LINGNAM vs. Skills and Talent Employment Pool, Inc.

(STEP)

FACTS
Respondent Colaste, entered a contract with Skills and Talent Employment Pool, Inc. (STEP) as
its project employee. He was assigned to work at Lingnam Restaurant, a client of STEP, as an assistant
cook/ utility. Colaste alleged that he was illegally terminated by Lingnam Restaurant when his
contract ended.

LEGAL ARBITER
Colaste filed a case for illegal dismissal against Lingnam Restaurant and STEP. Lingnam
Restaurant denied that it is the employer of Colaste, alleging STEP to be its real employer. Legal
Arbiter dismissed the complaint for lack of merit, ruling that STEP is the real employer of STEP,
as it has direct powers and responsibilities over Colaste.

NLRC
Colaste appealed to the National Labor Relations Commission (NLRC), which remanded
the case to the arbitration branch of origin for failure of ruling on the illegal dismissal case.

LABOR ARBITER (Remanded Case)

Lingnam restaurant was guilty of illegal dismissal, as Colaste’s job in the establishment
was necessary and desirable (assistant cook) to the business, thus, he is considered as regular
employee.

NLRC
Lingnam appealed to the NLRC, the decision was reversed and set aside. STEP was made
liable for the constructive dismissal of Colaste. That STEP is an independent contractor
providing manpower services to Lingnam Restaurant (thus, an employee-employer relationship
existed between STEP and Colaste, who was assigned to one of STEP’s clients, Lingnam
Restaurant)

COURT OF APPEALS (review for certiorari)

STEP filed with the CA a petition for certiorari. CA reversed and set aside the decision of
the
NLRC and reinstated and affirmed the decision of the Labor Arbiter. Court of Appeals held that
Colaste’s employer is Lingnam Restaurant, which illegally dismissed Colaste. The employment
of Colaste was co-terminus, arising from the nature of agreement between STEP and Lingnam;
and that STEP merely acted as a placement agency providing manpower to Lingnam.

ISSUE:
Whether or not STEP is engaged in labor-only contracting, hence, petitioner Lingnam Restaurant
is the employer of Jessie Colaste and is liable for his illegal dismissal.

HELD:
 Yes. STEP was engaged in labor-only contracting, as determined by the nature of the
contract between the parties involved, towards complainant, Colaste. SC ruled that since STEP
was engaged in labor only contracting, Lingnam Restaurant shall be deemed as the employer of
Jessie Colaste. Lingnam Restaurant shall be responsible to Colaste in the same manner and
extent as if he were directly employed by the company

In the case decided by the Court in PCI Automation Center, Inc. v. NLRC, the legitimate job
of the contractor provides services, while the labor-only contractor provides only manpower. The
legitimate job contractor undertakes to perform a specific job for the principal employer, while
the labor-only contractor merely provides the personnel to work for the employer.