Bajaro vs. Metro Stonerich Corp.

G.R. No. 227982, 23 April 2018

Facts of the case:

Metro Stonerich is a domestic entity engaged in the construction business. Bajaro was hired by Metro Stonerich as a concrete pump operator, tasked with operating the pouring of freshly mixed concrete on the latter's construction projects. He was assigned in various construction projects. Bajaro suffered an injury and seek financial help to Metro Stonerich but the latter refused to pay for his medical expenses. So he went to a hospital to have himself treated. When he fully recovered after two weeks and was issued a Certificate that he was fit to return to work, He went back at his work place but was informed to return to work the next day. However, he was informed that he should no longer report for work. Instead, he was offered money in lieu of his employment. He did not accept the money.

In his position paper, Bajaro asserted that he was a regular employee of Metro Stonerich, as he was continuously employed for six years and performed activities that were necessary and desirable to the latter's usual business. He likewise claimed that he was entitled to his monetary benefits. On the other hand, Metro Stonerich argued that Bajaro is a project employee stating that Bajaro was hired for 5 different construction projects, with each project lasting for a period of 5 months or 12 months. As proof that Bajaro was engaged on a per project basis, Metro Stonerich pointed out that it even submitted reports to the DOLE upon the completion of the projects Bajaro was engaged in. As to Bajaro’s monetary claim, Metro Stonerich countered that he was given the monetary benefits due him as shown in its accounting ledgers.

The Labor Arbiter (LA) dismissed Bajaro's complaint for illegal dismissal. The LA held that Bajaro was a project employee, as evidenced by the employment contracts he signed each time he was engaged by Metro Stonerich. Each contract clearly indicated the specific project, as well as the duration of his work. As a project employee, his employment was coterminous with each project. As for Bajaro's money claims, the LA awarded a total overtime pay differential of Php 14,921.10. Also, the LA awarded Php 4,333.30 as proportionate l3^th month pay for 2014, and Php 7,500.00, as SIL pay equivalent to 15 days. The NLRC dismissed Bajaro’s appeal. The NLRC rejected Bajaro's claim that his continued and repeated rehiring made him a regular employee. The CA, likewise dismissed the petition of petitioner on the ground that the NLRC did not commit any grave abuse of discretion to warrant the nullification of its decision. The CA likewise affirmed the benefits awarded by the LA and the NLRC.

Issue:

Whether or not petitioner is a regular employee.

Ruling of the Court:

Petitioner is a project employee

In a project-based employment, the employee is assigned to a particular project or phase, which begins and ends at a determined or determinable time. Consequently, the services of the project employee may be lawfully terminated upon the completion of such project or phase. For employment to be regarded as project-based, it is incumbent upon the employer to prove that (i) the employee was hired to carry out a specific project or undertaking; and (ii) the employee was notified of the duration and scope of the project. In order to safeguard the rights of workers against the arbitrary use of the word "project" as a means to prevent employees from attaining regular status, employers must prove that the duration and scope of the employment were specified at the time the employees were engaged, and prove the existence of the project.

In the case at bar, Bajaro was hired by Metro Stonerich as a concrete pump operator in five different construction projects. It is undisputed that Bajaro was adequately informed of his employment status (as a project employee) at the time of his engagement. This is clearly substantiated by his employment contracts (Kasunduan Para sa Katungkulang Serbisyo (Pamproyekto), stating that: (i) he was hired as a project employee; and (ii) his employment was for the indicated starting dates therein, and will end on the completion of the project. The said contracts that he signed sufficiently apprised him that his security of tenure with Metro Stonerich would only last as long as the specific phase for which he was assigned. In fact, the target date of completion was even indicated in each individual contract clearly warning him of the period of his employment.

Furthermore, pursuant to Department Order No. 19, Series of 1993, or the "Guidelines Governing the Employment of Workers in the Construction Industry," Metro Stonerich duly submitted the required Establishment Employment Report on April 23, 2014 to the DOLE for the reduction of its workforce. Bajaro was included among the 10 workers reported for termination as a consequence of the completion of the construction project effective May 23, 2014. As aptly pointed out by the CA, the submission of the said Establishment Employment Report is a clear indication of project employment.

Verily, being a project employee, Metro Stonerich was justified in terminating Bajaro's employment upon the completion of the project for which the latter was hired.

A project employee's length of service and repeated re-hiring constitute an unfair yardstick for determining regular employment in the construction industry

Accordingly, it is not uncommon for a construction firm to hire project employees to perform work necessary and vital for its business. Suffice it to say, in William Uy Construction Corp. and/or Uy, et al. v. Trinidad, the Court acknowledged the unique characteristic of the construction industry and emphasized that the laborer's performance of work that is necessary and vital to the employer's construction business, and the former's repeated rehiring, do not automatically lead to regularization, viz.:

Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say.

