CASE DIGEST: BITOY JAVIER (DANILO P. JAVIER), Petitioner, v.

FLY ACE CORPORATION and FLORDELYN CASTILLO,

Respondents. Javier v. Fly Ace (G.R. No. 192558; February 15, 2012).

FACTS: Javier an employee of Fly Ace performing various work for the latter filed a
complaint before the NLRC for underpayment of salaries and other labor standard
benefits.

He alleged that he reported for work from Monday to Saturday from 7:00 oclock in the
morning to 5:00 o'clock in the afternoon; that during his employment, he was not issued
an identification card and pay slips by the company; that he reported for work but he
was no longer allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior; that after several minutes of begging
to the guard to allow him to enter, he saw Ong whom he approached and asked why he
was being barred from entering the premises; that Ong replied by saying, Tanungin mo
anak mo;that he discovered that Ong had been courting his daughter Annalyn after the
two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he refused to accede; that thereafter,
Javier was terminated from his employment without notice; and that he was neither
given the opportunity to refute the cause/s of his dismissal from work.

Fly Ace denied the existence of employer-employee relationship between them and
Javier as the latter was only called roughly 5 to 6 times only in a month whenever the
vehicle of its contracted hauler, Milmar Hauling Services, was not available. Labor
Arbiter dismissed the complaint ruling that respondent Fly Ace is not engaged in
trucking business but in the importation and sales of groceries. Since there is a regular
hauler to deliver its products, we give credence to Respondents claim that complainant
was contracted on pakiao basis.

On appeal, NLRC reversed the decisin of the LA. It was of the view that a pakyaw-basis
arrangement did not preclude the existence of employer-employee relationship.
Payment by result is a method of compensation and does not define the essence of the
relation. It is a mere method of computing compensation, not a basis for determining
the existence or absence of an employer-employee relationship. The NLRC further
averred that it did not follow that a worker was a job contractor and not an employee,
just because the work he was doing was not directly related to the employers trade or
business or the work may be considered as extra helper as in this case; and that the
relationship of an employer and an employee was determined by law and the same
would prevail whatever the parties may call it. Finding Javier to be a regular employee,
the NLRC ruled that he was entitled to a security of tenure. For failing to present proof
of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of
Javier who was likewise entitled to backwages and separation pay in lieu of
reinstatement. However, on appeal, CA reversed the ruling of NLRC.
The CA ruled that Javier's failure to present salary vouchers, payslips, or other pieces of
evidence to bolster his contention, pointed to the inescapable conclusion that he was not
an employee of Fly Ace. Further, it found that Javiers work was not necessary and
desirable to the business or trade of the company, as it was only when there were
scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace
would contract the services of Javier as an extra helper. Lastly, the CA declared that the
facts alleged by Javier did not pass the control test.

He contracted work outside the company premises; he was not required to observe
definite hours of work; he was not required to report daily; and he was free to accept
other work elsewhere as there was no exclusivity of his contracted service to the
company, the same being co-terminous with the trip only. Since no substantial evidence
was presented to establish an employer-employee relationship, the case for illegal
dismissal could not prosper. Hence, this appeal.

ISSUE: Does an employer-employee relationship exist between Javier and

Fly Ace, thereby holding the latter guilty of illegal dismissal?

HELD: The LA and the CA found Javier's claim of employment with Fly Ace as wanting
and deficient. The Court is constrained to agree. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with little regard to
technicalities or formalities but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum of proof required,
however, must still be satisfied. Hence, when confronted with conflicting versions
on factual matters, it is for them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject only to the requirement that
their decision must be supported by substantial evidence.Accordingly, the petitioner
needs to show by substantial evidence that he was indeed an employee of the company
against which he claims illegal dismissal.

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. Whoever claims
entitlement to the benefits provided by law should establish his or her right thereto.
Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief.

By way of evidence on this point, all that Javier presented were his self-serving
statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier
failed to pass the substantiality requirement to support his claim.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he
was made to work in the company premises during weekdays arranging and cleaning
grocery items for delivery to clients, no other proof was submitted to fortify his claim.
The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening
Javiers cause.

The Court is of the considerable view that on Javier lies the burden to pass the well-
settled tests to determine the existence of an employer-employee relationship.
G.R. No. 155207 August 13, 2008

WILHELMINA S. OROZCO, petitioner,

vs.
THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER,
and LETICIA JIMENEZ MAGSANOC, respondents.

