716 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCG.R.No.116781.September5,1997.*TOMAS LAO CONSTRUCTION, LVM CONSTRUCTIONCORPORATION, THOMASandJAMESDEVELOPERS(PHIL.),INC., petitioners, vs. NATIONAL LABOR RELATIONSCOMMISSION, MARIO O. LABENDIA, SR., ROBERTOLABENDIA, NARCISO ADAN, FLORENCIO GOMEZ,ERNESTO BAGATSOLON, SALVADOR BABON, PATERNOBISNAR, CIPRIANO BERNALES, ANGEL MABULAY, SR.,LEOSURIGAO,andROQUEMORILLO,respondents.Labor Law EmployerEmployee Relationship Project EmployeesWordsandPhrasesProjectintherealmofbusinessandindustryrefersto a particular job or undertaking that is within the regular or usualbusiness of employer, but which is distinct and separate and identifiable assuchfromtheundertakingsofthecompanysuchjoborundertakingbeginsand ends at determined or determinable times.The principal test indetermining whether particular employees are project employeesdistinguished from regular employees is whether the project employeesareassignedtocarryoutspecificprojectorundertaking,theduration(andscope) of which are specified at the time the employees are engaged for theproject.Projectintherealmofbusinessandindustryreferstoaparticularjob or undertaking that is within the regular or usual business of employer,but which is distinct and separate and identifiable as such from theundertakings of the company. Such job or undertaking begins and ends atdeterminedordeterminabletimes.SameSameSameThe repeated rehiring and the continuing need forthe services of project employees over a long span of time had made themregular employees.While it may be allowed that in the instant case theworkers were initially hired for specific projects or undertakings of thecompany and hence can be classified as project employees, the repeated rehiring and the continuing need for their services over a long span of time(the shortest, at seven [7] years) have undeniably made them regularemployees. Thus, we held that where the employment of project employeesisextendedlongafterthesupposedprojecthasbeenfinished,theemployeesare removed from the scope of project employees and considered regularemployees._____________*FIRSTDIVISION.717VOL.278,SEPTEMBER5,1997 717TomasLaoConstructionvs.NLRCSame Same Same While length of time may not be a controlling testforprojectemployment,itcanbeastrongfactorindeterminingwhethertheemployee was hired for a specific undertaking or in fact tasked to performfunctionswhicharevital,necessaryandindispensabletotheusualbusinessor trade of the employer.While length of time may not be a controllingtestforprojectemployment,itcanbeastrongfactorindeterminingwhetherthe employee was hired for a specific undertaking or in fact tasked toperform functions which are vital, necessary and indispensable to the usualbusinessortradeoftheemployer.Inthecaseatbar,privaterespondentshadalreadygonethroughthestatusofprojectemployees.Buttheiremploymentsbecame noncoterminous with specific projects when they started to becontinuously rehired due to the demands of petitioners business and werereengagedformanymoreprojectswithoutinterruption.Same Same Same Work Pools The continuous rehiring of the samesetofemployeeswithintheframeworkofaparticulargroupofcompaniesisstrongly indicative that the employees are an integral part of a work poolfromwhichthecompaniesdrewtheirworkersfortheirvariousprojects.Aworkpoolmayexistalthoughtheworkersinthepooldonotreceivesalariesand are free to seek other employment during temporary breaks in thebusiness, provided that the worker shall be available when called to reportforaproject.Althoughprimarilyapplicabletoregularseasonalworkers,thissetup can likewise be applied to project workers insofar as the effect oftemporary cessation of work is concerned. This is beneficial to both theemployerandemployeeforitpreventstheunjustsituationofcoddlinglaborat the expense of capital and at the same time enables the workers to attainthestatusofregularemployees.Clearly,thecontinuousrehiringofthesameset of employees within the framework of the Lao Group of Companies isstrongly indicative that private respondents were an integral part of a workpoolfromwhichpetitionersdrewitsworkersforitsvariousprojects.Same Same Same The cessation of construction activities at the endof every project is a foreseeable suspension of workthe employees are,strictlyspeaking,notseparatedfromservicesbutmerelyonleaveofabsencewithoutpayuntiltheyarereemployed.Truly, the cessation of constructionactivitiesattheendofeveryprojectisaforeseeablesuspensionofwork.Ofcourse, no compensation can be demanded from the employer because thestoppage of operations at the end of a project and before the start of a newoneisregularand718718 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCexpectedbybothpartiestothelaborrelations.Similartothecaseofregularseasonalemployees,theemploymentrelationisnotseveredbymerelybeingsuspended.Theemployeesare,strictlyspeaking,notseparatedfromservicesbut merely on leave of absence without pay until they are reemployed. Thuswe cannot affirm the argument that nonpayment of salary or noninclusionin the payroll and the opportunity to seek other employment denote projectemployment.Same Same Same Failure of the employer to file termination papersafter every project completion proves that the employees are not projectemployees.Moreover, if