For this reason, the Court held in Caseres v. Universal Robina Sugar Milling Corporation that the repeated and successive rehiring of project employees do not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee.

Accordingly, it is all too apparent that the employee's length of service and repeated re-hiring constitute an unfair yardstick for determining regular employment in the construction industry. Thus, Bajaro's rendition of six years of service, and his repeated re-hiring are not badges of regularization.

Petitioner is entitled to his money benefits

Although Bajaro was hired as a project employee, he is still entitled to certain benefits under the law. Particularly, Bajaro is bound to receive overtime pay differentials, SIL pay, and proportionate 13^th month pay, with attorney's fees equivalent to 10% of the total monetary award.

Specifically, as for Bajaro's overtime pay, the records show that Bajaro rendered 531 hours of overtime work. Pursuant to Article 87 of the Labor Code, Bajaro is entitled to receive an additional compensation equivalent to 25% of his daily wage of Php 500.00 for every hour of overtime work he rendered. Unfortunately however, Bajaro merely received a meager overtime pay of Php 50.00. Thus, the Court agrees with the LA's conclusion that Bajaro is entitled to an overtime pay differential.

Additionally, Metro Stonerich failed to prove that it paid Bajaro his SIL pay. Notably, Article 95 of the Labor Code states that "every employee who has rendered at least one year of service shall be entitled to a yearly SIL of five days with pay." Metro Stonerich failed to prove that it gave Bajaro his SIL pay. It must be noted that in claims for payment of salary differential, SIL, holiday pay and 13^th month pay, the burden rests on the employer to prove payment. This standard follows the basic rule that in all illegal dismissal cases the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment. This likewise stems from the fact that all pertinent personnel files, payrolls, records, remittances and other similar documents - which will show that the differentials, SIL and other claims of workers have been paid - are not in the possession of the worker but are in the custody and control of the employer.

Likewise, Bajaro is entitled to receive his proportionate 13^th month pay corresponding to January 2014 to April 22, 2014.

In addition, Bajaro should be awarded attorney's fees equivalent to 10% of the total monetary award, as the instant case includes a claim for unlawfully withheld wages. Added to this, all amounts due shall earn a legal interest of six percent (6%) per annum.

On the other hand, Bajaro's claims for premium pay for holiday and rest day are denied for lack of factual basis, due to Bajaro's failure to specify the dates that he worked during special days, or rest days. It bears stressing that premium pays for holidays and rest days, are not usually incurred in the normal course of business. As such, the burden is shifted on the employee to prove that he actually rendered service on holidays and rest days.

In fine the Court affirms the right of an employer to hire project employees, for as long as the latter are sufficiently apprised of the nature and terms of their employment. Metro Stonerich was not remiss in informing Bajaro of his limited tenure as a project employee. Accordingly, being a project employee, Bajaro was validly terminated from employment due to the completion of the project in which he was engaged.

Good notes on this case

- In view of the distinct nature of the construction industry, the Court recognizes the right of an employer to hire a construction worker for a specific project, provided that the latter is sufficiently apprised of the duration and scope of such undertaking. In this instance, the worker's tenure shall be coterminous with the project. Notably, the employee's performance of work that is necessary and desirable to the construction business, as well as his repeated rehiring, do not bestow upon him regular employment status.

- Remarkably, in Gadia, et al. v. Sykes Asia, Inc., et al., the Court explained that the "projects" wherein the project employee is hired may consist of "(i) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (ii) a particular job or undertaking that is not within the regular business of the corporation."

- Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say.

- For this reason, the Court held in Caseres v. Universal Robina Sugar Milling Corporation that the repeated and successive rehiring of project employees do not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee.

- Additionally, in Malicdem, et al. v. Marulas Industrial Corporation, et al., the Court took judicial notice of the fact that in the construction industry, an employee's work depends on the availability of projects. The employee's tenure "is not permanent but coterminous with the work to which he is assigned."Consequently, it would be extremely burdensome for the employer, who depends on the availability of projects, to carry the employee on a permanent status and pay him wages even if there are no projects for him to work on. An employer cannot be forced to maintain the employees in the payroll, even after the completion of the project. "To do so would make the employee a privileged retainer who collects payment from his employer for work not done. This is extremely unfair to the employers and amounts to labor coddling at the expense of management."

