Maraguinot, Jr. vs. NLRC

A project or work pool employee who is continuously — as opposed to intermittently — rehired by the same employer for the same or similar tasks, and whose tasks are vital, necessary, and indispensable to the usual business or trade of the employer, attains the status of a regular employee pursuant to Article 280 of the Labor Code, and this principle applies not only in the construction industry but also in the motion picture industry.

Petitioners Alejandro Maraguinot, Jr. and Paulino Enero were film crew members who rendered services for Viva Films, the trade name of Viva Productions, Inc., and its executive producer Vic del Rosario. Viva Films is engaged in the distribution, exhibition, and production of motion pictures, contracting persons called "producers" or "associate producers" to make movies on its behalf. The dispute centers on whether the petitioners were project employees of independent associate producers or regular employees of Viva Films, and whether their termination upon the completion of particular film projects constituted illegal dismissal.

Petitioner Alejandro Maraguinot, Jr. was employed by private respondents on July 18, 1989 as part of the filming crew with a salary of ₱375.00 per week. About four months later, he was designated Assistant Electrician at ₱400.00 weekly, increased to ₱450.00 in May 1990. In June 1991, he was promoted to Electrician at ₱475.00 weekly, later raised to ₱539.00 in September 1991. Petitioner Paulino Enero was employed in June 1990 as a member of the shooting crew at ₱375.00 weekly, increased to ₱425.00 in May 1991, then to ₱475.00 on December 21, 1991. Their tasks consisted of loading, unloading, and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks assigned by the cameraman or director.

Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on July 20, 1992. Maraguinot was dropped from the company payroll from June 8 to 21, 1992, but was returned on June 22, 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on July 20, 1992. Petitioners thus sued for illegal dismissal before the Labor Arbiter.

Private respondents presented a different account. They claimed that Viva Films is the trade name of Viva Productions, Inc., primarily engaged in the distribution and exhibition of movies — not in the business of making movies — and that Vic del Rosario is merely an executive producer, the financier who invests money for the production of movies distributed and exhibited by Viva. They asserted that they contract persons called "producers" or "associate producers" to make movies, and that petitioners were project employees of these associate producers, who in turn acted as independent contractors. According to private respondents, Maraguinot was hired for the film "Mahirap Maging Pogi," which shot from July 2 to July 22, 1992, and he was released upon payment of his last salary when his services were no longer needed. Enero was hired for the movie "Sigaw ng Puso," later retitled "Narito ang Puso"; he went on vacation on June 8, 1992, and by the time he reported for work on July 20, 1992, shooting for the movie had already been completed.

The Labor Arbiter found that petitioners were employees of the respondents, that the producer could not be considered an independent contractor but only a labor-only contractor acting as a mere agent of the real employer, and that petitioners performed activities necessary and essential to the business of movie-making. The Labor Arbiter accordingly declared petitioners illegally dismissed and ordered their reinstatement with backwages and attorney's fees. The NLRC reversed, finding that petitioners were project employees based on the co-terminus nature of their employment with specific movie projects, their irregular working hours and schedules, lump-sum payments, and the fact that they were not prohibited from working with other movie companies.

• Regular Employment Status: Petitioners argued that they were regular employees because they performed activities necessary and desirable in the usual trade or business of private respondents, and their work was continuous — after one project was completed, they were assigned to another. They considered themselves part of a work pool from which private respondents drew workers for assignment to different projects.
• Illegal Dismissal: Petitioners maintained that as regular employees, their dismissal was illegal because it was premised on a "false cause," namely, the completion of a project, which is not among the causes for dismissal allowed by the Labor Code.
• No Basis for NLRC Classification: Petitioners lamented that there was no basis for the NLRC's conclusion that they were project employees while the associate producers were independent contractors.
• Grave Abuse of Discretion: Petitioners claimed that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in finding them project employees, ruling they were not illegally dismissed, and reversing the Labor Arbiter's decision.

