Basan vs. Coca-Cola Bottlers Philippines

Employees engaged to perform activities necessary or desirable in the usual business or trade of the employer are regular employees by nature of work, regardless of length of service, and cannot be deprived of regular status by the employer's unilateral assertion of fixed-term employment absent any written contract or proof that the fixed period was knowingly and voluntarily agreed upon without circumstances vitiating consent.

Petitioners were seven individuals hired at various times between 1988 and 1996 by respondent Coca-Cola Bottlers Philippines as route helpers, whose duties consisted of accompanying route salesmen aboard delivery trucks and loading and unloading softdrink products at various delivery points. Respondent corporation is one of the leading and largest manufacturers of softdrinks in the country. The dispute centers on whether petitioners, repeatedly engaged for periods shorter than one year, attained regular employment status entitling them to security of tenure, or whether they were fixed-term employees whose engagements lawfully expired at the end of each stipulated period. The legal framework governing the classification is Article 280 of the Labor Code, as amended, which distinguishes regular from casual employment and provides two categories of regular employees: those engaged to perform necessary or desirable activities, and those who have rendered at least one year of service.

On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao, Jr., Roberto Dela Rama, Jr., Ricky S. Nicolas, Crispulo D. Donor, and Galo Falguera filed a complaint for illegal dismissal with money claims against respondent Coca-Cola Bottlers Philippines, alleging that respondent dismissed them without just cause and without the prior written notice required by law. The petitioners had been hired at various dates spanning from 1988 to 1996 and were dismissed at various dates between April 1996 and February 1997. Their lengths of service ranged from approximately five months in the case of Dela Rama to about eight years in the case of Dizon, though the service was intermittent rather than continuous for most of them.

Respondent corporation countered that it hired petitioners as temporary route helpers to act as substitutes for absent regular route helpers for fixed periods in anticipation of high volumes of work in its plants or sales offices. According to respondent, petitioners knew that their assignment was temporary in duration. In its position paper, respondent expressly admitted that petitioners were employed as route helpers in anticipation of the high volume of work in its plants and sales offices. The payslips presented by petitioners during the hearing before the Labor Arbiter on March 11, 1998 showed that they rendered services for periods generally shorter than one year, with employment broken into intermittent segments.

On August 21, 1998, the Labor Arbiter ruled in favor of petitioners, finding that since they were performing activities necessary and desirable to the usual business of respondent for more than the period for regularization, they were regular employees whose dismissal was contrary to law in the absence of just cause and prior written notice. The Labor Arbiter ordered reinstatement with full backwages, lump sum increases under the collective bargaining agreement, accrued vacation and sick leave benefits, monetary awards, and attorney's fees. The NLRC affirmed this decision on January 30, 2003, rejecting respondent's contention that petitioners were project or seasonal employees, noting that respondent had failed to submit any contract of project employment or similar proof. The NLRC observed that petitioners could not be considered probationary employees since they had performed services for more than six months, and that as route helpers they performed work directly connected with respondent's ordinary business of manufacturing and distributing softdrink products. Respondent's motion for reconsideration was denied by the NLRC on September 24, 2003.

Respondent then filed a petition for certiorari with the Court of Appeals on December 9, 2003, alleging grave abuse of discretion on the part of the NLRC. In the meantime, petitioners sought a writ of execution before the Labor Arbiter, which was issued on March 25, 2004 and affirmed by the NLRC on June 21, 2004. Respondent filed a second petition for certiorari on October 22, 2004, claiming grave abuse of discretion in directing execution of a judgment whose validity was still under appellate review. The Court of Appeals consolidated the two petitions and, in its Decision dated August 31, 2005, reversed the NLRC and the Labor Arbiter, holding that although petitioners performed duties necessary or desirable in respondent's business, this was not the only standard for determining employment status, and that following Brent School, Inc. vs. Zamora, petitioners must be considered fixed-term employees. The CA denied petitioners' motion for reconsideration on August 24, 2006, prompting the instant petition.

• Regular Employment Status: Petitioners maintained that they were continuously hired by respondent to perform duties necessary and desirable in its usual trade or business, and were therefore regular employees entitled to security of tenure.
• Absence of Fixed-Term Contracts: Petitioners argued that if their services had truly been engaged for fixed specific periods, respondent should have at least provided the contracts of employment evidencing the same.
• Procedural Defect in Respondent's Appeal: Petitioners alleged that respondent's appeal of the Labor Arbiter's August 21, 1998 decision to the NLRC, filed only on December 20, 1998, rendered the Labor Arbiter's decision final and executory, thereby depriving the CA of jurisdiction to alter the final judgment.
• Finality of NLRC Resolutions: Petitioners claimed that the NLRC resolutions had become final and executory in view of the Entries of Judgment dated December 16, 2003 and September 16, 2004 issued by the NLRC.

