G.R. No. 74969 - Magante vs. National Labor Relations Commission

Case Summary (G.R. No. 74969)

Factual Background

Constress Philippines, Inc. was engaged in the concrete structural business. Magante worked as a carpenter from April 17, 1980 until his dismissal on March 6, 1982, earning about P300.00 a week excluding allowance and rendering approximately fourteen (14) hours of work daily. His tasks involved carpentry/molding work for structures such as bridges and buildings, and related cement post molds or formwork (including forma or siding for cement post), and other similar components.

The record showed that Magante was never assigned to work outside Constress’s plant. Every three (3) months, Magante was made to fill up and sign a contract relating to a phase of work in a specific project. The contracts were written in English, which Magante alleged he did not understand and which was not explained to him.

The last hiring agreement was executed on December 7, 1981, effective on the same date, with an agreed compensation of P21.36 a day. On March 6, 1982, Constress posted a notice of termination on its bulletin board, effective the following day, March 7, 1982, covering Magante and other employees as among those whose services would be terminated. Magante was told that he could no longer work because he was already old, that his contract had expired, and that it was not renewed because he was allegedly a project employee.

Constress reported the termination to the Ministry of Labor. Magante filed a complaint for illegal dismissal before the then Ministry (later the Department of Labor and Employment).

Labor Arbiter’s Decision

After the parties filed their respective position papers, Labor Arbiter Domingo V. del Rosario issued a decision dated June 22, 1983. The Labor Arbiter held that the terms of the contract labeling Magante as a project worker were not the controlling factor of employment status. The controlling factors were “the work performed” and “the place where he performed his assignment.”

The Labor Arbiter concluded that the contract scheme employed by Constress was designed to evade the company’s obligations under the law. It therefore directed Constress to reinstate Magante to his position with full backwages and all rights and benefits granted by law and by the company.

NLRC Appeal and Its Reasoning

Constress appealed to the NLRC. It argued that Magante’s employment ended because the phase of work in the project to which he was assigned had been completed, and that the termination complied with legal requirements.

The NLRC reversed the Labor Arbiter. It relied on Policy Instructions No. 20, characterizing the construction industry as having two types of employees: project employees and non-project employees. The NLRC quoted that project employees were those employed in connection with a particular construction project and that they were not entitled to termination pay when terminated due to completion of the project or phase in which they were employed.

Applying this framework, the NLRC found that Magante’s termination was for a cause—namely, completion of the particular phase of work—upon which Constress had hired him. It thus dismissed Magante’s complaint for lack of merit and denied Magante’s motion for reconsideration.

Petitioner’s Arguments in the Certiorari Proceeding

Magante sought certiorari, claiming that the NLRC committed grave abuse of discretion. He maintained that Constress’s theory of fixed-term employment did not override the Labor Arbiter’s factual findings. In particular, Magante argued that the contract labeling him as a project employee operated as a scheme to evade legal liability.

Magante also relied on the position taken by the Solicitor-General, which cited Fegurin, et al. vs. National Labor Relations Commission, et al. as support for treating Magante as a regular and permanent employee entitled to reinstatement with backwages.

NLRC’s Defense Before the Court

In its comment, the NLRC defended its ruling by invoking the exception under Article 281 of the Labor Code for employment fixed for a specific project or undertaking whose completion or termination is determined at the time of engagement. The NLRC argued that Magante’s case fell within this exception and that Fegurin did not apply fully because the employees there had substantially longer periods of service. The NLRC emphasized that Magante worked only for over a year, and that his last contract lasted only about four (4) months.

The NLRC further argued that Article 281 was intended for industries other than the construction industry, and that Policy Instructions No. 20 was adopted precisely because issues on regularity in construction employment continued to arise. According to the NLRC, the policy merely implemented the Article 281 exception.

Legal Basis and Reasoning

The Court sustained the position of the Solicitor-General that Magante was a regular employee of Constress. The Court began with Article 281 of the Labor Code, which provides that the employment is deemed regular when the employee performs activities usually necessary or desirable in the employer’s usual business or trade, except where the employment is fixed for a specific project or undertaking whose completion or termination is determined at the time of engagement. The provision also states that an employee who has rendered at least one year of service, whether continuous or broken, is considered regular with respect to the activity in which he is employed and whose employment continues while such work actually exists.

Applying these principles, the Court held that Magante’s evidence showed that, from the inception of his employment in 1980, he was never deployed project to project. He was consistently assigned to perform carpentry work under the supervision of Bernardo Padaon, who had worked for Constress since 1964 as supervisor of the Carpentry Department until his resignation on January 2, 1982. The Court viewed this as indicating that Magante’s assignment was to tasks usually necessary or desirable in Constress’s usual business and that his assignments did not truly end on a project-to-project basis. The Court found it apparent that Magante continued performing the same kind of work throughout his period of employment even though Constress presented separate employment contracts allegedly tied to different projects.

