SECOND DIVISION

[G.R. No. 169170. August 9, 2010.]

D.M. CONSUNJI, INC., petitioner, vs. ANTONIO GOBRES,

MAGELLAN DALISAY, GODOFREDO PARAGSA, EMILIO ALETA
and GENEROSO MELO, respondents.

DECISION

PERALTA, J : p

This is a petition for review on certiorari 1 of the Decision of the Court

of Appeals in CA-G.R. SP No. 70708, dated March 9, 2005, and its Resolution,
dated August 2, 2005, denying petitioner's motion for reconsideration.
The facts are as follows:
Respondents Antonio Gobres, Magellan Dalisay, Godofredo Paragsa,
Emilio Aleta and Generoso Melo worked as carpenters in the construction
projects of petitioner D.M. Consunji, Inc., a construction company, on several
occasions and/or at various times. Their termination from employment for
each project was reported to the Department of Labor and Employment
(DOLE), in accordance with Policy Instruction No. 20, which was later
superseded by Department Order No. 19, series of 1993. Respondents' last
assignment was at Quad 4-Project in Glorietta, Ayala, Makati, where they
started working on September 1, 1998. On October 14, 1998, respondents
saw their names included in the Notice of Termination posted on the bulletin
board at the project premises.
Respondents filed a Complaint with the Arbitration Branch of the
National Labor Relations Commission (NLRC) against petitioner D.M.
Consunji, Inc. and David M. Consunji for illegal dismissal, and non-payment of
13th month pay, five (5) days service incentive leave pay, damages and
attorney's fees. CSDTac

Petitioner D.M. Consunji, Inc. and David M. Consunji countered that

respondents, being project employees, are covered by Policy Instruction No.
20, as superseded by Department Order No. 19, series of 1993 with respect
to their separation or dismissal. Respondents were employed per project
undertaken by petitioner company and within varying estimated periods
indicated in their respective project employment contracts. Citing the
employment record of each respondent, petitioner and David M. Consunji
averred that respondents' services were terminated when their phases of
work for which their services were engaged were completed or when the
projects themselves were completed. Respondents' notices of termination
were filed with the DOLE, in compliance with Policy Instruction No. 20, 2
superseded by Department Order No. 19, series of 1993. 3 With respect to
respondent Generoso G. Melo, petitioner and David M. Consunji maintained
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 the same positions they had against the case of Melo's co-complainants. 4
Petitioner contended that since respondents were terminated by reason of
the completion of their respective phases of work in the construction project,
their termination was warranted and legal. 5
Moreover, petitioner claimed that respondents have been duly paid
their service incentive leave pay and 13th month pay through their
respective bank accounts, as evidenced by bank remittances. 6
Respondents replied that the Quad 4-Project at Glorietta, Ayala, Makati
City was estimated to take two years to finish, but they were dismissed
within the two-year period. They had no prior notice of their termination.
Hence, granting that they were project employees, they were still illegally
dismissed for non-observance of procedural due process. 7
On October 4, 1999, the Labor Arbiter rendered a Decision 8 dismissing
respondents' complaint. The Labor Arbiter found that respondents were
project employees, that they were dismissed from the last project they were
assigned to when their respective phases of work were completed, and that
petitioner D.M. Consunji, Inc. and David M. Consunji reported their
termination of services to the DOLE in accordance with the requirements of
law.
Respondents appealed the Labor Arbiter's Decision to the NLRC.
In a Resolution 9 dated July 31, 2001, the NLRC affirmed the decision of
the Labor Arbiter, and dismissed the appeal for lack of merit.
Respondents' motion for reconsideration was denied by the NLRC for
lack of merit in its Order 10 dated February 21, 2002.
Respondents filed a petition for certiorari with the Court of Appeals,
seeking the annulment of the NLRC Resolution dated July 31, 2001 and Order
dated February 21, 2002. Respondents prayed that their dismissal be
declared as illegal, and that they be ordered reinstated to their former
position with full backwages until actual reinstatement, and awarded moral,
exemplary and nominal damages.
On March 9, 2005, the Court of Appeals rendered a Decision, the
dispositive portion of which reads: AETcSa