- It must be noted that in claims for payment of salary differential, SIL, holiday pay and 13^th month pay, the burden rests on the employer to prove payment. This standard follows the basic rule that in all illegal dismissal cases the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment. This likewise stems from the fact that all pertinent personnel files, payrolls, records, remittances and other similar documents - which will show that the differentials, SIL and other claims of workers have been paid - are not in the possession of the worker but are in the custody and control of the employer.

- It bears stressing that premium pays for holidays and rest days, are not usually incurred in the normal course of business. As such, the burden is shifted on the employee to prove that he actually rendered service on holidays and rest days.

Gadia, et.al. vs. Sykes Asia

G.R. No. 209499, 28 January 2015

Facts of the case:

Sykes Asia is a corporation engaged in BPO which provides support to its international clients from various sectors by carrying on some of their operations, governed by service contracts that it enters with them. Alltel, a US-based telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and demands of Alltel clients. Thus, on different dates, Sykes Asia hired petitioners as customer service representatives, team leaders, and trainers for the Alltel Project.

On August 7, 2009 and September 9, 2009, Alltel sent letters to Sykes Asia informing the latter that it was terminating all support services provided by Sykes Asia related to the Alltel Project. In view of this development, Sykes Asia sent each of the petitioners end-of-life notices, informing them of their dismissal from employment due to the termination of the Alltel Project.

In their defense, respondents averred that petitioners were project-based employees, and as such, the termination of the Alltel Project served as a valid ground for their dismissal. In support of their position, respondents noted that it was expressly indicated in petitioners’ respective employment contracts that their positions are "project-based" and thus, "co-terminus to the project." Respondents further maintained that they complied with the requirements of procedural due process in dismissing petitioners by furnishing each of them their notices of termination at least 30 days prior to their respective dates of dismissal.

The LA ruled in favor of respondents and pronounced that petitioners are project-based employees, as their respective employment contracts indubitably provided for the duration and term of their employment, as well as the specific project to which they were assigned, i.e., the Alltel Project. The NLRC modified the LA decision, ruling that petitioners could not be properly characterized as project-based employees, ratiocinating that while it was made known to petitioners that their employment would be co-terminus to the Alltel Project, it was neither determined nor made known to petitioners, at the time of hiring, when the said project would end, be terminated, or be completed. In this relation, the NLRC concluded that inasmuch as petitioners had been engaged to perform activities which are necessary or desirable in respondents’ usual business or trade of BPO, petitioners should be deemed regular employees of Sykes Asia. The CA reinstated the ruling of the LA and held that based on petitioners’ respective employment contracts it readily shows that they were hired exclusively for the Alltel Project and that it was specifically stated therein that their employment would be project-based. The CA further held that petitioners’ employment contracts need not state an actual date as to when their employment would end, opining that it is enough that such date is determinable.

Issue:

Whether or not the petitioners are project-based employees.

Ruling of the Court:

The Court declared that petitioners are project-based employees.

Citing the case of Omni Hauling Services, Inc. v. Bon, the Court extensively discussed how to determine whether an employee may be properly deemed project-based or regular, to wit: A project employee is assigned to a project which begins and ends at determined or determinable times. Unlike regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the services of employees who are hired as "project-based employees" may be lawfully terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether particular employees are properly characterized as "project-based employees" as distinguished from "regular employees," is whether or not the employees were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time they were engaged for that project. The project could either be (1) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation. In order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent employees from attaining a regular status, employers claiming that their workers are project-based 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.

Verily, for an employee to be considered project-based, the employer must show compliance with two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope of which were specified at the time they were engaged for such project.

In this case, records reveal that Sykes Asia adequately informed petitioners of their employment status at the time of their engagement, as evidenced by the latter’s employment contracts which similarly provide that they were hired in connection with the Alltel Project, and that their positions were "project-based and as such is co-terminus to the project." In this light, the CA correctly ruled that petitioners were indeed project-based employees, considering that: (a) they were hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made known to them at the time of their engagement, i.e., "co-terminus with the project."

As regards the second requisite, the CA correctly stressed that "the law and jurisprudence dictate that ‘the duration of the undertaking begins and ends at determined or determinable times’" while clarifying that "the phrase ‘determinable times’ simply means capable of being determined or fixed." In this case, Sykes Asia substantially complied with this requisite when it expressly indicated in petitioners’ employment contracts that their positions were "co-terminus with the project." To the mind of the Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes Asia would only last as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated, petitioners no longer had any project to work on, and hence, Sykes Asia may validly terminate them from employment. Further, the Court likewise notes the fact that Sykes Asia duly submitted an Establishment Employment Report and an Establishment Termination Report to the Department of Labor and Employment Makati-Pasay Field Office regarding the cessation of the Alltel Project and the list of employees that would be affected by such cessation. As correctly pointed out by the CA, case law deems such submission as an indication that the employment was indeed project-based.

