788 Phil.

385 ← click for PDF copy

EN BANC
[ G.R. No. 210565. June 28, 2016 ]
EMMANUEL D. QUINTANAR, BENJAMIN O. DURANO,
CECILIO C. DELAVIN, RICARDO G GABORNI, ROMEL G
GERARMAN, JOEL JOHN P. AGUILAR, RAMIRO T. GAVIOLA,
RESTITUTO D. AGSALUD, MARTIN E. CELIS, PATRICIO L.
ARIOS, MICHAEL S. BELLO, LORENZO C. QUINLOG, JUNNE
G. BLAYA, SANTIAGO B. TOLENTINO, JR., NESTOR A.
MAGNAYE, ARNOLD S. POLVORIDO, ALLAN A. AGAPITO,
ARIEL E. BAUMBAD, JOSE T. LUTIVA, EDGARDO G.
TAPALLA, ROLDAN C. CADAYONA, REYNALDO V. ALBURO,
RUDY C. ULTRA, MARCELO R. CABILI, ARNOLD B.
ASIATEN, REYMUNDO R. MACABALLUG, JOEL R. DELEÑA,
DANILO T. OQUIÑO, GREG B. CAPARAS AND ROMEO T.
ESCARTIN, PETITIONERS, VS. COCA-COLA BOTTLERS,
PHILIPPINES, INC., RESPONDENT.
DECISION

MENDOZA, J.:

At bench is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the July 11, 2013 Decision[1] and the December 5, 2013 Resolution[2] of
the Court of Appeals (CA) in CA-G.R. SP No. 115469, which reversed and set aside
the March 25, 2010 Decision[3] and the May 28, 2010 Resolution[4] of the National
Labor Relations Commission (NLRC), affirming the August 29, 2008 Decision of the
Labor Arbiter (LA), in a case for illegal dismissal, damages and attorney's fees filed
by the petitioners against respondent Coca-Cola Bottlers Philippines, Inc. (Coca-
Cola).

The gist of the subject controversy, as narrated by the LA and adopted by the NLRC
and the CA, is as follows:

Complainants allege that they are former employees directly hired by

respondent Coca-Cola on different dates from 1984 up to 2000, assigned
as regular Route Helpers under the direct supervision of the Route Sales
Supervisors. Their duties consist of distributing bottled Coca-Cola
products to the stores and customers in their assigned areas/routes, and
they were paid salaries and commissions at the average of P3,000.00 per
month. After working for quite sometime as directly-hired employees of
Coca-Cola, complainants were allegedly transferred successively as
agency workers to the following manpower agencies, namely, Lipercon
Services, Inc., People's Services, Inc., ROMAC, and the latest being
respondent Interserve Management and Manpower Resources, Inc.

Further, complainants allege that the Department of Labor and

Employment (DOLE) conducted an inspection of Coca-Cola to determine
whether it is complying with the various mandated labor standards, and
relative thereto, they were declared to be regular employees of Coca-
Cola, which was held liable to pay complainants the underpayment of
their 13th month pay, emergency cost of living allowance (ECOLA), and
other claims. As soon as respondents learned of the filing of the claims
with DOLE, they were dismissed on various dates in January 2004. Their
claims were later settled by the respondent company, but the settlement
allegedly did not include the issues on reinstatement and payment of CBA
benefits. Thus, on November 10, 2006, they filed their complaint for
illegal dismissal.

In support of their argument that they were regular employees of Coca-

Cola, the complainants relied on the pronouncement of the Supreme
Court in the case of CCBPI vs. NOWM, G.R. No. 176024, June 18, 2007,
as follows:

"In the case at bar, individual complainants were directly hired

by respondent Coca-Cola as Route Helpers. They assist in the
loading and unloading of softdrinks. As such they were paid
by respondent Coca-Cola their respective salaries plus
commission. It is of common knowledge in the sales of
softdrinks that salesmen are not alone in making a truckload of
softdrinks for delivery to customers. Salesmen are usually
provided with route helpers or utility men who does the
loading and unloading. The engagement of the individual
complainants to such activity is usually necessary in the usual
business of respondent Coca-Cola.

Contrary to the Labor Arbiter's conclusion that respondent

Coca-Cola is engaged solely in the manufacturing is erroneous
 as it is also engaged in the sales of the softdrinks it
manufactured.

Moreover, having been engaged to perform, such activity for

more than a year all the more bolsters individual complainants'
status as regular employees notwithstanding the contract, oral
or written, or even if their employment was subsequently
relegated to a labor contractor."