WHEREFORE, the Decision and Resolution of the NLRC in finding

petitioners' dismissal as valid are AFFIRMED with MODIFICATION that
private respondents are ordered to pay each of the petitioners the sum
of P20,000.00 as nominal damages for non-compliance with the
statutory due process. Costs against petitioners. 11

The Court of Appeals sustained the findings of the NLRC that

respondents are project employees. It held:
The Labor Arbiter and [the] NLRC correctly applied Article 280 of
the Labor Code when it ruled that petitioners' employment, which is
fixed for [a] specific project and the completion of which has been
determined at the time that their services were engaged, makes them
project employees. As could be gleaned from the last portion of Article
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 280 of the Labor Code, the nature of employment of petitioners, which
is fixed for a specific project and the completion of which has been
determined when they were hired, is excepted therefrom.

This is the reason why under Policy Instruction No. 20 and

Department Order No. 19, series of 1993, employers of project
employees are required to report their termination to DOLE upon
completion of the project for which they were engaged. 12

The CA stated that although respondents were project employees, they

were entitled to know the reason for their dismissal and to be heard on
whatever claims they might have. It held that respondents' right to statutory
due process was violated for lack of advance notice of their termination,
even if they were validly terminated for having completed the phases of
work for which they were hired. The appellate court stated that had
respondents been given prior notice, they would not have reported for work
on October 14, 1998. It cited Agabon v. NLRC, 13 which held that where the
dismissal is for a just cause, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual, but the employer
should indemnify the employee for the violation of his statutory rights by
paying nominal damages. Hence, the Court of Appeals ordered petitioner
and David M. Consunji to pay respondents P20,000.00 each as nominal
damages for lack of advance notice of their termination.
Petitioner and David M. Consunji filed a partial motion for
reconsideration and prayed that the Decision of the Court of Appeals be
partially reconsidered by deleting the award of nominal damages to each
respondent. It pointed out that under Department Order No. 19, series of
1993, which is the construction industry's governing law, there is no
provision requiring administrative hearing/investigation before a project
employee may be terminated on account of completion of phase of work or
the project itself. Petitioner also argued that prior notice of termination is not
required in this case, and that Agabon is not applicable here, because the
termination in Agabon was for cause, while herein respondents were
terminated due to the completion of the phases of work for which their
services were engaged.
In a Resolution 14 dated August 2, 2005, the Court of Appeals denied
the partial motion for reconsideration. It held that the case of Agabon v.
NLRC is the one controlling and in point. The appellate court stated that in
Agabon, the Court ruled that even if the dismissal is legal, the employer
should still indemnify the employee for the violation of his statutory rights. It
added that no distinction was made in Agabon whether the employee is
engaged in a construction project or not. ECTSDa

Petitioner D.M. Consunji, Inc. filed this petition raising this question of
law:
WHETHER OR NOT THERE IS BASIS FOR THE COURT OF APPEALS IN
ORDERING HEREIN PETITIONER TO PAY RESPONDENTS EACH THE SUM
OF P20,000.00 AS NOMINAL DAMAGES FOR "ALLEGED" NON-
COMPLIANCE WITH THE STATUTORY DUE PROCESS. 15
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 Petitioner contends that the award of nominal damages in the amount
of P20,000.00 to each respondent is unwarranted under Section 2 (III), Rule
XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which
states, "If the termination is brought about by the completion of the contract
or phase thereof, no prior notice is required." 16
Petitioner also contends that Agabon v. NLRC is not applicable to this
case. The termination therein was for just cause due to abandonment of
work, while in this case, respondents were terminated due to the completion
of the phases of work.
In support of its argument, petitioner cited Cioco, Jr. v. C.E.
Construction Corporation, 17 which held:
. . . More importantly, Section 2 (III), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code provides that no
prior notice of termination is required if the termination is brought
about by completion of the contract or phase thereof for which the
worker has been engaged. This is because completion of the work or
project automatically terminates the employment, in which case, the
employer is, under the law, only obliged to render a report to the DOLE
on the termination of the employment. 18

The petition is meritorious.