private respondents were indeed employed asproject employees, petitioners should have submitted a report oftermination to the nearest public employment office every time theiremployment was terminated due to completion of each construction project.Therecordsshowthattheydidnot.PolicyInstructionNo.20isexplicitthatemployersofprojectemployeesareexemptedfromtheclearancerequirementbut not from the submission of termination report. We have consistentlyheld that failure of the employer to file termination reports after everyproject completion proves that the employees are not project employees.Nowhere in the New Labor Code is it provided that the reportorialrequirement is dispensed with. The fact is that Department Order No. 19superseding Policy Instruction No. 20 expressly provides that the report ofterminationisoneoftheindicatorsofprojectemployment.Same Same Same Security of Tenure When periods have beenimposedtoprecludetheacquisitionoftenurialsecuritybytheemployee,theyshouldbestruckdownascontrarytopublicmorals,goodcustomsorpublicorder.We agree with the NLRC that the execution of the projectemployment contracts was farcical. Obviously, the contracts were ascheme of petitioners to prevent respondents from being considered asregular employees. It imposed time frames into an otherwise flexibleemploymentperiodofprivaterespondentssomeofwhomwereemployedasfar back as 1969. Clearly, here was an attempt to circumvent labor laws ontenurial security. Settled is the rule that when periods have been imposed toprecludetheacquisitionoftenurialsecuritybytheemployee,theyshouldbestruck down as contrary to public morals, good customs or public order.Worth noting is that petitioners had engaged in various joint ventureagreementsinthepastwithouthavingtodraftprojectemploymentcontracts.That they would require execution of employment contracts and waivers atthis point, ostensibly to be used for audit purposes, is a suspect excuse,consideringthatpetitioners719VOL.278,SEPTEMBER5,1997 719TomasLaoConstructionvs.NLRCenforced the directive by withholding the salary of any employee whospurnedtheorder.SameSameSameItispreciselybecauseofthiscostsavingbenefittotheemployerthatthelawdeemsitfairthattheemployeesbegivenaregularstatus.We likewise reject petitioners justification in rehiring privaterespondents, i.e., that it is much cheaper and economical to rehire or reemploythesameworkersthantotrainanewsetofemployees.Itispreciselybecauseofthiscostsavingbenefittotheemployerthatthelawdeemsitfairthattheemployeesbegivenaregularstatus.Weneednotbelaborthispoint.Same Dismissal Insubordination Willful disobedience of theemployers lawful orders as a just cause for the dismissal of the employeesenvisages the concurrence of at least two (2) requisites: (a) the employeesassailed conduct must have been willful or intentional, the willfulness beingcharacterized by a wrongful and perverse attitude and, (b) the orderviolated must have been reasonable, lawful, made known to the employeeand must pertain to the duties which he has been engaged to discharge.TheNLRCwascorrectinfindingthattheworkerswereillegallydismissed.Theruleisthatineffectingavaliddismissal,themandatoryrequirementsofsubstantive and procedural due process must be strictly complied with.These were wanting in the present case. Private respondents were dismissedallegedly because of insubordination or blatant refusal to comply with alawful directive of their employer. But willful disobedience of theemployers lawful orders as a just cause for the dismissal of the employeesenvisages the concurrence of at least two (2) requisites: (a) the employeesassailed conduct must have been willful or intentional, the willfulness beingcharacterizedbyawrongfulandperverseattitudeand,(b)theorderviolatedmust have been reasonable, lawful, made known to the employee and mustpertain to the duties which he has been engaged to discharge. The refusal ofprivate respondents was willful but not in the sense of plain and perverseinsubordination. It was dictated by necessity and justifiable reasonsforwhat appeared to be an innocent memorandum was actually a veiled attemptto deny them their rightful status as regular employees. The workerstherefore had no option but to disobey the directive which they deemedunreasonable and unlawful because it would result in their being downsizedtomereprojectworkers.Thisactofselfpreservationshouldnotmeritthemtheextremepenaltyofdismissal.720720 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCSame Same Abandonment 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 employeremployee relationship, withthe second element as the more determinative factor manifested by someovert acts.The allegation of petitioners that private respondents are guiltyofabandonmentofdutyiswithoutmerit.Theelementsofabandonmentare:(a) failure to report for work or absence without valid or justifiable reason,and, (b) a clear intention to sever the employeremployee relationship, withthe second element as the more determinative factor manifested by someovert acts. In this case, private respondents Roberto Labendia and MarioLabendia were forced to leave their respective duties because their salarieswere withheld. They could not simply sit idly and allow their families tostarve. They had to seek employment elsewhere, albeit