In sum, respondents have shown by substantial evidence that petitioners were merely project-based employees, and as such, their services were lawfully terminated upon the cessation of the Alltel Project.

Good notes on this case:

Project-based Employment

- The principal test for determining whether particular employees are properly characterized as "project-based employees" as distinguished from "regular employees," is whether or not the employees were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time they were engaged for that project.

- The project could either be (1) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation.

- For an employee to be considered project-based, the employer must show compliance with two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope of which were specified at the time they were engaged for such project.

Rules of Court

- To justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction. To be considered "grave," discretion must be exercised in a despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law.

- In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and the conclusions reached thereby are not supported by substantial evidence. This requirement of substantial evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that "in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion."

Due Process in Termination of Employment

Every employee shall be assured security of tenure. No employee can be dismissed from work except for a just or authorized cause, and only after due process.

The essence of due process simply means that the employer shall afford the worker an ample opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complain of (Stayfast Phils. Corp vs. NLRC, G.R. No. 81480 Feb. 9, 1993).

Under the Constitution and the Labor Code, the requirements for the lawful dismissal of an employee by his employer are two-fold: the substantive and procedural.

a. The substantive aspect refers to the legality or illegality of the act of dismissal. The just and lawful cause constitutes the substantive aspect of due process (China City Restaurant Corp. vs. NLRC, G.R. No. 97196 January 22, 1993). In other words, the dismissal must be for a valid or authorized cause as provided by law (San Miguel Corp. vs. NLRC, G.R. No. 78277, May 12, 1989).

b. The procedural aspect refers to the legality or illegality of the manner of dismissal. The rudimentary requirements of due process – notice and hearing – must also be observed before an employee may be dismissed. The illegality of the manner of dismissal constitutes discharge without due process (Shoemart Inc. vs. NLRC, G.R. No. 74229, Aug. 11, 1989).

Constitutional due process differentiated from statutory due process

Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while, statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing (Agabon vs. NLRC, G.R. No. 158693, Nov. 17, 2004).

Procedural due process to be observed in termination of employment

The procedural due process will depend on the cause of the termination of employment of the employee. In other words, due process for just cause is not the same for an authorized cause.

A. Procedural due process in just cause termination

Articulation of procedural due process in labor cases is found in Article 292 (b) of the Labor Code. Thus:

Art. 292 (277). Miscellaneous Provisions.

x x x x

b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.

x x x x

The procedure can be summarized in this manner. First, the employer must furnish the employee with a written notice containing the cause for termination. Second, the employer must give the employee an opportunity to be heard. This could be done either through a position paper or through a clarificatory hearing. The employee may also be assisted by a representative or counsel. Finally, the employer must give another written notice apprising the employee of its findings and the penalty to be imposed against the employee, if any. In labor cases, these requisites meet the constitutional requirement of procedural due process, which "contemplates notice and opportunity to be heard before judgment is rendered, affecting one’s person or property" (Montinola vs. PAL, G.R. No. 198656, September 8, 2014).

In just cause termination, the twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal. Thus, the following procedure should be followed:

1. Service of Pre-Notice – the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought and is considered as the proper charge.

2. Answer and conduct of hearing

3. Service of Post-Notice – The notice informing the employee of the employer’s decision to dismiss him which notice must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, and ample opportunity to be heard and defend himself with the assistance of his representative if he so desires.

1. Service of Pre-Notice (first written notice)

The pre-notice to be served on the employee should contain the following:

a. The specific causes or grounds for termination as provided for under Article 297 of the Labor Code, as amended, and company policies, if any;

b. The detailed narration of the facts and circumstances that will serve as basis for the charge against the employee. This is required in order to enable him to intelligently prepare his explanation and defenses. A general description of the charge will not suffice.

c. A directive that the employee is given the opportunity to submit a written explanation within a reasonable period.

Reasonable period should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation, consult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint (Unilever vs. Rivera, G.R. No. 201701, Jun. 3, 2013).

2. Conduct of hearing

The employer should schedule and conduct a hearing or conference after serving the pre-notice to the employee. In this process, the employee will be given the opportunity to:

a. Explain and clarify his defenses to the charge/s against him;

b. Present evidence in support of his defenses; and

c. Rebut the evidence presented against him by the management.