• Project Employment: Respondents reiterated that petitioners were project employees whose employment was co-terminus with each movie project, the completion or termination of which was predetermined and made known to petitioners at the time of their engagement.
• Independent Contractors: Respondents maintained that associate producers were independent contractors who hired petitioners, and that no employer-employee relationship existed between petitioners and Viva Films.
• Irregular Work Schedule: Respondents pointed to petitioners' irregular workload and work schedule, including extreme variations in monthly working hours and gaps between scheduled working days, as evidence of project employment.
• Freedom to Work Elsewhere: Respondents emphasized the NLRC's finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies such as Regal, Seiko, and FPJ Productions.
• Movie Industry Characteristics: Respondents asked that the facts be viewed in the context of the peculiar characteristics of the movie industry.

• Propriety of Certiorari: Whether a special civil action for certiorari under Rule 65 is the proper remedy to challenge the NLRC's decision.
• Employer-Employee Relationship: Whether an employer-employee relationship existed between petitioners and private respondents, specifically Viva Films.
• Job Contracting vs. Labor-Only Contracting: Whether the associate producers were permissible job contractors or labor-only contractors under the Labor Code.
• Project vs. Regular Employment: Whether petitioners were project employees or had attained the status of regular employees.
• Illegal Dismissal: Whether petitioners were illegally dismissed.

• Propriety of Certiorari: Yes. A special civil action for certiorari under Rule 65 is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy.
• Employer-Employee Relationship: Yes. An employer-employee relationship existed between petitioners and Viva Films, as all four elements of the control test were satisfied, with Viva exercising control over the means and methods of petitioners' work.
• Job Contracting vs. Labor-Only Contracting: No. The associate producers were neither permissible job contractors — lacking substantial capital, tools, equipment, and work premises — nor labor-only contractors, since they did not supply, recruit, or hire the workers.
• Project vs. Regular Employment: Petitioners had attained the status of regular employees through continuous rehiring across numerous film projects performing tasks vital, necessary, and indispensable to Viva's business of making movies.
• Illegal Dismissal: Yes. Petitioners were illegally dismissed because project completion was not a valid cause for dismissal of regular employees under Article 282 of the Labor Code.

• Propriety of Certiorari: The Court ruled that certiorari under Rule 65 is proper where the NLRC is alleged to have acted in total disregard of evidence material to or decisive of the controversy. Since petitioners alleged that the NLRC's conclusions had no basis in fact and in law, the petition could not be dismissed on procedural or jurisdictional grounds.

• Employer-Employee Relationship: The Court applied the control test, the most important of the four elements for determining employment relationships. The four elements — selection and engagement, payment of wages, power of dismissal, and power to control the employee's conduct — were all present. Viva's control was evident in its mandate that the end result must be a "quality film acceptable to the company," and in its supervision of the means and methods: the movie project had to be finished within schedule without exceeding budget, additional expenses required justification, certain scenes were subject to change to suit the company's taste, and Viva's Supervising Producer acted as its "eyes and ears" in the field. The appointment slips issued to crew members required observance of rules and regulations promulgated by "superiors" and "Top Management" of Viva, and bore Viva's corporate name. Viva also paid petitioners' salaries through vouchers bearing its letterhead. The director's instructions to petitioners were merely supervisory in nature, with control ultimately resting on the employer.

• Job Contracting vs. Labor-Only Contracting: The Court examined whether the associate producers could qualify as permissible job contractors under Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, which requires that the contractor carry on an independent business and have substantial capital or investment in tools, equipment, machinery, work premises, and other materials. The evidence showed that all movie-making equipment — generators, cables, wooden platforms, cameras, shooting equipment, and trucks — were owned by Viva, and the associate producers merely leased them. The associate producers thus lacked substantial capital or investment. Even as labor-only contractors under Article 106 of the Labor Code, the associate producers failed because they did not supply, recruit, or hire the workers; it was Juanita Cesario, Shooting Unit Supervisor and Viva employee, who recruited crew members from an available group of freelance workers. The relationship between Viva and its producers was one of agency under Article 1868 of the Civil Code, as the producers made movies on behalf of Viva.

