G.R. No. 252720. August 22, 2022.
RICO PALIC CONJUSTA, PETITIONER, VS. PPI HOLDINGS, INC. (FORMERLY PHILIPPINE PIZZA, INC.), JORGE L. ARANETA (OWNER), ATALIAN GLOBAL SERVICES (FORMERLY CONSOLIDATED BUILDING MAINTENANCE, INC./CBMI), AND JUAN MANOLO ORTAÑEZ (OWNER), RESPONDENTS.

FACTS

Petitioner Rico Palic Conjusta was hired by PPI Holdings, Inc., the Pizza Hut franchisee, as a messenger in 2002. After several years, his employment was transferred to a manpower agency and later to Consolidated Building Maintenance, Inc. (CBMI). Despite the transfer, Conjusta performed the same messenger duties for PPI’s accounting department for 14 years until CBMI terminated his services in 2016. Conjusta filed an illegal dismissal case against PPI and CBMI, claiming he was PPI’s regular employee.
PPI denied an employer-employee relationship, asserting Conjusta was assigned by CBMI, a legitimate independent contractor. PPI presented service agreements showing CBMI was responsible for Conjusta’s payroll and benefits. CBMI acknowledged Conjusta as its employee but claimed it merely placed him on floating status after terminating its service contract with PPI. The Labor Arbiter initially found CBMI to be a legitimate contractor based on its registration and financial documents but ruled Conjusta was PPI’s regular employee due to his long tenure and necessary work. The NLRC reversed, declaring CBMI a labor-only contractor.

ISSUE

Whether CBMI is a legitimate job contractor or a labor-only contractor, thereby determining the identity of Conjusta’s true employer for the purposes of his illegal dismissal claim.

RULING

The Supreme Court ruled that CBMI is a labor-only contractor, making PPI the statutory employer of Conjusta. The Court emphasized that the determination of legitimate job contracting status is factual and must be based on the totality of circumstances in each case, not on previous unrelated declarations. For an entity to be considered a legitimate contractor, it must prove it: (1) carries on a distinct and independent business; (2) undertakes the job for the principal on its own account, under its own responsibility, according to its own manner and method; and (3) has substantial capital or investment.
Applying these criteria, the Court found CBMI lacking. While CBMI presented proof of substantial capitalization and DOLE registration, the service contracts revealed it merely supplied manpower to PPI without showing it performed the services through its own independent means and method. The contracts stipulated that workers like Conjusta were subject to PPI’s rules and performed tasks directly related to PPI’s main business as a pizza franchisee. Messengerial work is necessary and desirable to PPI’s operations. Furthermore, Conjusta’s 14 years of continuous service under PPI’s control and supervision solidified the direct employment relationship. Consequently, as a labor-only contractor, CBMI is considered merely an agent of PPI. PPI, as the principal, is therefore liable to Conjusta as his statutory employer for illegal dismissal. The Court reinstated the NLRC decision with modification, awarding full backwages, separation pay, and attorney’s fees.