FACTS: In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle
section. She religiously submitted her articles every week, except for a six-month stint in New York City
when she, nonetheless, sent several articles through mail. She received compensation of P250.00 – later
increased to P300.00 – for every column published.5

On November 7, 1992, petitioner’s column appeared in the PDI for the last time. Petitioner claims that her
then editor, Ms. Lita T. Logarta,6 told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief,
wanted to stop publishing her column for no reason at all and advised petitioner to talk to Magsanoc
herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that it was PDI
Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone
conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section
already had many columnists.7

On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to
discuss how to improve said section. They agreed to cut down the number of columnists by keeping only
those whose columns were well-written, with regular feedback and following. In their judgment,
petitioner’s column failed to improve, continued to be superficially and poorly written, and failed to meet
the high standards of the newspaper. Hence, they decided to terminate petitioner’s column. 8

Aggrieved by the newspaper’s action, petitioner filed a complaint for illegal dismissal, backwages, moral
and exemplary damages, and other money claims before the NLRC.

ISSUE: The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be
in the affirmative, whether she was illegally dismissed.

HELD: We rule for the respondents.

The existence of an employer-employee relationship is essentially a question of fact.20 Factual findings of

quasi-judicial agencies like the NLRC are generally accorded respect and finality if supported by
substantial evidence.21

Considering, however, that the CA’s findings are in direct conflict with those of the Labor Arbiter and
NLRC, this Court must now make its own examination and evaluation of the facts of this case.

It is true that petitioner herself admitted that she "was not, and [had] never been considered respondent’s
employee because the terms of works were arbitrarily decided upon by the respondent."22 However, the
employment status of a person is defined and prescribed by law and not by what the parties say it should
be.23

This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-
employee relationship between parties.24 The four elements of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee’s conduct.25

Of these four elements, it is the power of control which is the most crucial26 and most determinative
factor,27 so important, in fact, that the other elements may even be disregarded. 28
In other words, the test is whether the employer controls or has reserved the right to control the
employee, not only as to the work done, but also as to the means and methods by which the same is
accomplished.30

Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC.

Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the
former. Rules which serve as general guidelines towards the achievement of the mutually desired result
are not indicative of the power of control.

Petitioner believes that respondents’ acts are meant to control how she executes her work. We do not
agree. A careful examination reveals that the factors enumerated by the petitioner are inherent conditions
in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated
by the very nature of the newspaper business itself.

Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her
articles each week. Aside from the constraints presented by the space allocation of her column, there
were no restraints on her creativity; petitioner was free to write her column in the manner and style she
was accustomed to and to use whatever research method she deemed suitable for her purpose. The
apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not
translate to control, but was simply a logical consequence of the fact that her column appeared in that
section and therefore had to cater to the preference of the readers of that section.

The perceived constraint on petitioner’s column was dictated by her own choice of her column’s
perspective. The column title "Feminist Reflections" was of her own choosing, as she herself admitted,
since she had been known as a feminist writer.35 Thus, respondent PDI, as well as her readers, could
reasonably expect her columns to speak from such perspective.

Contrary to petitioner’s protestations, it does not appear that there was any actual restraint or limitation on
the subject matter – within the Lifestyle section – that she could write about. Respondent PDI did not
dictate how she wrote or what she wrote in her column. Neither did PDI’s guidelines dictate the kind of
research, time, and effort she put into each column. In fact, petitioner herself said that she received "no
comments on her articles…except for her to shorten them to fit into the box allotted to her column."
Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts,
i.e., the column itself, by way of either shortening or outright rejection of the column.

The newspaper’s power to approve or reject publication of any specific article she wrote for her column
cannot be the control contemplated in the "control test," as it is but logical that one who commissions
another to do a piece of work should have the right to accept or reject the product. The important factor to
consider in the "control test" is still the element of control over how the work itself is done, not just the end
result thereof.

In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note
the common practice in the newspaper business of assigning its regular reporters to cover specific
subjects, geographical locations, government agencies, or areas of concern, more commonly referred to
as "beats." A reporter must produce stories within his or her particular beat and cannot switch to another
beat without permission from the editor. In most newspapers also, a reporter must inform the editor about
the story that he or she is working on for the day. The story or article must also be submitted to the editor
at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or her to
cover another beat, if the need arises.

