G.R. No.

205688, July 04, 2018

VALENTINO S. LINGAT AND APRONIANO ALTOVEROS, Petitioners, v. COCA-COLA

BOTTLERS PHILIPPINES, INC., MONTE DAPPLES TRADING, AND DAVID
LYONS,* Respondents.

Factual Antecedents

On May 5, 2008, petitioners filed a Complaint against Coca-Cola Bottlers Phils.,

Inc. (CCBPI), Monte Dapples Trading Corp. (MDTC), and David Lyons (Lyons)
(respondents).

CCBPI employed Lingat and Altoveros as plant driver and forklift operator, and
segregator/mixer respectively.

According to petitioners, they were regular employees of CCBPI because it

engaged them to perform tasks necessary and desirable in its business or
trade. They explained that CCBPI made them part of its operations, and without them its products would not
reach its clients. They asserted that their work was the link between CCBPI and its sales force.

Petitioners alleged that CCBPI engaged Lingat primarily as a plant driver but he
also worked as forklift operator. In particular, he drove CCBPI's truck loaded with softdrinks and its other
products, and thereafter, returned the empty bottles as well as the unsold softdrinks back to the plant of CCBPI. On the other hand,
as segregator/mixer of softdrinks, Altoveros was required to segregate
softdrinks based on the orders of the customers. Altoveros declared, that when a customer
needed cases of softdrinks, such need was relayed to him since no sales personnel was allowed in the loading area.

Petitioners further stated, that after becoming regular employees and by way
of a modus operandi, CCBPI transferred them from one agency to another.
These agencies included Lipercon Services, Inc., People Services, Inc., Interserve Management and Manpower
Resources, Inc.
The latest agency to where they were transferred was MDTC. They
claimed that such transfer was a scheme to avoid their regularization in
CCBPI.

In addition, petitioners stressed that the aforesaid agencies were labor-only

contractors which did not have any equipment, machinery, and work premises
for warehousing purposes. They insisted that CCBPI owned the warehouse
where they worked; the supervisors thereat were CCBPI’s employees; and
petitioners themselves worked for CCBPI, not for any agency. In fine, they
maintained that they were regular employees of CCBPI because:

[Petitioners] worked within the premises of [CCBPI,] use the equipment, the facilities,
cater on [its] products, [and served] the Sales Forces x x x. In other words, while at
work, [petitioners] were under the direction, control and supervision of respondent
Coca-Cola's regular employees. The situation calls for the over-all control of the
operations by Coca-Cola employees as [petitioners] perform[ed] their work with x x x
Coca-Cola and [its] premises. x x x7

CCBPI and Lyons insisted that MDTC was a legitimate and independent contractor,
which only assigned petitioners at CCBPI's plant in Otis, Manila. They posited that MDTC carried on
a distinct and independent business; catered to other clients, aside from CCBPI; and possessed sufficient capital and investment in
machinery and equipment for the conduct of its business as well as an office building.

CCBPI and Lyons likewise stressed that petitioners were employees of MDTC, not
CCBPI. They averred that MDTC was the one who engaged petitioners and paid their
salaries. They also claimed that CCBPI only coordinated with the Operations Manager of MDTC in order to monitor the end
results of the services rendered by the employees of MDTC. They added that it was MDTC which imposed corrective action upon its
employees when disciplinary matters arose.

Finally, CCBPI and Lyons averred that when the Warehousing Management Agreement
between CCBPI and MDTC expired, the parties no longer renewed the same.
Consequently, it came as a surprise to CCBPI that petitioners filed this complaint
considering that CCBPI was not their employer, but MDTC.

Ruling of the Labor Arbiter

On December 9, 2008, the LA ruled for the petitioners, hereby rendered declaring
that complainants were ILLEGALLY DISMISSED from their employment.

The LA ruled that respondents failed to refute that petitioners were employees of CCBPI and the latter undermined their regular status by transferring them to an agency. The LA
decreed that, per the identification cards (IDs) of petitioners, CCBPI hired Lingat in 1993, and Altoveros in 1996. Moreover, as plant driver, and segregator/mixer, petitioners performed
activities necessary in the usual business or trade of CCBPI; and, their continued employment for more than one year proved that they were regular employees of CCBPI.

