CASE DIGEST
Ortiz v. Forever
Richsons Trading Corp.
G.R. No. 238289, [January 20, 2021]
EN BANC, LOPEZ, M.V
Legitimate Job
Contracting
While the existence of registration in favor of a contractor is a strong badge of legitimacy, the elements of substantial capital, or investment and control over the workers may be examined to rebut the presumption of regularity to prove that a contractor is a labor-only contractor.
Oscar S. Ortiz filed a complaint
against Forever Richsons Trading Corporation, now Charverson Wood Industry
Corporation, alleging illegal dismissal and monetary claims. He claimed to be a
regular employee, having served them for two years after the expiration of his
initial 5-month contract, and performed tasks essential to the company's
plywood manufacturing and marketing. He was allegedly terminated for refusing
to sign a new contract and blank papers. The respondents argued that they
contracted Workpool Manpower, a registered independent job contractor, for
supplying workers, and Oscar signed a contract with them. Workpool Manpower
confirmed Oscar's employment with them, terminated upon contract expiration.
The Labor Arbiter (LA) dismissed Oscar's complaint for not including Workpool
Manpower as a necessary party, deeming him their regular employee. The NLRC and
the CA affirmed this decision, recognizing Workpool Manpower as Oscar's
employer.
Whether or not Workpool Manpower is a legitimate labor contractor.
NO. Workpool
Manpower is a labor-only contractor. Article 106 of the Labor Code defines labor-only
contracting as an arrangement where a person supplies workers to an employer to
perform activities directly related to the employer's principal business
without substantial capital or investment. Legitimate contracting requires the
contractor to have registration, carry out work independently, have substantial
capital, and ensure compliance with labor laws. Despite Workpool Manpower's
registration, it lacked substantial capital and control over workers. Oscar's
employment directly with the respondents, performing tasks integral to their
plywood manufacturing, indicated labor-only contracting. The agreement between
respondents and Workpool Manpower showed the latter's sole obligation was to
provide workers. Additionally, Oscar's use of respondents' machinery and
receipt of wages from them indicated his direct employment with them.
Therefore, Workpool Manpower was deemed a mere labor supplier.
Whether or not Oscar is an employee of and was
illegally dismissed.
YES. Forever Richsons Trading Corporation, are the
employers of Oscar who they illegally dismissed. Due to the prohibited form of
contracting between Workpool Manpower and the respondents, it is unnecessary to
include Workpool Manpower as a party to the case. In labor-only contracting,
the principal and contractor's personalities merge, making Workpool Manpower a
mere representative of the respondents. Despite the respondents claiming
Oscar's termination was due to the expiration of his contract, Oscar had worked
for them for over a year, performing tasks integral to their plywood
manufacturing business. Therefore, Oscar is considered a regular employee, and
his dismissal must be for a valid cause, not merely because of the contract's
end. Consequently, the petition is granted, and Oscar S. Ortiz is declared
illegally dismissed. The respondents are ordered to reinstate Oscar to his
former position without loss of seniority rights and privileges and to provide
backwages and other benefits from the time of his dismissal to the time of
actual reinstatement.
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