This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not
precluded from submitting her column ahead of time or from submitting columns to be published at a later
time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but
only imposed the general guideline that the article should conform to the standards of the newspaper and
the general tone of the particular section.

Where a person who works for another performs his job more or less at his own pleasure, in the manner
he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result
of his efforts and not the amount thereof, no employer-employee relationship exists.36

Aside from the control test, this Court has also used the economic reality test. The economic realities
prevailing within the activity or between the parties are examined, taking into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. 37 This is especially
appropriate when, as in this case, there is no written agreement or contract on which to base the
relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment
relationships for purposes of applying the Labor Code ought to be the economic dependence of the
worker on his employer.38

Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
working in various women’s organizations.39 Likewise, she herself admits that she also contributes
articles to other publications.40 Thus, it cannot be said that petitioner was dependent on respondent PDI
for her continued employment in respondent’s line of business.41

The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent
contractor, engaged to do independent work.

In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service on one’s own account and
under one’s own responsibility according to one’s own manner and method, free from the control and
direction of the principal in all matters connected with the performance of the work except as to the results
thereof.45

On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening. In that case, the Court
found, using the four-fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but an
independent contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity
status not possessed by ordinary employees," a circumstance that, the Court said, was indicative, though
not conclusive, of an independent contractual relationship. Independent contractors often present
themselves to possess unique skills, expertise or talent to distinguish them from ordinary
employees.47 The Court also found that, as to payment of wages, Sonza’s talent fees were the result of
negotiations between him and ABS-CBN.48 As to the power of dismissal, the Court found that the terms of
Sonza’s engagement were dictated by the contract he entered into with ABS-CBN, and the same contract
provided that either party may terminate the contract in case of breach by the other of the terms
thereof.49 However, the Court held that the foregoing are not determinative of an employer-employee
relationship. Instead, it is still the power of control that is most important.

The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill,
experience, and her unique viewpoint as a feminist advocate. How she utilized all these in writing her
column was not subject to dictation by respondent. As in Sonza, respondent PDI was not involved in the
actual performance that produced the finished product. It only reserved the right to shorten petitioner’s
articles based on the newspaper’s capacity to accommodate the same. This fact, we note, was not
unique to petitioner’s column. It is a reality in the newspaper business that space constraints often dictate
the length of articles and columns, even those that regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed to
perform her work. Petitioner only needed her talent and skill to come up with a column every week. As
such, she had all the tools she needed to perform her work.
PURE FOODS CORPORATION vs NLRC Case Digest
[G.R. No. 122653 December 12, 1997]
PURE FOODS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL., * respondents.

FACTS: The private respondents were hired by petitioner Pure Foods to work for a fixed period of five
months at its tuna cannery plant in General Santos City. After the expiration of their respective contracts of
employment, their services were terminated. They forthwith executed a "Release and Quitclaim" stating
that they had no claim whatsoever against the petitioner. Private respondents then filed before the NLRC-
Sub-RAB a complaint for illegal dismissal against the petitioner.

The Labor Arbiter dismissed the complaint on the ground that the private respondents were mere
contractual workers, and not regular employees; hence, they could not avail of the law on security of tenure.
The termination of their services by reason of the expiration of their contracts of employment was, therefore,
justified.

The private respondents appealed the decision to the NLRC which affirmed the LA’s decision. However,
on private respondents' motion for reconsideration, the NLRC rendered another decision holding that the
private respondent and their co-complainants were regular employees. It declared that the contract of
employment for five months was a "clandestine scheme employed by the petitioner to stifle private
respondents' right to security of tenure" and should therefore be struck down and disregarded for being
contrary to law, public policy, and morals. Hence, their dismissal on account of the expiration of their
respective contracts was illegal. Its motion for reconsideration having been denied, the petitioner came to
this Court contending that respondent NLRC committed grave abuse of discretion amounting to lack of
jurisdiction in reversing the decision of the Labor Arbiter.

ISSUE: Whether or not private respondents are regular employees of petitioner company or mere
contractual employees.

HELD: The SC held that the petition devoid of merit. Under Art. 280, there are two kinds of regular
employees are (1) those who are engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer; and (2) those casual employees who have rendered at least one
year of service, whether continuous or broken, with respect to the activity in which they are employed.

