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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
In Nozomi Fortune Services, Inc. v. Naredo, the Supreme Court held that a DOLE Certificate of Recognition, by itself, is not a conclusive proof of legitimacy for a manpower provider. It only prevents the presumption of labor-only contracting from arising.
As a manpower business, Nozomi Fortune Services, Inc. (Nozomi) hired Celestino Naredo (Naredo) and other workers (collectively, complainants) between 2003 and 2005. They were assigned to Samsung, detailed as production operators for the various electronic components that it manufactured.
In May 2010, Nozomi’s branch Manager Ludy Lasiog (Lasiog) told complainants that Samsung would absorb them as regular employees if they passed its examination. Unfortunately, they failed to hurdle the tests and Samsung informed them that their services were no longer needed.
The complainants tendered their voluntary resignation by submitting handwritten letters and a month later, they instituted a complaint for illegal dismissal and regularization before the National Labor Relations Commission (NLRC) claiming they were actually regular employees of Samsung and that Nozomi was only a labor-only contractor who processed their wages.
The Labor Arbiter and the National Labor Relations Commission dismissed the complaint, ruling that Nozomi carried on an independent business as a contractor. They noted that Nozomi enjoys the presumption of being a legitimate independent job contractor, having been duly registered with the DOLE. Moreover, Nozomi had substantial capital and multiple facilities to meet its employees’ needs. Additionally, they found no evidence of illegal dismissal, as the complainants had submitted voluntary resignation letters.
The Court of Appeals reversed the ruling and held that Nozomi was a labor-only contractor.
Issue: Whether Nozomi is a labor-only contractor.
The Supreme Court’s Decision:
A DOLE Certificate of Recognition, by itself, is not a conclusive proof of legitimacy for a manpower provider. It only prevents the presumption of labor-only contracting from arising. To determine whether the contractor was engaged by the principal as a legitimate job contractor or a labor-only contractor, the totality of the facts and the surrounding circumstances are to be considered. All the features of the relationship are assessed.
An entity is engaged in prohibited labor-only contracting when the following are present:
(1) A person who supplies workers to an employer does not possess substantial capital or investment in the form of tools, pieces of equipment or machinery, work premises, among other; and
(2) The workers are made to perform tasks which are directly related to the employer’s principal business.
In gauging the first standard, it is not enough that the contractor possesses substantial capital. In fact, it is undeniable that Nozomi has sufficient capitalization as evinced by its audited financial statements. However, the contractor must also show that is has the equipment and machinery actually and directly used in the performance of the work or service it is contracted to do.
Here, 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.
On the second standard, there can be no serious contest that Naredo’s work was directly related to Samsung’s business. Samsung is engaged in the production and exportation of microchips for the assembly of electronic products. Naredo operated a stacking machine to pile chip capacitors on the press table to serve as guides for the alignment process in the manufacturing chain. His function is necessary to Samsung’s regular business and he is engaged whenever the demand exceeds Samsung’s normal workforce.
Aside from the fact that it was Samsung who paid Naredo’s salary, it was Samsung’s supervisors who gave him the instructions as to the means, method, and specifications for his job. This suffices to prove control. In addition, it bears stressing that Naredo’s engagement with Samsung was on a continuous basis for more than five years.
Therefore, Nozomi undeniably engaged in labor-only contracting and Samsung is the true employer of Naredo.
Source:
Nozomi Fortune Services, Inc. vs. Celestino A. Naredo
G.R. No. 221043 | July 31, 2024
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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