Respondent Coca-Cola denies employer-employee relationship with the

complainants pointing to respondent Interserve with whom it has a
service agreement as the complainants' employer. As alleged independent
service contractor of respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or reliever delivery
services to its own clients and for CCBPI in particular, the delivery of
CCBPI's softdrinks and beverage products." It is allegedly free from the
control and direction of CCBPI in all matters connected with the
performance of the work, except as to the results thereof, pursuant to the
service agreement. Moreover, respondent Interserve is allegedly highly
capitalized with a total of P21,658,220.26 and with total assets of
P27,509,716.32.

Further, respondent Coca-Cola argued that all elements of employer-

employee relationship exist between respondent Interserve and the
complainants. It was allegedly Interserve which solely selected and
engaged the services of the complainants, which paid the latter their
salaries, which was responsible with respect to the imposition of
appropriate disciplinary sanctions against its erring employees, including
the complainants, without any participation from Coca-Cola, which
personally monitors the route helpers' performance of their delivery
services pointing to Noel Sambilay as the Interserve Coordinator.
Expounding on the power of control, respondent Coca-Cola vigorously
argued that:

"12. According to Mr. Sambilay, he designates who among the

route helpers, such as complainants herein, will be assigned
for each of the delivery trucks. Based on the route helpers'
performance and rapport with the truck driver and the other
route helpers, he groups together a team of three (3) to five (5)
route helpers to undertake the loading and unloading of the
softdrink products to the delivery trucks and to their
designated delivery point. It is his exclusive discretion to
 determine who among the route helpers will be grouped
together to comprise an effective team to render the most
efficient delivery service of CCBPI's products.

"13. Similarly, it is Interserve, through Mr. Sambilay, who

takes charge of monitoring the attendance of the route helpers
employed by Interserve. At the start of the working day, Mr.
Sambilay would position himself at the gate of the CCBPI
premises to check the attendance of the route helpers. He also
maintains a logbook to record the time route helpers appear for
work. In case a route helper is unable to report for duty, Mr.
Sambilay reassigns another route helper to take his place."

On its part, respondent Interserve merely filed its position paper,

pertaining only to complainants Quintanar and Cabili totally ignoring all
the other twenty-eight (28) complainants. It maintains that it is a
legitimate job contractor duly registered as such and it undertakes to
perform utility, janitorial, packaging, and assist in transporting services by
hiring drivers. Complainants Quintanar and Cabili were allegedly hired as
clerks who were assigned to CCBPI Mendiola Office, under the
supervision of Interserve supervisors. Respondent Coca-Cola does not
allegedly interfere with the manner and the methods of the complainants'
performance at work as long as the desired results are achieved. While
admitting employer-employee relationship with the complainants,
nonetheless, respondent Interserve avers that complainants are not its
regular employees as they were allegedly mere contractual workers
whose employment depends on the service contracts with the clients and
the moment the latter sever said contracts, respondent has allegedly no
choice but to either deploy the complainants to other principals, and if the
latter are unavailable, respondent cannot allegedly be compelled to retain
them.[5]

The Decision of the LA

On August 29, 2008, the LA rendered its decision granting the prayer in the
complaint. In its assessment, the LA explained that the documentary evidence
submitted by both parties confirmed the petitioners' allegation that they had been
working for Coca-Cola for quite some time. It also noted that Coca-Cola never
disputed the petitioners' contention that after working for Coca-Cola through the
years, they were transferred to the various service contractors engaged by it, namely,
Interim Services, Inc. (ISI), Lipercon Services, Inc. (Lipercon), People Services, Inc.
(PSI), ROMAC, and lastly, Interserve Management and Manpower Resources, Inc.
(Interserve). In view of said facts, the LA concluded that the petitioners were simply
employees of Coca-Cola who were "seconded" to Interserve.[6]

The LA opined that it was highly inconceivable for the petitioners, who were already
enjoying a stable job at a multi-national company, to leave and become mere agency
workers. He dismissed the contention of Coca-Cola that the petitioners were
employees of Interserve, stressing that they enjoyed the constitutional right to
security of tenure which Coca-Cola could not compromise by entering into a service
agreement manpower supply contractors, make petitioners sign employment
contracts with them, and convert their employment status from regular to
contractual.[7]

Ultimately, the LA ordered Coca-Cola to reinstate the petitioners to their former

positions and to pay their full backwages.[8] The dispositive portion of the decision
reads:

WHEREFORE, all the foregoing premises being considered, judgment is

hereby rendered ordering respondent Coca-Cola Bottlers Phils., Inc. to
reinstate complainants to their former or substantially equivalent
positions, and to pay their full backwages which as of August 29, 2008
already amounts to P15,319,005.00, without prejudice to recomputation
upon subsequent determination of the applicable salary rates and benefits
due a regular route helper or substantially equivalent position on the
plantilla of respondent CCBPI.

