Philippine Pizza, Inc. vs. Jenny Porras Cayetano, et al.

A minute resolution, although it constitutes a disposition on the merits, does not operate as a binding precedent against persons who were not parties to the case, nor may it be invoked under the principle of stare decisis where the subject matter is not shown to be similar or related. Corollarily, a contractor holding a DOLE Certificate of Registration is presumed to be a legitimate job contractor, and employees placed on floating status who file complaints before any re-deployment are not illegally dismissed.

Philippine Pizza, Inc. (PPI) operates the Pizza Hut chain of restaurants, while Consolidated Building Maintenance, Inc. (CBMI) is a service contractor that supplies kitchen, delivery, sanitation, and allied personnel to PPI under several Contracts of Services. The respondents were among the personnel CBMI hired on various dates and deployed to Pizza Hut branches, serving either as team members/service crew or as delivery riders. The dispute turns on the statutory distinction between legitimate job contracting and prohibited labor-only contracting, and on the evidentiary weight of a prior minute resolution involving the same corporate parties.

Philippine Pizza, Inc. (PPI) operates the Pizza Hut chain of restaurants, and Consolidated Building Maintenance, Inc. (CBMI) is a job contractor that provides kitchen, delivery, sanitation, and allied services to PPI's Pizza Hut branches. On various dates, CBMI hired Jenny Porras Cayetano, Rizaldo G. Avenido, Pee Jay T. Gurion, Rumel A. Recto, Rogelio T. Sumbang, Jr., and Jimmy J. Deloso, and deployed them to different Pizza Hut branches. Cayetano and Deloso worked as team members or service crew, while Avenido, Gurion, Recto, and Sumbang, Jr. served as delivery riders. Their hiring dates spanned from May 2002 to August 2006, and they rendered work for periods ranging from seven to eleven years.

According to the respondents, they were in truth regular employees of PPI and not of CBMI. They claimed to have been initially hired by PPI but subsequently transferred to CBMI precisely to prevent them from attaining regular employment status. Despite the transfer, they asserted that they remained under the direct supervision of Pizza Hut managers and continued to use Pizza Hut's tools and machines for their work. On this basis, they and several others filed separate complaints for illegal dismissal against PPI and CBMI before the NLRC.

PPI denied any employer-employee relationship with the respondents. It averred that it had entered into several Contracts of Services with CBMI for the performance of janitorial, bussing, kitchen, table service, cashiering, warehousing, delivery, and allied services in its favor. It contended that the respondents were assigned to various Pizza Hut branches and performed their tasks in accordance with CBMI's manner and method, free from PPI's direction and control. CBMI, for its part, admitted that the respondents were its employees, that it paid their wages, and that it remitted their SSS, PhilHealth, and Pag-IBIG contributions. It insisted that it was a legitimate job contractor, possessing substantial capital and a DOLE Certificate of Registration, and undertaking a business separate and distinct from PPI's based on its Articles of Incorporation. It further maintained that it retained and exercised the right of control over the respondents. CBMI explained that it had no choice but to recall the respondents and place them in floating status because PPI had reduced its need for services in some Pizza Hut branches, and that before it could re-assign them, the respondents had already filed their complaints.

The Labor Arbiter found the respondents to be regular employees of PPI, observing that they were repeatedly hired to perform work usually necessary and desirable to PPI's main business, and that while CBMI had established compliance with the substantial capital requirement, it failed to show that it undertook the contract work on its own account. The Labor Arbiter likewise found that PPI exercised control over the respondents through numerous certifications issued to them, such as for delivering hospitality behavior, demonstrating skills and knowledge in cooking, completing training, being an outstanding rider, and exemplary performance. The NLRC, on the other hand, found CBMI to be a legitimate job contractor with sufficient capital and investment, presumed compliant in light of its DOLE Certificate of Registration, and the one which ultimately exercised control and supervision over the respondents through at least one supervisor assigned to each workplace. The Court of Appeals, in turn, found no showing that CBMI supervised and evaluated the deployed employees or established their working methods and procedures, and concluded that PPI exercised control and supervision in view of the awards and seminars given to them.

