THE Supreme Court (SC) has ruled that a certificate of registration from the Department of Labor and Employment (DOLE) is not a proof of a manpower agency’s legality or that it is engaged in lawful job contracting.
This was the gist of the 10-page decision of the Third Division of the High Court, penned by Associate Justice Japar Dimaampar, where it held that Nozomi Fortune Services, Inc., a manpower agency, engaged in labor-only contracting when it hired complainant Celestino Naredo and assigned him to Samsung Electro-Mechanics Philippines as a production operator from 2003 to 2005.
The decision was promulgated on July 31, 2024 but only made public on Monday.
In its ruling, the SC affirmed the Court of Appeals (CA) decision that Nozomi was a labor-only contractor and emphasized that the determination if a manpower agency is engaged in legitimate job contracting or labor-only contracting requires looking at all the facts and circumstances.
It stressed that a DOLE certificate of registration may help prevent assumptions of labor-only contracting, but it does not serve as conclusive proof of legality.
“Tested against the totality of circumstances established by the evidence presented, the Court finds that the CA correctly held that Nozomi is engaged in labor-only contracting,” it said.
Court records showed that Naredo and other Nozomi-contracted workers were assigned to Samsung, a company that produces and exports microchips, to work as production operators.
In 2010, Nozomi informed the workers that their services were no longer needed, prompting Naredo and the other workers 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 which processed their wages.
To recall, the Labor Code differentiates between two types of contracting, namely, legal job contracting and the prohibited labor-only contracting.
Under the job contracting setup, the contractor supplies another business or company with workers, along with the necessary tools and equipment for their tasks. The contractor is also responsible for controlling and supervising the workers as their employer.
On the other hand, labor-only contracting sees the contractor supplying only workers without the necessary tools or equipment.
The Labor Arbiter and the National Labor Relations Commission dismissed Naredo’s complaint, ruling that Nozomi was a legitimate job contractor as it was registered with the DOLE and had substantial capital and multiple facilities to meet its employees’ needs.
Additionally, the NLRC said it found no evidence of illegal dismissal, as the complainants submitted voluntary resignation letters.
The complainants elevated the case to the appellate court, which ruled in their favor, saying that Nozomi is a labor-only contractor and Samsung is the respondents’ true employer. This prompted Nozomi to elevate the case to the High Court, leading to the current ruling.
The SC said that in the labor-only contracting arrangement, the business or company manages the workers and is considered their true employer.
It said there is labor-only contracting when a contractor who supplies workers to an employer does not have substantial capital in the form of tools, equipment, work premises, and the workers perform tasks that are directly related to the employer’s principal business.
Under this arrangement, it added, the contractor is considered a mere agent of the employer who is ultimately responsible to the workers as if it directly employed them.
In the Nozomi case, the SC said it 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,” it held.
“There is nothing on record to show that Nozomi provided Naredo with the tools and equipment to perform his tasks as a production operator. There also does not appear to be any declared technical equipment in its financial statements for this particular kind of work. This lends further credence to Naredo’s claim that the equipment used in his job assignment were actually owned by Samsung,” it added.
“All told, Nozomi undeniably engaged in labor-only contracting and Samsung is the true employer of Naredo,” the SC underscored.
In the same ruling, though, the SC also ruled that Naredo was not illegally dismissed from his job as he admitted to resigning from his position.
Concurring with the decision were Associate Justices Benjamin Alfredo Caguioa, Henri Jean Paul Inting, Maria Filomena Singh, and Samuel Gaerlan. –