SO ORDERED.[9]

The Decision of the NLRC

Similar to the conclusion reached by the LA, the NLRC found that the petitioners
were regular employees of Coca-Cola. In its decision, dated March 25, 2010, it
found that the relationship between the parties in the controversy bore a striking
similarity with the facts in the cases of Coca-Cola Bottlers Philippines, Inc. v.
National Organization of Workingmen[10] (N.O.W.) and Magsalin v. National
Organization of Workingmen (Magsalin).[11] The NLRC, thus, echoed the rulings of
the Court in the said cases which found the employees involved, like the petitioners
in this case, as regular employees of Coca-Cola. It stated that the entities ISI,
Lipercon, PSI, ROMAC, and Interserve simply "played to feign that status of an
employer so that its alleged principal would be free from any liabilities and
responsibilities to its employees."[12] As far as it is concerned, Coca-Cola failed to
provide evidence that would place the subject controversy on a different plane from
N.O.W and Magsalin as to warrant a deviation from the rulings made therein.

As for the quitclaims executed by the petitioners, the NLRC held that the same could
not be used by Coca-Cola to shield it from liability. The NLRC noted the Minutes of
the National Conciliation and Mediation Board (NCMB) which stated that the
petitioners agreed to settle their claims with Coca-Cola only with respect to their
claims for violation of labor standards law, and that their claims for illegal dismissal
would be submitted to the NLRC for arbitration.[13]

Coca-Cola sought reconsideration of the NLRC decision but its motion was denied.
[14]

The Decision of the CA

Reversing the findings of the LA and the NLRC, the CA opined that the petitioners
were not employees of Coca-Cola but of Interserve. In its decision, the appellate
court agreed with the contention of Coca-Cola that it was Interserve who exercised
the power of selection and engagement over the petitioners considering that the latter
applied for their jobs and went through the pre-employment processes of Interserve.
It noted that the petitioners' contracts of employment and personal data sheets, which
were filed with Interserve, categorically stipulated that Interserve had the sole power
to assign them temporarily as relievers for absent employees of their clients. The CA
also noted that the petitioners had been working for other agencies before they were
hired by Interserve.[15]

The CA also gave credence to the position of Coca-Cola that it was Interserve who
paid the petitioners' salaries. This, coupled with the CA's finding that Coca-Cola paid
Interserve for the services rendered by the petitioners whenever they substituted for
the regular employees of Coca-Cola, led the CA to conclude that it was Interserve
who exercised the power of paying the petitioners' wages.

The CA then took into consideration Interserve's admission that they had to sever the
petitioners' from their contractual employment because its contract with Coca-Cola
expired and there was no demand for relievers from its other clients. The CA equated
this with Interserve's exercise of its power to fire the petitioners.[16]

Finally, the CA was of the considered view that it was Interserve which exercised the
power of control. Citing the Affidavit[17] of Noel F. Sambilay (Sambilay),
Coordinator of Interserve, the CA noted that Interserve exercised the power of
control, monitoring the petitioners' attendance, providing them with their
assignments to the delivery trucks of Coca-Cola, and making sure that they were able
to make their deliveries.[18]

The CA then went on to conclude that Interserve was a legitimate independent

contractor. It noted that the said agency was registered with the Department of Labor
and Employment (DOLE) as an independent contractor which had provided delivery
services for other beverage products of its clients, and had shown that it had
substantial capitalization and owned properties and equipment that were used in the
conduct of its business operations. The CA was, thus, convinced that Interserve ran
its own business, separate and distinct from Coca-Cola.[19]

The petitioners sought reconsideration, but they were rebuffed.[20]

Hence, this petition, raising the following

GROUNDS FOR THE PETITION/ASSIGNMENT OF ERRORS

THE COURT OF APPEALS IS GUILTY OF GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN:

I.

RENDERING A DECISION THAT IS CONTRARY TO LAW AND

ESTABLISHED JURISPRUDENCE

II.

