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The latest Supreme Court decisions on labor contracting

After all the seminars, the conferences and the workshops, it is sad to note that employers still keep on committing the same mistakes. Company owners do not listen to their personnel and HR managers. Management seems never to learn. The companies always take the risks as business judgment, so to say. They use labor-only contracting and project employment as a scheme to save money. Then they end up spending a lot of more money in litigation and in attorney's fees. They try to save on a few thousands in terms of labor cost, and yet, when the adverse decisions come, the good name and reputation of the company is ruined, or besmirched, and they end up losing millions in legal expenses. The workers are paid pittance and the giant law firms end up collecting fat attorney's fees. This is a phenomenon that we need to rectify. And do it fast.

The Supreme Court has never wavered in its consistent array of labor decisions. Labor-only contracting is absolutely prohibited. Employers must deal only with legitimate job contractors that have substantial capital (at least, 3 million paid-up), and the work to be contracted should not be usually necessary or desirable to the usual or main business or trade of the employer. In A S Alilin vs PC (name of a big oil firm is withheld to protect its reputation), GR 177592, the Supreme Court on 09 June 2014, again ruled against the principal employer for dealing with a labor-only contractor since the 1990's. The Court held the company liable for all the benefits and wages of the workers who worked for so long and uninterrupted. The nature of work done was part of the essential work related to the oil industry.

The High Court quoted its ruling in the case of Digitel Telecom ( GR 184903-94, 10 Dec 2012, 683 SCRA 466 ), and also the ruling in the case of Garden of Memories Park and Life Plan, GR 160778, 08 Feb 2012, 665 SCRA 293. The Supreme Court held that the principal employer bears the burden of proof when it alleges that its contractor is legitimate. It is not the duty of the workers to prove that the contractor is a labor-only contractor. It is rather the duty of the principal employer that the contractor has substantial capital. The lawyers know all about this case. The personnel managers also know this. Then why are the companies still practicing this legally denounced activity? Is it only a matter of saving labor cost, which, in many cases is being justified as a legitimate business judgment?

In another new case, decided on 26 February 2014, the Supreme Court ruled in the case of MacArthur Malicdem vs MIC, GR 204206 that a project employment that has been repeated and repeated involving the same workers for a regular work, which is not really a project, is really a REGULAR JOB. The employers cannot hide under the scheme of Project employment in order to deprive the workers from the wages and salaries and benefits of regular employees. The High Court explained the philosophy of these rulings, quoting Maraguinot  vs NLRC (348 Phil 580), is to implement Article 286 of the Labor Code. The Court could not allow circumvention of the law by allowing employers' scheme to prevent workers from acquiring regular status. The Court and the DOLE, as instrumentality of the State has the mandate and the duty to afford full protection to labor.

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