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Macarthur Malicdem and Hermenigildo Flores v Marulas Industrial Corp.

G.R. No. 204406 | February 26, 2014

Principal test of Project Employment

 Malicdem and Flores were hired by Marulas Industrial Corp. as extruder operators in 2006.
They were in charge of bagging filament yarn, checking the quality of the yarn package,
and cleanliness of the work area.
 They had employment contracts valid for a period of 1 year. They were made to sign a
resignation/quitclaims a day after the expiration of their contract then sign another contract
valid for another year.
o December 2010 – Flores was told not to report to work anymore after signing a
paper acknowledging the completion of his contractual status
o Februrary 2011 – Malicdem was terminated.
o BOTH filed a complaint for illegal dismissal
 LA: No illegal dismissal since their employment naturally ceased because of the expiration
of contract but Marulas must pay the wage differential
 NLRC: Partial grant of appeal to include the payment of 13th month pay, SIL, and holiday
pay for 3 years; MR of petitioners denied.
 CA: Denied the Rule 65 petition
o Issue of whether or not they were project employees or regular employees were
factual I nature and is not within the ambit of a Rule 65 petition
o CA ruled that there was no illegal dismissal hence, the payment of backwages,
separation pay, damages, and attorney’s fees should not be awarded.
o MR denied
 At the Supreme Court, petitioners claim that their continuous rehiring paved the way for
their regularization and, for said reason, they could not be terminated from their jobs
without cause.
o Respondent company countered by citing William Uy Construction Corp. v.
Trinidad where it was held that “repeated and successive rehiring of project
employees did not qualify them as regular employees, as length of service was not
the controlling determinant of the employment tenure of a project employee, but
whether the employment had been fixed for a specific project or undertaking, its
completion had been determined at the time of the engagement of the employee”
W/N the CA erred in not finding GADALEJ on the part of the NLRC
YES. The petitioners have convincingly showed that they are regular employees entitled to full
backwages and other entitlements.
 In paragraph 3(b) of 2008 employment contracts, it states that after the 6-month
probationary period, the petitioners will be reclassified as project employees.
o HOWEVER Art. 281 of the LC states that “an employee who is allowed to
work after a probationary period shall be considered a regular employee”. No
employer is allowed to determine indefinitely the fitness of its employees.
 Maraguinot, Jr. v. NLRC: A project employee who has been (1) continuously, as
opposed to intermittently, rehired by the same employer for the same tasks or nature
of tasks; and (2) those tasks are vital, necessary and indispensable to the usual
business or trade of the employer, must be deemed a regular employee
 The test to determine if the employment is regular or not is the reasonable connection
between the particular activity performed in relation to the usual business or trade of the
employer, even if it is not continuous or merely intermittent.
 IN THE PRESENT CASE: There was deliberate intent to prevent the regularization of the
o No actual project or undertaking to speak of in the contracts.
o Even if they were project employees, the fact that they were repeatedly hired by the
respondent for the same position prove that their work was vital, necessary, and
indispensable to the usual business or trade of the employer. Hence, using
Maraguinot, they shall be deemed regular employees.
o The project employment contracts that the petitioners were made to sign every year
since the start of their employment were only a stratagem to violate their security
of tenure in the company.
o Using William Uy case was also misplaced because the ruling only applies to the
project employees in the construction industry where work depends on availability
of projects.
 Having established that the petitioners were regular employees, their termination is
considered illegal for lack of just or authorized causes.

WHEREFORE, the petition is GRANTED. The assailed July 18, 2012 decision of the Court of
Appeals and its November 12, 2012 Resolution in CA-G.R. SP No. 124470,are hereby
Accordingly, respondent Marulas Industrial Corporation is hereby ordered to reinstate petitioners
Macarthur Malicdem and Hermenigildo Flores to their former positions without loss of seniority
rights and other privileges and to pay their full backwages, inclusive of allowances and their other
benefits or their monetary equivalent computed from the time their compensations were withheld
from them up to the time of their actual reinstatement plus the wage differentials stated in the July
13, 2011 decision of the Labor Arbiter, as modified by the December 19, 2011 NLRC decision.