MISAPPRECIATING FACTS WHICH GRAVELY PREJUDICED

THE RIGHTS OF THE PETITIONERS.[21]

In their petition for review on certiorari, the petitioners ascribed grave abuse of
discretion on the part of the CA when it reassessed the evidence and reversed the
findings of fact of the LA and the NLRC that ruled in their favor.[22]

The petitioners also claimed that the CA violated the doctrine of stare decisis when it
ruled that Interserve was a legitimate job contractor. Citing Coca Cola Bottlers,
Philippines, Inc. v. Agito (Agito),[23] the petitioners argued that because the parties
therein were the same parties in the subject controversy, then the appellate court
should have followed precedent and declared Interserve as a labor-only contractor.
[24]

In further support of their claim that Interserve was a labor-only contractor and that
Coca-Cola, as principal, should be made ultimately liable for their claims, the
petitioners asserted that Interserve had no products to manufacture, sell and
distribute to customers and did not perform activities in its own manner and method
other than that dictated by Coca-Cola. They claimed that it was Coca-Cola that
owned the softdrinks, the trucks and the equipment used by Interserve and that Coca-
Cola assigned supervisors to ensure that the petitioners perform their duties.[25]

Lastly, the petitioners insisted that both Coca-Cola and Interserve should be made
liable for moral and exemplary damages, as well as attorney's fees, for having
transgressed the petitioners' right to security of tenure and due process.[26]

The Court's Ruling

Essentially, the core issue presented by the foregoing petition is whether the
petitioners were illegally dismissed from their employment with Coca-Cola. This, in
turn, necessitates a determination of the characterization of the relationship between
route-helpers such as the petitioners, and softdrink manufacturers such as Coca-Cola,
notwithstanding the participation of entities such as ISI, Lipercon, PSI, ROMAC,
and Interserve. The petitioners insist that ISI, Lipercon, PSI, ROMAC, and
Interserve are labor-only contractors, making Coca-Cola still liable for their claims.
The latter, on the other hand, asserts that the said agencies are independent job
contractors and, thus, liable to the petitioners on their own.

Procedural Issues

Before the Court proceeds to resolve the case on its merits, it must first be pointed
out that the petitioners erred in resorting to this petition for review on certiorari
under Rule 45 of the Rules of Court and alleging, at the same time, that the CA
abused its discretion in rendering the assailed decision.

Well-settled is the rule that grave abuse of discretion or errors of jurisdiction may be
corrected only by the special civil action of certiorari under Rule 65. Such corrective
remedies do not avail in a petition for review on certiorari which is confined to
correcting errors of judgment only. Considering that the petitioners have availed of
the remedy under Rule 45, recourse to Rule 65 cannot be allowed either as an add-on
or as a substitute for appeal.[27]
Moreover, it is observed that from a perusal of the petitioners' arguments, it is quite
apparent that the petition raises questions of facts, inasmuch as this Court is being
asked to revisit and assess anew the factual findings of the CA and the NLRC. The
petitioners fundamentally assail the findings of the CA that the evidence on record
did not support their claims for illegal dismissal against Coca-Cola. In effect, they
would have the Court sift through, calibrate and re-examine the credibility and
probative value of the evidence on record so as to ultimately decide whether or not
there is sufficient basis to hold the respondents accountable for their alleged illegal
dismissal. This clearly involves a factual inquiry, the determination of which is the
statutory function of the NLRC.[28]

Basic is the rule that the Court is not a trier of facts and this doctrine applies with
greater force in labor cases. Questions of fact are for the labor tribunals to resolve.
[29] Only errors of law are generally reviewed in petitions for review on certiorari
under Rule 45 of the Rules of Court.

In exceptional cases, however, the Court may be urged to probe and resolve factual
issues when there is insufficient or insubstantial evidence to support the findings of
the tribunal or the court below, or when too much is concluded, inferred or deduced
from the bare or incomplete facts submitted by the parties or, where the LA and the
NLRC came up with conflicting positions.[30] In this case, considering the
conflicting findings of the LA and the NLRC on one hand, and the CA on the other,
the Court is compelled to resolve the factual issues along with the legal ones.

Substantial Issues

The Court finds for the petitioners. The reasons are:

First. Contrary to the position taken by Coca-Cola, it cannot be said that route-
helpers, such as the petitioners no longer enjoy the employee-employer relationship
they had with Coca-Cola since they became employees of Interserve. A cursory
review of the jurisprudence regarding this matter reveals that the controversy
regarding the characterization of the relationship between route-helpers and Coca-
Cola is no longer a novel one.

As early as May 2003, the Court in Magsalin struck down the defense of Coca-Cola
that the complainants therein, who were route-helpers, were its "temporary" workers.
In the said Decision, the Court explained:

The basic law on the case is Article 280 of the Labor Code. Its pertinent
provisions read:
 Art. 280. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not

covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in
which he is employed and his employment shall continue
while such activity exists.

Coca-Cola Bottlers Phils., Inc. is one of the leading and largest

manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and
undertake the laborious task of loading and unloading softdrink products
of petitioner company to its various delivery points.