temporarily, in orderto survive. On the other hand, it would be the height of injustice to validateabandonmentinthisparticularcaseasagroundfordismissalofrespondentsthereby making petitioners benefit from a gross and unjust situation whichtheythemselvescreated.Privaterespondentsdidnotintendtosevertieswithpetitioner and permanently abandon their jobs otherwise, they would nothavefiledthiscomplaintforillegaldismissal.SameProjectEmployeesSecurityofTenureAprojectemployeehiredfor a specific task also enjoys security of tenurea termination of hisemploymentmustbeforalawfulcauseandmustbedoneinamannerwhichaffords him the proper notice and hearing.Petitioners submit that sinceprivate respondents were only project employees, they are not entitled tosecurityoftenure.Thisisincorrect.InArchbuildMastersandConstruction,Inc. v. NLRC we heldx x x a project employee hired for a specific taskalsoenjoyssecurityoftenure.Aterminationofhisemploymentmustbefora lawful cause and must be done in a manner which affords him the propernotice and hearing x x x x To allow employers to exercise their prerogativeto terminate a project workers employment based on gratuitous assertionsof project completion would destroy the constitutionally protected right oflabortosecurityoftenure(emphasissupplied).SameIllegalDismissalBackwagesIllegallydismissedemployeesareentitled to full backwages, undiminished by earnings derived elsewhereduring the period of their illegal dismissal.Conformably with our rulinginBustamantev.NLRCtheillegallydismissedemployeesareentitledtofullback wages, undiminished by earnings derived elsewhere during the periodoftheirillegal721VOL.278,SEPTEMBER5,1997 721TomasLaoConstructionvs.NLRCdismissal. In the event that reinstatement is no longer feasible, back wagesshall be computed from the time of illegal termination until the time of thefinality of the decision. The award shall be based on the documentssubmitted by private respondents, i.e., affidavits, SSS and Medicaredocuments, since petitioners failed to adduce competent evidence to thecontrary. The separation pay shall be equivalent to at least one (1) monthsalary or to one (1) month salary for every year of service, whichever ishigher, a fraction of at least six (6) months being considered as one wholeyear.Same Corporation Law Piercing the Veil of Corporate FictionWhere it appears that [three] business enterprises are owned, conductedand controlled by the same parties, both law and equity will, whennecessary to protect the rights of third persons, disregard the legal fictionthat the [three] corporations are distinct entities, and treat them asidentical.Public respondent NLRC did not err in disregarding the veil ofseparate corporate personality and holding petitioners jointly and severallyliable for private respondents back wages and separation pay. The recordsdisclose that the three (3) corporations were in fact substantially owned andcontrolled by members of the Lao family composed of Lao Hian Beng aliasTomas Lao, Chiu Siok Lian (wife of Tomas Lao), Andrew C. Lao, Lao Y.Heng,VicenteLaoChua,LaoE.Tin,EmmanuelLaoandIsmaelitaMaluto.AmajorityoftheoutstandingsharesofstockinLVMandT&Jisownedbythe Lao family. T&J is 100% owned by the Laos as reflected in its Articlesof Incorporation. The Lao Group of Companies therefore is a closedcorporation where the incorporators and directors belong to a single family.Lao Hian Beng is the same Tomas Lao who owns Tomas Lao Corporationand is the majority stockholder of T&J. Andrew C. Lao is the ManagingDirector of LVM Construction, and President and Managing Director of theLao Group of Companies. Petitioners are engaged in the same line ofbusiness under one management and use the same equipment includingmanpower services. Where it appears that [three] business enterprises areowned, conducted and controlled by the same parties, both law and equitywill, when necessary to protect the rights of third persons, disregard thelegal fiction that the [three] corporations are distinct entities, and treat themasidentical.Same Same Same It should always be borne in mind that the fictionof law that a corporation as a juridical entity has a distinct and separatepersonalitywasenvisagedforconvenienceandtoservejusticetherefore,itshouldnotbeusedasasubterfugetocommit722722 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCinjusticeandcircumventlaborlaws.Consonantwithourearlierruling,weholdthattheliabilityofpetitionersextendstotheresponsibleofficersactingin the interest of the corporations. In view of the peculiar circumstances ofthiscase,wedisregardtheseparatepersonalitiesofthethree(3)corporationsand at the same time declare the members of the corporations jointly andseverallyliablewiththecorporationsforthemonetaryawardsduetoprivaterespondents.Itshouldalwaysbeborneinmindthatthefictionoflawthatacorporation as a juridical entity has a distinct and separate personality wasenvisaged for convenience and to serve justice therefore it should not beusedasasubterfugetocommitinjusticeandcircumventlaborlaws.SPECIALCIVILACTIONintheSupremeCourt.Certiorari.ThefactsarestatedintheopinionoftheCourt.Formoso&QuimboLawOfficeforpetitioners.SimeonC.Caparroso,Jr.forprivaterespondents.BELLOSILLO,J.:From October to December 1990 private respondents individuallyfiled