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AT A GLANCE:
The power of control is the most significant factor to consider in order to determine the existence of an employer-employee relationship.
As a manpower business, petitioner Nozomi Fortune Services, Inc. hired respondent Celestino A. Naredo and several others (collectively, complainants) and assigned them to Samsung on various dates between 2003 and 2005. Sometime in May 2010, Nozomi’s branch manager, Ludy Lasiog, told complainants that Samsung would absorb them as regular employees if they passed its examination. Unfortunately, they failed to hurdle the tests. Samsung informed them that their services were no longer needed.
On July 15, 2010, complainants all tendered their voluntary resignation by submitting handwritten letters citing various personal reasons. A month later, they instituted a complaint for illegal dismissal and regularization before the National Labor Relations Commission (NLRC).
The Labor Arbiter dismissed the complaint for lack of merit, holding that Nozomi carried on an independent business as a contractor. Having been duly registered with the DOLE, it thus enjoys the presumption of being a legitimate independent job contractor. In resolving the argument on illegal dismissal, the Labor Arbiter declared complainants to have voluntarily resigned from their posts. It was incumbent upon them to prove the fact of dismissal before the burden shifted to their employer to prove that it was done for just cause. However, they failed to discharge this burden.
The NLRC affirmed the judgment of the Labor Arbiter, finding that Nozomi was the employer of complainants after applying the fourfold test.
The Court of Appeals (CA) upheld the finding that Naredo was not illegally dismissed. Nevertheless, it declared that Nozomi is a labor-only contractor and Samsung is Naredo’s true employer. Still, there was no proof that Naredo was illegally dismissed. Hence, this petition for review on certiorari.
The issue in this case is whether or not the CA erred in finding grave abuse of discretion amounting to lack or excess of jurisdiction in the rulings of the NLRC, and in declaring that Nozomi is a labor-only contractor.
The Supreme Court Decides
The Supreme Court denied the petition for review on certiorari for lack of merit.
The Court found that the CA correctly found grave abuse of discretion in the rulings of the NLRC. The Court emphasized that a DOLE Certificate of Registration, by itself, is not a conclusive proof of legitimacy for a manpower provider. It only prevents the presumption of labor-only contracting from arising.
The CA correctly held that Nozomi is engaged in labor-only contracting. 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 others; and (2) the workers are made to perform tasks which are directly related to the employer’s principal business.”
The Court held that the power of control is the most significant factor to consider in order to determine the existence of an employer-employee relationship. 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, Naredo’s engagement with Samsung was on a continuous basis for more than five (5) years, a fact that was not controverted by either Nozomi or Samsung.
The Labor Arbiter, the NLRC, and the CA were of one mind in declaring that, regardless of who Naredo’s actual employer was, the evidence presented spoke of no illegal dismissal. The Court arrived at the same conclusion.
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/ 09175772207/ 09778050020.
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