April 17, 2017

G.R. No. 208936

HERMA SHIPYARD, INC, and MR. HERMINIO ESGUERRA, Petitioner,

vs.
DANILO OLIVEROS, JOJIT BASA ARNEL SABAL, CAMILO OLIVEROS, ROBERT NARIO, FREDERJCK CATIG, RICARDO ONTALAN, RUBEN
DELGADO, SEGUNDO LABOSTA, EXEQUIEL OLlVERIA, OSCAR TIROL and ROMEO TRINIDAD, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for review on Certiorari1 assails the decision2 dated 30, 2013 of the court of appeals (CA) in CA-G.R SP No. 118068 that
reversed the decision of the National Labor Relations Commissions (NLRC) and the labor arbiter and declared that Danilo Oliveros,
Jojit Basa, Arnel Sabal, Camilo Oliveros, Robert Nario, Frederick Catig, Ricardo Ontalan, Ruben Delgado, Segundo Labosta, Exequiel
Oliveria, Oscar Tirol and Romeo Trinidad (respondents) are regular employees of petitioner Herma Shipyard Inc. (Herma Shipyard).

Factual Antecedents

Herma Shipyard is a domestic corporation engaged in the business of shipbuilding and repair. The respondents were its employees
occupying various positions such as welder, leadman, pipe fitter, laborer, helper, etc.

On June 17, 2009, the respondents filed before the Regional Arbitration Branch III, San Fernando City, Parnpanga a Complaint 3 for
illegal dismissal, regularization, and non-payment of service incentive leave pay with prayer for the payment of full backwages and
attorney's fees against petitioners. Respondents alleged that they are Herma Shipyard's regular employees who have been
continuously performing tasks usually necessary and desirable in its business. On various dates, however, petitioners dismissed
them from employment.

Respondents further alleged that as a condition to their continuous and Uninterrupted employment, petitioners made them sign
employment contracts for a fixed period ranging from one to four months to make it appear that they were project-based
employees. Per respondents, petitioners resorted to this scheme to defeat their right to security of tenure, but in truth there was
never a time when they ceased working for Henna Shipyard due to expiration of project-based employment contracts. In fact, if they
were indeed project employees, petitioners should have reported to the Department of Labor and Employment (DOLE) the
completion of such project. But petitioners have never submitted such report to the DOLE.

For their defense, petitioners argued that respondents were its project-based employees in its shipbuilding projects and that the
specific project for which they were hired had already been completed, In support thereof, Herma Shipyard presented contracts of
employment, some of which are written in the vernacular and denominated as kasunduang Paglilingkod (Pang-Proyektong
Kawani).4

Ruling of the Labor Arbiter

On May 24, 2010, the Laborer Arbiter rendered a Decision 5 Dismissing respondents’ Complaint. The Laborer Arbiter held that
respondents were project-based employees whose services were validly terminated upon the completion of the specific work for
which they were individually hired. The dispositive portion of the Labor Arbiter’s Decision reads:

WHEREFORE, premises considered, let the instant complaint be, as it is hereby ORDERED dismissed for lack of merit.

AU the money cla.ims as well as moral and exemplary damages and attorney's fees raised by the complainants in their complaint are
likewise DENIED for lack of merit.

SO ORDERED.6

Respondents thus appealed to the NLRC.

Ruling of the National Labor Relations Commission

On September 7, 2010, the NLRC rendered its Decision7 denying respondents' appeal and affirming in toto the Decision of the Labor
Arbiter, It sustained the finding of the Labor Arbiter that based on their employment contracts, respondents were project-based
employees hired to do a particular project for a specific period of time.

Respondents moved for reconsideration but the NLRC denied their Motion for Reconsideration 8 in its November 11, 2010
Resolution.9

Unfazed, respondents filed a Petition for Certiorari10 before the CA imputing grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the labor tribunals in finding that they were project-based employees and in not awarding them service
incentive leaves. Respondents contended that the labor tribunals grievously erred in relying on the project employment contracts
which were for a uniform duration of one month. They argued that if it were true that they were project-based employees, the
duration of their employment should have coincided with the completion of the project for which they were hired and not for a
uniform period of one month.

Ruling of the Court of Appeals

On May 30, 2013, the CA rendered its assailed Decision 11 granting respondents’ Petitions for Certiorari and setting aside the labor
tribunals’ Decision. It held that even if the contracts of employment indicated that respondents were hired as project-based
workers, their employment status have become regular since: they were performing tasks that are necessary, desirable, and vital to
the operation of petitioners’ business; petitioners failed to present proof that respondents were hired for a specific period or that
their employment was coterminous with specific project; it is not clear from the contracts of employment presented that the
completion or termination of the project or undertaking was already determined at the time petitioners engaged the services of
respondents; respondents were made to work not only in one project but also in different projects and were assigned to different
departments of Herma Shipyard; respondents were repeatedly and successively rehired as employees of Herma Shipyard; except
with regard to respondent’s last employment, petitioners failed to represent proof that they reported to the nearest public
employment office the termination of respondents’ previous employment or every time a project or a phase thereof had been
completed; and, petitioners failed to file as many reports of termination as there were shipbuilding and repair projects actually
completed, The CA concluded that the project employment contracts were indeed used as a device to circumvent respondents’ right
to security of tenure. The fallo of the assailed CA Decision reads:

WHEREFORE, the instant for certiorari is GRANTED. The assailed decision and resolution of the respondent National Labor Relations
Commission are REVERSED and SET ASIDE, and a new judgment is hereby rendered holding petitioners as regular employees and
declaring their dismissal as illegal. According, private respondents are hereby ordered to REINSTATE petitioners to their former
employment. Should reinstatement be not possible due to strained relations, private respondents are ordered to pay petitioners
their separation pay equivalent to one month pay or one-half-month pay for every year of service. Whichever is higher, with full
backwages computed from the time of dismissal up to the finality of the decision. For this purpose, the case is hereby REMANDED to
the respondent NLRC for the computation of the amounts due petitioners.

SO OREDERED. 12

Petitioners moved for reconsideration. In a Resolution 13 dated August 30, 2013, however, the CA denied their Motion for
Reconsideration. 14

Hence, this Petition for Review on Certiorari assailing the May 30, 2013 Decision and August 30, 2013 Resolution of the CA,
Petitioners anchor their Petition on the following arguments:

PREVAIL IN JURISPRUDENCE DICTATES THAT RESPONDENTS ARE NOT REGULAR EMPLOYEES OF PETITIONER [HERMA SHIPYARD].
THEY ARE PROJECT EMPLOYEES WHOSE TERMS OF EMPLOYMENT WERE VALIDLY TERMINATED UPON THE EXPIRATION OF THE
TERM OF THEIR PROJECT EMPLOYMENT CONTRACTS.

B
THE ASSAILED DECISION AND ASSAILED RESOLUTION RULED ON ISSUES WHICH WERE NEITHER DISPUTED IN RESPONDENTS'
PETITION FOR CERTIORARI NOR RAISED IN THE DECISION OF THE HONORABLE [NLRC].

ASA BORNE BY THE PROJECT EMPLOYMENT CONTRACTS OF RESPONDENTS AND TERMINATION REPORTS SUBMITTED TO THE
DEPARTMENT OF LABOR AND EMPLOYMENT, RESPONDENTS UNDOUBTEDLY PROJECTS EMPLOYEES OF PETITIONER [HERMA
SHIPYARD].

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT RESPONDENTS’ PETITION FOR CERTIORARI DID NOT RAISE AS AN
ISSUE AN ACTS COMMITTED BY THE HONORABLE [NLRC] WHICH AMOUNTED TO GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDJCTION.

BY VIRTUE OF THE DOCTRINE OF SEPARATE JURIDICAL PERSONALITY, PETITIONER ESGUERRA SHOULD NOT BE HELD LIABLE IN THE
INSTANT LABOR COMPIAINT.

THE HONORABLE COURT OF APPEALS FAILED TO GIVE WEIGHT AND RESPECT TO THE FACTUAL FINDINGS OF THE HONORABLE
NATIONAL LABOR RELATIONS COMMISSION AND THE HONORABLE LABOR ARBITER.

THE HONORABLE COURT OF APPEALS DID NOT ACQUIRE JURISDICTION OVER THE INSTANT CASE AS THE HONORABLE NLRC'S
DECISION AND RESOLUTION ALREADY BECAUSE EXECUTORY CONSIDERING THAT RESPONDENTS' PETITION FOR CERTIORARI WAS
FILED BEYOND THE REGLEMENTARY PERIOD PRESCRIBED BY THE RULES. 15

Petitioners contend, among others, that necessity and desirability of respondents’ services in Herma Shipyard’s business are not the
only factors to be considered in determining the nature of respondents; employment. They assert that the CA should have also
taken into consideration to the contracts of employment signed by the respondents apprising them to the fact that their services
were engaged for a particular project only and that their employment was coterminous therewith. The authenticity and genuineness
of said contracts, according to petitioners, were never disputed by the respondent during the pendency of the case before the labor
tribunals. It was only in their comment 16 to the instant Petition that respondents disavow said contracts of employment for
allegedly being fictitious.

Petitioners aver that the CA also erred in ruling that he duration of respondents’ employment depends upon a progress
accomplishment as paragraph 10 of the employment contract readily shows that the same is dependent upon the completion of the
project indicated therein.

With regard to the repeated rehiring of the respondents, petitioners insist that the same will not result in respondents becoming
regular employees because length of service does not determine employment status. What is controlling of specific project or
undertaking, its completion having been determined and made known to the employees at the time of their engagement. Thus,
regardless of the number of projects for which respondents had been repeatedly hired, they remained project-based employees
because their engagements were limited to a particular project only. Petitioners emphasize that Herma Shipyard merely accepts
contracts for shipbuilding and for repair of vessels. It is not engaged in the continuous production of vessels for sale which would
necessitate the hiring of a large number of permanent employees.

Respondents, for their part, deny having worked for a specific projects or undertaking. They insist that the employment contracts
presented by petitioners purportedly showing that they were project-based employees are fictitious designed to circumvent the law.
In any case, said contracts are not valid project employment contracts because the completion of the project.
Our Ruling

The Petition is impressed by merit.