Even while the language of law might have been more definitive, the
clarity of its spirit and intent, i.e., to ensure a "regular" worker's security
of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of
the employer. The standard, supplied by the law itself, is whether the
work undertaken is necessary or desirable in the usual business or trade of
the employer, a fact that can be assessed by looking into the nature of the
services rendered and its relation to the general scheme under which the
business or trade is pursued in the usual course. It is distinguished from a
specific undertaking that is divorced from the normal activities required
in carrying on the particular business or trade. But, although the work to
be performed is only for a specific project or seasonal, where a person
thus engaged has been performing the job for at least one year, even if the
performance is not continuous or is merely intermittent, the law deems
the repeated and continuing need for its performance as being sufficient to
indicate the necessity or desirability of that activity to the business or
trade of the employer. The employment of such person is also then
deemed to be regular with respect to such activity and while such activity
exists.

The argument of petitioner that its usual business or trade is softdrink

manufacturing and that the work assigned to respondent workers as sales
route helpers so involves merely "postproduction activities," one which is
not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose
work are directly involved in the production of softdrinks may be held
performing functions necessary and desirable in its usual business or
trade, there would have then been no need for it to even maintain regular
truck sales route helpers. The nature of the work performed must be
viewed from a perspective of the business or trade in its entirety and not
on a confined scope.

The repeated rehiring of respondent workers and the continuing need for
their services clearly attest to the necessity or desirability of their services
in the regular conduct of the business or trade of petitioner company. The
Court of Appeals has found each of respondents to have worked for at
least one year with petitioner company. While this Court, in Brent School,
Inc. vs. Zamora, has upheld the legality of a fixed-term employment, it
has done so, however, with a stern admonition that where from the
circumstances it is apparent that the period has been imposed to preclude
the acquisition of tenurial security by the employee, then it should be
struck down as being contrary to law, morals, good customs, public order
and public policy. The pernicious practice of having employees, workers
and laborers, engaged for a fixed period of few months, short of the
normal six-month probationary period of employment, and, thereafter, to
be hired on a day-to-day basis, mocks the law. Any obvious
circumvention of the law cannot be countenanced. The fact that
respondent workers have agreed to be employed on such basis and to
forego the protection given to them on their security of tenure,
demonstrate nothing more than the serious problem of impoverishment of
so many of our people and the resulting unevenness between labor and
capital. A contract of employment is impressed with public interest. The
provisions of applicable statutes are deemed written into the contract, and
"the parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting with
 each other."[31]

Shortly thereafter, the Court in Bantolino v. Coca-Cola,[32] among others, agreed

with the unanimous finding of the LA, the NLRC and the CA that the route-helpers
therein were not simply employees of Lipercon, Peoples Specialist Services, Inc. or
ISI, which, as Coca-Cola claimed were independent job contractors, but rather, those
of Coca-Cola itself. In the said case, the Court sustained the finding of the LA that
the testimonies of the complainants therein were more credible as they sufficiently
supplied every detail of their employment, specifically identifying their
salesmen/drivers were and their places of assignment, aside from the dates of their
engagement and dismissal.

Then in 2008, in Pacquing v. Coca-Cola Philippines, Inc. (Pacquing),[33] the Court

applied the ruling in Magsalin under the principle of stare decisis et non quieta
movere (follow past precedents and do not disturb what has been settled). It was
stressed therein that because the petitioners, as route helpers, were performing the
same functions as the employees in Magsalin, which were necessary and desirable in
the usual business or trade of Coca- Cola Philippines, Inc., they were considered
regular employees of Coca-Cola entitled to security of tenure.

A year later, the Court in Agito[34] similarly struck down Coca-Cola's contention that
the salesmen therein were employees of Interserve, notwithstanding the submission
by Coca-Cola of their personal data files from the records of Interserve; their
Contract of Temporary Employment with Interserve; and the payroll records of
Interserve. In categorically declaring Interserve as a labor-only contractor,[35] the
Court found that the work of the respondent salesmen therein, constituting
distribution and sale of Coca-Cola products, was clearly indispensable to the
principal business of petitioner Coca-Cola.[36]

As to the supposed substantial capital and investment required of an independent job

contractor, the Court stated that it "does not set an absolute figure for what it
considers substantial capital for an independent job contractor, but it measures the
same against the type of work which the contractor is obligated to perform for the
principal."[37] The Court reiterated that the contractor, not the employee, had the
burden of proof that it has the substantial capital, investment and tool to engage in
job contracting. As applied to Interserve, the Court ruled:

The contractor, not the employee, has the burden of proof that it has the
substantial capital, investment, and tool to engage in job contracting.
Although not the contractor itself (since Interserve no longer appealed the
 judgment against it by the Labor Arbiter), said burden of proof herein
falls upon petitioner who is invoking the supposed status of Interserve as
an independent job contractor. Noticeably, petitioner failed to submit
evidence to establish that the service vehicles and equipment of
Interserve, valued at P510,000.00 and P200,000.00, respectively, were
sufficient to carry out its service contract with petitioner. Certainly,
petitioner could have simply provided the courts with records showing the
deliveries that were undertaken by Interserve for the Lagro area, the type
and number of equipment necessary for such task, and the valuation of
such equipment. Absent evidence which a legally compliant company
could have easily provided, the Court will not presume that Interserve had
sufficient investment in service vehicles and equipment, especially since
respondents' allegation that they were using equipment, such as forklifts
and pallets belonging to petitioner, to carry out their jobs was
uncontroverted.