complaints for illegal dismissal against petitioners with theNational Labor Relations Commission Regional Arbitration BranchNo.VIII(NLRCRABVIII),TaclobanCity.Allegingthattheywerehired for various periods as construction workers in differentcapacities they described their contractual terms as follows: (a)Roberto Labendia, general construction foreman, from 1971 to 17October 1990 at P3,700/month (b) Narciso Adan, tireman, fromOctober 1981 to November 1990 at P75.00/day (c) FlorencioGomez, welder, from July 1983 to July 1990 at P60.00/day (d)Ernesto Bagatsolon leadman/checker, from June 1982 to October1990 at P2,800/month (e) Salvador Babon, clerk/timekeeper/paymaster, from June 1982 to October 1990 at P3,200/month (f)PaternoBisnar,roadgraderoperator,fromJanuary1979toOctober1990 at P105/day (g) Cipriano Bernales, instrument man, fromFebruary 1980 to November 1990 at P3,200/month (h) AngelMabulay,Sr.,dumptruckdriver,fromAugust1974toOctober1990atP90/day(i)LeoSurigao,payloaderoperator,fromMarch1975toJanuary1978atP100/day(j)Mario723VOL.278,SEPTEMBER5,1997 723TomasLaoConstructionvs.NLRCLabendia, Sr. surveyor/foreman, from August 1971 to July 1990 atP2,900/month and, (k) Roque Morillo, company watchman, fromAugust1983toOctober1990atP3,200/month.1Within the periods of their respective employments, theyalternately worked for petitioners Tomas Lao Corporation (TLC),Thomas and James Developers (T&J) and LVM ConstructionCorporation (LVM), altogether informally referred to as the LaoGroup of Companies, the three (3) entities comprising a businessconglomerate exclusively controlled and managed by members oftheLaofamily.TLC, T&J and LVM are engaged in the construction of publicroadsandbridges.Underjointventureagreementstheyenteredintoamong each other, they would undertake their projects eithersimultaneously or successively so that, whenever necessary, theywould lease tools and equipment to one another. Each one wouldalso allow the utilization of their employees by the other two (2).With this arrangement, workers were transferred whenevernecessarytoongoingprojectsofthesamecompanyoroftheothers,or were rehired after the completion of the project or project phaseto which they were assigned. Soon after, however, TLC ceased itsoperations2whileT&JandLVMstayedon.Sometimein1989AndresLao,ManagingDirectorofLVMandPresidentofT&J,3issuedamemorandum4requiringallworkersandcompany personnel to sign employment contract forms andclearances which were issued on 1 July 1989 but antedated 10January 1989. These were to be used allegedly for audit purposespursuant to a joint venture agreement between LVM and T&J. Toensure compliance with the directive, the company ordered thewithholdingofthesalaryofany__________________1Records,pp.111.2PetitiondoesnotallegetheexactdateTLCretiredfromthebusiness.3 Some documents show that Tomas Lao is the Managing Director of T&J andLiaisonOfficerofLVM.4AnnexA,Records,p.183.724724 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCemployeewhorefusedtosign.Quitenotably,thecontractsexpresslydescribed the construction workers as project employees whoseemploymentswereforadefiniteperiod,i.e.,upontheexpirationofthe contract period or the completion of the project for which theworkerswashired.Except for Florencio Gomez5 all private respondents refused tosigncontendingthatthisschemewasdesignedbytheiremployertodowngrade their status from regular employees to mere projectemployees.Resultantly,theirsalarieswerewithheld.Theywerealsorequired to explain why their services should not be terminated forviolating company rules and warned that failure to satisfactorilyexplain would be construed as disinterest in continuedemploymentwiththecompany.Sincetheworkersstoodfirmintheirrefusaltocomplywiththedirectivestheirserviceswereterminated.NLRC RAB VIII dismissed the complaints lodged before it,finding that private respondents were project employees whoseemployments could be terminated upon completion of the projectsor project phase for which they were hired. It upheld petitionerscontention that the execution of their employment contracts was toforestalltheeventualityofbeingcompelledtopaytheworkerstheirsalaries even if there was no more work to be done due to thecompletion of the projects or project phases. The labor courthowever granted each employee a separation pay of P6,435.00computed at onehalf (1/2) month salary for every year of service,uniformlyroundedatfive(5)years.6The decision of Labor Arbiter Gabino A. Velasquez, Jr., wasreversed on appeal by the Fourth Division of the National LaborRelations Commission (NLRC) of Cebu City which found thatprivate respondents were regular employees who were dismissedwithoutjustcauseanddenieddueprocess.