• Defective Verification and Certification: Respondent contended that the petition should be denied due course because the verification and certification of non-forum shopping was signed by only one of the petitioners.
• Fixed-Term Employment: Respondent argued that even assuming the validity of the verification, the petition should still be dismissed because the appellate court aptly found that petitioners were fixed-term employees hired intermittently.
• Insufficient Substantiation of Claims: Respondent asserted that petitioners failed to completely substantiate their claims, pointing out that the payslips presented during the March 11, 1998 hearing showed employment terms of less than one year, which precluded regular employment status.
• Destruction of Employment Contracts: Respondent explained that its failure to present petitioners' employment contracts was due to a fire that destroyed its Manila Plant where the contracts were kept, and maintained that where a fixed period of employment was agreed upon knowingly and voluntarily, with the duration made known at the time of engagement, petitioners could not claim otherwise.
• Nature of Route Helper Functions: Respondent disagreed with the contention that petitioners, as route helpers, were performing functions necessary or desirable to its business.

• Verification and Certification Against Forum Shopping: Whether the petition should be dismissed for defective verification and certification of non-forum shopping signed by only one of the petitioners.
• Employment Status: Whether petitioners, employed as route helpers performing loading and unloading of softdrink products, were regular employees or fixed-term employees.
• Illegal Dismissal: Whether petitioners were illegally dismissed and entitled to reinstatement, backwages, and other monetary awards.

• Verification and Certification Against Forum Shopping: No. The signature of only one petitioner constituted substantial compliance, all petitioners sharing a common interest and invoking a common cause of action, and the relaxation of technical rules in labor cases being warranted to serve substantial justice.
• Employment Status: Petitioners are regular employees by nature of work. As route helpers performing loading and unloading of softdrink products necessary or desirable to respondent's business, they are deemed regular employees under Article 280 of the Labor Code irrespective of length of service, and respondent failed to prove any knowingly and voluntarily agreed fixed-term employment.
• Illegal Dismissal: Yes. For lack of any clear, valid, just, or authorized cause in terminating petitioners' employment, respondent was found guilty of illegal dismissal, entitling petitioners to reinstatement, backwages, allowances, attorney's fees, and interest.

• Verification and Certification Against Forum Shopping: The general rule requiring all petitioners to sign the verification and certification of non-forum shopping admits of exceptions. The rule on verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations signs the verification, and when the matters alleged are made in good faith or are true and correct. Similarly, when all petitioners share a common interest and invoke a common cause of action or defense, the signature of only one in the certification against forum shopping substantially complies with the requirement. The Court found that petitioner Basan's signature alone sufficed, and that it was more in accord with substantial justice to overlook the procedural lapse, technical rules of procedure being relaxable in labor cases to serve the demand of justice.

• Employment Status: The nature of work of route helpers hired by Coca-Cola Bottlers Philippines, Inc. as necessary and desirable to its usual business or trade, thereby qualifying them as regular employees, had already been categorically resolved in Magsalin vs. National Organization of Working Men. The applicable test is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer. The standard, supplied by Article 280 of the Labor Code, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer. Respondent expressly admitted that petitioners were employed as route helpers in anticipation of high volumes of work in its plants and sales offices. The nature of the work must be viewed from the perspective of the business or trade in its entirety, not from a confined scope. Respondent's argument that only those directly involved in softdrink production perform necessary functions was rejected, as there would be no need to maintain regular truck sales route helpers if that were the case. The repeated rehiring of the workers and the continuing need for their services attested to the necessity or desirability of their services. Under Article 280, there are two kinds of regular employees: (1) regular employees by nature of work, engaged to perform activities necessary or desirable in the usual business or trade of the employer regardless of length of service; and (2) regular employees by years of service, who have rendered at least one year of service whether continuous or broken. Petitioners fell under the first category. That they rendered services for periods of less than one year was of no moment, since for as long as they performed activities necessary to respondent's business, they were deemed regular employees irrespective of length of service.

  Regarding respondent's reliance on Brent School, Inc. vs. Zamora for fixed-term employment, the Court acknowledged that fixed-term employment is not per se illegal, and that the Civil Code recognizes contracts with a fixed or definite period. However, Brent laid down two criteria to prevent circumvention of security of tenure: (1) the fixed period was knowingly and voluntarily agreed upon without force, duress, or improper pressure and absent circumstances vitiating consent; or (2) the employer and employee dealt on more or less equal terms with no moral dominance exercised by the former over the latter. The records were bereft of any proof that petitioners freely entered into agreements with respondent for specified periods. No employment contracts were presented. Respondent's explanation that the contracts were destroyed by fire was deemed insufficient, as respondent could have submitted other pertinent files, records, and remittances showing the fixed period. Respondent's failure to submit the necessary documents, which were in its possession as employer, gave rise to the presumption that their presentation was prejudicial to its cause. The repeated engagement of petitioners for periods shorter than the six-month probationary period evidenced intent to thwart their security of tenure, particularly given the awareness that ordinary workers are never on equal terms with their employers. The principle of stare decisis was applied through Pacquing vs. Coca-Cola Philippines, Inc., which had applied the Magsalin ruling to route helpers performing the same functions.