In the instant case, the private respondents' activities consisted in the receiving, skinning, loining, packing,
and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they were performing
activities which were necessary and desirable in petitioner's business or trade. Contrary to petitioner's
submission, the private respondents could not be regarded as having been hired for a specific project or
undertaking. The term "specific project or undertaking" under Article 280 of the Labor Code contemplates
an activity which is not commonly or habitually performed or such type of work which is not done on a daily
basis but only for a specific duration of time or until completion; the services employed are then necessary
and desirable in the employer's usual business only for the period of time it takes to complete the project.
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that
performed by those whose contracts had expired negates petitioner's contention that those workers were
hired for a specific project or undertaking only.

Although, this Court has upheld the legality of fixed-term employment, none of the criteria had been met in
the present case. It could not be supposed that private respondents and all other so-called "casual" workers
of the petitioner KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract. Cannery
workers are never on equal terms with their employers. Almost always, they agree to any terms of an
employment contract just to get employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the freedom to starve if they
refuse to work as casual or contractual workers. Indeed, to the unemployed, security of tenure has no value.
It could not then be said that petitioner and private respondents "dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former over the latter.
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its workforce
consisted of its so-called "casual" employees; (2) that as of July 1991, "casual" workers numbered 1,835;
and regular employee, 263; (3) that the company hired "casual" every month for the duration of five months,
after which their services were terminated and they were replaced by other "casual" employees on the
same five-month duration; and (4) that these "casual" employees were actually doing work that were
necessary and desirable in petitioner's usual business. This scheme of the petitioner was apparently
designed to prevent the private respondents and the other "casual" employees from attaining the status of
a regular employee. It was a clear circumvention of the employees' right to security of tenure and to other
benefits like minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay. Indeed,
the petitioner succeeded in evading the application of labor laws. Also, it saved itself from the trouble or
burden of establishing a just cause for terminating employees by the simple expedient of refusing to renew
the employment contracts.

The five-month period specified in private respondents' employment contracts having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck down
or disregarded as contrary to public policy or morals. To uphold the contractual arrangement between the
petitioner and the private respondents would, in effect, permit the former to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees'
security of tenure in their jobs.

Petition is dismissed.
G.R. No. 116781 September 5, 1997

TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and JAMES

DEVELOPERS (PHIL.), INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA, SR., ROBERTO
LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR
BABON, PATERNO BISNAR, CIRPRIANO BERNALES, ANGEL MABUHAY, SR., LEO
SURIGAO, and ROQUE MORILLO, respondents.

FACTS: From October to December 1990 private respondents individually filed complaints for illegal
dismissal against petitioners with the National Labor Relations Commission Regional Arbitration
Branch No. VIII (NLRC — RAB VIII), Tacloban City. Alleging that they were hired for various periods
as construction workers in different capacities they described their contractual terms as follows: (a)
Roberto Labendia, general construction foreman, from 1971 to 17 October 1990 at P3,700/month;
(b) Narciso Adan, tireman, from October 1981 to November 1990 at P75.00/day; (c) Florencio
Gomez, welder, from July 1983 to July 1990 at P260.00/day; (d) Ernesto Bagatsolon
leadman/checker, from June 1982 to October 1990 at P2,800/month; (e) Salvador Babon,
clerk/timekeeper/paymaster, from June 1982 to October 1990 at P3,200/month; (f) Paterno Bisnar,
road grader operator, from January 1979 to October 1990 at 105/day; (g) Cipriano Bernales,
instrument man, from February 1980 to November 1990 at P3,200/month; (h) Angel Mabulay, Sr.,
dump truck driver, from August 1974 to October 1990 at P90/day; (I) Leo Surigao, payloader
operator, from March 1975 to January 1978 at P100/day; (J) Mario Labendia, Sr. surveyor/foreman,
from August 1971 to July 1990 at P2,900/month; and, (k) Roque Morillo, company watchman, from
August 1983 to October 1990 at P3,200/month.1

Within the periods of their respective employments, they alternately worked for petitioners Tomas
Lao Corporation (TLC), Thomas and James Developers (T&J) and LVM Construction Corporation
(LVM), altogether informally referred to as the "Lao Group of Companies," the three (3) entities
comprising a business conglomerate exclusively controlled and managed by members of the Lao
family.

TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture
agreements they entered into among each other, they would undertake their projects either
simultaneously or successively so that, whenever necessary, they would lease tools and equipment
to one another. Each one would also allow the utilization of their employees by the other two (2).
With this arrangement, workers were transferred whenever necessary to on-going projects of the
same company or of the others, or were rehired after the completion of the project or project phase
to which they were assigned. Soon after, however, TLC ceased its operations2 while T&J and LVM
stayed on.

Sometime in 1989 Andres Lao, Managing Director of LVM and President of T&J,3 issued a
memorandum4 requiring all workers and company personnel to sign employment contract forms and
clearances which were issued on 1 July 1989 but antedated 10 January 1989. These were to be
used allegedly for audit purposes pursuant to a joint venture agreement between LVM and T&J. To
ensure compliance with the directive, the company ordered the withholding of the salary of any
employee who refused to sign. Quite notably, the contracts expressly described the construction
workers as project employees whose employments were for a definite period, i.e., upon the
expiration of the contract period or the completion of the project for which the workers was hired.

Except for Florencio Gomez5 all private respondents refused to sign contending that this scheme
was designed by their employer to downgrade their status from regular employees to mere project
employees. Resultantly, their salaries were withheld. They were also required to explain why their
services should not be terminated for violating company rules and warned that failure to satisfactorily
explain would be construed as "disinterest" in continued employment with the company. Since the
workers stood firm in their refusal to comply with the directives their services were terminated.

HELD: The principal test in determining whether particular employees are "project employees"
distinguished from "regular employees" is whether the "project employees" are assigned to carry out
"specific project or undertaking," the duration (and scope) of which are specified at the time the
employees are engaged for the project. "Project" in the realm of business and industry refers to a
particular job or undertaking that is within the regular or usual business of employer, but which is
distinct and separate and identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times.9

While it may be allowed that in the instant case the workers were initially hired for specific projects or
undertakings of the company and hence can be classified as project employees, the repeated re-
hiring and the continuing need for their services over a long span of time (the shortest, at seven [7]
years) have undeniably made them regular employees. Thus, we held that where the employment of
project employees is extended long after the supposed project has been finished, the employees are
removed from the scope of project employees and considered regular employees.10

While length of time may not be a controlling test for project employment, it can be a strong factor in
determining whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual business or trade of the
employer. In the case at bar, private respondents had already gone through the status of project
employees. But their employments became non-coterminous with specific projects when they started
to be continuously re-hired due to the demands of petitioners' business and were re-engaged for
many more projects without interruption. We note petitioners' own admission —

[t]hese construction projects have been prosecuted by either of the three petitioners, either
individually or in a joint venture with one another. Likewise, these construction projects have
been prosecuted by either of the three petitioners, either simultaneously, one construction
project overlapping another and/or one project commencing immediately after another
project has been completed or terminated. Perhaps because of their capacity to prosecute
government projects and their good record and performance, at least one of the three
petitioners had an on-going construction project and/or one of the three petitioners'
construction project overlapped that of another.11

The denial by petitioners of the existence of a work pool in the company because their projects were
not continuous is amply belied by petitioners themselves who admit that —

All the employees of either of the three petitioners were actually assigned to a particular
project to remain in said project until the completion or termination of that project. However,
after the completion of that particular project or when their services are no longer needed in
the project or particular phase of the project where they were assigned, they were
transferred and rehired in another on-going project.12

A work pool may exist although the workers in the pool do not receive salaries and are free to seek
other employment during temporary breaks in the business, provided that the worker shall be
available when called to report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and employee for it prevents
the unjust situation of "coddling labor at the expense of capital" and at the same time enables the
workers to attain the status of regular employees. Clearly, the continuous rehiring of the same set of
employees within the framework of the Lao Group of Companies is strongly indicative that private
respondents were an integral part of a work pool from which petitioners drew its workers for its
various projects.

In a final attempt to convince the Court that private respondents were indeed project employees,
petitioners point out that the workers were not regularly maintained in the payroll and were free to
offer their services to other companies when there were no on-going projects. This argument
however cannot defeat the workers' status of regularity. We apply by analogy the case of Industrial-
Commercial-Agricultural Workers Organization v. CIR13 which deals with regular seasonal
employees. There we held —

That during the temporary layoff the laborers are free to seek other employment is natural,
since the laborers are not being paid, yet must find means of support. A period during which
the Central is forced to suspend or cease operation for a time . . . should not mean starvation
for employees and their families (emphasis supplied).

