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PHILIPPINE PIZZA v. JENNY PORRAS CAYETANO

FACTS:

Philippine Pizza, Inc. (PPI) and Consolidated Building Maintenance, Inc. (CBMI) filed a petition for review on certiorari against the decision of the Court of Appeals (CA). The CA reversed the decision of the National Labor Relations Commission (NLRC) and reinstated the decision of the Labor Arbiter (LA), which found PPI and CBMI jointly and severally liable for illegal dismissal. The respondents, who were hired by CBMI and deployed to various branches of PPI's Pizza Hut chain, claimed that they were regular employees of PPI and filed complaints for illegal dismissal. PPI denied any employer-employee relationship with the respondents and argued that they were employees of CBMI. CBMI admitted that the respondents were its employees and claimed to be a legitimate job contractor. The LA ruled in favor of the respondents, while the NLRC reversed the decision. The CA reinstated the LA's ruling and found that CBMI engaged in prohibited labor-only contracting and that PPI exercised control over the respondents.

ISSUES:

  1. Whether or not the CA correctly relied on the ruling in Philippine Pizza, Inc. in concluding that CBMI is engaged in a prohibited labor-only contracting arrangement with PPI.

  2. Whether or not the CA correctly ruled that respondents were illegally dismissed from employment.

RULING:

  1. The Supreme Court ruled that the CA incorrectly relied on the ruling in Philippine Pizza, Inc. because a minute resolution does not necessarily bind non-parties to the action even if it amounts to a final action on a case. The minute resolution in the Philippine Pizza, Inc. case did not contain sufficient facts or applicable laws and jurisprudence to serve as a binding precedent in this case.

  2. The Supreme Court concluded that the NLRC did not gravely abuse its discretion in holding that CBMI is a legitimate job contractor and consequently, the employer of respondents. As such, the respondents were not illegally dismissed from employment as they were in a temporary lay-off status when they prematurely filed the complaints.

PRINCIPLES:

  • Grave Abuse of Discretion: A decision is considered tainted with grave abuse of discretion when it is made in a capricious, whimsical manner, amounting to an evasion or refusal to perform a duty enjoined by law.

  • Labor-Only Contracting: The principle where a contractor merely supplies workers to an employer, who directly controls and supervises the work performed by the workers.

  • Legitimate Job Contracting: A legitimate contractor retains substantial capital or investment and exercises control over the performance of the work of the contracted employees.

  • Stare Decisis: A legal principle by which judges are obliged to respect the precedent established by prior decisions. However, minute resolutions are not treated as binding precedents to cases involving other persons.

  • Employment Relationship: The criteria for determining an employer-employee relationship include selection and engagement of the employee, payment of wages, power of dismissal, and control over the employee's conduct with respect to the means and methods by which the work is to be accomplished.