Conjusta v. PPI Holdings, Inc., G.R. No. 252720, [August 22, 2022]

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Conjusta v. PPI Holdings, Inc.

 G.R. No. 252720, [August 22, 2022]

SECOND, LOPEZ, M.

 

Independent job contractor; totality of facts and circumtances threshold shows labor-only contracting

 

Previous declarations that a company is an independent job contractor cannot validly be the basis in concluding its status as such in another case involving a different employee. The totality of the facts and surrounding circumstances, distinct in every case, must be assessed in determining whether an entity is a legitimate job contractor or a labor-only contractor. 

PPI Holdings, Inc. (PPI), the franchisee of Pizza Hut in the Philippines, initially hired Rico Palic Conjusta (Conjusta) as a messenger for its human resources department and later for its accounting department. Despite being transferred to a manpower agency and then to Consolidated Buildings Maintenance, Inc. (CBMI), Conjusta continued to work as PPI's messenger in its accounting department. However, CBMI terminated Conjusta's services along with his coworkers, leading Conjusta to file an illegal dismissal case against PPI, CBMI, and their owners, claiming to be PPI's regular employee for 14 years. 

PPI argued that it should not be held solidarily liable for the monetary awards with CBMI since the latter is a legitimate job contractor, and, consequently, was Conjusta's direct employer. PPI also contended that CBMI carried out its services independently, with its own means, method, and manner, as stipulated in the service agreements. 

 

Whether or not CBMI was a legitimate job contractor and, consequently, was Conjusta's direct employer.

NO. The Supreme Court found that CBMI engaged in labor-only contracting rather than legitimate job contracting. For a contractor to be considered legitimate, it must operate independently from the control and supervision of the principal employer, carry out its services according to its own manner and method, and have substantial capital or investments in the forms of tools, machines, equipment, buildings and other assets. Failure to meet these criteria may result in the contractor being deemed a labor-only contractor, in which case the principal employer becomes solidarily liable for the employees' claims as if they were directly employed by the principal. 

Here, despite CBMI's registration and presentation of financial statements indicating substantial capital, the Court determined that CBMI did not operate independently from PPI's control and supervision. The contracts between PPI and CBMI indicated that CBMI provided manpower only, without undertaking the performance of services according to its own manner and method. Additionally, there was evidence that PPI exercised control over the work of CBMI's employees, including Conjusta, the petitioner in the case. CBMI was considered a labor-only contractor, making PPI Conjusta's direct employer. Consequently, PPI and CBMI were held solidarily liable for Conjusta's illegal dismissal and monetary claims.

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