Unsubstantiated belief

Job contracting or subcontracting is a legitimate arrangement where the law creates an employer-employee relationship between the principal and the person hired by the job contractor only to ensure that the latter’s wages are paid so that the principal becomes jointly and severally liable with the job contractor only for the payment of said wages. In labor-only contracting on the other hand, the labor only contractor is a mere agent of the principal so that the law creates an employer-employee relationship between the principal and the person hired by the labor contractor for a comprehensive purpose to prevent the circumvention of labor laws. Thus the principal becomes solidarily liable with the labor-only contractor for all the rightful claims of the latter’s employees. This case of Ramil is an example of a legitimate job contracting arrangement not a labor-only contract.

Ramil was first contracted by a manufacturer of agricultural fertilizers and crop protection products (Bayer) in April 1992 as crop protection technician. His job was to promote and market the latter’s products in Panay Island under the supervision of its sales representative. In 1996, Ramil’s employment with Bayer ended prompting him to seek employment elsewhere.

On April 7, 1997 however Bayer reemployed Ramil through another independent company (PIM) which Bayer hired to promote and market its products under a Contract of Promotional Services, as the latter was primarily engaged in such promotion and marketing business with several other big clienteles. Ramil performed the same task as crop protection technician promoting Bayer products to farmers and dealers in Panay Island under the direct supervision of Ed, PIM president and general manager.

Ramil continued working and receiving compensation as crop technician until he unilaterally stopped reporting for work sometime in January 2002 upon expiration of his authorized leave of absence. 

Believing that his employment was terminated, Ramil filed a complaint for illegal dismissal with the NLRC against Bayer and its sales supervisor Dan, PIM and its president Ed. According to him, as early as October 2001, he was directed by the Bayer sales representative to submit his letter of resignation but he refused. Then in January 2002, he was ordered by Dan, the Bayer district sales manager in Panay to quit and to return all the pieces of service equipment issued to him but again he refused and continued performing his job. Then on April 7, 2002, he received a memorandum that he would be transferred to Luzon of which he sought reconsideration but to no avail. Then, he claimed that Dan and Ed spread rumors that reached dealers that he was not anymore connected with Bayer and any transaction with him would no longer be honored by April 30, 2002.

Bayer and Dan denied any employer-employee relationship with Ramil explaining that Ramil’s work at Bayer was simply occasioned by its Contract of Promotional Services with PIM. PIM and Ed on the other hand admitted that Ramil was hired as an employee on a contractual basis with no fixed hours and minimal supervision and his performance was gauged on the accomplishment report submitted by Bayer. They said that Ramil was not dismissed and just stopped reporting for work at his new work station in Luzon where he was reassigned in accordance with the personnel reorganization program.

While the Labor Arbiter found Bayer, PIM, Dan and Ed guilty of illegal dismissal, the NLRC reversed such ruling holding that as independent contractor PIM was Ramil’s employer but there was no evidence that he was dismissed and was deemed to have abandoned his work for failing to report for work upon expiration of his authorized leave. Was the NLRC correct?

Yes. Permissible job contracting refers to an arrangement whereby a principal agrees to farm out with a contractor or subcontractor the performance of a specific job or service within a definite or predetermined period regardless of whether such job or service is to be performed or completed within or outside the premises of the principal.

In this case, PIM is a legitimate job contractor because (1) it had a contract with Bayer for the promotion and marketing of its products; (2) it had an independent business and provide service nationwide to big companies under its own responsibility and its own manner and method free from control and direction of Bayer; (3) per record its total assets, capital and investment are substantial amounting to an average of P.5 million. Furthermore, it also posted a bond of P100,000 to answer for any claim of its employees for unpaid wages and other benefits.

As legitimate job contractor PIM is clearly the employer of Ramil who was hired as crop protection technician on April 7, 1997 paying him his wages and other benefits with power to discipline him. There is no evidence at all that he was dismissed but he unilaterally stopped reporting for work merely based on his unsubstantiated belief that Dan and Ed has spread rumors that his transaction would no longer be honored. While the employer has the burden of showing that dismissal was for a valid cause, the employee must first establish by substantial evidence that there was dismissal (Gallego vs. Bayer Phils.Inc. et. al. G.R. 179807, July 31, 2009).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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