At the outset, the issue of whether petitioners were project-based employees is a question of fact that, generally, cannot be passed
and ruled upon by this Court in a petition for review on certiorari filed under Rule 45 of the rules of Court. It is settled that the
jurisdiction of this Court in a Rule 45 petition is generally limited to reviewing errors of law. Nevertheless, in view of the opposing
views of the tribunals below, this Court shall take cognizance of and resolve the factual issues involved in this case. 17

Who are project-based employees?

A project employee under Article 280 (now Article 294)18 of the Labor Code, as amended, is one whose employment has been fixed
for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee, Thus:

Art, 280. Regular and Casual Employment. –The provisions of written agreement for the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are 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 the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

x x x x (Emphasis supplied)

The services of project-based employees are co-terminous with the project and may be terminated upon the end or completion of
the project or a phase thereof for which they were hired. 19 The principal test in determining whether particular employees were
engaged as project-based employees, as distinguished from regular employees, is whether they were assigned to carry out a specific
project or undertaking, the duration and scope of which was specified at, and made known to them, at the time of their
engagement. 20 It is crucial that the employees were informed of their status 8rS project employees at the time of hiring and that
the period of their employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress, or
improper pressure being brought to bear upon the employees or any other circumstances vitiating their consent. 21

Respondents Knowingly and voluntarily

entered in and signed the project-based
employment contracts.

The records of this case reveal that for each and every project respondents were hired. They were adequately informed of their
employment status as project-based employees at least at the time they signed their employment contracts. They were fully
apprised of the nature and scope of their work whenever they affixed their signature to their employment contract. Their contracts
of employment (mostly written in the vernacular) provide in no uncertain terms that they were hired as project-based employees
whose services are coterminous with the completion date thereof. They also contain a provision expressly stating that respondents’
employment shall end upon the arrival of the target completion date or upon the completion of such project. Except for the
underlined portions, the contract of employment read:

KASUNDUAN NG PAGLILINGKOD
(PANG-PROYEKTONG KAAWANI)

PARA SA KAALAMAN NG LAHAT:

ALAMIN NG LAHAT NA:

HERMA SHIPYARD, INC., isang korporasyon na itinatag at nananatili sa ilalim ng batas ng Pilipinas at may tanggapan sa Herma
IndustrialComplex, Mariveles, Bataan na kinakatwan [ni] EDUARDO S. CARANCIO ay makikilala bilang kompanya; OLIVEROS, CAMILO
IBAÑEZ, sapat ang gulang, Pilipino, may asawa/asawa na tubong__________, naninirahan sa BASECO Country Aqwawan, Mariveles,
Bataan dito ay nakikilala bilang PANG-PROYEKTONG KAWANI;
NAGSASAYSAY NA:

NA, ang kumpanya ay nangangailangan ng paglilingkod ng isang Ship Fitter Class A sa panandaliang panahon at bilang pang suporta
sa paggawa at pagsasaayos ng proyekto para sa MT Masinop.

NA, ang PANG-PROYEKTONG KAWANI ay nagpapahayag ng kanyang kakayahan at kagustuhang isagawa ang proyektong iniaalok ng
KUMPANYA at handing tuparin ang nasabing Gawain sa KUMPANYA sa ilalim ng sumusunod na kundisyon;

Bilang pagkilala sa mga nasabing batayan, ang mga kinauukulang partido ay nagkakasundo at nagtatakda ng mga sumusunod:

1) AngKUMPANYA ay pumapayag na bayaran ang serbisyo ng PANG-PROYEKTONG KAWANI bilang Ship Fitter Class A sa nasabing
proyekto simula 4/1/2009 hanggang 4/30/2009 o sa sandaling matapos ang nasabing Gawain o anumang bahagi nito kung saan
siya ay inupahan o kung saan ang kanyang serbisyo ay kailangan at ang PANG-PROYEKTO KAWANI ay sumasang-ayon. Ang
maga gawaing nabanggit sa kasunduang ito ay hindi pangkaraniwang ginagawa ng KUMPANYA kundi para lamang sa
itinakdang panahon o hanggang matapos ang nasabing proyekto;

2) Ang KUMPANYA ay may karapatan na pawalang bias o kanselahin ang kasunduang ito anomang oras kung mapatutunayan na ang
PANG-PROYEKTONG KAWANI ay walang kakayahan na gawin ang naturang gawain kung saan siya ay inupahan nang naaayon sa
pamantayan o sa kagustuhan ng KUMPANYA o sa anumang dahilan na naaayon sa batas, kasama na rito ang paglabag ng PANG-
PROYEKTONG KAWANI sa mga alituntunin ng KUMPANYA;

3) Ang PANG-PROYEKTONG KAWANI ay sumasang-ayon na gampanan ang mga gawaing ito para sa KUMPANYA buong katapatan at
husay;

4) Ang PANG-PROYEKTONG KAWANI ay magtratrabaho ng walong (8) oras sa bawat araw ng trabaho ayon sa oras na itinakda ng
KUMPANYA at siya ay babayaran ng ₱405 (₱397.00/basic+8/ecola) bawat araw at ito ay kanyang matatanggap tuwing ika-
labinlimang araw at katapusan ng buwan na kanyang ipinagtrabaho. Ang PANG-PROYEKTONG KAWANI ay hindi babayaran sa mga
araw na hindi siya pumasok sa trabaho sa KUMPANYA;