During the hearing or conference, the employee is given the chance to defend himself personally, with the assistance of a representative or counsel of his choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

The general rule is that the conduct of hearing is a requisite only in just cause termination. The exception to this rule is when the just cause of termination of employment is due to abandonment. This just cause is considered a form of gross neglect of duties under Art. 297 (b) of the Labor Code. For obvious reason, the conduct of hearing is no longer required here. Hence, in abandonment cases, due process is consist only of the service of two (2) notices to the employee, viz.: 1. First Notice directing the employee to explain why he should not be declared as having abandoned his job; and 2. Second Notice to inform him of the employer’s decision to dismiss him on the ground of abandonment (Kingsize Manufacturing Corporation vs. NLRC, G.R. Nos. 110452-54, Nov. 24, 1994).

A just cause dismissal without the benefit of a hearing prior to the employee’s termination violates his right to due process which requires that the person sought to be dismissed must be given a chance to answer and be heard on the charges against him before he is dismissed (Bondoc vs. NLRC, G.R. No. 103209, Jul. 28, 1997). Due process is satisfied when the employee is afforded fair and reasonable opportunity to explain his side of the controversy at hand (Gana vs. NLRC, G.R. No. 164640, Jun. 13, 2008).

A formal or trial-type hearing is not at all times and in all instances essential, as the due process requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand (Valiao vs. CA, G.R. No. 146621, Jul. 30, 2004). Meeting, dialogue, consultation or interview is not the hearing required by law. It may not be a substitute for the actual holding of a hearing (Maneja vs. NLRC, G.R. No. 124013, Jun. 5, 1998).

Due process, therefore, is not violated where a person is not heard because he has chosen, for whatever reason, not to be heard. It should be obvious that if he opts to be silent where he has a right to speak, he cannot later be heard to complain that he was unduly silenced (New Puerto Commercial vs. Lopez, G.R. No. 169999, Jul. 26, 2010). If the employee does not answer, hearing should still proceed (Hagonoy Rural Bank vs. NLRC, G.R. No. 122075, Jan. 28, 1998).

3. Service of Post-Notice (second written notice)

After determining that termination of employment is justified, the employer shall serve the subject employee a written notice of termination indicating the following:

a. That all the circumstances involving the charge/s against the employee has been considered; and

b. That the grounds have been established to justify the severance of his employment (King of Kings Transport, Inc. vs. Mamac, G.R. No. 166208, Jun. 29, 2007).

All the forgoing notices shall be served personally to the employee or to the employee’s last known address (Agabon vs NLRC, G.R. No. 158693, Nov. 17, 2004).

B. Procedural due process in authorized cause termination

Articles 298 and 299 of the Labor Code, as amended, provides for the due process requirement in terminating employees for authorized causes. Due process is deemed complied with upon the separate and simultaneous service of a written notice of the intended termination to both the employee subject of the termination and the appropriate DOLE Regional Office at least 30 days before the intended date of the termination specifying the grounds therefore and the undertaking to pay the separation pay required under the Labor Code.

Separation pay shall be paid by the employer to an employee terminated due to installation of labor-saving devices, redundancy, retrenchment, closure or cessation of operations not due to serious business losses or financial reverses, and disease.

An employee terminated due to installation of labor-saving devices, redundancy and disease shall be paid by the employer a separation pay equivalent to 1 month pay or at least 1 month pay for every year of service, whichever is higher, a fraction of 6 months service is considered as 1 whole year.

An employee terminated due to retrenchment and closure or cessation of business operation not due to serious business losses shall be paid by the employer a separation pay equivalent to 1 month pay or at least ½ month pay for every year of service, whichever is higher, a fraction of 6 months service is considered as 1 whole year.

Where closure is due to serious business losses or financial reverses, no separation pay is required.

C. Procedural due process in probationary employment termination

The services of a probationary employee may be terminated for any of the following: (1) a just cause; (2) an authorized cause; and (3) when he or she fails to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer (Moral vs. Momentum Properties Management Corporation, G.R. No. 226240, March 06, 2019).

Probationary employment may be terminated prior to the lapse of the probationary period for just or authorized cause. In this case, the appropriate procedural due process shall apply.

If the ground invoke is failure to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer, due process of law has already been observed if reasonable standards expected of the employee during his or her probationary period was made known to him or her at the time of his or her probationary employment. In other words, termination of probationary employment in this ground does not require notice and hearing. It is sufficient that a written notice of termination is served to the probationary employee within a reasonable time from the effective date thereof setting forth the justification of such termination. To be valid, however, termination must be done prior to lapse of probationary period (Pasamba vs. NLRC, G.R. No. 168421, Jun. 8, 2007).

