GR 209418; (December, 2015) (Digest)
G.R. No. 209418, December 07, 2015
W.M. MANUFACTURING, INC., PETITIONER, VS. RICHARD R. DALAG AND GOLDEN ROCK MANPOWER SERVICES, RESPONDENTS.
FACTS
Petitioner W.M. Manufacturing, Inc. (WM MFG) entered into a Service Agreement with respondent Golden Rock Manpower Services (Golden Rock), a contractor. Golden Rock subsequently hired respondent Richard Dalag under a five-month Employment Contract and assigned him to work at WM MFG’s factory as a side seal machine operator. On August 7, 2010, Dalag was prevented from entering his work station by a company security guard. He alleged this constituted illegal dismissal without notice or cause, claiming his job was necessary and desirable to WM MFG’s business, making him a regular employee. He further contended that Golden Rock was engaged in labor-only contracting, as WM MFG supplied the equipment, workplace, and supervised his work.
WM MFG and Golden Rock countered that Dalag was not dismissed but had abandoned his work. They presented memos showing Dalag was required to answer charges of gross negligence, qualified theft, and machine sabotage. The final memo detailed findings from an investigation and directed him to explain within 24 hours. They argued the contract was for a fixed period and that Golden Rock was a legitimate independent contractor.
ISSUE
Whether WM MFG and Golden Rock are solidarily liable for the illegal dismissal of respondent Dalag.
RULING
Yes, the Supreme Court affirmed the solidary liability of WM MFG and Golden Rock. The legal logic proceeds from a determination of the employment relationship. The Court found that Golden Rock was engaged in labor-only contracting, as defined under Article 106 of the Labor Code and Department Order No. 18-02. The elements were present: the contractor (Golden Rock) did not have substantial capital or investment, and the work assigned to Dalag (side seal machine operator) was directly related to, and necessary and desirable in, the principal’s (WM MFG’s) main manufacturing business. Consequently, Golden Rock was considered merely an agent of WM MFG. Under the law, in labor-only contracting, the principal is deemed the direct employer of the workers supplied by the contractor.
Having established WM MFG as the direct employer, the Court examined the dismissal. Dalag’s preventive suspension and eventual barring from work, based on memos alleging infractions, constituted a dismissal. The employer failed to prove the alleged grounds for termination (negligence, theft) with substantial evidence. Furthermore, WM MFG and Golden Rock failed to comply with the twin-notice requirement and a hearing, violating Dalag’s right to procedural due process. As the direct employer found to have illegally dismissed Dalag, WM MFG is solidarily liable with its agent, Golden Rock, for the resulting monetary claims, including backwages and separation pay in lieu of reinstatement. The stipulations in the Service Agreement attempting to waive such liability are void as they contravene law and public policy.