G.R. No. 100353 . October 22, 1999.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION (PNCC), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSIONS (NLRC), HONORABLE LABOR ARBITER LITA V. AGLIBUT IN HER CAPACITY AS NLRC LABOR ARBITER and ERNESTO N. SUAREZ, respondents.

FACTS

Private respondent Ernesto M. Suarez was hired by petitioner PNCC, a government-owned and controlled corporation, on April 23, 1967, as a “Heavy Equipment Operator” under a temporary employment contract. This contract stipulated benefits such as sick leave, vacation leave, and separation pay after 180 days of continuous service. On April 11, 1969, he received a regular appointment as a “Crane Operator.” He worked for PNCC on various projects from 1967 to 1989, including an international assignment in Malaysia from 1978 to 1985, after which he was advised to take a vacation and await recall. He was re-hired on February 13, 1987. On August 16, 1989, he received a notice of termination effective in 30 days, citing retrenchment and state privatization policy. He was granted separation pay covering only the period 1987-1989 under a special separation program for project employees. Due to financial constraints, he executed a quitclaim and received P18,815.35. Subsequently, he filed a complaint for illegal dismissal on December 28, 1989, seeking separation pay for his entire service from April 1967 to September 1989. The Labor Arbiter ruled in his favor, ordering PNCC to pay additional separation pay. The NLRC affirmed this decision. PNCC filed the present petition, arguing that Suarez was a project employee not entitled to full separation pay, that his cause of action had prescribed, and that the quitclaim barred his claim.

ISSUE

1. Whether private respondent Ernesto Suarez was a project employee or a regular employee.
2. Whether his cause of action for recovery of additional separation pay had prescribed.
3. Whether he is estopped from claiming separation benefits due to his execution of a quitclaim.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the NLRC Resolution.
1. On the Nature of Employment: The Court ruled that Suarez was a regular employee, not a project employee, for the period from 1967 to 1985. The principal test for distinguishing project employees is whether they are assigned to a specific project or undertaking with a duration specified at the time of engagement. Suarez’s temporary employment contract did not specify a project duration (the space for it was left blank) and provided for separation pay and benefits typical of regular employment. His regular appointment in 1969 also contained no indication of project-based hiring. While a Personnel Action form from 1988 indicated a conversion to project employment for his last two years of service (1987-1989), his status from 1967 to 1985 was that of a regular employee. Under Article 280 of the Labor Code and Article 1702 of the Civil Code (which mandates construction in favor of labor), he was entitled to separation pay for his regular service, excluding a gap of one year and nine months of vacation leave from 1985 to 1987.
2. On Prescription: The Court held the complaint was filed within the three-year prescriptive period under Article 291 of the Labor Code. Suarez was only formally notified of his termination on August 16, 1989. His complaint filed in December 1989 was well within the three-year period from the accrual of his cause of action.
3. On the Quitclaim: The Court ruled the quitclaim did not estop Suarez from claiming full benefits. Quitclaims by laborers are often frowned upon as contrary to public policy, especially where the employee, due to financial necessity, signs out of adherence, not choice. The State’s policy is to protect workers’ welfare (Section 18, Article II, 1987 Constitution ). The records showed Suarez sought reconsideration twice after signing the quitclaim and filed the case shortly thereafter, demonstrating he did not intend to abandon his claim. Acceptance of benefits under such circumstances does not constitute estoppel.
The NLRC decision was affirmed in toto.