The LA likewise ratiocinated that the contracts of employment which petitioners may have entered with CCBPI's contractors could not undermine their (petitioners) tenure arising from
their regular status with CCBPI.

In sum, the LA decreed that, since respondents failed to debunk the allegations raised by petitioners, then judgment must be rendered in favor of petitioners.

Ruling of the National Labor Relations Commission

On appeal, the NLRC dismissed the illegal dismissal case. It, nonetheless,
ordered MDTC to pay Altoveros separation pay

Lingat's complaint must be dismissed on the ground of prescription.

Altoveros was an employee of MDTC, the NLRC gave credence to the Warehousing Management Agreement between MDTC and
CCBPI as well as to MDTC's Amended Articles of Incorporation. It held that MDTC did not appear to be a mere agent of CCBPI but
was one that provided stock handling and storage services to CCBPI. It held that, considering MDTC was the employer of Altoveros,
then it must pay him separation pay of 1/2 month pay for every year of his service.

Ruling of the Court of Appeals

the CA modified the NLRC Decision in that it ordered MDTC to pay separation pay to
both petitioners.

the CA found that the illegal dismissal case filed by Lingat had not yet prescribed.

Nevertheless, the CA agreed with the NLRC that MDTC was an independent contractor and the employer of petitioners. It gave
weight to petitioners' latest IDs, which were issued by MDTC as well as to the Articles of Incorporation of MDTC, which indicated
that its secondary purpose was "to engage in the business of land transportation" and "the business of warehousing services." It
further ruled that MDTC had substantial capital stock, as well as properties and equipment, which supported the conclusion that
MDTC was a legitimate labor contractor.
 Issues

Undaunted, petitioners filed this Petition raising these issues:

Whether or not the Court of Appeals gravely erred in declaring [that] Petitioners
[were] not regular employees of Respondent CCBPI;
Petitioners maintain that they were regular employees of CCBPI. They insist that their engagement by CCBPI in 1993 (Lingat) and 1996 (Altoveros) proved that they were its employees from the beginning. They also aver that they
worked at CCBPI's warehouse, wore its uniforms, operated its machinery, and were under the direct control and supervision of CCBPI. They likewise contend that CCBPI illegally dismissed them from work. On this, they insist that
respondents themselves admitted that petitioners' employment contract expired; and thereafter, they were no longer given any new assignments. They remain firm that such termination of contract was not a valid cause for their
dismissal from work.

CCBPI and Lyons, for their part, counter that this Petition was not a proper recourse because petitioners seek a recalibration of facts and evidence which is not within the scope of the Petition because only pure questions of law may
be raised herein. They add that MDTC was a legitimate and independent job contractor and was the employer of petitioners, not CCBPI.

Our Ruling

The Petition is impressed with merit.

In addition, in Pacquing v. Coca-Cola Philippines, Inc.,19 the Court ruled that the sales route helpers of CCBPI were its regular employees. In this case, petitioners had similarly undertook to bring CCBPI's products to its customers at
their delivery points. In Pacquing, it was even stated that therein sales route helpers "were part of a complement of three personnel comprised of a driver, a salesman and a regular route helper, for every delivery truck."20 As such,
it would be absurd for the Court to hold those helpers as regular employees of CCBPI without giving the same status to its plant driver, including its segregator of softdrinks, whose work also had reasonable connection to CCBPI's
business of distribution and sale of soft drinks and other beverage products.

Furthermore, in Quintanar v. Coca-Cola Bottlers, Philippines, Inc.,21 therein route helpers, like petitioners, were tasked to distribute CCBPI's products and were likewise successively transferred to agencies after having been initially
employed by CCBPI. The Court decreed therein that said helpers were regular employees of CCBPI notwithstanding the fact that they were transferred to agencies while working for CCBPI. In the same vein, the transfer of herein
petitioners from one agency to another did not adversely affect their regular employment status. Such was the case because they continued to perform the same tasks for CCBPI even if they were placed under certain agencies, the
last of which was MDTC.

CCBPI and Lyons' contention that MDTC was a legitimate labor contractor and
was the actual employer of petitioners does not hold water.

