G.R. No. 238289, January 20, 2021.
Oscar S. Ortiz, Petitioner, v. Forever Richsons Trading Corporation, Charverson Wood Industry Corporation, and Adan Co, Respondents.

FACTS

Petitioner Oscar S. Ortiz filed a complaint for illegal dismissal and monetary claims against respondents Forever Richsons Trading Corporation (now Charverson Wood Industry Corporation) and Adan Co. He alleged he was hired by Forever Richsons in June 2011 and signed a 5-month employment contract with Workpool Manpower Services. Despite the contract’s expiration, he continued working for respondents. In April 2013, after news spread that five previous employees won a case in the Court of Appeals, respondents’ paymaster required workers to sign new 5-month contracts, blank papers, and vouchers. Ortiz and a few others refused. He claimed he was a regular employee performing tasks necessary to respondents’ plywood business, was illegally dismissed for his refusal to sign, and was underpaid without statutory benefits. Respondents asserted Ortiz was an employee of Workpool Manpower, a legitimate contractor certified by DOLE, hired under a Contract Agreement as a Project Worker from January to June 2013, and his employment ended due to contract expiration. The Labor Arbiter dismissed the complaint for failure to implead Workpool Manpower as an indispensable party, a ruling affirmed by the NLRC and the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in dismissing the petition based on the failure to implead Workpool Manpower as an indispensable party, and whether a labor-only contracting arrangement exists making Ortiz a regular employee of respondents, thereby rendering his dismissal illegal.

RULING

The petition is meritorious. The Supreme Court held that the CA erred in dismissing the case on a technical ground. The Court reviewed the factual findings due to conflicting conclusions among the tribunals. It ruled that Workpool Manpower is a labor-only contractor, making Ortiz a regular employee of respondents. The determination is based on the elements of labor-only contracting under Department Order No. 18-A. Workpool Manpower lacked substantial capital, as its certification of registration did not prove it met the required P3,000,000.00 capital or net worth. Furthermore, the tasks performed by Ortiz as a machine operator were directly related to respondents’ main business of plywood manufacturing. In a labor-only contracting arrangement, the employees are deemed employees of the principal. Consequently, Ortiz was illegally dismissed without just cause and due process. He is entitled to reinstatement without loss of seniority rights, full backwages, and other benefits from the time his compensation was withheld until actual reinstatement.