Respondents were found to be project employees by the Labor Arbiter,
the NLRC and the Court of Appeals. Their unanimous finding that
respondents are project employees is binding on the Court. It must also be
pointed out that respondents have not appealed from such finding by the
Court of Appeals. It is only the petitioner that appealed from the decision of
the Court of Appeals.
The main issue is whether or not respondents, as project employees,
are entitled to nominal damages for lack of advance notice of their
dismissal.
A project employee is defined under Article 280 of the Labor Code as
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 or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season." 19
In this case, the Labor Arbiter, the NLRC and the Court of Appeals all
found that respondents, as project employees, were validly terminated due
to the completion of the phases of work for which their services were
engaged. However, the Court of Appeals held that respondents were entitled
to nominal damages, because petitioner failed to give them advance notice
of their termination. The appellate court cited the case of Agabon v. NLRC as
basis for the award of nominal damages. HDTSIE

The Court holds that Agabon v. NLRC is not applicable to this case,
because it involved the dismissal of regular employees for abandonment of
work, which is a just cause for dismissal under Article 282 of the Labor Code.
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 20 Although the dismissal was for a cause, the employer therein was
required to observe the standard of due process for termination of
employment based on just causes under Article 282 of the Labor Code,
which procedural due process requirements are enumerated in Section 2,
Rule 1, Book VI 21 of the Omnibus Rules Implementing the Labor Code. 22
Since the employer therein failed to comply with the twin requirements of
notice and hearing, the Court ordered the employer to pay the employees
involved nominal damages in the amount of P30,000.00 for failure to
observe procedural due process.
Unlike in Agabon, respondents, in this case, were not terminated for
just cause under Article 282 of the Labor Code. Dismissal based on just
causes contemplate acts or omissions attributable to the employee. 23
Instead, respondents were terminated due to the completion of the phases of
work for which their services were engaged.
As project employees, respondents' termination is governed by Section
1 (c) and Section 2 (III), Rule XXIII (Termination of Employment), Book V of
the Omnibus Rules Implementing the Labor Code.
Section 1 (c), Rule XXIII, Book V of the Omnibus Rules Implementing
the Labor Code states:
Section 1. Security of tenure. — (a) In cases of regular
employment, the employer shall not terminate the services of an
employee except for just or authorized causes as provided by law, and
subject to the requirements of due process.
xxx xxx xxx

(c) In cases of project employment or employment covered

by legitimate contracting or sub-contracting arrangements, no
employee shall be dismissed prior to the completion of the project or
phase thereof for which the employee was engaged, or prior to the
expiration of the contract between the principal and contractor, unless
the dismissal is for just or authorized cause subject to the requirements
of due process or prior notice, or is brought about by the completion of
the phase of the project or contract for which the employee was
engaged. 24

Records show that respondents were dismissed after the expiration of

their respective project employment contracts, and due to the completion of
the phases of work respondents were engaged for. Hence, the cited
provision's requirements of due process or prior notice when an employee is
dismissed for just or authorized cause (under Articles 282 and 283 of the
Labor Code) prior to the completion of the project or phase thereof for which
the employee was engaged do not apply to this case. AECDHS

Further, Section 2 (III), Rule XXIII, Book V of the Omnibus Rules

Implementing the Labor Code provides:
Section 2. Standard of due process: requirements of notice. —
In all cases of termination of employment, the following standards of
due process shall be substantially observed.
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 1. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee specifying
the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his
side;

(b) A hearing or conference during which the employee

concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him; and
(c) A written notice [of] termination served on the
employee indicating that upon due consideration of all the
circumstance, grounds have been established to justify his
termination.

In case of termination, the foregoing notices shall be served on

the employee's last known address.

II. For termination of employment as based on authorized

causes defined in Article 283 of the Code, the requirements of due
process shall be deemed complied with upon service of a written notice
to the employee and the appropriate Regional Office of the Department
at least thirty (30) days before the effectivity of the termination,
specifying the ground or grounds for termination.
III.If the termination is brought about by the completion of
the contract or phase thereof, no prior notice is required. If the
termination is brought about by the failure of an employee to meet the
standards of the employer in the case of probationary employment, it
shall be sufficient that a written notice is served the employee within a
reasonable time from the effective date of termination. 25

In this case, the Labor Arbiter, the NLRC and the Court of Appeals all
found that respondents were validly terminated due to the completion of the
phases of work for which respondents' services were engaged. The above
rule clearly states, "If the termination is brought about by the
completion of the contract or phase thereof, no prior notice is
required." Cioco, Jr. v. C.E. Construction Corporation 26 explained that this
is because completion of the work or project automatically terminates the
employment, in which case, the employer is, under the law, only obliged to
render a report to the DOLE on the termination of the employment. cDCaHA

