A.C. No. 10294 - Guevarra-Castil vs. Trinidad

On December 11, 2007, 40 petitioners initiated a complaint for regularization and for fringe benefits under a Collective Bargaining Agreement (CBA), alleging illegal dismissal and deprivation of benefits as they were hired by private respondents.
Petitioners, comprising route helpers, drivers, helpers, and forklift operators, claimed they worked continuously for Coca-Cola Bottlers Philippines Inc. (CCBPI) despite being employed through various contractors, namely Interserve Management Manpower Resources Inc. (Interserve) and Hotwired Marketing Systems Inc. (Hotwired).
They asserted that their functions, including delivery, loading and unloading, and stock handling, were directly related to the manufacturing, distribution, and marketing business of CCBPI.

On January 30, 2008, an additional 27 employees filed a Supplemental Complaint, joining the original 40 petitioners, adopting the same facts and claims.
A second supplemental complaint was later filed, invoking illegal dismissal after petitioners were banned from reporting to work when asked to transfer due to an impending closure of a CCBPI outlet.
Petitioners alleged that despite performing functions essential to CCBPI’s business, they were denied regularization and were being used by labor-only contractors to mask an employer-employee relationship with CCBPI.

In their original filings and position papers, petitioners contended that they were regular employees of CCBPI and that their continued engagement by different contractors constituted a subterfuge for denying labor rights.
Respondents, particularly CCBPI, argued that there was no employer-employee relationship with the petitioners by virtue of the following:

The application of a four-fold test addressing selection, payment, discipline, and control, wherein CCBPI maintained minimal direct involvement.
Submission of documentary evidence (affidavits, service agreements, balance sheets, and articles of incorporation) that purported to demonstrate that Interserve and Hotwired were legitimate job contractors with substantial capitalization and independent operational capacities.

CCBPI also raised issues regarding the timeliness of some of the petitioners’ claims, alleging that certain claims had prescribed under the applicable four-year prescriptive period.

The Labor Arbiter (LA) initially dismissed the petitioners’ complaint with respect to CCBPI for lack of jurisdiction and found the claims against Interserve and Hotwired to be without merit.
The National Labor Relations Commission (NLRC) later affirmed the LA’s decision, holding that:

Interserve and Hotwired were legitimate independent job contractors, exercising control over the petitioners’ work.
The petitioners did not perform tasks indispensable to the manufacturing operations of CCBPI.

The Court of Appeals (CA) denied the petition for certiorari filed by petitioners, upholding the NLRC and LA findings on the legitimacy of the contractors and the absence of an employer-employee relationship between CCBPI and petitioners.
Petitioners, however, filed a Petition for Review on Certiorari under Rule 45, arguing that the CA erred by not applying established precedents (e.g., Agito, Magsalin, Pacquing, Dela Cruz, Lingat) which recognized the worker’s status as regular employees of CCBPI.

Petitioners contended that the CA’s rulings were based on an erroneous assessment of the evidentiary record regarding the capitalization of Interserve and Hotwired.
They argued that despite being hired through contractors, the nature of their work (as essential support in sales, distribution, and warehousing) rendered them regular employees of CCBPI.
Additionally, petitioners claimed that their termination was illegal, as it lacked just cause and due process, particularly under Articles 282-284 of the Labor Code, since their dismissal was effected by merely denying them entry after the expiration of the service agreements.

Is there a sufficient substantial investment (in tools, equipment, machinery, and work premises) by the contractors to classify them as legitimate job contractors?
Does the arrangement with CCBPI via these contractors disguise an actual employer-employee relationship?

Whether the termination (or contractual expiration) of the petitioners’ services constitutes a legal dismissal.
Whether due process requirements, including Notice under Article 283 of the Labor Code, were observed in their termination.

Whether the established precedents (Magsalin, Pacquing, Agito, Dela Cruz, Lingat) should apply to the present case given the similarity in the nature of the work performed by the petitioners.
Whether the CA failed to consider these precedents and committed grave abuse of discretion.