Case Summary (G.R. No. 238289)
Background and Petitioner’s Claims
Oscar S. Ortiz filed a complaint for illegal dismissal and monetary claims against respondents, asserting he was a regular employee of the respondents despite initially signing a five-month contract with Workpool Manpower Services. He alleged continuous employment beyond the contract’s expiration, refusal to sign a subsequent five-month contract resulting in illegal dismissal, and non-payment of lawful benefits such as holiday pay, 13th month pay, service incentive leaves, overtime pay, and payment below the prescribed minimum wage. Ortiz sought reinstatement, backwages, moral and exemplary damages, and attorney’s fees.
Respondents’ Position
Respondents contended Ortiz was not their employee but was employed by Workpool Manpower—a legitimate, DOLE-certified job contractor—which supplied workers for a fixed duration. They argued Ortiz had signed a contract with Workpool Manpower effective January to June 2013, and his wages and related contributions were paid by this contractor. Accordingly, respondents claimed they had no employment relationship with Ortiz and thus no authority to dismiss him or pay his claims.
Procedural History and Labor Tribunal Decisions
The Labor Arbiter dismissed Ortiz’s complaint due to his failure to implead Workpool Manpower as an indispensable party, based on the assertion that Workpool Manpower was Ortiz’s direct employer. The Labor Arbiter also held Workpool Manpower as a legitimate labor contractor and Ortiz as its regular employee due to continued service beyond the contract period. The National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision, emphasizing the indispensability of Workpool Manpower’s participation to adjudicate the case. The Court of Appeals similarly dismissed Ortiz’s petition for certiorari, upholding the necessity to implead Workpool Manpower and agreeing with the labor tribunals that Workpool Manpower was the employer. Ortiz’s motions for reconsideration were denied, prompting this petition before the Supreme Court.
Issues for Resolution
The principal issues for the Court’s determination were:
- The existence and nature of the employment relationship among Ortiz, the respondents, and Workpool Manpower.
- Whether labor-only contracting existed in this case.
- Whether Ortiz was illegally dismissed by the respondents.
Legal Standards on Labor-Only Contracting
Under Article 106 of the Labor Code and DOLE Department Orders No. 18-02 and No. 18-A, labor-only contracting is prohibited. It occurs when a contractor, lacking substantial capital or investment, supplies workers to perform activities directly related to the principal employer’s business, without exercising control over the workers. Legitimate contracting requires:
(a) Registration and independent business operation by the contractor, responsible for job performance;
(b) Substantial capital or investment in tools, equipment, machinery, or work premises; and
(c) Service agreements ensuring workers’ statutory rights and benefits.
The presence of registration creates a presumption of legitimacy but can be rebutted by showing lack of capital or absence of control over workers.
Analysis of Contractual Relationship and Evidence
The Court found that despite Workpool Manpower’s DOLE registration, substantial capital or investment was not proven, as it supplied no tools, equipment, or machinery; these were owned and controlled by respondents. Ortiz’s work involved operating machinery integral to plywood manufacturing, a core business of respondents. Ortiz testified, uncontested, that he was hired directly by respondents in 2011, trained by respondents’ personnel, supervised by respondents’ leadmen, and paid wages by respondents’ paymaster. The contract purportedly signed by Ortiz with Workpool Manpower was not presented as evidence by respondents.
The work arrangement resembled labor-only contracting, as Workpool Manpower acted merely as a manpower supplier without exercising control or supervision over Ortiz. The respondents’ contractual agreement with Workpool Manpower designated the latter as responsible for personnel discipline and payment but did not reflect actual operational control.
Legal Consequence: Employer Identity and Party Indispensability
Since labor-only contracting was established, the personality of Workpool Manpower and the respondents was legally merged, rendering Workpool Manpower merely an agent of respondents. Consequently, the labor contractor was not an indispensable party to the case, and refusal to implead it could not be a basis to dismiss Ortiz’s complaint. The respondents were deemed Ortiz’s true employer.
Illegality of Dismissal
As a regular employee performing tasks necessary to respondents’ principal business, Ortiz is protected by the security of t
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Case Syllabus (G.R. No. 238289)
Background and Procedural History
- Oscar S. Ortiz (Oscar) filed a complaint for illegal dismissal and money claims against Forever Richsons Trading Corporation (later Charverson Wood Industry Corporation) and Adan Co (respondents) on June 28, 2013.
- Oscar alleged he was hired directly by respondents in June 2011 under a 5-month contract via Workpool Manpower Services, a manpower agency.
- Despite the expiration of the contract, Oscar continued working for respondents and refused to sign new 5-month contracts and other documents upon respondents’ demand in April 2013.
- Oscar claimed regular employee status due to continuous service for more than two years performing tasks necessary for respondents’ plywood manufacturing business.
- He asserted illegal dismissal for refusing to sign the contracts and claimed unpaid wages, holiday pay, 13th month pay, service incentive leave pay, overtime pay, and other benefits.
- Respondents maintained Oscar was employed by Workpool Manpower, a legitimate labor contractor certified by DOLE, and had no employer-employee relationship with Oscar.
- The Labor Arbiter dismissed the complaint for failure to implead Workpool Manpower, ruling that Oscar was a regular employee of Workpool Manpower but not of respondents.
- The NLRC affirmed the dismissal, agreeing Workpool Manpower was an indispensable party.
- The Court of Appeals (CA) upheld the NLRC ruling, dismissed the petition for failure to implead Workpool Manpower, and ruled that Workpool Manpower was Oscar’s employer.
- Oscar moved for reconsideration, which was denied, prompting the present petition for review on certiorari.
Issues Presented
- Whether Oscar S. Ortiz is a regular employee of respondents despite the contract with Workpool Manpower.
- Whether Workpool Manpower is a legitimate labor contractor or a labor-only contractor.
- Whether respondents illegally dismissed Oscar.
- Whether Workpool Manpower is an indispensable party in the case.
- Whether the CA erred in dismissing the petition on technical grounds without addressing substantive issues.
Parties’ Arguments
Oscar’s Arguments:
- He was directly hired by respondents in June 2011 and performed work under respondents’ control using respondents’ equipment.
- Workpool Manpower is a labor-only contractor, lacking substantial capital, equipment, and control over workers, thus respondents are his real employer.
- His dismissal for refusing to sign new contracts was illegal.
- The order to implead Workpool Manpower was a mere technicality violating his substantive rights.
- Requests reinstatement with full backwages and attorney’s fees.
Respondents’ Arguments:
- Oscar is employed by Workpool Manpower as evidenced by the contract and salary payments.
- Workpool Manpower is a legitimate job contractor registered with DOLE.
- Workpool Manpower is an indispensable