5) Lahat ng kaalaman o impormasyon na maaaring mabatid ns; PANG-PROYEKTONG KAWANI habang siya ay may kaμgnayan sa
KUMPANYA ay iingatan niya at hindi maaaring gamitin, ipasipi o ipaalam sa kaninuman ng walang kaukulang pahintnlot lalo na kung
ito ay maAaring makapinsala sa KUMPANYA;

6) Ang PANG-PROYEKTONG KAWANI ay nangangako na ibibigay ang kanyang panahon at buong kakayahan para sa kapakanan ng
KUMPANYA, tutugon sa lahat ng alintuntunin ng KUMPANYA, susunod s autos ng mga namumuno na naaayon sa batas, at
tatanggapin ang pananagutan sa lahat ng kanyang mga galaw na maaaring makapinsala o makasakit sa kapwa kawani at sa ari-arian
ng KUMPANYA, ganun din ang kapakanan at ari-arian ng ibang tao;

7) Nababatid at nauunawaan ng bawat partido sa kasunduang ito na ang PANG-PROYEKTONG KAWANI ay hindi maituturing na
pampirmihan or "regular" na kawani ano man at gaano man katagal ang kanyang paglingkod sa kumpanya. Sa ganitong
kadahilanan, ang PANG-PROYEKTONG KAWANI ay hindi tatanggap ng karaniwang benepisyo na ipinagkaloob sa pampirmihan o
"regular" na kawani, katulad ng bonuses, medical insurance, at retirement benefits, maliban sa ilang benepisyo na
pinagkakaloob ng batas.

8) Sa pagtupad ng mga nasabing gawa, nalalaman at inaasahan ng PANG-PROYEKTONG KAWANI ang ilang kaakibat na peligro sa
maayos na pagganap ng naturang mga gawa. Alam ng PANG-PROYEKTONG KAWANI na ang KUMPANYA ay walang kinalaman sa
bagay na ito at hindi dapat panagutin ukol dito;

9) Ang lahat ng mga nakasaad at nasusulat na mga kondisyon sa kasunduang ito ay nauunawaan at naiintindihan ng PANG-
PROYEKTONG KAWANI;

10) Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring kailangan para sa matagumpay na
pagtatapos ng mga gawa o proyektong pinagkasunduan;

BILANG SAKSI sa kasunduang ito, ang mga partido ay lumagda ngayong ika-1 ng Abril 2009 sa Mariveles, Bataaan,
Pilipinas; 22 (Emphases supplied)
There is no indication that respondents were coerced into signing their employment contracts or that they affixed their signature
thereto against their will. While they claim that they signed the said contracts in order to secure continuous employment, they have
not, however presented sufficient evidence to support the same other than their bare allegations. It is settled that "[c]ontracts for
project employment are valid under the law."23 Thus, in Jamias vs National Labor Relations Commission, 24 this court upheld the
project employment contracts which were knowingly and voluntarily signed by the employees for want of proof that the employers
employed force, intimidation, or fraudulently manipulated them into signing the same. Similarly in this case, by voluntarily entering
into the aforementioned project employment contracts, respondents are deemed to have understood that their employment is
coterminous with the particular project indicated therein. They cannot expect to be employed continuously beyond the completion
of such project because a project employment terminates as soon as it is completed.

Performance by project-based
Employees of task necessary and
Desirable to the usual business
Operation of the employer will not
automatically result in their
regularization.

In disregarding the projects employment contracts and ruling that respondents are regular employees, the CA took into
consideration that respondents were performing tasks necessary and desirable to the business operation of Herma Shipyard and
that they were repeatedly hired. Thus:

[I]t is significant to note that even if the contracts of employment indicates that [respondents] were hired as project workers, they
are still considered regular employees on the ground that as welder, ship fitter, pipe fitter, expediter and helper, [respondents’]
services are all necessary, desirable and vital to the operation of the ship building and repair business of [petitioners]. A confirmation
of the necessity and desirability of their services is the fact that [respondents] were continually and successively assigned to the
different projects of private respondents even after the completion of a particular project to which they were previously assigned.
On this score, it cannot be denied that petitioners were regular employees. 25

It is settled, however, that project-based employees may or may not be performing tasks usually necessary or desirable in the usual
business or trade of the employer. The fact that the job is usually necessary or desirable in the business operation of the employer
does not automatically imply regular employment; neither does it impair the validity of the project employment contract stipulating
a fixed duration of employment. 26 As this Court held in ALU-TUCP v. National Labor Regulation Commission: 27

In the realm of business and industry, we note that ‘project’ could refer to one or the other of at least two (2) distinguishable types
of activities. Firstly, a project could refer to 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 undertaking of the company. Such
job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete
identifiable construction projects: e,g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and
domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one these separate projects, the scope and
duration of which has been determined and made known to the employees at the time of employment are properly treated as
‘project employees.’ and their services may be lawfully terminated at completion of the project.