A labor-only contractor is one who enters into an agreement with the principal employer to act as the agent in the recruitment, supply, or placement of
workers for the latter. A labor-only contractor 1) does not have substantial capital or investment in tools, equipment, work premises, among others, and
the recruited employees perform tasks necessary to the main business of the principal; or 2) does not exercise any right of control anent the performance
where a labor-only contracting exists, the principal shall be
of the contractual employee. In such case,

deemed the employer of the contractual employee; and the principal and the labor-only
contractor shall be solidarily liable for any violation of the Labor Code. On the other
hand, a legitimate job contractor enters into an agreement with the employer for the
supply of workers for the latter but the "employer-employee relationship between the
employer and the contractor's employees [is] only for a limited purpose, i.e., to ensure
that the employees are paid their wages."22

In Diamond Farms, Inc. v. Southern Philippines Federation of Labor (SPFL)-Workers Solidarity of DARBMUPCO/Diamond-SPFL,23 the
Court distinguished a labor-only contractor and a legitimate job contractor in this wise:

The Omnibus Rules Implementing the Labor Code distinguishes between permissible job contracting (or independent
contractorship) and labor-only contracting. Job contracting is permissible under the Code if the following conditions are met:

(a) The contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and

(b) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business.

In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by law, if a person who
undertakes to supply workers to an employer:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other
materials; and

(2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or
operations of the employer in which workers are habitually employed.
Based on their Warehousing Management Agreement, CCBPI hired MDTC to perform
warehousing management services, which it claimed did not directly relate to its
(CCBPI's) manufacturing operations. However, it must be stressed that CCBPI's
business not only involved the manufacture of its products but also included
their distribution and sale. Thus, CCBPI's argument that petitioners were
employees of MDTC because they performed tasks directly related to
"warehousing management services," lacks merit. On the contrary, records
show that petitioners were performing tasks directly related to CCBPI's
distribution and sale aspects of its business.

To reiterate, CCBPI is engaged in the manufacture, distribution, and sale of its products; in turn, as plant driver
petitioners were engaged to perform tasks relevant
and segregator/mixer of soft drinks,
to the distribution and sale of CCBPI's products, which relate to the core
business of CCBPI, not to the supposed warehousing service being rendered
by MDTC to CCBPI. Petitioners' work were directly connected to the
achievement of the purposes for which CCBPI was incorporated. Certainly,
they were regular employees of CCBPI.

Moreover, the Court ruled that "the possession of substantial capital is only one
element."26 To determine whether a person or entity is indeed a legitimate labor
contractor, it is necessary to prove not only substantial capital or investment in
tools, equipment, work premises, among others, but also that the work of the
employee is directly related to the work that contractor is required to perform
for the principal..

Finally, as regular employees, petitioners may be dismissed only for cause and with due process. These
requirements were not complied with here.

It was not disputed that petitioners ceased to perform their work when they were no longer given any new
assignment upon the alleged termination of the Warehousing Management Agreement between CCBPI and MDTC.
However, this is not a just or authorized cause to terminate petitioners' services. Otherwise stated, the contract
there was no clear
expiration was not a valid basis to dismiss petitioners from service. At the same time,
showing that petitioners were afforded due process when they were terminated.
Therefore, their dismissal was without valid cause and due process of law; as such,
the same was illegal.

Considering that petitioners were illegally terminated, CCBPI and MDTC are
solidarily liable for the rightful claims of petitioners.

Moreover, by reason of the lapse of more than 10 years since the inception of this case on May 5, 2008, the Court deems it more
practical and would serve the best interest of the parties to award separation pay to petitioners, in lieu of reinstatement.29 Finally,
since petitioners were compelled to litigate to protect their rights and interests, attorney's fees of 10% of the monetary award is
given them. The legal interest of 6% per annum shall be imposed on all the monetary grants from the finality of the Decision until
paid in full.30

WHEREFORE, the Petition is GRANTED. The July 4, 2012 Decision and January 16,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 112829 are REVERSED and
SET ASIDE. Accordingly, the December 9, 2008 Decision of the Labor Arbiter
is REINSTATED WITH MODIFICATIONS in that separation pay, in lieu of
reinstatement, and attorney's fees equivalent to 10% of the monetary grants are
awarded to petitioners. All monetary awards shall earn interest at the legal rate of 6%
per annum from the finality of this Decision until fully paid.
SO ORDERED.