The Case of Carpio

Among the six kinds of employment (including probationary), it is probably in project employment where divergence in views, and even in decisions of the Supreme Court, is more than apparent. In an effort to summarize and clarify the various decisions on project employment, the Supreme Court, in Ruben Carpio vs. Modair Manila Co. Ltd., Inc. (G.R. No. 239622, June 21, 2021), “(synthesized) the jurisprudence and, to obviate further confusion regarding the nature of employment for workers in the construction industry, the Court (articulated) the following principles for the guidance of workers, employers, labor tribunals, the bench, bar, and public:” (Note: for brevity, citations were omitted; note further that while Carpio involves the construction industry, the doctrine therein may also be applied to other industries).

First, a worker is presumed a regular employee, unless the employer establishes that (1.) the employee was hired under a contract specifying that the employment will last only for a specific undertaking, the termination of which is determined at the time of engagement; (2.) there was indeed a project undertaken; and, (3.) the parties bargained on equal terms, with no vices of consent.
Second, if considered a regular employee at the outset, security of tenure already attached, and the subsequent execution of project employment contracts cannot undermine such security, but will simply be considered a continuation in the regular engagement of such employee.

Third, even if initially engaged as a project employee, such nature of employment may ripen into regular status if (1.) there is continuous rehiring of project employees even after cessation of a project; and, (2.) the tasks performed by the alleged “project employee” are vital, necessary, and indispensable to the usual business or trade of the employer. Conversely, project-based employment will not ripen into regularity if the worker was truly engaged as a project-based employee, and between each successive project, the employer made no manifestations of any intent to treat the worker as a continuing resource for the main business.

Fourth, regularized construction workers (in a work pool) are subject to the “no work, no pay” principle, such that the employer is not obliged to pay them a salary when “on leave.” In case of an oversupply of regularized workers, then the employer can exercise management prerogative to decide whom to engage for the limited projects and whom to consider as still “on leave.” The employer must use fair and reasonable standards in deciding, e.g., experience, skills-match, and availability.
Fifth and finally, the submission of termination reports to the Department of Labor and Employment may be considered only as an indicator of project employment; non-submission does not automatically grant regular status.

However, even with the synthesis made in Carpio, there may still be questions as to when a repeated hiring and re-hiring may or may not ripen into regular employment. The Court said that the employees should not be treated as “ongoing resources to be deployed for each and every project it might perform.” But this begs the question of whether the hiring and rehiring of employees for successive projects (even if not for “each and every project”) for several years is a badge of regular employment.
With all due respect, the Court may have failed to consider one strand of jurisprudence involving a situation where there is an identifiable project, with a determined duration, and several employees are hired to work on the project or on the several phases and/or components thereof. Absent any bad faith on the part of the employer, it is my opinion that the project employees remain as such even if they are continuously hired and re-hired within the project period to work on different phases or components of the same project.

Finally, with respect to the fourth principle, the “regularized project employees” are not exactly the same as the regular employees referred to in Article 295 of the Labor Code. The idea of a work pool of “regularized project employees,” as held in one case, is not to impose on the employer the mandatory duty to re-hire the employee after the completion of the project for which he was engaged. Rather, the employees are part of a pool from which the employer should tap, for engagement in projects that it has or may have, depending on the supply of manpower and the qualifications and skills of the employees. On the other hand, the regular employees of a company perform their tasks for the entire year regardless of the presence or absence of projects. Furthermore, the concept of leave enunciated in Carpio refers to the period that the employee is not engaged for a particular project, which is not the same as the concept of leave for the regular employees under Article 295.
This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.

Neptali B. Salvanera is a partner of the Labor and Employment Department (LED) of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW, located at Bonifacio Global City, Taguig City, Metro Manila, Philippines.
(632) 8830-8000
[email protected]

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