The term ‘project’ could also refer to, secondly, a particular job or undertaking that is not within the regular business of the
corporation , Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at determined or determinable times. 28

Here, a meticulous examination of the contracts of employment reveals that while the tasks assigned to the respondents were
indeed necessary and desirable in the usual business of Herma Shipyard, the same were distinct, separate, and identifiable from the
other projects or contracts services. Below is the summary of the respondents’ employment contracts indicating the positions they
held, the specific projects for which they were hired, and the duration or expected completion thereof:
Names Positions Projects Durations

1. Ricardo J. Ontalon Pipe Fitter MT Masinop 03/18/09-03/31/0929

Pipe Fitter 12mb _phase 3 09/15/08-12/20/0830
Pipe Fitter 12mb/ Petrotrade 6 05/29/08-08/31/0831
Pipe Fitter Aleem Calaca 04/29/08-completion32
Pipe Fitter Hull 0102-phase 6 12/17107-03/03/0833
Pipe Fitter Hull 0103 & Hull 0104- phase 1 09/11/07-12/11/0734

2. Roberto T. Nario Welder 6G MT Masinop 03/18/09-03/31/09 35

Welder 6G 12 mb/ Matikas/ 06/02/08-07/31/08 36
Red Dragon
Welder 6G 22mb/12mb/Galapagos /Petrotrade 7/Ma 03/04/08-06/05/08 37
Oliva/ Solid Sun/ Hagonoy/ Banga Uno/
Bigaa
Welder 6G Hull 0102-phase 5 10/18/07-12/18/07 38

3. Oscar J. Tirol Pipe Fitter Class B Red Dragon (installation of lube oil, diesel 01/16/09-02/15/09 39
oil, air compressed line,
Freshwater cooling, lavatory, sea water
pipe line)
Pipe Fitter MT Magino/MV Diana 06/27/08-completion 40
------------- Petrotrade 7/Solid Gold 02/08/08 41 – 02/08/08 42

4. Exequiel R. Oliveria Leadman 12mb/Petrotrade 6 05/29/08-08/31/08 43

Leadman Red Dragon 05/29/08-05/31/08 44
Leadman Hull 0102-phase 6 12/01/07 45
Leadman Hull 0102-phase 5 03/03/08 46
Leadman Hull 0102-phase 4 09/11/07-11/30/07 47
06/07/07-08/27/07 48

5. Arnel S. Sabal Leadman MT Masinop 03/18/09-03/31/09 49

Leadman 12mb/-phase 3 09/15/08 50 –12/20/08 51
Leadman 12mb/Petrotrade 6 05/29/08-08/31/08 52
Leadman 22mb/12mb/Galapagos 03/04/08-06/05/08 53
Petrotrade 7/ Ma Oliva
Solid Sun/ Hagonoy/
Banga Uno/ Bigaa
Leadman Hull 0102-phase 6 12/01/2007 54 -3/03/08 55
Leadman Hull 0102-phase 5 09/11/07-11/30/07 56
Pipe Fitter Hull 0102-phase 4 06/13/07-09/04/07 57
------------- Hull 0102-phase 2 01/15/07-03/30/07 58
Pipe Fitter Hull 0102 01/08/07-completion 59
Pipe Fitter PetroTrade8/EUN HEE 05/17/06-completion 60
Pipe Fitter MT Angat 06/02/05 61 -06/25/05 62
Pipe Fitter M/T Pandi 12/08/04-completion 63
Pipe Fitter M/T Makisig 11/08/04-completion 64
Pipe Fitter Petro Trade - 7 08/12/04 65 -09/13/04 66

6. Segundo Q. Labosta , ABS Welder 6G MT Masinop 03/18/09-03/31/09 67

Jr. ABS Welder 6G 12mb-phase 3 09/26/08-12/20/08 68
ABS Welder 6G PetroTrade 6/12 mb 08/01/08-10/31/08 69
ABS Welder 6G Cagayan de Oro/ Petrotrade 6/ Plaridel 06/01/08-07/31/31/08 70

7. Jojit A. Besa Leadman – ABS 6G MT Masinop 03/18/09-03/31/09 71

Leadman – ABS 6G 12mb/Barge Kwan Sing/ Solid Pearl 01/16/09-03/14/0972
Leadman – ABS 6G 12mb-phase 3 10/10/08-12/20/0873
Leadman – ABS 6G Hull 0102-phase 6 12101/0%02/29/08 74
Pipe Welder 6G Hull 0102-phase 4 06/07/07-08/29/07 75
 Pipe Welder Hull 0102-phase4 06/01/07-08/27/07 76
Pipe Fitter MT Matilde/M/Tug Mira 08/07/06-completion77
Pipe Fitter MT Marangal/ MT Masikap/ MT Maginoo/ 04/15/06-completion78
Petro Trade 8
Pipe Fitter/Welder MV ST Ezekiel Moreno 03/01/06-completion79
Pipe Fitter MT Plaridel/Monalinda 11/03/05-completion80
95/Tug Bout Sea Lion
Pipe Fitter MT Angat/Banga Dos 05/31105-06/30/05
Pipe Fitter M/T Makisig 11 /08/04-completion81
Pipe Fitter M/T Baliuag Oceantique 10/18/04-completion82
Petro Trade – 7
Pipe Fitter Petro Trade V/Guiguinto 9/17/04-one month/
completion83
Pipe Fitter 08/03/04-two months/
completion83
Pipe Fitter 07 /03/04-one month/
Completion. 85