• Absence of Employer-Employee Relationship: PPI denied any employer-employee relationship with the respondents, averring that it entered into several Contracts of Services with CBMI and that the respondents performed their tasks in accordance with CBMI's manner and method, free from PPI's direction and control.
• Legitimate Job Contracting: PPI maintained that CBMI is a legitimate job contractor, possessing substantial capital and a DOLE Certificate of Registration, and undertaking a business separate and distinct from PPI's.
• Misplaced Reliance on Stare Decisis: PPI assailed the Court of Appeals for relying on the minute resolution in Philippine Pizza, Inc. vs. Matias, contending that the same could not serve as binding precedent against non-parties.
• Absence of Illegal Dismissal: PPI argued that the respondents were not illegally dismissed, as they had been placed merely in a temporary lay-off or floating status pending re-deployment.

• Regular Employment with PPI: The respondents alleged that they rendered work for Pizza Hut ranging from seven to eleven years and were therefore regular employees of PPI and not of CBMI.
• Pretextual Transfer to CBMI: They claimed to have been initially hired by PPI but were subsequently transferred to CBMI so as to prevent them from attaining regular employment status.
• Control by PPI: They asserted that despite the transfer, they remained under the direct supervision of Pizza Hut managers and had been using Pizza Hut's tools and machines for work.

• Stare Decisis and the Philippine Pizza, Inc. Minute Resolution: Whether the Court of Appeals correctly relied on the ruling in Philippine Pizza, Inc. in concluding that CBMI is engaged in a prohibited labor-only contracting arrangement with PPI.
• Illegal Dismissal: Whether the Court of Appeals correctly ruled that the respondents were illegally dismissed from employment.

• Stare Decisis and the Philippine Pizza, Inc. Minute Resolution: No. A minute resolution, although a disposition on the merits, cannot be treated as a binding precedent against persons who were not parties to the case, or on another subject matter that may or may not have the same parties and issues.
• Illegal Dismissal: No. The respondents were placed in a temporary lay-off or floating status when they prematurely filed their complaints, and no dismissal — hence no illegal dismissal — may be attributed to CBMI, their actual employer.