Hence, prior or advance notice of termination is not part of procedural

due process if the termination is brought about by the completion of the
contract or phase thereof for which the employee was engaged. Petitioner,
therefore, did not violate any requirement of procedural due process by
failing to give respondents advance notice of their termination; thus, there is
no basis for the payment of nominal damages.
In sum, absent the requirement of prior notice of termination when the
termination is brought about by the completion of the contract or phase
thereof for which the worker was hired, respondents are not entitled to
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 nominal damages for lack of advance notice of their termination.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 70708, dated March 9, 2005, insofar as it upholds
the validity of the dismissal of respondents is AFFIRMED, but the award of
nominal damages to respondents is DELETED. The Resolution of the Court of
Appeals, dated August 2, 2005, is SET ASIDE.
No costs.
SO ORDERED.

Carpio, Nachura, Abad and Mendoza, JJ., concur.

Footnotes
1.Under Rule 45 of the Rules of Court.
2.Policy No. 20: Stabilizing Employer-Employee Relations in the
Construction Industry
In the interest of stabilizing employer-employee relations in the construction
industry and taking into consideration its unique characteristics, the
following policy instructions are hereby issued for the guidance of all
concerned:

Generally, there are two types of employees in the construction industry,

namely: a) Project employees, and 2) Non-Project employees.

Project employees are those employed in connection with a particular

construction project. . . .

Project employees are not entitled to termination pay if they are terminated
as a result of the completion of the project or any phase thereof in which
they are employed, regardless of the number of projects in which they have
been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the company is a
report to the nearest Public Employment Office for statistical purposes.
3.Department Order No. 19, series of 1993
xxx xxx xxx

2.2 Indicators of project employment. Either one or more of the following

circumstances, among others, may be considered as indicators that an
employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is
engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is
defined in an employment agreement and is made clear to the employee at
the time of hiring.
(c) The work/service performed by the employee is in connection with the
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 particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to
offer his services to any other employer.
(e) The termination of his employment in the particular
project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from
work, using the prescribed form on employees' terminations
dismissals suspensions.
(f) An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most construction
companies.
xxx xxx xxx
6.1. Requirements of labor and social legislations. (a) The construction
company and the general contractor and/or subcontractor referred to in Sec.
2.5 shall be responsible for the workers in its employ on matters of
compliance with the requirements of existing laws and regulations on hours
of work, wages, wage related benefits, health, safety and social welfare
benefits, including submission to the DOLE-Regional Office of Work
Accident/Illness Report, Monthly Report on Employees'
Terminations/Dismissals/Suspensions and other reports . . . . (Emphasis
supplied.)
4.Decision of the Labor Arbiter, rollo, p. 264.
5.Respondents' Position Paper, CA rollo, p. 27; Id.
6.Respondents' Position Paper, CA rollo, p. 40.

7.Reply & Rejoinder to Respondents' Position Paper, CA rollo, p. 46.

8.Rollo , pp. 263-265.
9.Id. at 283-285.
10.Id. at 371-372.
11.Id. at 37.

12.Id. at 33.
13.485 Phil. 248 (2004).
14.Rollo , pp. 47-49.
15.Id. at 18.

16.Emphasis supplied.
17.481 Phil. 270 (2004). (Emphasis and underscoring supplied.)
18.Id. at 277-278.
19.See Saberola v. Suarez, G.R. No. 151227, July 14, 2008, 558 SCRA 135, 142.

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 20.Art. 282. Termination by employer . — An employer may terminate an
employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
d. Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representative; and

e. Other causes analogous to the foregoing.

21.Section 2. Security of Tenure. — . . . (d) In all cases of termination of
employment, the following standards of due process shall be substantially
observed: For termination of employment based on just causes as defined in
Article 282 of the Code:
(i) A written notice served on the employee specifying the ground or grounds
for termination, and giving said employee reasonable opportunity within
which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the
charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that

upon due consideration of all the circumstance, grounds have been
established to justify his termination.
22.Agabon v. National Labor Relations Commission , supra note 13, at 284.
23.Id.

24.Emphasis and underscoring supplied.

25.Emphasis and underscoring supplied.
26.Supra note 17.

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