D. Procedural due process on the following definite-period employments

Procedural due process is not required for definite-period employments because as to:

a. Project employment – it automatically terminates upon completion of the project.

b. Seasonal employment – it automatically terminates upon the end of the season.

c. Casual employment – it automatically terminates upon the lapse of the agreed period.

d. Fixed-term employment – it automatically terminates upon the expiration of the fixed period.

However, within the period of employment, the project, seasonal, casual or fixed-term employee cannot be terminated without just or authorized cause. Hence, appropriate procedural due process shall be exercise if termination is done during the period of their employment.

References:

- Article 292 par (b) Miscellaneous Provisions, PD No. 422, as amended and renumbered per DOLE Department Advisory No. 1, Series of 2015.

- Article 298. Closure of Establishment and Reduction of Personnel, PD No. 422, as amended and renumbered per DOLE Department Advisory No. 1, Series of 2015.

- Article 299. Disease as Ground for Termination, PD No. 422, as amended and renumbered per DOLE Department Advisory No. 1, Series of 2015.

- Department Order No. 147-15, Series of 2015, Amending the Implementing Rules and Regulations of Book VI of the Labor Code of the Philippines, as amended.

- Poquiz, Labor Relations Law, 2005.

- Supreme Court Decisions

IKSI vs. Inting, et. al.

G.R. No. 211892, 6 December 2017

Facts of the case:

Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data processing, encoding, indexing, abstracting, typesetting, imaging, and other processes in the capture, conversion, and storage of data and information and was hired by a company based in the US to review various litigation documents. For this purpose, IKSI engaged the services of respondents with a contract duration of five (5) years.

IKSI argued that based on the contract, respondents’ employment was fixed for a specific project or undertaking, with its completion or termination clearly determined at the time of the employee’s engagement. However, sometime in November 2008, IKSI required respondents to work on another project called "Bloomberg," which was not included in the original contracts that they signed and without entering into a new project employment contract. Respondents initially opposed working on said project but eventually agreed, in fear of losing their employment altogether. Months later, they were again required to work on their assigned project and reverted to their previous designation.

On January 7, 2010, however, respondents received a Notice of Forced Leave from IKSI informing them that they shall be placed on indefinite forced leave effective that same day due to changes in business conditions, client requirements, and specifications. Hence, respondents filed a complaint for illegal dismissal, reinstatement or payment of separation pay, backwages, and damages against IKSI. Subsequently, IKSI sent respondents separate notices dated May 27, 2010 informing them that due to the unavailability of new work related to the product stream and uncertainties pertaining to the arrival of new workloads, their project employment contracts would have to be terminated.

The Labor Arbiter declared that there was no illegal dismissal. The NLRC affirmed the decision of LA but with modification. On appeal to the CA, the petition was granted declaring that petitioners were illegally dismissed by Innodata.

Issues:

1. Whether or not respondents are project employees.

2. Whether or not the respondents were constructively dismissed when petitioner put them under floating status.

Ruling of the Court:

1. The respondents are not project employees.

IKSI failed to show that respondents worked for a specific project and the duration of the same as stated in their contract. The fact is IKSI actually hired respondents to work, not only on the ACT Project, but on other similar projects such as the Bloomberg. When respondents were required to work on the Bloomberg project, without signing a new contract for that purpose, it was already outside of the scope of the particular undertaking for which they were hired; it was beyond the scope of their employment contracts. The fact that the same happened only once is inconsequential. What matters is that IKSI required respondents to work on a project which was separate and distinct from the one they had signed up for.

With regard to the duration, it can be gleaned in their respective contract that the 5-year period is not actually the duration of the project but merely that of the employment contract. Naturally, therefore, not all of respondents' employment would end on the same date, as the completion of the 5-year period would depend on when each employee was employed. This is precisely the reason why IKSI originally left a blank for the termination date because it varied for each employee. If respondents were truly project employees, then the termination date would have been uniform for all of them. In effect, respondents entered into fixed-term employment contracts with IKSI with a fixed period of 5 years.

In other words, IKSI sought to alternatively avail of project employment and employment for a fixed term so as to preclude the regularization of respondents' status. The fact that respondents were lawyers or law graduates who freely and with full knowledge entered into an agreement with the company is inconsequential. The utter disregard of public policy by the subject contracts negates any argument that the agreement is the law between the parties and that the fixed period was knowingly and voluntarily agreed upon by the parties. Considering that there were no valid fixed-term or project contracts, they are considered as regular employees who could not be dismissed except for just or authorized causes.