____________________5Heclaimedhesignedthecontractandquitclaimduetocoercionandhisdireeconomicnecessity.Nonethelesshewasdismissedon15July1990.6 See Decision of Labor Arbiter Gabino A. Velasquez, Jr., NLRC RAB VIII,TaclobanCity,Records,p.410.725VOL.278,SEPTEMBER5,1997 725TomasLaoConstructionvs.NLRCThe NLRC also overruled the fixing by the Labor Arbiter of theterm of employment of complainants uniformly at five (5) yearssince the periods of employment of the construction workers asalleged in their complaints were never refuted by petitioners. Ingranting monetary awards to complainants, NLRC disregarded theveil of corporate fiction and treated the three (3) corporations asformingonlyoneentityonthebasisoftheadmissionofpetitionersthat the three (3) operated as one (1), intermingling andcomminglingallitsresources,includingmanpowerfacility.7Petitionersnowlaytheircausebeforeusandassignthefollowingerrors: (a) NLRC erred in classifying the employees as regularinstead of project employees (b) assuming that the workers wereregular employees, NLRC failed to consider that they wereterminated for cause (c) assuming further that the employees wereillegally dismissed, NLRC erred in awarding back wages in excessof three (3) years and, (d) assuming finally that the decision iscorrect, NLRC erred when it pierced the veil of corporatepersonalityofpetitionercorporations.The main thrust of petitioners expostulation is that respondentshave no valid cause to complain about their employment contractssince these documents merely formalized their status as projectemployees.TheycitePolicyInstructionNo.20oftheDepartmentofLabor which defines project employees as those employed inconnection with a particular construction project, adding that therulinginSandoval Shipyards, Inc. v. NLRC8 applies squarely to theinstantcasebecausetheretheCourtdeclaredthattheemploymentofprojectemployeesiscoterminouswiththecompletionoftheprojectregardless of the number of projects in which they have worked.And as their employment is one for a definite period, they are notentitledtoseparationpaynoristheiremployer___________________7DecisionoftheFourthDivision,NLRC,CebuCity,composedofCommissionersI.E.Canissa,B.S.BatunanandA.B.Canete,p.11Rollo,p.925.8G.R.Nos.65689&66119,31May1985,136SCRA674.726726 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCrequired to obtain clearance from the Secretary of Labor inconnection with their termination. Petitioners thus argue that theirdismissalfromtheserviceofprivaterespondentswaslegalsincetheprojects for which they were hired had already been completed. Asadditional ground, they claim that Mario Labendia and RobertoLabendia had absented themselves without leave givingmanagementnochoicebuttosevertheiremployment.Wearenotconvinced.Theprincipaltestindeterminingwhetherparticular employees are project employees distinguished fromregular employees is whether the project employees areassignedtocarryoutspecificprojectorundertaking,theduration(and scope) of which are specified at the time the employees areengaged for the project. Project in the realm of business andindustry refers to a particular job or undertaking that is within theregular or usual business of employer, but which is distinct andseparate and identifiable as such from the undertakings of thecompany.Suchjoborundertakingbeginsandendsatdeterminedordeterminabletimes.9Whileitmaybeallowedthatintheinstantcasetheworkerswereinitially hired for specific projects or undertakings of the companyand hence can be classified as project employees, the repeated rehiringandthecontinuingneedfortheirservicesoveralongspanoftime (the shortest, at seven [7] years) have undeniably made themregular employees. Thus, we held that where the employment ofproject employees is extended long after the supposed project hasbeenfinished,theemployeesareremovedfromthescopeofprojectemployeesandconsideredregularemployees.10While length of time may not be a controlling test for projectemployment,itcanbeastrongfactorindetermining____________________9ALUTUCPv.NLRC,G.R.No.109902,2August1994,234SCRA678.10Phesco,Inc.v.NLRC,G.R.Nos.10444449,17December1994,239SCRA446CapitolIndustrialConstructionGroupsv.NLRC,G.R.No.105359,22April1993,221SCRA469.727VOL.278,SEPTEMBER5,1997 727TomasLaoConstructionvs.NLRCwhethertheemployeewashiredforaspecificundertakingorinfacttasked to perform functions which are vital, necessary andindispensable to the usual business or trade of the employer. In thecaseatbar,privaterespondentshadalreadygonethroughthestatusof project employees. But their employments became noncoterminous with specific projects when they started to becontinuously rehired due to the demands of petitioners businessand were reengaged for many more projects without interruption.Wenotepetitionersownadmission[t]hese construction projects have been prosecuted by either of the threepetitioners, either individually or in a joint venture with one another.Likewise, these construction projects have been prosecuted by either of thethreepetitioners,eithersimultaneously,oneconstructionprojectoverlappinganotherand/oroneprojectcommencingimmediatelyafteranotherprojecthasbeencompletedorterminated.Perhapsbecauseoftheircapacitytoprosecutegovernment projects and their good record and performance, at least one ofthe three petitioners had an ongoing construction project and/or one of thethreepetitionersconstructionprojectoverlappedthatofanother.11The denial by petitioners of the existence of a work pool in thecompanybecausetheirprojectswerenotcontinuousisamplybeliedbypetitionersthemselveswhoadmitthatAlltheemployeesofeitherofthethreepetitionerswereactuallyassignedtoa particular project to remain in said project until the completion ortermination of that project. However, after the completion of that particularproject or when their services are no longer needed in the project orparticular phase of the project where they were assigned, they weretransferredandrehiredinanotherongoingproject.12A work pool may exist although the workers in the pool do notreceive salaries and are free to seek other employment duringtemporary breaks in the business, provided that the worker shall beavailablewhencalledtoreportforaproject.