ABESCO Construction and Development Corporation vs.

Ramirez
GR No. 141168, 20 April 2006
Facts:
The respondents were employees of Abesco from 1976-1992. In 1997, they filed 2 complaints of illegal
dismissal against Abesco and its general manager, contending that they are regular employees of the
company as evidenced by their continuous engagement as laborers, road roller operator, painters or
drivers by Abesco. The respondents also indicate that as regular employees they are entitled to claims
for the non-payment of 13th month, 5-day service incentive leave pay, premiums on holidays and rests
days, and moral and exemplary damages. The said complaints were later on consolidated by the Labor
Arbiter.
Abesco, on the other hand, denies the allegations of the respondent employees. Abesco argued that the
respondents are project employees because their services are availed only when the company had
projects for completion. The company further added that as project employees, the respondents do not
have a security of tenure and consequently not entitled to a separation pay upon termination.
Issue/s:

Does continuous engagement and period of service sufficient to determine whether an

individual is a regular or project?
If not, what are other determinative factors to be considered?

Ruling:
The Labor Arbiter ruled that the employees are regular employees as manifested by the hiring and rehiring of the respondents for Abesco projects. In his resolution, the Labor Arbiter highlighted the fact
that the respondents were part of a work pool which was readily tapped by the company at their
discretion and that it has been a practice for a period of 18 years.
The Supreme Court sustained the ruling of the Labor Arbiter but indicated that long period of service
does not automatically make the respondents regular employees as length of service is not a controlling
factor. The Supreme Court explained that the primary test to determine whether the respondents are
regular or project employees is (i) whether they are assigned to carry out a specific project or
undertaking and (ii) the duration and scope of which are specified at the time they are engaged for that
project. The high court also emphasized that such duration and particular work/service to be performed
should be defined in the employment agreement and are made clear to the employees at the time of
hiring.