Title
Maraguinot, Jr. vs. National Labor Relations Commission
Case
G.R. No. 120969
Decision Date
Jan 22, 1998
Workers in film production, initially hired as project employees, were deemed regular employees due to continuous rehiring and vital roles. Their dismissal was ruled illegal, entitling them to reinstatement and back wages.

Case Summary (G.R. No. 127692)

Labor Arbiter’s Findings and Award

The Labor Arbiter ruled that petitioners were employees of Viva, not independent contractors. He applied the “labor‐only contracting” concept, noting Viva’s control over essential film‐making tasks and salary payments. He ordered reinstatement with back wages (computed to December 31, 1993) and attorney’s fees.

NLRC’s Reversal and Project Employee Classification

The NLRC reversed, finding petitioners to be “project employees.” It emphasized:

  • Engagement for specific films with predetermined time frames known at hiring;
  • Irregular work hours and gaps between assignments;
  • Nonexclusive service, as petitioners could accept work elsewhere;
  • Lump‐sum weekly salaries reflecting noncontinuous employment.

Supreme Court’s Standard of Review and Issues

Under Rule 65 certiorari, the Court examined whether the NLRC committed grave abuse of discretion in:

  1. Classifying petitioners as project employees.
  2. Finding no employer–employee relationship with Viva.
  3. Upholding termination upon project completion.

Employer–Employee Relationship: Job vs. Labor-Only Contracting

The Court applied:

  • Section 8 (job contracting): requires independent contractor status supported by capital, equipment, and autonomy.
  • Section 9 (labor‐only contracting): prohibits outsourcing of activities directly related to the employer’s business when the contractor lacks substantial capital.
    Findings:
  • Associate producers lacked substantial capital, equipment, and premises; Viva owned and supplied all major film‐making assets.
  • Producers did not recruit or hire petitioners; Viva’s shooting‐unit supervisor selected crew from a freelance pool.
  • Viva exercised decisive control over film quality, budgets, schedules, personnel rules, and disciplinary measures.

Conclusion: Petitioners were direct employees of Viva under the control test (selection, wage payment, dismissal power, and supervisory authority).

Acquisition of Regular Employee Status

Even if initially engaged per project, petitioners became regular employees by continuous re-hiring for the same tasks essential to Viva’s business. Both worked on numerous successive films over two to three years, demonstrating a de facto work pool and continuity of service.

Illegality of Dismissal and Remedies

Because petitioners had attained regular status, their termination upon project completion lacked valid cause under Artic

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