__________________11Petition,p.9Rollo,p.10.12Petition,p.10Rollo,p.11.728728 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCAlthough primarily applicable to regular seasonal workers, this setupcanlikewisebeappliedtoprojectworkersinsofarastheeffectoftemporarycessationofworkisconcerned.Thisisbeneficialtoboththe employer and employee for it prevents the unjust situation ofcoddling labor at the expense of capital and at the same timeenables the workers to attain the status of regular employees.Clearly,thecontinuousrehiringofthesamesetofemployeeswithintheframeworkoftheLaoGroupofCompaniesisstronglyindicativethat private respondents were an integral part of a work pool fromwhichpetitionersdrewitsworkersforitsvariousprojects.In a final attemptto convincethe Courtthatprivate respondentswere indeed project employees, petitioners point out that theworkers were not regularly maintained in the payroll and were freeto offer their services to other companies when there were no ongoing projects. This argument however cannot defeat the workersstatus of regularity. We apply by analogy the case of IndustrialCommercialAgricultural Workers Organization v. CIR13 whichdealswithregularseasonalemployees.ThereweheldThat during the temporary layoff the laborers are free to seek otheremployment is natural, since the laborers are not being paid, yet must findmeansofsupport.AperiodduringwhichtheCentralisforcedtosuspendorcease operation for a time x x x should not mean starvation for employeesandtheirfamilies(emphasissupplied).Truly, the cessation of construction activities at the end of everyproject is a foreseeable suspension of work. Of course, nocompensation can be demanded from the employer because thestoppageofoperationsattheendofaprojectandbeforethestartofa new one is regular and expected by both parties to the laborrelations. Similar to the case of regular seasonal employees, theemployment relation is not severed by merely being suspended.14Theemployeesare,strictlyspeaking,not__________________13No.L21465,31March1966,16SCRA562,567568.14ManilaHotelCo.v.CIR,No.L18873,30September1963,9SCRA186.729VOL.278,SEPTEMBER5,1997 729TomasLaoConstructionvs.NLRCseparatedfromservicesbutmerelyonleaveofabsencewithoutpayuntiltheyarereemployed.15Thuswecannotaffirmtheargumentthatnonpayment of salary or noninclusion in the payroll and theopportunitytoseekotheremploymentdenoteprojectemployment.Contrary to petitioners assertion, our ruling in SandovalShipyards is inapplicable considering the special circumstancesattendanttothepresentcase.InSandoval,thehiringofconstructionworkers, unlike in the instant case, was intermittent and notcontinuous for the shipyard merely accepts contracts forshipbuilding or for repair of vessels from third parties and, only onoccasions when it has work contract of this nature that it hiresworkerstodothejobwhich,needlesstosay,lastsonlyforlessthanayearorlonger.16Moreover, if private respondents were indeed employed asproject employees, petitioners should have submitted a report ofterminationtothenearestpublicemploymentofficeeverytimetheiremploymentwasterminatedduetocompletionofeachconstructionproject.17Therecordsshowthattheydidnot.PolicyInstructionNo.20 is explicit that employers of project employees are exemptedfrom the clearance requirement but not from the submission oftermination report. We have consistently held that failure of theemployer to file termination reports after every project completionproves that the employees are not project employees.18 Nowhere intheNewLaborCodeisitprovidedthatthereportorialrequirementisdispensed with. The fact is that Department Order No. 19supersedingPolicyInstructionNo.20expresslypro___________________15Ibid.16SeeNote8.17Magantev.NLRC,G.R.No.74969,7May1990,185SCRA21.18Ochoco v. NLRC,No.L56363, 24 February 1983, 120 SCRA 774 Magante v.NLRC,G.R.No.74969, 7 May 1990, 185SCRA21Capitol Industrial ConstructionCorporationv.NLRC,G.R.No.105359,22April1993,221SCRA469AuroraLandProjectsCorporationv.NLRC,G.R.No.114733,2January1997.730730 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCvidesthatthereportofterminationisoneoftheindicatorsofprojectemployment.19We agree with the NLRC that the execution of the projectemployment contracts was farcical.20 Obviously, the contractswere a scheme of petitioners to prevent respondents from beingconsidered as regular employees. It imposed time frames into anotherwise flexible employment period of private respondents someof whom were employed as far back as 1969. Clearly, here was anattempt to circumvent labor laws on tenurial security. Settled is therule that when periods have been imposed to preclude theacquisition of tenurial security by the employee, they should bestruck down as contrary to public morals, good customs or publicorder.21Worthnotingisthatpetitionershadengagedinvariousjointventure agreements in the past without having to draft projectemployment contracts. That they would require execution ofemployment contracts and waivers at this