G.R. No. 141168 . April 10, 2006.
ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and MR. OSCAR BANZON, General Manager, Petitioners, vs. ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA and GARY DISON, Respondents.

FACTS

Respondents were hired by petitioner construction company between 1976 and 1992 for various positions. In 1997, they filed complaints for illegal dismissal, alleging termination without valid cause or due process, and claiming unpaid monetary benefits. Petitioners countered that respondents were project employees, their employment ending with each specific construction project, and thus were not regular employees entitled to security of tenure or separation pay.
The Labor Arbiter ruled for respondents, declaring them regular employees. The decision was based on their belonging to a “work pool” hired and re-hired over 18 years, making them regular under the law. The Arbiter found illegal dismissal and awarded reinstatement with backwages and other monetary claims. The NLRC affirmed. Before the Court of Appeals, petitioners shifted their defense, arguing respondents were not dismissed but merely suspended pending new projects. The CA dismissed the petition, barring this new defense raised only on appeal.

ISSUE

The primary issues were: (1) whether respondents were project or regular employees; and (2) whether they were illegally dismissed.

RULING

The Supreme Court denied the petition, affirming that respondents were regular employees illegally dismissed. On the first issue, the Court clarified that length of service or membership in a work pool does not automatically confer regular status. An employee remains a project employee if hired for a specific undertaking with a defined duration made known at the time of engagement. The principal test is whether the employee was assigned to carry out a specific project, the duration and scope of which were specified at the time of hiring.
Here, petitioners failed this test. They did not present any employment agreement specifying the duration and scope of a particular project for which respondents were hired. They also failed to inform respondents of the project-based nature of their work at the time of engagement. This failure to substantiate their claim of project employment led the Court to declare respondents as regular employees. The Court also noted petitioners’ inconsistent defenses, which weakened their position.
On the second issue, the Court held the dismissal illegal due to petitioners’ failure to comply with the procedural due process requirement of the “two-notice rule.” Respondents were not furnished with the required notices: one specifying the grounds for dismissal and another informing them of the decision to terminate. This procedural flaw, coupled with the absence of a just or authorized cause for termination, solidified the finding of illegal dismissal. The awards granted by the Labor Arbiter were thus sustained.