The Supreme Court upholds validity of job contracting

by Atty. Josephus B. Jimenez (The Freeman) – Sep 28, 2018

Attention, DOLE inspectors. In one rare moment whereby employers and service contractors won their case, the highest court of the land has ruled that legitimate job contracting is perfectly legal, valid, and not prohibited, as long as it is done in accordance with law and DOLE regulations. It also held that when service contractors illegally dismiss their workers, the principal employer is not liable at all. Thus, I am sending a copy of such decision to all my clients all over the country. And I am writing this to explain the nuances and far-reaching implications of said important Supreme Court decision. This is in the case of Leo Mago et al versus Sunpower Manufacturing Ltd. (GR 210961, 24 January 2018).

First of all, the Supreme Court declared that contracting is perfectly legal even if the contractor’s workers perform their work inside the premises of the principal. Take note, dear DOLE inspectors. Second, when the complainant admits that the contractor had been registered with DOLE, whether under DO 18-A or DO 174, such admission and such registration removes the burden of proof from the principal employer to submit evidence of legitimacy of the contractor’s status. Remember this, DOLE inspectors. Third, the High Court reminds DOLE that a contractor’s certificate of registration carries with it the presumption that DOLE conducted its own inquiry on the agency’s legitimacy. It is like saying to DOLE: When you already issued a certificate, you cannot question your own declaration of legitimacy.

Fourth, the Supreme Court admonishes DOLE to believe the documented position of the employers as compared to the bare, baseless, and speculative allegations of the complaining worker. Fifth, and perhaps the most important victory of the principal and the contractors is when the highest court of the land tells DOLE and all and sundry that once substantial capital is proven, there is no need to prove investment in tools, equipment, machineries, and work premises. This has been my position and advocacy from the very start. I have been telling DOLE that you cannot hire an elevator boy and tell him to bring his own elevator. See? The Supreme Court agrees with me because the law, Article 106 of the Labor Code, uses the conjunction “or”. It gives a choice between capital and investment.

Sixth, the Court has re-emphasized the Neri precedent (Neri vs. NLRC, 296 Phil 610, 1993) that when a contractor has substantial capital, it does not need to have equipment, machinery, and tools. This will stop DOLE inspectors from requiring contractual waiters to bring their own spoons, forks, knives, plates, and glasses to the hotels and restaurants where they are deployed. Take note, DOLE inspectors. Seventh is on the issue of control, since the workers get their salaries from the agency, and submit their leave application to it, then it follows that the agency, not the principal controls the workers. Eighth, I wish the Supreme Court ruled that when it comes to illegal dismissal and security of tenure, the jurisdiction belongs to the NLRC and not to the DOLE regional office. Thus, DOLE should stop issuing orders to principals to absorb all workers of the agencies. This is beyond the scope of their power and authority.

Lastly, while we have a very competent new regional director in DOLE Region 7 in the person of Atty. Johnson Cañete, we hope that the DOLE inspectors under him have time to read and really discern the scope of the visitorial power of the DOLE secretary as well as the letter, spirit, and philosophy of the law of legitimate service contracting. This group is employing no less than five million skilled, semi-skilled, and unskilled workers. They give free training and free endorsement of outstanding human capital. Contractors pay millions in taxes. They are assets not burdens to the economy. DOLE should help them and not make their life miserable.

josephusbjimenez@gmail.com