point, ostensibly to beused for audit purposes, is a suspect excuse, considering thatpetitioners enforced the directive by withholding the salary of anyemployeewhospurnedtheorder.We likewise reject petitioners justification in rehiring privaterespondents,i.e., that it is much cheaper and economical to rehireorreemploythesameworkersthantotrainanewsetofemployees.It is precisely because of this costsaving benefit to the employerthat the law deems it fair that the employees be given a regularstatus.Weneednotbelaborthispoint.TheNLRCwascorrectinfindingthattheworkerswereillegallydismissed. The rule is that in effecting a valid dismissal, themandatory requirements of substantive and procedural due processmust be strictly complied with. These were wanting in the presentcase.Privaterespondentswere_________________19Sec.2.2(e),DepartmentOrderNo.19,1April1993.20Decision,p.16,Rollo,p.923.21Samsonv.NLRC,G.R.No.113166,1February1996,253SCRA124Caramolv.NLRC,G.R.No.102973,24August1993,225SCRA582(1993).731VOL.278,SEPTEMBER5,1997 731TomasLaoConstructionvs.NLRCdismissed allegedly because of insubordination or blatant refusal tocomply with a lawful directive of their employer. But willfuldisobedienceoftheemployerslawfulordersasajustcauseforthedismissaloftheemployeesenvisagestheconcurrenceofatleasttwo(2) requisites: (a) the employees assailed conduct must have beenwillful or intentional, the willfulness being characterized by awrongfulandperverseattitudeand,(b)theorderviolatedmusthavebeen reasonable, lawful, made known to the employee and mustpertainto theduties whichhehasbeen engagedto discharge.22Therefusal of private respondents was willful but not in the sense ofplainandperverseinsubordination.Itwasdictatedbynecessityandjustifiable reasonsfor what appeared to be an innocentmemorandum was actually a veiled attempt to deny them theirrightful status as regular employees. The workers therefore had nooptionbuttodisobeythedirectivewhichtheydeemedunreasonableand unlawful because it would result in their being downsized tomereprojectworkers.Thisactofselfpreservationshouldnotmeritthemtheextremepenaltyofdismissal.Theallegationofpetitionersthatprivaterespondentsareguiltyofabandonment of duty is without merit. The elements ofabandonment are: (a) failure to report for work or absence withoutvalid or justifiable reason, and, (b) a clear intention to sever theemployeremployee relationship, with the second element as themore determinative factor manifested by some overt acts.23 In thiscase, private respondents Roberto Labendia and Mario Labendiawere forced to leave their respective duties because their salarieswere withheld. They could not simply sit idly and allow theirfamilies to starve. They had to seek employment elsewhere, albeittemporarily,inordertosurvive.Ontheotherhand,itwouldbetheheightofinjustice__________________22Manebov.NLRC,G.R.No.107721,10January1994,229SCRA240.23DeYsasiIIIv.NLRC,G.R.No.104599,11March1994,231SCRA173Bonotanv.NLRC,G.R.No.104321,25October1995,237SCRA717.732732 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCto validate abandonment in this particular case as a ground fordismissal of respondents thereby making petitioners benefit from agross and unjust situation which they themselves created.24 Privaterespondents did not intend to sever ties with petitioner andpermanently abandon their jobs otherwise, they would not havefiledthiscomplaintforillegaldismissal.25Petitioners submit that since private respondents were onlyprojectemployees,theyarenotentitledtosecurityoftenure.Thisisincorrect.InArchbuildMastersandConstruction,Inc.v.NLRC26weheldx x x a project employee hired for a specific task also enjoys security oftenure. A termination of his employment must be for a lawful cause andmustbedoneinamannerwhichaffordshimthepropernoticeandhearingxxxxToallowemployerstoexercisetheirprerogativetoterminateaprojectworkers employment based on gratuitous assertions of project completionwould destroy the constitutionally protected right of labor to security oftenure(emphasissupplied).Theburdenofprovingthatanemployeehasbeenlawfullydismissedthereforelieswiththeemployer.Inthecaseatbar,theassertionsofpetitioners were selfserving and insufficient to substantiate theirclaim of proximate project completion. The services of theemployeeswereterminatednotbecauseofcontractexpirationbutassanction for their refusal to sign the project employment forms andquitclaims.Finding that the dismissal was without just cause, we find itunnecessary to dwell on the nonobservance of procedural dueprocess. Suffice it to state that private respondents were not priorlynotified of their impending dismissal and that they were notprovidedampleopportunitytodefendthemselves.Petitioners charge as erroneous the grant to private respondentsbyNLRCofbackwagesinexcessofthree(3)years__________________24Tooguev.NLRC,G.R.No.112334,18November1994,238SCRA241.25JacksonBuildingCondominiumCorporationv.NLRC,G.R.No.111515,14July1995,246SCRA329.26G.R.No.108142,26December1995,251SCRA491,492.733VOL.278,SEPTEMBER5,1997 733TomasLaoConstructionvs.NLRCor,inthealternative,toanawardofseparationpayifreinstatementisnolongerfeasible.We disagree. Since the illegal dismissal was made in 1990 oraftertheeffectivityoftheamendatoryprovisionofRANo.6715on21 March 1989, private respondents