Continuous Project Employment and Regularization: The Villarico Ruling

The Supreme Court’s 2021 decision in Villarico v. D.M. Consunji, Inc. clarifies a critical point in Philippine labor law: repeated and successive project employment contracts do not automatically make a worker a project employee. When a worker is continuously rehired for years, performing tasks necessary to the employer’s business, the law may consider that worker regular — regardless of what the contracts say.

The case also illustrates how a valid dismissal can still be procedurally defective, and what that costs an employer.

The Facts of the Case

Joy M. Villarico first worked for D.M. Consunji, Inc. (DMCI) as a laborer in November 2007. Over the next nine years, he was assigned to various projects — as a laborer, then a rigger, and finally a crane operator. His last assignment was the NAIA Expressway Project in March 2016.

When his contract expired on April 22, 2016, DMCI did not renew it. Villarico later applied for re-employment but was declared unfit after testing positive for tetrahydrocannabinol, a dangerous drug under Republic Act No. 9165. He filed a complaint for illegal dismissal, claiming he was a regular employee who had been dismissed without just cause and due process.

The Labor Arbiter, the NLRC, and the Court of Appeals all ruled against Villarico, holding that he was a project employee whose contract simply expired. The Supreme Court reversed in part.

The Issue

Was Villarico a project employee or a regular employee? And if his dismissal was valid, did DMCI still violate his right to due process?

The Ruling: Repeated Hires Can Create Regular Employment

The Supreme Court ruled that Villarico was a regular employee, not a project employee.

Under Article 295 of the Labor Code, employment is regular when the employee performs activities “usually necessary or desirable” to the employer’s business — unless the employment is fixed for a specific project whose completion was determined at the time of hiring.

The Court applied two tests: (1) whether the employee was assigned to a specific project, and (2) whether the duration and scope of that project were specified at the time of engagement. But the Court emphasized that repeated and successive rehiring can override the project label.

Here, DMCI continuously employed Villarico for nine years with barely any gaps between appointments. His skills as a laborer, rigger, and crane operator were necessary and desirable to DMCI’s construction business. Citing its earlier rulings in D.M. Consunji Corp. v. Bello and D.M. Consunji, Inc. v. Jamin, the Court held that such continuous, successive rehiring makes an employee regular.

The completion of a project, therefore, was not a valid ground to terminate a regular employee.

Just Cause, But No Due Process

Despite finding Villarico regular, the Court ruled he was not illegally dismissed. DMCI had just cause: Villarico tested positive for prohibited drugs. Under Article 297 of the Labor Code, drug use constitutes serious misconduct. The Court noted that an employee under the influence of drugs poses a serious threat to co-workers and property — especially a crane operator.

However, DMCI failed the twin-notice requirement. A valid dismissal requires two notices: one informing the employee of the charge, and another informing him of the decision. DMCI issued neither. The termination paper merely cited project completion, not the drug test result. For this procedural lapse, the Court awarded Villarico P30,000.00 in nominal damages.

Monetary Claims and Liabilities

The Court also ordered DMCI to pay Villarico’s 13th month pay and service incentive leave pay for 2007 to 2016. The bank advisories DMCI submitted were insufficient proof of payment — they did not establish that the accounts belonged to Villarico or that he received the amounts.

Villarico was also awarded attorney’s fees of 10% of the total award, plus legal interest of 6% per annum from finality of the decision. The corporate officer impleaded was not held personally liable, as there was no evidence of malice or bad faith.

Practical Takeaways

• Project labels are not conclusive. An employer cannot simply call a worker a “project employee” to avoid regularization. Continuous, successive rehiring for years — with tasks necessary to the business — can make the worker regular under Article 295 of the Labor Code.
• Documentation matters, but substance prevails. Appointment papers and DOLE reports help establish project employment, but they do not override the reality of continuous service.
• Valid cause is not enough. Even with just cause for dismissal, employers must observe the twin-notice rule. Failure to do so results in nominal damages of P30,000.00.
• Proof of payment is the employer’s burden. Bank advisories that do not clearly identify the employee or confirm receipt may not satisfy the burden of proving payment of 13th month pay and service incentive leave.
• Drug use is serious misconduct. Testing positive for dangerous drugs can justify dismissal, especially in safety-sensitive roles.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.