In sum, Interserve did not have substantial capital or investment in the

form of tools, equipment, machineries, and work premises; and
respondents, its supposed employees, performed work which was directly
related to the principal business of petitioner. It is, thus, evident that
Interserve falls under the definition of a labor-only contractor, under
Article 106 of the Labor Code; as well as Section 5(1) of the Rules
Implementing Articles 106-109 of the Labor Code, as amended.[38]

As for the certification issued by the DOLE stating that Interserve was an
independent job contractor, the Court ruled:

The certification issued by the DOLE stating that Interserve is an

independent job contractor does not sway this Court to take it at face
value, since the primary purpose stated in the Articles of Incorporation of
Interserve is misleading. According to its Articles of Incorporation, the
principal business of Interserve is to provide janitorial and allied services.
The delivery and distribution of Coca-Cola products, the work for which
respondents were employed and assigned to petitioner, were in no way
allied to janitorial services. While the DOLE may have found that the
capital and/or investments in tools and equipment of Interserve were
sufficient for an independent contractor for janitorial services, this does
not mean that such capital and/or investments were likewise sufficient to
maintain an independent contracting business for the delivery and
distribution of Coca-Cola products.[39]

Finally, the Court determined the existence of an employer-employee relationship

between the parties therein considering that the contract of service between Coca-
Cola and Interserve showed that the former indeed exercised the power of control
over the complainants therein.[40]

The Court once more asserted the findings that route-helpers were indeed employees
of Coca-Cola in Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz[41] and, recently,
in Basan v. Coca-Cola Bottlers Philippines, Inc.[42] and that the complainants
therein were illegally dismissed for want of just or authorized cause. Similar
dispositions by the CA were also upheld by this Court in N.O.W[43] and Ostani,[44]
through minute resolutions.

It bears mentioning that the arguments raised by Coca-Cola in the case at bench even
bear a striking similarity with the arguments it raised before the CA in N.O.W[45] and
Ostani.[46]

From all these, a pattern emerges by which Coca-Cola consistently resorts to various
methods in order to deny its route-helpers the benefits of regular employment.
Despite this, the Court, consistent with sound pronouncements above, adopts the
rulings made in Pacquing that Interserve was a labor-only contractor and that Coca-
Cola should be held liable pursuant to the principle of stare decisis et non quieta
movere.

It should be remembered that the doctrine of stare decisis et non quieta movere is
embodied in Article 8 of the Civil Code of the Philippines which provides:

ART. 8. Judicial decisions applying or interpreting the laws or the

Constitution shall form a part of the legal system of the Philippines.

And, as explained in Fermin v. People:[47]

The doctrine of stare decisis enjoins adherence to judicial precedents. It

requires courts in a country to follow the rule established in a
decision of the Supreme Court thereof. That decision becomes a
judicial precedent to be followed in subsequent cases by all courts in the
land. The doctrine of stare decisis is based on the principle that once a
question of law has been examined and decided, it should be deemed
settled and closed to further argument.[48]

[Emphasis Supplied]
The Court's ruling in Chinese Young Men's Christian Association of the Philippine
Islands v. Remington Steel Corporation is also worth citing, viz:[49]

Time and again, the court has held that it is a very desirable and
necessary judicial practice that when a court has laid down a principle
of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the facts are
substantially the same. Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. Stare decisis simply means that
for the sake of certainty, a conclusion reached in one case should be
applied to those that follow if the facts are substantially the same,
even though the parties may be different. It proceeds from the first
principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the
same questions relating to the same event have been put forward by the
parties similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.[50]

[Emphases Supplied]

Verily, the doctrine has assumed such value in our judicial system that the Court has
ruled that "[a]bandonment thereof must be based only on strong and compelling
reasons, otherwise, the becoming virtue of predictability which is expected from this
Court would be immeasurably affected and the public's confidence in the stability of
the solemn pronouncements diminished."[51] Thus, only upon showing that
circumstances attendant in a particular case override the great benefits derived by our
judicial system from the doctrine of stare decisis, can the courts be justified in
setting it aside.