• Stare Decisis and the Philippine Pizza, Inc. Minute Resolution: The Court began by restating the standard of review: in a Rule 45 petition arising from a labor case, the Court examines whether the Court of Appeals correctly determined the presence or absence of grave abuse of discretion in the NLRC Decision, and Rule 45 limits the review to questions of law. Grave abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic manner by reason of passion or personal hostility, so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined by law; in labor cases, it may be attributed to the NLRC when its findings and conclusions are not supported by substantial evidence. The Court found that the Court of Appeals erroneously ascribed grave abuse of discretion to the NLRC. The appellate court had adopted the Court's minute resolution in Philippine Pizza, Inc. as purportedly stemming from a similar complaint for illegal dismissal filed by a delivery rider against PPI and CBMI. Case law instructs that although the dismissal of a case via a minute resolution constitutes a disposition on the merits, it cannot be treated as a binding precedent to cases involving other persons who are not parties to the case, or another subject matter that may or may not have the same parties and issues; a minute resolution does not necessarily bind non-parties even if it amounts to a final action. The records bore no proof that the respondents were parties to, or participated in, the Philippine Pizza, Inc. case, and no showing that the subject matters of the two cases were similar or related, since the minute resolution contained no complete statement of facts and no discussion of the applicable laws and jurisprudence. The principle of stare decisis could not therefore be invoked to obtain a dismissal of the petition. Independently considering the circumstances, the Court found that the NLRC did not gravely abuse its discretion in holding CBMI to be a legitimate job contractor and the employer of the respondents. CBMI was presumed to have complied with all the requirements of a legitimate job contractor in light of the Certificates of Registration issued by the DOLE; although not conclusive proof of legitimacy, the certification prevents the presumption of labor-only contracting from arising and gives rise to a disputable presumption that the contractor's operations are legitimate. CBMI also had substantial capital and investment: its 2012 General Information Sheet showed authorized capital stock of P10,000,000.00, subscribed capital stock of P5,000,000.00, of which P3,500,000.00 was paid-up, and its audited financial statements showed considerable current and non-current assets amounting to P85,518,832.00. More importantly, CBMI retained control over the respondents, as shown by the deployment of at least one CBMI supervisor in each Pizza Hut branch to oversee, monitor, and supervise attendance and performance, corroborated by the affidavits of CBMI's area coordinators who oversaw compliance with company policies, ensured performance of tasks in the manner CBMI mandated, regularly visited and monitored each area of deployment, tracked attendance and punctuality, and reported violations to CBMI's Human Resource Department Manager. The element of control was further inferred from CBMI's act of subjecting the respondents to disciplinary sanctions for violations of company rules, evidenced by various Offense Notices and Memoranda, and from its observance of due process before imposing disciplinary action, as attested by its HRD Manager. Finally, no employer-employee relationship existed between PPI and the respondents: the respondents applied for work with CBMI and were selected and hired by it; they attended orientations and seminars conducted by CBMI on working conditions, basic customer service, basic good grooming, and company rules and regulations; CBMI paid their wages and remitted their SSS, PhilHealth, and Pag-IBIG contributions; and CBMI exercised the power of discipline and control over them.
• Illegal Dismissal: On the second issue, the Court agreed with the NLRC that the respondents were not illegally dismissed. While PPI denied the existence of an employer-employee relationship, CBMI acknowledged that the respondents were its employees and presented proof that it duly informed them of their impending lay-off; the respondents, however, immediately filed their complaints before CBMI had the chance to re-deploy them. The respondents did not refute CBMI's claim that they were informed of its decision to place them in floating status pending re-deployment. Accordingly, they could not have been illegally terminated, for they were placed in a temporary lay-off status when they prematurely filed their complaints. There being no dismissal to speak of, the respondents were not illegally dismissed by CBMI, their actual employer.

• Stare decisis and the non-binding character of minute resolutions — A minute resolution, although it constitutes a disposition on the merits and amounts to a final action on a case, cannot be treated as a binding precedent to cases involving other persons who are not parties to the case, or another subject matter that may or may not have the same parties and issues. It does not necessarily bind non-parties. In this case, the Court held that the Court of Appeals erred in applying stare decisis on the basis of the minute resolution in Philippine Pizza, Inc. vs. Matias, since the records showed neither that the respondents were parties to that case nor that the subject matters of the two cases were similar or related, the minute resolution containing no complete statement of facts and no discussion of the applicable laws and jurisprudence.
• Grave abuse of discretion in labor cases — Grave abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic manner by reason of passion or personal hostility, the character of which being so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. In labor cases, it may be attributed to the NLRC when its findings and conclusions are not supported by substantial evidence, which refers to that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, no grave abuse of discretion exists and the Court of Appeals should so declare and dismiss the petition.
• Legitimate job contracting and the DOLE certificate presumption — A Certificate of Registration issued by the DOLE, although not conclusive proof of legitimacy, prevents the presumption of labor-only contracting from arising and gives rise to a disputable presumption that the contractor's operations are legitimate. The requisites of legitimate job contracting, as applied by the Court, include substantial capital and investment — here shown by authorized capital stock of P10,000,000.00, subscribed capital stock of P5,000,000.00 with P3,500,000.00 paid-up, and current and non-current assets of P85,518,832.00 — sufficient to carry out the contractor's obligations and cover its operational expenses, as well as the retention and exercise of the right of control over the deployed employees.
• Floating status or temporary lay-off — Employees who are placed in floating status pending re-deployment are not dismissed from service. Where the employer duly informs them of the impending lay-off and they file complaints before the employer has the opportunity to re-deploy them, there is no dismissal to speak of, and no illegal dismissal may be attributed to the employer.

