Maraguinot vs NLRC

-Petitioner Alejandro Maraguinot, Jr. and Paulino Enero maintain that they was employed by private
respondents on July 1989 and June 1990 respectively, their salaries were raised periodically and remained
employed until 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 that the cameraman and/or director may assign.
- Sometime in May 1992, petitioners sought the assistance of their supervisors, 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 20 July 1992. Meanwhile,
Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992.
He was again asked to sign a blank employment contract, and when he still refused, private respondents
terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal before the LA.
- Respondents claim that Viva Films is primarily engaged in the distribution and exhibition of movies — but not
in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive
producer, i.e., the financier who invests a certain sum of money for the production of movies distributed and
exhibited by VIVA. They assert that they contract persons called "producers/associate producers” to "produce"
or make movies for them (Viva) and contend that petitioners are project employees of the association
producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship
between petitioners and private respondents. That it was the associate producer of the film "Mahirap Maging
Pogi," who hired Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that
Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent
petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso," later re-tired "Narito and Puso." He went
on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the movie had
already been completed.
LA: complainants are the employees of the respondents. The producer cannot be considered as an
independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere
agent of the real employer, the herein respondent. Complainants are doing activities which are necessary and
essential to the business of the respondents, that of movie-making. Complainant Maraguinot worked as an
electrician while complainant Enero worked as a crew.
NLRC: REVERSED LA. Petitioners are project employees, they were hired for specific movie projects and
their employment was co-terminus with each movie project the completion/termination of which are pre-
determined, such fact being made known to complainants at the time of their engagement.  The work of the
shooting units, which work independently from each other, are not continuous in nature but depends on the
availability of movie projects (they have irregular work hours and sched which explain the lump sum payment
per movie proj, one movie project at a time, complainants were not prohibited from working with such movie
companies like Regal, Seiko and FPJ Productions)
- To support their claim that they were regular (and not project) employees of private respondents, petitioners
cited their performance of activities that were necessary or desirable in the usual trade or business of private
respondents and added that their work was continuous, i.e., after one project was completed they were assigned
to another project. Petitioners thus considered themselves part of a work pool from which private respondents
drew workers for assignment to different projects. 
OSG: found petition to be improper as the issues are of facts and Art 280, LC merely distinguishes between two
types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits." The OSG asserts that what matters is that there was a time-frame for each movie
project made known to petitioners at the time of their hiring.
Issue:  Whether an employer-employee relationship existed between petitioners and private respondents or any
one of private respondents?
Held: Yes. Regular employees of Viva.
-private respondents' evidence even supports the view that VIVA is engaged in the business of making movies.
- Assuming that the associate producers are job contractors, they must then be engaged in the business of
making motion pictures. associate producers must have tools, equipment, machinery, work premises, and other
materials necessary to make motion pictures. However, the associate producers here have none of these. Private
respondents' evidence reveals that the movie-making equipment are supplied to the producers and owned by
VIVA. These include generators, cables and wooden platforms, cameras and "shooting equipment;"  in fact,
VIVA likewise owns the trucks used to transport the equipment.  It is thus clear that the associate producer
merely leases the equipment from VIVA. Private respondents in effect admit that their producers, especially
petitioners' last producer, are not engaged in permissible job contracting.
-If private respondents insist that the associate producers are labor contractors, then these producers can only be
"labor-only" contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor. —
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing
the Labor Code:
Sec. 9. Labor-only contracting. — (a) Any person who undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such person:
(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 which are directly related to the
principal business or operations of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor
shall be considered merely as an agent or intermediary of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders
whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the workers involved. In such case, he may
prescribe conditions and restrictions to insure the protection and welfare of the workers.
- As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere
agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of
VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. It was
Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an
"available group of free-lance workers which includes the complainants Maraguinot and Enero." The
memorandum as evidence showed that the associate producers did not supply the workers required by the movie
project. The relationship between VIVA and its producers or associate producers seems to be that of agency,  as
the latter make movies on behalf of VIVA, whose business is to "make" movies.
- In determining the existence of an employment relationship, namely: (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 of the
employee's conduct, the most important element is the employer's control of the employee's conduct or the
"control test."  Not only as to the result of the work to be done but also as to the means and methods to
accomplish the same.  These four elements are present here (as evidenced by the appointment slip, release of
wages).
- Respondents expressly admitted that petitioners were part of a work pool;  and, while petitioners were initially
hired possibly as project employees, they had attained the status of regular employees in view if VIVA's
conduct.
- It may not be ignored, however, that private respondents expressly admitted that petitioners were part
of a work pool;  and, while petitioners were initially hired possibly as project employees, they had
attained the status of regular employees in view if VIVA's conduct.
-A project employee or a member of a work pool may acquire the status of a regular employee when the
following concur:
1) There is a 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. 
However, the length of time during which the employee was continuously re-hired is not controlling, but
merely serves as a badge of regular employment.
-In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years
and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3)
years and worked on at least twenty-three (23) projects.  Their tasks were vital, necessary and indispensable to
the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is
ascertained by considering the nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety. 
- 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 of 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.
- Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool
employee even outside the construction industry, he is deemed, ipso jure, a regular employee. 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. To
rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/DO 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.
- petitioners had already gained the status of regular employees, their dismissal was unwarranted , for the cause
invoked by private respondents for petitioners' dismissal, viz.: completion of project, was not, as to them, a valid
cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to back wages
and reinstatement, without loss of seniority rights and other benefits that may have accrued.  Nevertheless,
following the principles of "suspension of work" and "no pay" between the end of one project and the start of a
new one, in computing petitioners' back wages, the amounts corresponding to what could have been earned
during the periods from the date petitioners were dismissed until their reinstatement when petitioners' respective
Shooting Units were not undertaking any movie projects, should be deducted.
-Granted. NLRC Annulled. LA decision reinstated.