back wages should becomputed on the basis of Art. 279 of the Labor Code which statesthat (a)n employee who is unjustly dismissed from work shall beentitled to reinstatement without loss of seniority rights and otherprivilegesandtohisfullbackwages,inclusiveofallowances,andtohis other benefits or their monetary equivalent computed from thetime his compensation was withheld from him up to the time of hisactualreinstatement.Conformably with our ruling in Bustamante v. NLRC27 theillegally dismissed employees are entitled to full back wages,undiminished by earnings derived elsewhere during the period oftheir illegal dismissal. In the event that reinstatement is no longerfeasible, back wages shall be computed from the time of illegalterminationuntilthetimeofthefinalityofthedecision.28Theawardshall be based on the documents submitted by private respondents,i.e.,affidavits,SSSandMedicaredocuments,sincepetitionersfailedto adduce competent evidence to the contrary. The separation payshall be equivalent to at least one (1) month salary or to one (1)month salary for every year of service, whichever is higher, afraction of at least six (6) months being considered as one wholeyear.29Finally, public respondent NLRC did not err in disregarding theveilofseparatecorporatepersonalityandholdingpetitionersjointlyand severally liable for private respondents back wages andseparation pay. The records disclose that the three (3) corporationswere in fact substantially owned and controlled by members of theLaofamilycomposedofLaoHianBengaliasTomasLao,ChiuSiokLian(wifeofTomas___________________27G.R.No.111651,28November1996.28Ibid.29Sec.4(b),BookVI,OmnibusRulesImplementingtheLaborCode.734734 SUPREMECOURTREPORTSANNOTATEDTomasLaoConstructionvs.NLRCLao),AndrewC.Lao,LaoY.Heng,VicenteLaoChua,LaoE.Tin,EmmanuelLaoandIsmaelitaMaluto.AmajorityoftheoutstandingsharesofstockinLVMandT&JisownedbytheLaofamily.T&Jis100% owned by the Laos as reflected in its Articles ofIncorporation. The Lao Group of Companies therefore is a closedcorporationwheretheincorporatorsanddirectorsbelongtoasinglefamily. Lao Hian Beng is the same Tomas Lao who owns TomasLaoCorporationandisthemajoritystockholderofT&J.AndrewC.Lao is the Managing Director of LVM Construction, and PresidentandManagingDirectoroftheLaoGroupofCompanies.Petitionersareengagedinthesamelineofbusinessunderonemanagementanduse the same equipment including manpower services. Where itappears that [three] business enterprises are owned, conducted andcontrolled by the same parties, both law and equity will, whennecessary to protect the rights of third persons, disregard the legalfiction that the [three] corporations are distinct entities, and treatthemasidentical.30Consonant with our earlier ruling,31 we hold that the liability ofpetitionersextendstotheresponsibleofficersactingintheinterestofthecorporations.Inviewofthepeculiarcircumstancesofthiscase,we disregard the separate personalities of the three (3) corporationsandatthesametimedeclarethemembersofthecorporationsjointlyand severally liable with the corporations for the monetary awardsdue to private respondents. It should always be borne in mind thatthefictionoflawthatacorporationasajuridicalentityhasadistinctandseparatepersonalitywasenvisagedforconvenienceandtoservejustice therefore, it should not be used as a subterfuge to commitinjusticeandcircumventlaborlaws.WHEREFORE, the petition is DENIED and the decision of theNational Labor Relations Commission dated 05 August 1994 isAFFIRMED.Petitionersareorderedtoreinstatepri__________________30Claparolsv.CIR,No.L30822,31July1975,65SCRA622.31Indinov.NLRC,G.R.No.80352,29September1989,178SCRA177,citingLaCampana Coffee Factory, Inc. v. Kaisahan ng mga Manggagawa sa La Campana(KKM),93Phil.160(1953).735VOL.278,SEPTEMBER5,1997 735TomasLaoConstructionvs.NLRCvate respondents to their former positions without loss of seniorityrights and other privileges with full back wages, inclusive ofallowances,computedfromthetimecompensationwaswithhelduptothetimeofactualreinstatement.Intheeventthatreinstatementisnolongerfeasible,petitionersaredirectedtopayprivaterespondentsseparation pay equivalent to one month salary for every year ofservice,afractionofatleastsix(6)monthsbeingconsideredone(1)yearinthecomputationthereof,andfullbackwagescomputedfromthe time compensation was withheld until the finality of thisdecision.AllotherclaimsofthepartiesareDISMISSEDforlackofmerit.Costsagainstpetitioners.SOORDERED.Vitug,KapunanandHermosisima,Jr.,JJ.,concur.Petitiondenied,judgmentaffirmed.Notes.Project employees are those workers hired (1) for aspecific project or undertaking and (2) the completion orterminationofwhichprojectorundertakinghasbeendeterminedatthe time of engagement of the employees. (Uy vs. National LaborRelationsCommission,261SCRA505[1996])The principal test for determining whether particular employeesare properly characterized as project employees as distinguishedfromregularemployees,iswhetherornottheprojectemployeeswere assigned to carry out a specific project or undertaking, theduration (and scope) of which were specified at the time theemployees were engaged for that project. (Raycor AircontrolSystems,Inc.vs.NationalLaborRelationsCommission,261 SCRA589[1996])o0o736Copyright2015CentralBookSupply,Inc.Allrightsreserved.