• "Case law instructs that although the Court's dismissal of a case via a minute resolution constitutes a disposition on the merits, the same could not be treated as a binding precedent to cases involving other persons who are not parties to the case, or another subject matter that may or may not have the same parties and issues." — This is the ratio decidendi on the first issue; it states the controlling rule that disarmed the Court of Appeals' reliance on stare decisis and is the formulation most likely to be cited in later jurisprudence on minute resolutions.
• "In other words, a minute resolution does not necessarily bind non-parties to the action even if it amounts to a final action on a case." — This passage restates the same doctrine in its canonical, compact form and clarifies that finality on the merits does not equate to precedential reach over non-parties.
• "Although not a conclusive proof of legitimacy, the certification nonetheless prevents the presumption of labor-only contracting from arising. It gives rise to a disputable presumption that the contractor's operations are legitimate." — This defines the evidentiary effect of a DOLE Certificate of Registration, the pivotal ruling that sustained CBMI's status as a legitimate job contractor.
• "As such, respondents could not have been illegally terminated from work, for they were placed in a temporary lay-off status when they prematurely filed the complaints." — This states the dispositive reasoning on the second issue, tying the absence of dismissal to the respondents' premature filing while on floating status.

• Philippine Pizza, Inc. vs. Matias, Minute Resolution in G.R. No. 200656, April 16, 2012 — Distinguished and held inapplicable; the Court ruled that the minute resolution, though a disposition on the merits, could not bind the respondents as non-parties and could not support the Court of Appeals' application of stare decisis.
• Read-Rite Philippines, Inc. vs. Francisco, G.R. No. 195457, August 16, 2017 — Controlling authority cited for the rule that a minute resolution does not constitute binding precedent against non-parties.
• Philippine Health Care Providers, Inc. vs. Commissioner of Internal Revenue, 616 Phil. 387 (2009) — Cited, through Read-Rite, for the same doctrine on the non-binding character of minute resolutions.
• Alonso vs. Cebu Country Club, Inc., 426 Phil. 61 (2002) — Cited, through Read-Rite, for the rule that a minute resolution does not necessarily bind non-parties even if it amounts to a final action.
• W.M. Manufacturing, Inc. vs. Dalag, 774 Phil. 353 (2015) — Cited for the rule that a DOLE certification, while not conclusive proof of legitimacy, prevents the presumption of labor-only contracting from arising and gives rise to a disputable presumption of legitimate operations.
• Quebral vs. Angbus Construction, Inc., G.R. No. 221897, November 7, 2016, 807 SCRA 176 — Cited for the standard of review in labor cases and for the definition of grave abuse of discretion and substantial evidence.
• Montoya vs. Transmed Manila Corporation, 613 Phil. 696 (2009) — Cited, through Quebral, for the approach of viewing the Court of Appeals' Decision in the same context in which the petition for certiorari was presented to it.
• Gadia vs. Sykes Asia, Inc., 752 Phil. 413 (2015) — Cited, through Quebral, for the definition of grave abuse of discretion.
• Innodata Knowledge Services, Inc. vs. Inting, G.R. No. 211892, December 6, 2017 — Cited in support of the ruling that the respondents were not illegally dismissed, having been placed on floating status.
• Mindanao Terminal and Brokerage Service, Inc. vs. Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor, 700 Phil. 205 (2012) — Cited, together with Innodata, in support of the ruling on floating status and the absence of illegal dismissal.

Carpio (Chairperson), Caguioa, A. Reyes, Jr., and J. Reyes, Jr., JJ., concurred. Justice J. Reyes, Jr. was designated an additional member per Special Order No. 2587 dated August 28, 2018.