G.R. No.

109902 August 2, 1994

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely:

ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H.
FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO,
EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S.
BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I.
FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL
CORPORATION (NSC), respondents.

Leonard U. Sawal for petitioners.

Saturnino Mejorada for private respondent.

FELICIANO, J.:

In this Petition for Certiorari, petitioners assail the Resolution of the National Labor
Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be
project employees of private respondent National Steel Corporation ("NSC"), and the
NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for
reconsideration.

Petitioners plead that they had been employed by respondent NSC in connection with
its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they
were separated from NSC's service:

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-91

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2

On 5 July 1990, petitioners filed separate complaints for unfair labor practice,
regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City.

The complaints were consolidated and after hearing, the Labor Arbiter in a Decision
dated 7 June 1991, declared petitioners "regular project employees who shall continue
their employment as such for as long as such [project] activity exists," but entitled to the
salary of a regular employee pursuant to the provisions in the collective bargaining
agreement. It also ordered payment of salary differentials. 3

Both parties appealed to the NLRC from that decision. Petitioners argued that they were
regular, not project, employees. Private respondent, on the other hand, claimed that
petitioners are project employees as they were employed to undertake a specific project
— NSC's Five Year Expansion Program (FAYEP I & II).

The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed
the Labor Arbiter's holding that petitioners were project employees since they were
hired to perform work in a specific undertaking — the Five Years Expansion Program,
the completion of which had been determined at the time of their engagement and
which operation was not directly related to the business of steel manufacturing. The
NLRC, however, set aside the award to petitioners of the same benefits enjoyed
by regular employees for lack of legal and factual basis.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in excess of
jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January
1993 and 15 February 1993.

The law on the matter is Article 280 of the Labor Code which reads in full:

Art. 280. Regular and Casual Employment — The provisions of the written

agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, and 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 services to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the

preceding paragraph: Provided, That, any employee who has rendered at
 least one year service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such actually exists.
(Emphasis supplied)

Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are
"necessary, desirable and work-related to private respondent's main business, steel-
making"; and (ii) they have rendered service for six (6) or more years to private
respondent NSC. 4

The basic issue is thus whether or not petitioners are properly characterized as "project
employees" rather than "regular employees" of NSC. This issue relates, of course, to an
important consequence: the services of project employees are co-terminous with the
project and may be terminated upon the end or completion of the project for which they
were hired. 5 Regular employees, in contract, are legally entitled to remain in the service
of their employer until that service is terminated by one or another of the recognized
modes of termination of service under the Labor Code. 6

It is evidently important to become clear about the meaning and scope of the term
"project" in the present context. The "project" for the carrying out of which "project
employees" are hired would ordinarily have some relationship to the usual business of
the employer. Exceptionally, the "project" undertaking might not have an ordinary or
normal relationship to the usual business of the employer. In this latter case, the
determination of the scope and parameeters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which has
absolutely no relationship to the usual business of the company; thus, for instance, it
would be an unusual steel-making company which would undertake the breeding and
production of fish or the cultivation of vegetables. From the viewpoint, however, of the
legal characterization problem here presented to the Court, there should be no difficulty
in designating the employees who are retained or hired for the purpose of undertaking
fish culture or the production of vegetables as "project employees," as distinguished
from ordinary or "regular employees," so long as the duration and scope of the project
were determined or specified at the time of engagement of the "project
employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code,
quoted earlier, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular
employees," is whether or not the "project 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.

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 undertakings 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 a domestic air terminal in Iloilo City. Employees who are hired for the carrying
out of one of 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. The case at bar presents what appears to our mind as a typical
example of this kind of "project."

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate
end in view of expanding the volume and increasing the kinds of products that it may
offer for sale to the public. The Five Year Expansion Program had a number of
component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project";
(b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and
installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead
of contracting out to an outside or independent contractor the tasks of constructing the
buildings with related civil and electrical works that would house the new machinery and
equipment, the installation of the newly acquired mill or plant machinery and equipment
and the commissioning of such machinery and equipment, NSC opted to execute and
carry out its Five Yeear Expansion Projects "in house," as it were, by administration.
The carrying out of the Five Year Expansion Program (or more precisely, each of its
component projects) constitutes a distinct undertaking identifiable from the ordinary
business and activity of NSC. Each component project, of course, begins and ends at
specified times, which had already been determined by the time petitioners were
engaged. We also note that NSC did the work here involved — the construction of
buildings and civil and electrical works, installation of machinery and equipment and the
commissioning of such machinery — only for itself. Private respondent NSC was not in
the business of constructing buildings and installing plant machinery for the general
business community, i.e., for unrelated, third party, corporations. NSC did not hold itself
out to the public as a construction company or as an engineering corporation.

Which ever type of project employment is found in a particular case, a common basic
requisite is that the designation of named employees as "project employees" and their
assignment to a specific project, are effected and implemented in good faith, and not
merely as a means of evading otherwise applicable requirements of labor laws.

Thus, the particular component projects embraced in the Five Year Expansion Program,
to which petitioners were assigned, were distinguishable from the regular or ordinary
business of NSC which, of course, is the production or making and marketing of steel
products. During the time petitioners rendered services to NSC, their work was limited
to one or another of the specific component projects which made up the FAYEP I and II.
There is nothing in the record to show that petitioners were hired for, or in fact assigned
to, other purposes, e.g., for operating or maintaining the old, or previously installed and
commissioned, steel-making machinery and equipment, or for selling the finished steel
products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the
petitioners were indeed "project employees:"

It is well established by the facts and evidence on record that herein 13

complainants were hired and engaged for specific activities or undertaking
the period of which has been determined at time of hiring or engagement.
It is of public knowledge and which this Commission can safely take
judicial notice that the expansion program (FAYEP) of respondent NSC
consist of various phases [of] project components which are being
executed or implemented independently or simultaneously from each
other . . .

In other words, the employment of each "project worker" is dependent and

co-terminous with the completion or termination of the specific activity or
undertaking [for which] he was hired which has been pre-determined at
the time of engagement. Since, there is no showing that they (13
complainants) were engaged to perform work-related activities to the
business of respondent which is steel-making, there is no logical and legal
sense of applying to them the proviso under the second paragraph of
Article 280 of the Labor Code, as amended.

xxx xxx xxx

The present case therefore strictly falls under the definition of "project
employees" on paragraph one of Article 280 of the Labor Code, as
amended. Moreover, it has been held that the length of service of a project
employee is not the controlling test of employment tenure but whether or
not "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". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA
674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6) years should qualify
them as regular employees. We believe this claim is without legal basis. The simple fact
that the employment of petitioners as project employees had gone beyond one (1) year,
does not detract from, or legally dissolve, their status as project employees. 10 The
second paragraph of Article 280 of the Labor Code, quoted above, providing that an
employee who has served for at least one (1) year, shall be considered a regular
employee, relates to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations Commission,  11 this Court ruled
that the proviso in the second paragraph of Article 280 relates only to casual
employees and is not applicable to those who fall within the definition of said Article's
first paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is
to be construed with reference to the immediately preceding part of the provision to
which it is attached, and not to other sections thereof, unless the clear legislative intent
is to restrict or qualify not only the phrase immediately preceding the proviso but also
earlier provisions of the statute or even the statute itself as a whole. No such intent is
observable in Article 280 of the Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby

DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January 1993 and
15 February 1993 are hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero, Melo,
Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Bellosillo, J., is on leave.