CASE DIGEST
Ortiz v. Forever
Richsons Trading Corp.
G.R. No. 238289, [January 20, 2021]
SECOND, LOPEZ, M.
Illegal Dismissal and Money Claims; Labor-only Contracting
The prohibition against labor-only
contracting is established in Article 106 of the Labor Code. This doctrine
prohibits arrangements where a contractor merely supplies workers to an
employer without substantial capital or control over the workers.
Oscar S. Ortiz (Oscar) filed a complaint for illegal dismissal and monetary claims against Forever Richsons Trading Corporation (now Charverson Wood Industry Corporation) and Adan Co (respondents) on June 28, 2013. He alleged that he was hired by Forever Richsons in June 2011 under a 5-month employment contract with Workpool Manpower Services (Workpool Manpower). Despite the contract's expiration, Oscar continued working for the respondents. When news of successful cases by previous employees spread, respondents required workers to sign new contracts, blank papers, and vouchers. Oscar refused and was subsequently dismissed.
Whether or not Oscar’s dismissal was
legal.
NO. The court ruled in favor of Oscar. In determining
the existence of an employer-employee relationship and the validity of
dismissal, courts must closely examine the nature of the contracting
relationship between parties. Specifically, the case emphasizes the prohibition
against labor-only contracting, where a contractor supplies workers to an
employer without substantial capital or control over the workers, as defined in
Article 106 of the Labor Code. The Court
found that Workpool Manpower was a labor-only contractor, as it lacked
substantial capital and control over its workers. Oscar, who performed tasks
essential to the respondents' business and was paid by them, was considered a
regular employee. Since his dismissal lacked valid cause, he was entitled to
reinstatement with full backwages and benefits.
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