8. Camilo I. Oliveros Shift Fitter Class A MT Masinop 04/01/09-04/30/0986

Leadman Petrotrade 6/ Plaridel/ Red Dragon 06/03/08-09/10/0887
ABS Welder 6G Hull 0102/0103
Welder Hull 0102-phase 5 01/15/08-completion88
Welder Hull 0102-phase 4 09/11/07/-12/04/0789
Welder Hull 0102-phase 3 06/06/07-08/28/0790
Welder Hull 0102-phase 2 04/12/07-06/12/0791
Ship Welder 22 mb oil tanker 01/24/07-03/30/0792
09/06/06-completion93

9. Romeo I. Trinidad Helper Modernization Project- painting of prod’n 01/24/07-01 /28/0794

bldg. and overhead crane
Laborer Pin Jiq assembly, building table 09/10/07-12/10/0795
construction, painting of ex-oxygen bldg.
frabrication of slipways railings
Laborer Ground level of main 04123/07-05/31/0796
entrance road & CHB wall
plastering/repair of
warehouse no 1 for conversion to training
bldg.
Electrician/Laborer Construction of launchway and perimeter 12/04/06-completion97
fence

10. Ruben F. Delgado Leadman Red Dragon (water tight door installation, 01/16/09-02/15/0998
soft batch)
Leadman Red Dragon 10/13/08-12/20/0899
Leadman MV Ma Diana 06/28/08-completion 100
Ship Fitter Hull 0102-Phase 4 05/30/07-08/26/07101
Ship Fitter Thomas Cloma 12/03/07-completion101
Ship Fitter MV Solid Jade/ Construction of New 03/10/07-completion103
Caisson Gate
Ship Fitter MT Hagonoy 02/01/07104
02/21/07105
Ship Fitter MT Mabiuag 01/09/07-completion 106
Ship Fitter MT Ma Xenia 12/18/06107 -1/07 /07108

11. Danilo I. Oliveros Welder 3G. & 4G MT Hagonoy/ MT Masinop/MT Matikas 04/01 /09-04/15/09109
Hagonoy
Welder 3G & 4G l2mb-phase 3 03/20/09-03/31/09110
Welder 3G & 4G l2mb/Petrotrade 6 09/25/08-12/20/08111
Welder Hull 0102-phase 6 07/01/08-09/30/08112
 Welder 3G & 4G Hull 0102-phase 5 12/08/07-03/08/08113
Welder Hull 0102 09/10/07-12/10/07114
Welder 12/19/06-completion115

12. Frederick C. Catig Pipe Fitter Class C MT Masinop 02/06/09-02/28/09116

Pipe Fitter Class C 12mb 01/08/09-0l /31/09117
Helper 12mb_phase 3 09/15/08-completion 118
Helper 12mb/Petrotrade 6 05/29/08-08/31/08 119
Helper Hull 0102-phase 6 01 /02/08-03/31/08120
Helper Hull 0102, Hull 0103, 10/01/07-12/3l/07121
Hull 0104
Helper Hull 0103 phase 1 07/25/07-09/31/07122

As shown above, respondents were hired for various projects which are distinct, separate, and identifiable from each other. The CA
thus erred in immediately concluding that since respondents were performing tasks necessary, desirable, and vital to Herma
Shipyard's business operation, they are regular employees.

Repeated rehiring of project employees

to different projects does not ipso facto
make then regular employees.

"[T]he repeated and successive rehiring [of respondents as project-based employees] does not [also], by and of itself: qualify them
as regular employees. Case law states that length of service (through rehiring) is not the controlling determinant of the employment
tenure [of project-based employees but, as earlier mentioned], whether the employment has been fixed for a specific project or
unde1taking, with its completion having been determined at the tin1e of [their] engagement." 123 Stated otherwise the rule that
employees initially hired on a temporary basis may become permanent employees by reason of their length of service is not
applicable to project-based employees. Our ruling in Villa v. National Labor Relations Commission 124 is instructive on the matter,
viz.:

Thus, the fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a
basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they
have worked. Length of service is not the controlling determinant of the employment tenure of a project employee. In the case of
Mercado Sr. v. NLRC, this Court rule that the proviso in the second paragraph of Article 280, providing that an employee who has
served for at least one year, shall be considered a regular employee, relates only to casual employees and not to project employees.

The rationale for the inapplicability of this rule to project-based employees was discussed in Dacles v. Millennium Erectors
Corporation,, 125 to wit:

x x x While 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, this standard will not be fair, if applied to the
constrn9tion industry because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project
as they have no control over the decisions and resources of project proponents or owners. Thus, once the project is completed it
would be unjust to require the employer to maintain these employees in their payroll since this would be tantamount to making the
employee a privileged retainer who collects payment from his employer for work not done, and amounts to labor coddling at the
expense of management.126

Indeed, if we consider the nature of Henna Shipyard's business, it is clear that Herma Shipyard only hirG5 workers when it has
existing contracts for shipbuilding and repair. It is not engaged in the business of building vessels for sale which would require it to
continuously construct vessels for its inventory and consequently hire a number of permanent employees. In Sandoval Shipyards,
Inc. v. National labor Relations Commission 127 where therein petitioner was engaged in a similar kind of business this Court opined
that:

It is significant to note that the corporation does not construct vessels for sale or othe1wise which will demand continuous
productions of ships and will need permanent or regular workers. It merely accepts contracts for shipbuilding or for repair of vessels
from third parties and, only, on occasion when it has work contract of this nature that it hires workers to do the job which, needless
to say, lasts only for less than a year or longer.128
The completion of their work or project automatically terminates their employment, in which case, the employer is, under the law,
only obliged to render a report on the termination of the employment.

