BY: ATTY. JULIUS GREGORY B. DELGADO
NOZOMI FORTUNE SERVICES, INC. VS. CELESTINO A. NAREDO, G.R. NO. 221043, JULY 31, 2024: CERTIFICATE OF REGISTRATION FROM THE DEPARTMENT OF LABOR AND EMPLOYMENT ALONE IS NOT A CONCLUSIVE PROOF OF LEGITIMATE JOB CONTRACTING BUT MERELY PREVENTS THE PRESUMPTION OF LABOR-ONLY CONTRACTING FROM ARISING
The case stems from the illegal dismissal complaint filed by respondent Celestino A. Naredo (“Naredo”) against Nozomi Fortune Services, Inc. (“Nozomi”), its Manager Ludy Lasiog, Samsung Electro-Mechanics Phils. (“Samsung”) and its President, Jung Soo Lee, and its Human Resources Manager, Anna Roselle Dayday. Respondent Naredo was hired by Nozomi and assigned to Samsung on various dates between 2003 to 2005. Along with co-workers, Naredo was assigned as production operator for various electronic components manufactured by Samsung. On July 15, 2010, Naredo and his coworkers tendered their voluntary resignation for various personal reasons. A month later, they instituted a complaint for illegal dismissal citing that they were already regular employees of Samsung since they worked for Samsung for more than a year already and their function is necessary and desirable to the business of Samsung. They also averred that Nozomi is only a labor-only contractor and that it is Samsung which supervises them.
Nozomi argued that it is a legitimate job contractor operating its own medical laboratory and diagnostic services. Nozomi also averred that it has training facilities and has numerous service agreements with other companies. Nozomi also asserted that it has a sufficient capitalization. Samsung denied liability stating that the complainants are employees of Nozomi and were merely assigned by virtue of a Service Agreement.
The Labor Arbiter dismissed the complaint stating that Nozomi, having presented a Certificate of Registration as Job Contractor, is presumed to be engaged in legitimate job contracting. Labor Arbiter also noted that Nozomi has a net income of almost a billion in 2009 alone, it has several facilities and separate offices for every Service Agreement to monitor performance of its assigned employees, it has fully computerized payroll and software development centers. Labor Arbiter also ruled that it is Nozomi which paid their wages, has the right to terminate their employment and exercised control and supervision over the complainants. The National Labor Relations Commission affirmed the ruling of the Labor Arbiter. Only Naredo sought relief from the Court of Appeals which held that Nozomi was engaged in labor-only contracting but ruled that Naredo was not illegally dismissed.
On Petition for Review on Certiorari, the Supreme Court held that Nozomi was engaged in labor-only contracting ruling that a Certificate of Registration from the Department of Labor and Employment, by itself, is not a conclusive proof of legitimacy for a manpower provider. The Court held that the same merely prevents presumption of labor-only contracting from arising. In Caballero vs. Vikings Commissary, G.R. No. 238859 (October 19, 2022), the Supreme Court held “to determine whether the contractor was engaged by the principal as a legitimate job contractor or labor-only contractor, the totality of the facts and the surrounding circumstances are to be considered.”
Citing Caballero vs. Vikings Commissary, supra, the Supreme Court distinguished legitimate job contracting and labor-only contracting as follows – legitimate job contracting involves contracting out of work, job or service while labor-only contracting involves the contracting out of only labor. The Court also held that to test that a company is engaged in labor-only contracting is when: (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 Supreme Court found Nozomi to be a labor-only contractor since it did not meet the requirement that it should possess equipment and machinery which are “actually and directly used in the performance of the work or service” to the employer. The machinery and equipment owned used by Naredo in performing his duties and functions are owned by Samsung. On the second test, the Court also held that the function of Naredo in operating a stacking machine to pile chip capacitors to serve as guides for the alignment process in the manufacturing chain is related to the principal business of Samsung which is to produce and export microchips. The Court also noted that the fact that he was offered the opportunity to be absorbed as regular employee proves that his work is directly necessary to Samsung’s principal business and is not merely sporadic and intermittent. Notwithstanding the foregoing, the Supreme Court denied the Petition for Review on Certiorari of Naredo as he failed to prove that his resignation was not voluntary and that he was constructively dismissed.