Legitimate Job Contracting vs.

Labor Only Contracting

Legitimate Job Contracting refers to a contractor engaged in a distinct and

independent business and undertakes to perform the job or work on its own responsibility
according to its own manner and method; it has substantial capital to carry out the job framed
out by the principal on his own account, investment in the form of tools, equipment,
machinery and supervision; it is free from control and/or direction from the principal
except as to result thereto, the service agreement ensures compliance with all the rights
and benefits for all employees of the contractor under labor laws.

Labor Only Contracting refers to an arrangement where the contractor or subcontractor

merely recruits, supplies or places workers to perform a job or work for a principal, and
elements enumerated in the Implementing Rules (Dept Order No. 174, Series of 2017)

Reno Foods, Inc. vs. Nagkakaisang Lakas ng Manggagawa-Katipunan

Q: Is criminal conviction necessary to find just cause for termination of employment?

A: No, In Nicolas v. National Labor Relations Commission, it was held that a criminal
conviction is not necessary to find just cause for employment termination. Otherwise
stated, an employees’ acquittal in a criminal case, especially one that is grounded on the
existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty
of acts inimical to the employers’ interests. Criminal cases require proof beyond reasonable
doubt while labor disputes require only substantial evidence, which means such relevant
evidence as a reasonable mind might accept as adequate to justify a conclusion.

Q: Is he qualified for separation pay?

A: No, Separation pay is only warranted when the cause for termination is not attributable to
the employees’ fault, such as those provided in Articles 283 and 284 of the Labor Code, as well
as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed
when an employee is dismissed for just cause, such as serious misconduct.

Migrant Worker's – Seafarers

Q: In cases filed by OFWs, may Labor Arbiters may exercise jurisdiction even absent of the
employment relationship?

A: Yes, In the case of Santiago v. CF Sharp Crew Management Inc., it was held that a seafarer
who has already signed a POEA-approved employment contract but was not deployed overseas
and, therefore, there is no employer-employee relationship, may file monetary claims with the
Labor Arbiter. This is because the jurisdiction of Labor Arbiters is not limited to claims
arising from employer-employee relationship. Under Section 10 of RA 8042 (Migrant
Workers and Overseas Filipino Act of 1995) as amended, the Labor Arbiter may exercise
jurisdiction over the claims of OFWs arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for overseas employment,
including claims for actual, moral, exemplary and other forms of damage.

Colegio Del Santisimo Rosario, vs. Jeric Rojo Forbes

Q: Is an elementary teacher hired for three (3) consecutive school years as a probationary
employee automatically and/or by law becomes a permanent employee?

A: Here the ruled in the affirmative. For teachers on probationary employment, in which case
a fixed term contract is not specifically used for the fixed term it offers, it is
incumbent upon the school to have not only set reasonable standards to be followed by said
teachers in determining qualification for regular employment, the same must have also been
communicated to the teachers at the start of the probationary period, or at the very least, at
the start of the period when they were to be applied.

These terms, in addition to those expressly provided by the Labor Code, would serve as the just
cause for the termination of the probationary contract. The specific details of this finding of just
cause must be communicated to the affected teachers as a matter of due process.

In Tamson’s Enterprises, Inc. v. Court of Appeals,43 we held that “the law is clear that in all
cases of probationary employment, the employer shall [convey] to the employee the standards
under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular
employee.

In this case, glaringly absent from petitioners’ evidence are the reasonable standards that
respondent was expected to meet that could have served as proper guidelines for purposes of
evaluating his performance.