The Court acknowledged that Magante had worked for only almost two years. It nevertheless held that the length of service did not detract from his status where the determining factors were the nature of the work and the place of assignment. These were aligned with the Labor Arbiter’s factual conclusions.

The Court then revisited Fegurin. Although it recognized that the facts in Fegurin were not identical to those in the present case because Fegurin involved a work pool, the Court held that the

Case Syllabus (G.R. No. 74969)

Parties and Procedural Posture

Telesforo Magante petitioned for certiorari to challenge the National Labor Relations Commission (NLRC) decision dated August 1, 1984.
The NLRC had reversed and set aside the decision of Labor Arbiter Domingo V. del Rosario dated June 22, 1983.
The Labor Arbiter had ordered Constress Philippines, Inc. to reinstate Magante with full backwages and all rights and benefits granted by law.
After the NLRC denied Magante’s motion for reconsideration, Magante sought relief from the NLRC ruling via Rule 65 on the ground of grave abuse of discretion.
The Solicitor-General filed a Comment supporting Magante and invoking Fegurin, et al. vs. National Labor Relations Commission as the basis for treating Magante as a regular and permanent employee.
The NLRC filed its own Comment to defend its dismissal of the illegal dismissal complaint and its application of Article 281 of the Labor Code and Policy Instructions No. 20.

Key Factual Allegations

Constress Philippines, Inc. engaged in the concrete structural business, with principal address at Ortigas Avenue, Pasig, Metro Manila.
Magante was employed as a carpenter from April 17, 1980 until his dismissal on March 6, 1982.
Magante allegedly earned P300.00 a week excluding allowance and worked about 14 hours daily from 7:00 a.m. to 10:00 p.m.
Magante’s work involved making molds (forma or siding of cement post) for bridges, buildings, charcoal guilder, sea file, and others.
The records showed Magante was never assigned outside Constress’s plant.
Every three (3) months, Magante was made to fill up and sign an employment contract relating to a particular phase of work in a specific project.
The contract terms written in English were allegedly not understood by Magante, and were allegedly not explained to him.
The last hiring agreement was on December 7, 1981, to take effect immediately and provided an agreed compensation of P21.36 a day.
On March 6, 1982, Constress posted a notice of termination on its bulletin board effective March 7, 1982, including Magante among employees whose services were terminated.
Magante was told he could no longer work because he was already old, and because his contract had expired and was not renewed since he was a “project employee.”
Constress reported the termination to the Ministry of Labor, after which Magante filed a complaint for illegal dismissal with the then Ministry of Labor and Employment.
After position papers were filed, the Labor Arbiter found the arrangement as a scheme to evade labor obligations, while the NLRC found termination valid as completion of a project phase.

Labor Arbiter’s Findings

The Labor Arbiter held that the terms of the contract that Magante was a “project worker” were not the determining factor of status.
The Labor Arbiter ruled that the determining factor was the work performed and the place where the assignment occurred.
The Labor Arbiter concluded that the contracts and project framing were a mechanism to evade liability or obligation under the law.
The Labor Arbiter ordered reinstatement of Magante to his position with full backwages and all rights and benefits granted by law and by Constress.

NLRC’s Reversal Rationale

On appeal, the NLRC found merit in Constress’s contention that termination followed the completion of the phase of work in the project for which Magante was hired.
The NLRC applied Policy Instructions No. 20, treating Magante as a project employee under the construction industry framework.
The NLRC quoted the policy’s distinction between project employees and non-project employees and treated project employment as not entitled to termination pay when terminated due to completion of the project or phase.
The NLRC held that upon completion of the phase of work, Magante’s termination was “indubitably for cause.”
Consequently, the NLRC set aside the Labor Arbiter’s reinstatement order and dismissed the illegal dismissal complaint for lack of merit.
Magante’s motion for reconsideration was denied by the NLRC.

Issues Raised in Certiorari

The petition presented the sole core inquiry of whether the NLRC committed grave abuse of discretion in reversing the Labor Arbiter’s decision.
The controversy required determining whether Magante was a regular employee or a project employee whose employment ended with project completion.
The petition implicated whether the NLRC properly considered the surrounding circumstances and the evidence on record, rather than relying only on the face of the written contracts.
The parties also disputed the applicability of Article 281 of the Labor Code and the construction-industry exceptions implemented by Policy Instructions No. 20.
The petition invoked Fegurin to support regularity and reinstatement with backwages, while the NLRC argued that the facts in Fegurin were not on all fours.

Contentions of the Parties

Magante argued that Constress could not escape the Labor Arbiter’s factual finding that the contract scheme was designed to evade legal obligations by portraying him as a project employee.
Magante re