2. Respondents were constructively dismissed when petitioner put them under floating status.

Requiring employees on forced leave is one of the cost-saving measures adopted by the management in order to prevent further losses but IKSI failed to discharge the burden of proof vested upon it. The records are bereft of any evidence of actual suspension of IKSI's business operations or even of the ACT Project alone. In fact, while IKSI cited Article 301 to support the temporary lay-off of its employees, it never alleged that it had actually suspended the subject undertaking to justify such lay-off.

In light of the well-entrenched rule that the burden to prove the validity and legality of the termination of employment falls on the employer, IKSI should have established the bona fide suspension of its business operations or undertaking that could legitimately lead to the temporary layoff of its employees for a period not exceeding six (6) months, in accordance with Article 301. IKSI’s paramount consideration should be the dire exigency of its business that compelled it to put some of its employees temporarily out of work. This means that it should be able to prove that it faced a clear and compelling economic reason which reasonably constrained it to temporarily shut down its business operations or that of the ACT Project, incidentally resulting in the temporary lay-off of its employees assigned to said particular undertaking. IKSI must likewise bear the burden of proving that there were no other available posts to which the employees temporarily put out of work could be possibly assigned. Unfortunately, IKSI was not able to fulfill any of the aforementioned duties.

In fact, IKSI still continued its operations and retained several employees who were also working on the ACT Project even after the implementation of the January 2010 forced leave. Much worse, it continued to hire new employees, with the same qualifications as some of respondents. The placing of an employee on floating status presupposes, among others, that there is less work than there are employees. Hence, placing respondents on floating status was unnecessary. If any, respondents - with their experience, knowledge, and familiarity with the workings of the company - should be preferred to be given new projects and not new hires who have little or no experience working for IKSI. And even assuming, without admitting, that there was indeed suspension of operations, IKSI did not recall the employees back to work or place them on valid permanent retrenchment after the period of 6 months, as required of them by law.

There being no valid suspension of business operations, IKSI’s act amounted to constructive dismissal of respondents since it could not validly put the latter on forced leave or floating status pursuant to Article 301.

Inasmuch as IKSI failed to adduce clear and convincing evidence to support the legality of respondents' dismissal, the latter is entitled to reinstatement without loss of seniority rights and backwages computed from the time compensation was withheld up to the date of actual reinstatement, as a necessary consequence. However, reinstatement is no longer feasible in this case because of the palpable strained relations between the parties and the possibility that the positions previously held by respondents are already being occupied by new hires. Thus, separation pay equivalent to 1-month salary for every year of service should be awarded in lieu of reinstatement.

Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned by the unreasonable dismissal. The Court has consistently accorded the working class a right to recover damages for unjust dismissals tainted with bad faith, where the motive of the employer in dismissing the employee is far from noble. The award of such damages is based, not on the Labor Code, but on Article 2220 of the Civil Code. In line with recent jurisprudence, the Court finds the amount of ₱50,000.00 for each of moral and exemplary damages adequate.

The award of attorney's fees is likewise due and appropriate since respondents incurred legal expenses after they were forced to file an action to protect their rights. The rate of interest, however, has been changed to 6% starting July 1, 2013, pursuant to the BSP Circular No. 799, Series of 2013.

Good notes on this case:

Employment status is defined by law

- The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good. Thus, provisions of applicable statutes are deemed written into the contract, and the parties are never at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply entering into contracts with each other.

- Based on Article 295, the law determines the nature of the employment, regardless of any agreement expressing otherwise. The supremacy of the law over the nomenclature of the contract and its pacts and conditions is to bring life to the policy enshrined in the Constitution to afford full protection to labor. Thus, labor contracts are placed on a higher plane than ordinary contracts since these are imbued with public interest and, therefore, subject to the police power of the State.

Employment contracts

- In the interpretation of contracts, obscure words and provisions shall not favor the party that caused the obscurity. Consequently, the terms of the employment contract should be construed strictly against the employer, for being the party who prepared it. Verily, the private agreement of the parties can never prevail over Article 1700 of the Civil Code, which states: Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of labor and similar subjects.

Project employment

- Project employment contracts, which fix the employment for a specific project or undertaking, are valid under the law. By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may no longer be employed after the completion of the project for which he was hired. But project employment contracts are not lopsided agreements in favor of only one party. The employer's interest is equally important as that of the employees. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts must not prejudice the employee.

- In order to safeguard the rights of workers against the arbitrary use of the word "project" which prevents them from attaining regular status, employers claiming that their workers are project employees have the burden of showing that: (a) the duration and scope of the employment was specified at the time they were engaged; and (b) there was indeed a project. Therefore, as evident in Article 295, the litmus test for determining whether particular employees are properly characterized as project employees, as distinguished from regular employees, is whether or not the 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.

