G.R. No. 193023 - National Power Corp. vs. Tuazon

PPI Holdings, Inc. (PPI) was the sole franchisee of Pizza Hut in the Philippines.
Rico Palic Conjusta (Conjusta) was hired by PPI as a messenger for its human resources department, and later for its accounting department.
Consolidated Buildings Maintenance, Inc. (CBMI), now Atalian Global Services, was engaged in services that included janitorial, kitchen, elevator maintenance, and allied services for various entities, including PPI.
Human Resources, Inc. served as a manpower agency through which Conjusta’s employment was transferred before later transfer to CBMI.
Jorge L. Araneta (owner) and Juan Manolo Or tanez (owner) were impleaded as owners of entities involved in the contracting arrangement.

On October 2, 2002, PPI hired Conjusta as a messenger for its human resources department.
Conjusta’s assignment was later transferred to PPI’s accounting department.
Conjusta’s employment was eventually transferred to Human Resources, Inc., and subsequently to CBMI (now Atalian Global Services).
Despite the transfers, Conjusta continued to work as PPI’s messenger in its accounting department.
On August 1, 2016, CBMI sent Conjusta and other coworkers a Letter terminating Conjusta’s services with PPI.
Conjusta’s dismissal was effective September 30, 2016, as reflected in the Labor Arbiter’s computation of backwages.

On October 21, 2016, Conjusta filed a case for illegal dismissal with money claims against PPI, CBMI, and their owners.
Conjusta argued that:

He was PPI’s regular employee because he had worked for PPI for 14 years.
There was no just cause for his dismissal.

Conjusta was merely assigned to it by CBMI.
CBMI was a legitimate job contractor.
CBMI had rendered janitorial, sanitation, warehousing services, and allied services to PPI until the termination of their latest Contract of Services Agreement on September 1, 2016.
Under the service agreement, CBMI relayed company rules, regulations, and working terms and conditions.
CBMI paid Conjusta’s salary and the statutory contributions to the SSS, Pag-IBIG, and PhilHealth.

It did not terminate Conjusta’s services.
Conjusta, together with other co-employees, was placed on floating status when CBMI decided to terminate its latest service contract with PPI effective September 1, 2016 due to financial disagreements.
Conjusta’s complaint should be dismissed for being prematurely filed.

On August 31, 2017, the Labor Arbiter found sufficient evidence to prove that CBMI was a legitimate contractor, considering:

CBMI’s SEC registration.
CBMI’s company profile.
Contracts of Services entered into with PPI for several years.
CBMI certificates of registration with DOLE under DO No. 18-A, Series of 2011 and DO No. 18-02, Series of 2002.
Audited financial statements filed with the SEC showing substantial capital or investment.
The LA further found, based on stipulations in the service agreements, that CBMI carried out its work independently from its principal through its own means, method, and manner.

Despite finding CBMI as a legitimate contractor, the LA ruled that Conjusta was PPI’s regular employee, stating that nothing in the record showed an employer-employee relationship between CBMI and Conjusta.
The LA relied on Conjusta’s 14 years of service with PPI, performing tasks usually necessary or desirable to PPI’s main business as a messenger.
The LA held that PPI failed to present any just or authorized cause for termination.
The LA disposed:

Full backwages from September 30, 2016 up to finality, tentatively computed at PHP 154,934.93.
Separation pay of one month pay per year of service (PHP 491.00 x 15 years) totaling PHP 191,490.00.
13th month pay of PHP 37,518.00.
Attorney’s fees equivalent to 10% of the total monetary awards totaling PHP 38,394.29.

Dismissing the complaint against CBMI, Jorge L. Araneta, and Juan Manolo O. Ortañez for lack of merit.
Dismissing other claims for lack of merit.

PPI filed a partial appeal, insisting that Conjusta was not its employee but that of CBMI as a legitimate job contractor.
On May 31, 2018, the National Labor Relations Commission (NLRC) ruled that CBMI was a labor-only contractor.
The NLRC’s reasons included:

Despite proof of substantial capitalization, there was no showing that CBMI carried out its contracts according to its own manner and method, free from PPI’s control and supervision.
The contracts of services showed CBMI undertook only to supply manpower.
DOLE registration as an independent contractor was not conclusive.
Conjusta’s job as messenger was necessary and vital to PPI’s business as the sole Pizza Hut franchisee, requiring services such as food and kitchen services, sanitation, delivery, warehousing, commissary, and related services.
Conjusta’s 14 years of uninterrupted service with PPI.
PPI failed to adduce evidence of a just or authorized cause, and procedural due proces...(Subscriber-Only)

Whether the CA erred in ruling that CBMI was a legitimate job contractor and, consequently, the direct employer of Conjusta.