• Project vs. Regular Employment: The Court held that a project or work pool employee may acquire regular status when two conditions concur: (1) continuous rehiring of project employees even after cessation of a project, and (2) the tasks performed are vital, necessary, and indispensable to the usual business or trade of the employer. The length of continuous rehiring is not controlling but serves as a badge of regular employment. Enero was employed for two years and engaged in at least eighteen projects; Maraguinot was employed for three years and worked on at least twenty-three projects. Their tasks — loading, unloading, and arranging movie equipment, returning equipment to Viva's warehouse, and assisting in fixing the lighting system — were vital, necessary, and indispensable to Viva's business of making movies. The Court applied by analogy the doctrine on regular seasonal employees from Industrial-Commercial-Agricultural Workers Organization vs. CIR and Manila Hotel Co. vs. CIR, holding that the employment relation is not severed by temporary suspension of work between projects; employees are not separated from service but merely on leave without pay until reemployed. The Court rejected the argument that non-payment of salary or freedom to seek other employment denotes project employment. The principles from Tomas Lao Construction vs. NLRC, though involving the construction industry, were applied to the motion picture industry because both industries involve projects with foreseeable suspension of work.

• Illegal Dismissal: Having attained regular employee status, petitioners' dismissal was unwarranted because the cause invoked — completion of a project — was not a valid cause for dismissal under Article 282 of the Labor Code. Petitioners were entitled to backwages and reinstatement without loss of seniority rights and other benefits. However, following the "no work-no pay" principle, amounts corresponding to periods when petitioners' respective Shooting Units were not undertaking any movie projects should be deducted from the backwages computation. Pursuant to Republic Act No. 6715, which amended Section 279 of the Labor Code, and Bustamante vs. NLRC, petitioners were entitled to full backwages from the date of dismissal up to reinstatement, without deducting earnings derived elsewhere, subject to the foregoing deduction.

• Control Test — The existence of an employer-employee relationship is determined by four elements: (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, not only as to the result of the work to be done but also as to the means and methods to accomplish the same. The fourth element — control over the means and methods — is the most important. In this case, Viva Films exercised control through its Supervising Producer, Project Accountant, and Shooting Unit Supervisor, who monitored the progress of film projects, ensured adherence to budget and schedule, and required changes to suit the company's taste. Appointment slips bearing Viva's corporate name and requiring observance of Viva's rules further established control.

• Labor-Only Contracting — Under Article 106 of the Labor Code and Section 9, Rule VIII, Book III of the Omnibus Rules, labor-only contracting exists where the person supplying workers to an employer (1) does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials, and (2) the workers recruited and placed by such person are performing activities directly related to the principal business of the employer. Labor-only contracting is prohibited, and the person acting as contractor is considered merely an agent or intermediary of the employer. In this case, the associate producers could not even be labor-only contractors because they did not supply, recruit, or hire the workers — a Viva employee did.

• Project Employee Attaining Regular Status (Two-Concurrence Test) — A project employee or member of a work pool may acquire the status of a regular employee when the following concur: (1) there is continuous rehiring of project employees even after cessation of a project; and (2) the tasks performed by the alleged project employee are vital, necessary, and indispensable to the usual business or trade of the employer. The length of continuous rehiring is not controlling but serves as a badge of regular employment. This principle applies not only in the construction industry (governed by Policy Instruction No. 20/Department Order No. 19) but also in the motion picture industry, because the raison d'être of both industries concerns projects with a foreseeable suspension of work.

• Work Pool Doctrine — A work pool may exist although 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. The cessation of activities at the end of every project is a foreseeable suspension of work; the employment relation is not severed but merely suspended, with employees on leave without pay until reemployed. Non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment do not denote project employment.