In this case, Coca-Cola has not shown any strong and compelling reason to convince
the Court that the doctrine of stare decisis should not be applied. It failed to
successfully demonstrate how or why both the LA and the NLRC committed grave
abuse of discretion in sustaining the pleas of the petitioners that they were its regular
employees and not of Interserve.

Second. A reading of the decision of the CA and the pleadings submitted by Coca-
Cola before this Court reveals that they both lean heavily on the service
agreement[52] entered into by Coca-Cola and Interserve; the admission by Interserve
that it paid the petitioners' salaries; and the affidavit of Sambilay who attested that it
was Interserve which exercised the power of control over the petitioners.
The service agreements entered into by Coca-Cola and Interserve, the earliest being
that dated January 1998,[53] (another one dated July 11, 2006)[54] and the most
recent one dated March 21, 2007[55] - all reveal that they were entered into One,
after the petitioners were hired by Coca-Cola (some of whom were hired as early as
1984); Two, after they were dismissed from their employment sometime in January
2004; and Three, after the petitioners filed their complaint for illegal dismissal on
November 10, 2006 with the LA.

To quote with approval the observations of the LA:

x x x The most formidable obstacle against the respondent's theory of

lack of employer-employee relationship is that complainants have [been]
performing the tasks of route-helpers for several years and that practically
all of them have been rendering their services as such even before
respondent Interserve entered into a service agreement with Coca-
Cola sometime in 1998. Thus, the complainants in their position paper
categorically stated the record of their service with Coca-Cola as having
started on the following dates: Emmanuel Quintanar - October 15, 1994;
Benjamin Durano - November 16, [1987]; Cecilio Delaving - June 10,
1991; Ricardo Gaborni - September 28, 1992; Romel Gerarman - June 20,
1995; Ramilo Gaviola - October 10, 1988; Joel John Aguilar - June 1,
1992; Restituto Agsalud - September 7, 1989; Martin Celis - August 15,
1995; Patricio Arios - June 2, 1989; Michael Bello - February 15, 1992;
Lorenzo Quinlog - May 15, 1992; Junne Blaya - September 15, 1997;
Santiago Tolentino, Jr. - May 29, 1989; Nestor Magnaye - February 15,
1996; Arnold Polvorido - February 8, 1996; Allan Agapito - April 15,
1995; Ariel Baumbad - January 15, 1995; Jose Lutiya - February 15,
1995; Edgardo Tapalla - August 15, 1994; Roldan Cadayona - May 14,
1996; Raynaldo Alburo - September 15, 1996; Rudy Ultra - February 28,
1997; Marcelo Cabili - November 15, 1995; Arnold Asiaten - May 2,
1992; Raymundo Macaballug - July 31, 1995; Joel Delena - January 15,
1991; Danilo Oquino - September 15, 1990; Greg Caparas - August 15,
1995; and Romeo Escartin - May 15, 1986.

It should be mentioned that the foregoing allegation of the complainants'

onset of their services with respondent Coca-Cola has been confirmed
by the Bio-Data Sheets submitted in evidence by the said respondent
[Coca-Cola]. Thus, in the Bio-Data Sheet of complainant Quintanar
(Annex "4"), he stated therein that he was in the service of respondent
Coca-Cola continuously from 1993 up to 2002. Likewise, complainant
 Quinlog indicated in his Bio-data Sheet submitted to respondent
Interserve that he was already in the employ of respondent Coca-Cola
from 1992 (Annex "12"). Complainant Edgardo Tapalla also indicated in
his Bio-Data Sheet that he was already in the employ of Coca-Cola since
1995 until he was seconded to Interserve in 2002 (Annex "20").

As a matter of fact, complainants' allegation that they were directly hired

by respondent Coca-Cola and had been working with the latter for quite
sometime when they were subsequently referred to successive agencies
such as Lipercon, ROMAC, People's Services, and most recently,
respondent Interserve, has not been controverted by the respondents.
Even when respondent Coca-Cola filed its reply to the complainants'
position paper, there is nothing therein which disputed complainant's
statements of their services directly with the respondent even before it
entered into service agreement with respondent Interserve.[56]

As to the payment of salaries, although the CA made mention that it was Interserve
which paid the petitioners' salaries, no reference was made to any evidence to
support such a conclusion. The Court, on the other hand, gives credence to the
petitioners' contention that they were employees of Coca-Cola. Aside from their
collective account that it was Coca-Cola's Route Supervisors who provided their
daily schedules for the distribution of the company's products, the petitioners'
payslips,[57] tax records,[58] SSS[59] and Pag-Ibig[60] records more than adequately
showed that they were being compensated by Coca-Cola. More convincingly, the
petitioners even presented their employee Identification Cards,[61] which expressly
indicated that they were "[d]irect hire[es]" of Coca-Cola.