Fixed-term employment

- While the former requires a particular project, the duration of a fixed-term employment agreed upon by the parties may be any day certain, which is understood to be "that which must necessarily come although it may not be known when." The decisive determinant in fixed-term employment is not the activity that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of the employment relationship.

- The Court has previously recognized the validity of fixed-term employment contracts, but it has consistently held that this is more of an exception rather than the general rule. Aware of the possibility of abuse in the utilization of fixed-term employment contracts, the Court has declared that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down as contrary to public policy or morals.

Retrenchment

- Considering the grave consequences occasioned by retrenchment, whether permanent or temporary, on the livelihood of the employees to be dismissed, and the avowed policy of the State to afford full protection to labor and to assure the employee's right to enjoy security of tenure, the Court stresses that not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses. The employer bears the burden of proving this allegation of the existence or imminence of substantial losses, which by its nature is an affirmative defense. It is the employer’s duty to prove with clear and satisfactory evidence that legitimate business reasons exist in actuality to justify any retrenchment. Failure to do so would inevitably result in a finding that the dismissal is unjustified. Otherwise, such ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or reverses in their business ventures to dispose of their employees.

- Retrenchment is the severance of employment, through no fault of and without prejudice to the employee, which management resorts to during the periods of business recession, industrial depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new production program or the introduction of new methods or more efficient machinery, or of automation. In other words, lay-off is an act of the employer of dismissing employees because of losses in the operation, lack of work, and considerable reduction on the volume of its business. However, a lay-off would amount to dismissal only if it is permanent. When it is only temporary, the employment status of the employee is not deemed terminated, but merely suspended.

- There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a specific period or duration. Notably, in both permanent and temporary lay-offs, the employer must act in good faith - that is, one which is intended for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under the law or under valid agreements.

- Employees cannot forever be temporarily laid-off. Hence, in order to remedy this situation or fill the hiatus, Article 301 may be applied to set a specific period wherein employees may remain temporarily laid-off or in floating status. Elsewise stated, an employer may validly put its employees on forced leave or floating status upon bona fide suspension of the operation of its business for a period not exceeding 6 months. In such a case, there is no termination of the employment of the employees, but only a temporary displacement. When the suspension of the business operations, however, exceeds 6 months, then the employment of the employees would be deemed terminated, and the employer would be held liable for the same.

- Withal, in both permanent and temporary lay-offs, jurisprudence dictates that the one (1)-month notice rule to both the DOLE and the employee under Article 298 is mandatory.

- Under the Labor Code, separation pay is payable to an employee whose services are validly terminated as a result of retrenchment, suspension, closure of business or disease.

Requisites for a valid dismissal from employment

- Dismissal is the ultimate penalty that can be meted to an employee, the requisites for a valid dismissal from employment must always be met, namely: (1) it must be for a just or authorized cause; and (2) the employee must be afforded due process, meaning, he is notified of the cause of his dismissal and given an adequate opportunity to be heard and to defend himself. Our rules require that the employer be able to prove that said requisites for a valid dismissal have been duly complied with.

Rules of Court

- A distinction must be made between non-compliance with the requirement on or submission of defective verification and noncompliance with the requirement on or submission of defective certification against forum shopping:

1. As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading fatally defective. The court may order its submission or correction, or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served;

2. Verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct;

3. As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification, is generally not curable by its subsequent submission or correction thereof, unless there is a need to relax the Rule on the ground of substantial compliance or the presence of special circumstances or compelling reasons;

4. The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the Rule; and

5. Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf.

- In view of the circumstances of the case and the substantive issues raised therein, the Court may find justification to liberally apply the rules of procedure to the case. Rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice; their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed.

The Court previously held that the signature of only one of the petitioners substantially complied with the Rules if all the petitioners share a common interest and invoke a common cause of action or defense. In cases, therefore, where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum shopping, it is sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as representative, to sign the certificate, provided that the plaintiffs share a common interest in the subject matter of the case or filed the case as a "collective" raising only one common cause of action or defense.

- Verification, like in most cases required by the rules of procedure, is a formal requirement, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not necessarily render the pleading fatally defective. It is mainly intended to secure an assurance that matters which are alleged are done in good faith or are true and correct and not of mere speculation.

- Indeed, the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. Labor cases must be decided according to justice and equity and the substantial merits of the controversy. After all, the policy of our judicial system is to encourage full adjudication of the merits of an appeal. Procedural niceties should be avoided in labor cases in which the provisions of the Rules of Court are applied only in suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part of an injustice not commensurate with the degree of non-compliance with the process required.