Truly, the cessation of construction activities at the end of every project is a foreseeable suspension
of work. Of course, no compensation can be demanded from the employer because the stoppage of
operations at the end of a project and before the start of a new one is regular and expected by both
parties to the labor relations. Similar to the case of regular seasonal employees, the employment
relation is not severed by merely being suspended.14 The employees are, strictly speaking, not
separated from services but merely on leave of absence without pay until they are
reemployed.15 Thus we cannot affirm the argument that non-payment of salary or non-inclusion in the
payroll and the opportunity to seek other employment denote project employment.

Moreover, if private respondents were indeed employed as "project employees," petitioners should
have submitted a report of termination to the nearest public employment office every time their
employment was terminated due to completion of each construction project.17 The records show that
they did not. Policy Instruction No. 20 is explicit that employers of project employees are exempted
from the clearance requirement but not from the submission of termination report. We have
consistently held that failure of the employer to file termination reports after every project completion
proves that the employees are not project employees.18 Nowhere in the New Labor Code is it
provided that the reportorial requirement is dispensed with. The fact is that Department Order No. 19
superseding Policy Instruction No. 20 expressly provides that the report of termination is one of the
indicators of project employment.19

We likewise reject petitioners' justification in re-hiring private respondents i.e., that it is much
cheaper and economical to re-hire or re-employ the same workers than to train a new set of
employees. It is precisely because of this cost-saving benefit to the employer that the law deems it
fair that the employees be given a regular status. We need not belabor this point.

The NLRC was correct in finding that the workers were illegally dismissed. The rule is that in
effecting a valid dismissal, the mandatory requirements of substantive and procedural due process
must be strictly complied with. These were wanting in the present case. Private respondents were
dismissed allegedly because of insubordination or blatant refusal to comply with a lawful directive of
their employer. But willful disobedience of the employer's lawful orders as a just cause for the
dismissal of the employees envisages the concurrence of at least two (2) requisites: (a) the
employee's assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and, (b) the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he has been
engaged to discharge.22 The refusal of private respondents was willful but not in the sense of plain
and perverse insubordination. It was dictated by necessity and justifiable reasons — for what
appeared to be an innocent memorandum was actually a veiled attempt to deny them their rightful
status as regular employees. The workers therefore had no option but to disobey the directive which
they deemed unreasonable and unlawful because it would result in their being downsized to mere
project workers. This act of self-preservation should not merit them the extreme penalty of dismissal.

The allegation of petitioners that private respondents are guilty of abandonment of duty is without
merit. The elements of abandonment are: (a) failure to report for work or absence without valid or
justifiable reason, and, (b) a clear intention to sever the employer-employee relationship, with the
second element as the more determinative factor manifested by some overt acts.23 In this case,
private respondents Roberto Labendia and Mario Labendia were forced to leave their respective
duties because their salaries were withheld. They could not simply sit idly and allow their families to
starve. They had to seek employment elsewhere, albeit temporarily, in order to survive. On the other
hand, it would be the height of injustice to validate abandonment in this particular case as a ground
for dismissal of respondents thereby making petitioners benefit from a gross and unjust situation
which they themselves created.24 Private respondents did not intend to sever ties with petitioner and
permanently abandon their jobs; otherwise, they would not have filed this complaint for illegal
dismissal.25

Petitioners submit that since private respondents were only project employees, they are not entitled
to security of tenure. This is incorrect. In Archbuild Masters and Construction, Inc. v. NLRC26 we held
—

. . . a project employee hired for a specific task also enjoys security of tenure. A termination
of his employment must be for a lawful cause and must be done in a manner which affords
him the proper notice and hearing . . . . To allow employers to exercise their prerogative to
terminate a project worker's employment based on gratuitous assertions of project
completion would destroy the constitutionally protected right of labor to security of
tenure (emphasis supplied).

The burden of proving that an employee has been lawfully dismissed therefore lies with the
employer. In the case at bar, the assertions of petitioners were self-serving and insufficient to
substantiate their claim of proximate project completion. The services of the employees were
terminated not because of contract expiration but as sanction for their refusal to sign the project
employment forms and quitclaims.

