The Supreme Court (SC) has ironed out anew the difference between “job contracting” and “labor-only contracting” employed by some manpower service agencies in supplying workers to firms and businesses in the country.
In a decision written by Associate Justice Japar B. Dimaampao, the SC reiterated that a Certificate of Registration from the Department of Labor and Employment (DOLE) does not automatically mean a manpower agency is engaged in lawful job contracting.
The SC said that in determining whether a manpower agency is engaged in legitimate job contracting or labor-only contracting requires looking at all the facts and circumstances.
Reiterating its previous ruling, the SC said that “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 person are performing activities which are directly related to the principal business of such employer.”
In “labor-only” contracting, it said “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.”
The SC also said that “permissible job contracting ‘refers to an agreement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance of completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.’”
“Simply put, the permissible job contracting involves contracting out of work, job or service, while prohibited labor-only contracting involves the contracting out of only labor,” it stressed.
The SC decision denied the petition filed by Nozomi Fortune Services, Inc. which challenged the Court of Appeals (CA) ruling that the firm was engaged in labor-only contracting in the cases of Celestino A. Naredo and other workers who were supplied by the manpower firm to Samsung Electro-Mechanics Phils.
A case background issued by the SC’s Public Information Office (SC-PIO) stated that Nozomi hired Naredo and other workers between 2003 and 2005. They were assigned to Samsung, a company that produces and exports microchips, to work as production operators.
It said that in 2010, Samsung informed the workers that their services were no longer needed. This prompted complainants to file a complaint for illegal dismissal and regularization, claiming they were actually regular employees of Samsung and that Nozomi was only a labor-only contractor who processed their wages.
It also said that the labor arbiter and the National Labor Relations Commission (NLRC) dismissed the complaint with a ruling that Nozomi was a legitimate job contractor.
Both the arbiter and the NLC noted that Nozomi was registered with the DOLE and had substantial capital and multiple facilities to meet its employees’ needs, the SC-PIO said in its summary.
Additionally, they found no evidence of illegal dismissal, as the complainants had submitted voluntary resignation letters, it also said.
On appeal, the CA reversed the NLRC ruling and held that Nozomi was a labor-only contractor. The CA’s ruling was affirmed by the SC.
The SC-PIO summary also stated:
“The SC emphasized that determining whether a manpower agency is engaged in legitimate job contracting or labor-only contracting requires looking at all the facts and circumstances.
“A DOLE Certificate of Registration may help prevent assumptions of labor-only contracting, but it does not serve as conclusive proof of legality.
“There is labor-only contracting when (1) a contractor who supplies workers to an employer does not have substantial capital in the form of tools, equipment, work premises, etc., and (2) the workers perform tasks that are directly related to the employer’s principal business.
“Under this arrangement, the contractor is a mere agent of the employer who is ultimately responsible to the workers as if the employer directly employed them.
“In this case, the SC found elements of labor-only contracting. The tools and equipment Naredo used as a production operator belonged to Samsung, not Nozomi.
“His task of operating a stacking machine to pile chip capacitors was essential to Samsung’s production of microchips. Samsung’s supervisors directed his work, demonstrating that Samsung managed and controlled his employment.
“Despite holding a DOLE Certificate of Registration, Nozomi was found by the SC to have engaged in labor-only contracting, with Samsung identified as Naredo’s true employer.
“However, the SC affirmed that there was no illegal dismissal.”
The dispositive portion of the decision:
“All told, Nozomi undeniably engaged in labor-only contracting and Samsung is the true employer of Naredo.
“The foregoing notwithstanding, the Court cannot provide succor to Naredo. The labor arbiter, the NLRC, and the CA were of one mind in declaring that regardless of who his actual employer was, the evidence presented spoke of no illegal dismissal. A perspicacious sifting of the records and the applicable jurisprudence lead the Court of the same conclusion.
“Naredo admitted to resigning from his position but claims that he and the other complainants were coerced to do so to receive ‘financial assistance’ from Nozomi.
“Other than this bare allegation of this purported coercion, however, he proffered no other evidence to support this claim. When the fact of resignation is admitted, it becomes incumbent upon the employee to prove that it was involuntary and that it was actually a case of constructive dismissal.
“Bare allegations of constructive dismissal, when contrary to the evidence on record, cannot be given credence. Unless the fact of dismissal is proven, whether actual or constructive, the validity or legality thereof cannot be put in issue.
“Accordingly, the Petition for Review on Certiorari is denied for lack of merit. The Dec. 10, 2014 Decision and Sept. 3, 2015 Resolution of the Court of Appeals in CA GR SP 125058 are affirmed. So ordered.”