly filing the termination report and payment of completion bonuses; however, such proof was found insufficient by the Court.
Payment of Completion Bonus and Quitclaim Issues
Petitioners produced payroll records indicating "completion bonus" payments equivalent to 15-day salaries, but respondents denied receipt. Petitioners failed to prove there was an undertaking to pay such bonuses upon project completion as required. The Court emphasized that an after-the-fact bonus does not establish project employment status and could be used improperly to circumvent security of tenure protections. Furthermore, the quitclaims signed by respondents, which released petitioners from claims, were deemed unenforceable as they lacked valid consideration and could not bar lawful claims for backwages and separation pay.
Legal Principle on Burden of Proof and Inference Favoring Employees
The Supreme Court reiterated the principle that the employer bears the burden of proving the legality of dismissal. In absence of clear, convincing evidence supporting petitioners’ claims, doubts should be resolved in favor of respondents. The absence of documented contracts, failure to file requisite termination reports after each project, and lack of credible evidence to rebut claims
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Case Syllabus (G.R. No. 170181)
Parties and Procedural Posture
- The case involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse the Court of Appeals Decision dated 28 July 2005.
- Petitioners are Hanjin Heavy Industries and Construction Co. Ltd. (a foreign construction company registered with the SEC), and its employees Hak Kon Kim (Project Director) and Jhunie Adajar (Supervisor).
- Respondents are several employees (Felicito IbaAez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot, Ruel Calda, among others) who filed complaints for illegal dismissal before the NLRC.
- The Court of Appeals reversed the NLRC decision that had found petitioners liable and declared respondents as regular employees illegally dismissed.
- Petitioners challenge the Court of Appeals’ ruling, particularly regarding employee classification and legality of dismissal.
Facts of the Case
- Respondents were hired by Hanjin for various positions on different dates, including tireman, crane operator, welder, and warehouseman.
- Respondents alleged that their tasks were necessary in Hanjin’s usual business and claimed regular employee status based on extended periods of employment dating back as far as 1992.
- Petitioners contended respondents were project employees hired exclusively for the LRT/MRT Line 2 Package 2 and 3 Project on a three-month renewable contract basis, terminating upon project completion.
- Petitioners did not present the alleged employment contracts to the Labor Arbiter.
- Petitioners filed a Termination Report with DOLE on 11 April 2002 and paid purported “completion bonuses” to respondents.
- Respondents were dismissed on 15 April 2002. At dismissal time, Hanjin still had ongoing projects (e.g., MRT II and III) and hired replacements for respondents’ positions.
Claims and Contentions of Parties
- Respondents claimed illegal dismissal without just cause or due process and asserted they were regular employees entitled to reinstatement and backwages.
- Petitioners denied illegal dismissal, asserting respondents were project employees, terminable upon project completion, and that payments of completion bonuses and Termination Report to DOLE supported lawful termination.
- Petitioners later conceded no written contract existed and tried to rely on other indicators for project employee classification.
- Respondents denied executing contracts stipulating project employment status.
Labor Arbiter’s Findings and Ruling
- Labor Arbiter found respondents to be regular employees who were illegally dismissed without just or valid cause and without due process.
- Labor Arbiter noted petitioners failed to prove respondents were project employees due to absence of contracts.
- The single termination report filed was deemed insufficient since one should be filed upon completion of each project or phase, not just one.
- Labor Arbiter emphasized respondents’ lengthy continuous service as proof of regular status.
- Awarded respondents full backwages, separation pay in lieu of reinstatement, moral and exemplary damages, and litigation expenses.
NLRC’s Ruling on Appeal
- NLRC reversed the Labor Arbiter, ruling respondents were project employees legally terminated.
- Gave probative value to the Termination Report filed, completion bonus receipts signed by respondents, and quitclaims releasing Hanjin from claims.
- Declared lack of evidence supporting respondents’ employment prior to 1997 or outside the LRT/MRT Project.
- Deleted award of moral and exemplary damages.
- Dismissed respondents' illegal dism