Since the illegal dismissal was made in 1990 or after the effectivity of the amendatory provision of
RA No. 6715 on 21 March 1989, private respondents' back wages should be computed on the basis
of Art. 279 of the Labor Code which states that "(a)n employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
back wages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement."

Conformably with our ruling in Bustamante v. NLRC27 the illegally dismissed employees are entitled
to full back wages, undiminished by earnings derived elsewhere during the period of their illegal
dismissal. In the event that reinstatement is no longer feasible, back wages shall be computed from
the time of illegal termination until the time of the finality of the decision.28 The award shall be based
on the documents submitted by private respondents, i.e. affidavits, SSS and Medicare documents,
since petitioners failed to adduce competent evidence to the contrary. The separation pay shall be
equivalent to "at least one (1) month salary or to one (1) month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one whole year."29
G.R. No. L-21465, March 31, 1966 [With Resolution of Aug. 23, 1966]

INDUSTRIAL-COMMERCIAL-AGRICULTURAL WORKERS' ORGANIZATION

(ICAWO), PETITIONER-APPELLANT, VS. COURT OF INDUSTRIAL RELATIONS,
CENTRAL AZUCARERA DE PILAR AND/OR ANTONIO BELZARENA AS MANAGER,
CENTRAL AZUCARERA DE PILAR ALLIED WORKERS ASSOCIATION (CAPAWA),
RESPONDENTS-APPELLEES.

FACTS: On 9 February 1956, the petitioner, Industrial-Commercial-Agricultural Workers'

Organization (hereinafter referred to as the "ICAWO"), declared a strike against the
respondent Central Azucarera de Pilar. The strike was amicably settled the following
day, and among the provisions of the "Amicable Settlement" (Exhibit "C") reads:

"That the company shall not discriminate against any worker and the same treatment
shall be accorded to workers (ICAWO affiliates) who declared a strike or not. A petition
for Certification Election will be filed by the ICAWO in view of the other labor union,
CAPAWA, with whom the company has an existing collective bargaining contract, a
union which is considered by the ICAWO as a company union."

The CAPAWA therein referred to is the herein respondent Central Azucarera de Pilar
Allied Workers Association and the collective bargaining contract, likewise therein
referred to, entered into in 1955, provided:

"The EMPLOYER agrees that in hiring unskilled employees and laborers, the members
of the WORKERS ASSOCIATION should be given preference and the management
should notify accordingly to the WORKERS ASSOCIATION of any vacancy existing in
all Departments. New employees and laborers hired who are members of the
WORKERS ASSOCIATION will be on TEMPORARY STATUS and the EMPLOYER
agrees that before they will be considered regular employees and laborers they have to
become members of the CENTRAL AZUCARERA DE PILAR ALLIED WORKERS'
ASSOCIATION within thirty (30) days from the date of employment and if they refuse to
affiliate with the said labor organization within this time they will be immediately
dismissed by the EMPLOYER;"

Among the strikers were 101 seasonal workers, some of whom have worked as such for
the company since pre-war years.

On the opening of the milling season for the year 1956-1957, the respondent company
refused to re-admit these 101 seasonal workers of the ICAWO on the ground that it was
precluded by the closed shop clause in its collective bargaining agreement with the
CAPAWA. Thus, on 8 May 1958, the ICAWO filed an unfair labor practice charge
against the company.

HELD: In an almost identical case, involving practically the same parties, G. R. No. L-
17422, 28 February 1962, the Court interpreted the closed shop agreement, jam quot,
as referring "to future or new employees or laborers". This interpretation, however, does
not resolve the present issue because it does not classify the seasonal workers one
way or the other. A direct precedent, however, exists in the case of Manila Hotel
Company vs. Court of Industrial Relations, et al., L-18873, 30 September 1963, wherein
this Court, alluding to certain employees in the Pines Hotel in Baguio, stated:

" * * * Their status is that of regular seasonal employees who are called to work from
time to time, mostly during summer season. The nature of their relationship with the
hotel is such that during off season they are temporarily laid off but during summer
season they are re-employed, or when their services may be needed. They are not
strictly speaking separated from the service but are merely considered as on leave of
absence without pay until they are re-employed. Their employment relationship is never
severed but only suspended. As such, these employees can be considered as in the
regular employment of the hotel."

Our conclusion is that petitioners, even if seasonal workers, were not "new workers"
within the scope of the closed shop contract between the sugar central and the
CAPAWA union; hence their discharge was illegal.