• "All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence." — This passage states the ratio decidendi, articulating the two-concurrence test for project employees attaining regular status and extending the doctrine beyond the construction industry.

• "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." — This defines the work pool doctrine as applied to project workers, clarifying that temporary cessation of work between projects does not sever the employment relationship.

• "To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer's conduct." — This explains the policy rationale for extending the regular-employment doctrine beyond the construction industry, preventing employers from circumventing labor laws through project-employment labels.

• Encyclopedia Britannica (Phils.) vs. NLRC, 264 SCRA 1 (1996) — Cited for the formulation of the control test, the most important element in determining the existence of an employer-employee relationship.
• Tomas Lao Construction vs. NLRC, G.R. No. 116781, Sept. 5, 1997 — Controlling precedent on work pools and the acquisition of regular employment status by project employees through continuous rehiring; its principles were applied by analogy to the motion picture industry.
• Industrial-Commercial-Agricultural Workers Organization vs. CIR, 16 SCRA 526 (1966) — Cited for the doctrine on regular seasonal employees, applied by analogy to project workers: the employment relation is not severed by temporary suspension of work, and employees are merely on leave without pay until reemployed.
• Manila Hotel Co. vs. CIR, 9 SCRA 186 (1963) — Cited in support of the principle that cessation of work at the end of a project is a foreseeable suspension that does not sever the employment relationship.
• Bustamante vs. NLRC, 265 SCRA 61 (1996) — Cited for the proposition that illegally dismissed employees are entitled to full backwages from the date of dismissal up to reinstatement, without deducting earnings derived elsewhere, pursuant to Republic Act No. 6715.
• Mamansag vs. NLRC, 218 SCRA 722 (1993) — Cited by the Office of the Solicitor General for the proposition that what matters in project employment is the existence of a time-frame for each project made known to the employee at the time of hiring.
• Philippine National Construction Corp. vs. NLRC, 174 SCRA 191 (1989) — Cited for the principle that continuous rehiring of project employees even after cessation of a project is a factor in acquiring regular employment status.
• Capitol Industrial Construction Groups vs. NLRC, 221 SCRA 469 (1993) — Cited for the requirement that tasks performed by the alleged project employee must be vital, necessary, and indispensable to the usual business or trade of the employer.

• Article 280, Labor Code of the Philippines — Defines regular and casual employment; applied to determine that petitioners, having been continuously rehired for tasks necessary and desirable to Viva's business, were regular employees.
• Article 282, Labor Code of the Philippines — Enumerates the just causes for termination of employment; applied to hold that project completion is not a valid cause for dismissal of regular employees.
• Article 106, Labor Code of the Philippines — Defines labor-only contracting; applied to determine that the associate producers could not qualify as labor-only contractors because they did not supply, recruit, or hire the workers.
• Section 8, Rule VIII, Book III, Omnibus Rules Implementing the Labor Code — Defines permissible job contracting; applied to show that the associate producers lacked substantial capital or investment in tools, equipment, machinery, and work premises, as all movie-making equipment was owned by Viva.
• Section 9, Rule VIII, Book III, Omnibus Rules Implementing the Labor Code — Defines labor-only contracting in detail and declares it prohibited; applied to the associate producers' relationship with Viva.
• Section 279, Labor Code of the Philippines (as amended by Republic Act No. 6715) — Governs backwages for illegally dismissed employees; applied to award full backwages from the date of dismissal to reinstatement.
• Article 1868, Civil Code of the Philippines — Defines the contract of agency; applied to characterize the relationship between Viva and its associate producers as one of agency, making the employment relationship between petitioners and Viva direct.
• Section 3, Article XIII, 1987 Constitution — States the constitutional policy of strengthening the labor sector; cited as the policy basis for the ruling.

Bellosillo, Vitug, and Kapunan, JJ., concurred.