As for the affidavit of Sambilay, suffice it to say that the same was bereft of
evidentiary weight, considering that he failed to attest not only that he was already
with Interserve at the time of the petitioners hiring, but also that he had personal
knowledge of the circumstances surrounding the hiring of the petitioners following
their alleged resignation from Coca-Cola.

Third. As to the characterization of Interserve as a contractor, the Court finds that,

contrary to the conclusion reached by the CA, the petitioners were made to suffer
under the prohibited practice of labor-only contracting. Article 106 of the Labor
Code provides the definition of what constitutes labor-only contracting. Thus:

Article 106. Contractor or subcontractor. - x x x

There is "labor-only" contracting where the person supplying workers to

 an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to me workers in the same
manner and extent as if the latter were directly employed by him.

Expounding on the concept, the Court in Agito explained:

The law clearly establishes an employer-employee relationship between

the principal employer and the contractor's employee upon a finding that
the contractor is engaged in "labor-only" contracting. Article 106 of the
Labor Code categorically states: "There is labor-only' contracting where
the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such
persons are performing activities which are directly related to the
principal business of such employer." Thus, performing activities
directly related to the principal business of the employer is only one
of the two indicators that "labor-only" contracting exists; the other is
lack of substantial capital or investment. The Court finds that both
indicators exist in the case at bar.

[Emphases and Underscoring Supplied]

In this case, the appellate court considered the evidence of Interserve that it was
registered with the DOLE as independent contractor and that it had a total
capitalization of P27,509,716.32 and machineries and equipment worth
P12,538859.55.[62] As stated above, however, the possession of substantial capital
is only one element. Labor-only contracting exists when any of the two elements is
present.[63] Thus, even if the Court would indulge Coca-Cola and admit that
Interserve had more than sufficient capital or investment in the form of tools,
equipment, machineries, work premises, still, it cannot be denied that the petitioners
were performing activities which were directly related to the principal business of
such employer. Also, it has been ruled that no absolute figure is set for what is
considered 'substantial capital' because the same is measured against the type of
work which the contractor is obligated to perform for the principal.[64]

More importantly, even if Interserve were to be considered as a legitimate job

contractor, Coca-Cola failed to rebut the allegation that petitioners were transferred
from being its employees to become the employees of ISI, Lipercon, PSI, and
ROMAC, which were labor-only contractors. Well-settled is the rule that "[t]he
contractor, not the employee, has the burden of proof that it has the substantial
capital, investment, and tool to engage in job contracting."[65] In this case, the said
burden of proof lies with Coca-Cola although it was not the contractor itself, but it
was the one invoking the supposed status of these entities as independent job
contractors.

Fourth. In this connection, even granting that the petitioners were last employed by
Interserve, the record is bereft of any evidence that would show that the petitioners
voluntarily resigned from their employment with Coca-Cola only to be later hired by
Interserve. Other than insisting that the petitioners were last employed by Interserve,
Coca-Cola failed not only to show by convincing evidence how it severed its
employer relationship with the petitioners, but also to prove that the termination of
its relationship with them was made through any of the grounds sanctioned by law.

The rule is long and well-settled that, in illegal dismissal cases such as the one at
bench, the burden of proof is upon the employer to show that the employees'
termination from service is for a just and valid cause.[66] The employer's case
succeeds or fails on the strength of its evidence and not the weakness of that adduced
by the employee,[67] in keeping with the principle that the scales of justice must be
tilted in favor of the latter in case doubts exist over the evidence presented by the
parties.[68]

For failure to overcome this burden, the Court concurs in the observation of the LA
that it was highly inconceivable for the petitioners, who were already enjoying a
stable job at a multi-national company, to leave and become mere agency workers.
Indeed, it is contrary to human experience that one would leave a stable employment
in a company like Coca-Cola, only to become a worker of an agency like Interserve,
and be assigned back to his original employer — Coca-Cola.

Although it has been said that among the four (4) tests to determine the existence of
any employer-employee relationship, it is the "control test" that is most persuasive,
the courts cannot simply ignore the other circumstances obtaining in each case in
order to determine whether an employer-employee relationship exists between the
parties.

WHEREFORE, the petition is GRANTED. The July 11, 2013 Decision and the
December 5, 2013 Resolution of the Court of Appeals, in CA-G.R. SP No. 115469
are REVERSED and SET ASIDE and the August 29, 2008 Decision of the Labor
Arbiter in NLRC Case Nos. 12-13956-07 and 12-14277-07, as affirmed in toto by