Hence, Herma Shipyard should be allowed '"to reduce [its] work force into a number suited for the remaining work to be done upon
the completion or proximate accomplishment of [each particular] project." 129 As for respondents, since they were assigned to a
project or a phase thereof which begins and ends a determined or determinable times, their services were lawfully ten11inated
upon the completion of such project or phase thereof 130

Moreover, our examination of the records revealed other circumstances that convince us that respondents were and remained
project-based employees, albeit repeatedly rehired. Contrary to their claim, respondents' employment were neither continuous and
uninterrupted nor for a uniform period of one month; they were intermittent with varying durations as well as gaps ranging from a
few days to several weeks or months. These gaps coincide with the completion of a particular project and the start of a new specific
and distinct project for which they were individually rehired. And for each completed project, petitioners submitted the required
Establishment Employment Records to the DOLE which is a clear indicator of project employment. 131 The records also show that
respondents' employment had never been extended beyond the completion of each project or phase thereof fix which they had
been engaged.

The project employment contract is not subject to a condition.

The CA likewise erred in holding that paragraph 10 of the employment contract allowing the extension of respondents' employment
violates the second requisite of project employment that the completion or tem1ination of such project or undertaking be
determined at the time of engagement of the employee. It reads:

10 Ang knsunduang ito maaaring palawigin ng mas mababang panahon na maaaring kailanganin para sa matagumpay na pagtatapos
ng mga gawn o proyektong pinagkasunduan; 132

To our mind, paragraph 10 is in harmony with the agreement of the parties that respondents' employment is coterminous with the
particular project stated in their contact. It was placed therein to ensure the successful completion of the specific work fur which
respondents were hired. Thus, in case of delay or where said work is not finished within the estimated completion, respondents’
period of employment can be extended until it is completed. In which case, the duration and nature of their employment remains
the same as previously determined in the project employment contract; it is still coterminous with the particular project for which
they were fully apprised of at the time of their engagement.

As to the requirement that the completion or termination of the specific project or undertaking for which respondents were hired
should be determined at the time of their engagement, we rule and so hold that it is enough that Herma Shipyard gave the
approximate or target completion date in the project employment contract, Given the nature of its business and the scope of its
projects which take months or even years to finish~ we cam1ot expect Henna Shipyard to give a definite and exact completion date.
It can only approximate or estimate the completion date. What is important is that the respondents were apprised at the time of
their engagement that their employment is coterminous with the specific project and that should their employment be extended by
virtue of paragraph 10 the purpose of the extension is only to complete the same specific project, and not to keep them employed
even after the completion thereof. Put differently, paragraph l 0 does not allow the parties to extend the period of respondents'
employment after the co111pletion of the specific project for which they were hired. Their employment can only be extended if that
particular project, to which their employment depends, remains unfinished.

In sum, the CA erred in disr9garding the project employment contracts and in concluding that respondents have become regular
employees because they were performing tasks necessary and desirable to the business of Henna Shipyard and were repeatedly
rehired. The Labor, Arbiter and the NLRC, which have expertise in their specific and specialized jurisdiction, did not err, much less
commit grave abuse of discretion in holding that respondents were project-based employees. Their uniform conclusion is supported
by substantial evidence and should, therefore, be accorded not only respect, but even finality.

WHEREFOR, the instant Petition for Review on Certiorari is GRANTED. The assailed Decision dated May 30, 2013 of the Court of
Appeals in CA-GR. SP No. 118068 is REVERSED and SETASIDE, The May 24, 20 l 0 Decision of the Labor Arbiter dismissing
respondents' Complaint and affirmed by the National Labor Relations Commission in its Decision dated September 7, 2010
is REINSTATED and AFFIRMED.

SO ORDERED.
 SECOND DIVISION

ABESCO CONSTRUCTION AND G.R. No. 141168

DEVELOPMENT CORPORATION

and MR. OSCAR BANZON,

General Manager,

Petitioners, Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,

- v e r s u s - CORONA,

AZCUNA and

GARCIA, JJ.

ALBERTO RAMIREZ, BERNARDO

DIWA, MANUEL LOYOLA,

REYNALDO P. ACODESIN,

ALEXANDER BAUTISTA,

EDGAR TAJONERA and

GARY DISON,*

Respondents. Present:

April 10, 2006

x------------------------------------------x

RESOLUTION

CORONA, J.:

Petitioner company was engaged in a construction business where respondents were hired on different dates from 1976 to
1992 either as laborers, road roller operators, painters or drivers.

In 1997, respondents filed two separate complaints[1] for illegal dismissal against the company and its General Manager,
Oscar Banzon, before the Labor Arbiter (LA). Petitioners allegedly dismissed them without a valid reason and without due process of
law. The complaints also included claims for non-payment of the 13th month pay, five days service incentive leave pay, premium pay
for holidays and rest days, and moral and exemplary damages. The LA later on ordered the consolidation of the two complaints. [2]
Petitioners denied liability to respondents and countered that respondents were project employees since their services were
necessary only when the company had projects to be completed. Petitioners argued that, being project employees, respondents
employment was coterminous with the project to which they were assigned. They were not regular employees who enjoyed security
of tenure and entitlement to separation pay upon termination from work.

After trial, the LA declared respondents as regular employees because they belonged to a work pool from which the company
drew workers for assignment to different projects, at its discretion. He ruled that respondents were hired and re-hired over a period
of 18 years, hence, they were deemed to be regular employees. He likewise found that their employment was terminated without just
cause. In a decision dated January 7, 1998, he stated:

WHEREFORE, judgment is hereby rendered declaring respondents guilty of illegal dismissal and ordering
the latter to reinstate complainants to their former positions with backwages and other benefits from the time their
compensation was withheld from them up to the time their actual reinstatement which as of the date of this decision
amounted to:

NAME

1. Alberto Ramirez P49,764.00

2. Manuel B. Loyola 46,695.22

3. Hernando Diwa 49,764.00

4. Reynaldo Acodesin 46,695.22

5. Alexander Bautista 45,285.24

6. Edgar Tajonera 62,985.00

7. Gary Dison 53,911.00

TOTAL P 355,099.68

However, if reinstatement is no longer feasible, a one-month salary shall be awarded as a form of separation pay, in
addition to the aforementioned award.

Respondents are likewise ordered to pay complainants the following:

NAME UNPAID SALARY 13THMONTH 5 DAYS SEPARATION

SALARY DIFFERENTIAL PAY SERVICE PAY
INCENTIVE
LEAVE

1.Hernando Diwa P765.00 P1,274.00 P4,147.00

2.Alexander Bautista P23,088.00 11,141.00 P2,005.00 45,617.00

3.Alberto Ramirez 11,141.00 2,005.00 74,646.00

4.Manuel B. Loyola 11,141.00 2,020.00 41,170.00

5.Reynaldo Acodesin 11,141.00 2,020.00 20,735.00

 6.Edgardo Tajonera 19,500.00 3,750.00 130,000.00

7.Gary Dison 11,141.00 2,020.00 29,029.00

P765.00 P23,088.00 P76,479.00 P13,820.00 P345,344.00

xxx

All other claims are hereby dismissed for lack of merit.[3]

Petitioners appealed to the National Labor Relations Commission (NLRC) which affirmed the LAs decision. [4]

Subsequently, petitioners filed a petition for review in the Court of Appeals (CA) arguing that they were not liable for illegal dismissal
since respondents services were merely put on hold until the resumption of their business operations. They also averred that they had
paid respondents their full wages and benefits as provided by law, hence, the latter had no more right to further benefits.

The CA was not convinced and dismissed petitioners appeal. It held:

We note that the petitioners are taking a new tack in arguing, for the first time, that the [respondents] were
not dismissed but their employment was merely suspended. Previous to this, their defense was that the
[respondents] were project employees who were not entitled to security of tenure. The petitioners are barred from
raising a new defense at this stage of the case.

xxx xxx xxx

WHEREFORE, the petition for certiorari is hereby DISMISSED, for lack of merit.[5]

Petitioners filed a motion for reconsideration but it was dismissed by the CA.[6]

In this petition for review under Rule 45 of the Rules of Court, petitioners raise the following issues for resolution: (1) whether
respondents were project employees or regular employees and (2) whether respondents were illegally dismissed.

On the first issue, we rule that respondents were regular employees. However, we take exception to the reasons cited by the
LA (which both the NLRC and the CA affirmed) in considering respondents as regular employees and not as project employees.

Contrary to the disquisitions of the LA, employees (like respondents) who work under different project employment contracts
for several years do not automatically become regular employees; they can remain as project employees regardless of the number of
years they work.[7]Length of service is not a controlling factor in determining the nature of ones employment.[8]

Moreover, employees who are members of a work pool from which a company (like petitioner corporation) draws workers
for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in
some cases [9] that members of a work pool can either be project employees or regular employees.
 The principal test for determining whether employees are project employees or regular employees is whether they are
assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for
that project.[10] Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is
made clear to the employees at the time of hiring.[11]

In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the
nature of the latters work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were
project employees, we are constrained to declare them as regular employees.

Furthermore, petitioners cannot belatedly argue that respondents continue to be their employees (so as to escape liability
for illegal dismissal). Before the LA, petitioners staunchly postured that respondents were only project employees whose employment
tenure was coterminous with the projects they were assigned to. However, before the CA, they took a different stance by insisting
that respondents continued to be their employees. Petitioners inconsistent and conflicting positions on their true relation with
respondents make it all the more evident that the latter were indeed their regular employees.

On the issue of illegal dismissal, we hold that petitioners failed to adhere to the two-notice rule which requires that workers
to be dismissed must be furnished with: (1) a notice informing them of the particular acts for which they are being dismissed and (2)
a notice advising them of the decision to terminate the employment. [12] Respondents were never given such notices.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioners.

SO ORDERED.