• Illegal Dismissal: Having established that petitioners were regular employees entitled to security of tenure, their employment could only be terminated for just or authorized cause and with observance of due process. The records showed no clear, valid, just, or authorized cause for the termination. The Court therefore found respondent guilty of illegal dismissal, entitling petitioners to reinstatement, backwages from the time their salaries were withheld until actual reinstatement, allowances and other benefits or their monetary equivalent at the time of dismissal, attorney's fees equivalent to ten percent of the monetary awards, and interest at six percent per annum of the total monetary awards computed from the finality of the decision until full satisfaction.

• Regular Employment by Nature of Work — Under Article 280 of the Labor Code, an employment is deemed regular where the employee is engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, regardless of length of service. The test is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer. The Court applied this doctrine by holding that route helpers who load and unload softdrink products at various delivery points perform work necessary and desirable to Coca-Cola's business of manufacturing and distributing softdrinks, making them regular employees by nature of work irrespective of the brevity or intermittency of their service.

• Regular Employment by Years of Service — Under Article 280, any employee who has rendered at least one year of service, whether continuous or broken, is considered a regular employee with respect to the activity in which employed, and the employment continues while such activity exists. This category is distinct from regular employment by nature of work and applies regardless of the nature of the work performed.

• Fixed-Term Employment (Brent School Doctrine) — Fixed-term employment contracts are valid and enforceable in this jurisdiction, as the Civil Code recognizes contracts with a fixed or definite period. However, to prevent circumvention of security of tenure, two criteria must be satisfied: (1) the fixed period was knowingly and voluntarily agreed upon by the parties without force, duress, or improper pressure and absent circumstances vitiating consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. The Court found that neither criterion was met, as no employment contracts were presented and the repeated hiring for periods shorter than the six-month probationary period demonstrated intent to circumvent security of tenure.

• Stare Decisis in Labor Law — The principle of stare decisis et non quieta movere (follow past precedents and do not disturb what has been settled) was applied through Pacquing vs. Coca-Cola Philippines, Inc., which had itself applied the Magsalin ruling to route helpers at Coca-Cola performing the same functions, holding them to be regular employees.

• Substantial Compliance in Verification and Certification Against Forum Shopping — The rule on verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations signs the verification, and when the matters alleged are made in good faith or are true and correct. When all petitioners share a common interest and invoke a common cause of action or defense, the signature of only one in the certification against forum shopping substantially complies with the requirement. Technical rules of procedure may be relaxed in labor cases to serve the demand of justice.

• Presumption from Non-Production of Evidence — An employer's failure to submit necessary documents within its possession gives rise to the presumption that their presentation is prejudicial to its cause. The Court applied this presumption to respondent's failure to produce employment contracts or other pertinent records despite claiming they were destroyed by fire.

• "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." — This passage, quoted from Magsalin vs. National Organization of Working Men, articulates the canonical test for distinguishing regular from non-regular employment under Article 280 of the Labor Code, and is the foundational ratio decidendi for the Court's ruling that petitioners were regular employees.

• "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." — Quoted from Brent School, Inc. vs. Zamora, this passage defines the critical limitation on fixed-term employment: that a fixed period imposed to circumvent security of tenure is void, and it forms the basis for the Court's rejection of respondent's fixed-term employment claim.

• "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." — This passage from Magsalin, emphasized by the Court, condemns the practice of repeated short-term hiring designed to prevent employees from attaining regular status, and directly supports the finding that respondent's hiring pattern evidenced intent to circumvent security of tenure.

• "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.'" — This formulation establishes that employment contracts cannot override mandatory labor law protections, reinforcing the principle that the parties cannot contract out of security of tenure guarantees through fixed-term arrangements.

• Magsalin vs. National Organization of Working Men, 451 Phil. 254 (2003) — Controlling precedent. The Court held that route helpers hired by Coca-Cola Bottlers Philippines, Inc. perform work necessary and desirable to its usual business, qualifying them as regular employees. This ruling was applied directly to the present case and was the primary basis for the decision.

• Pacquing vs. Coca-Cola Philippines, Inc., 567 Phil. 323 (2008) — Followed under the principle of stare decisis. The Court applied the Magsalin ruling to route helpers at Coca-Cola performing the same functions, holding them regular employees entitled to security of tenure. Also cited for the proposition that the signature of only one petitioner in the certification against forum shopping constitutes substantial compliance when petitioners share a common interest.

• Brent School, Inc. vs. Zamora, 260 Phil. 747 (1990) — Distinguished and limited. Recognized as establishing the validity of fixed-term employment contracts, but the Court found that the criteria laid down therein for preventing circumvention of security of tenure were not satisfied in this case, as no proof of voluntary agreement to fixed periods was presented.

• Noblejas vs. Italian Maritime Academy Phils., Inc., G.R. No. 207888, June 9, 2014 — Cited for the classification of regular employees into two kinds under Article 280: regular by nature of work and regular by years of service.

• GMA Network, Inc. vs. Pabriga, G.R. No. 176419, November 27, 2013 — Cited for the recognition of fixed-term employment as a valid type of employment and for the criteria to prevent circumvention of security of tenure, as well as for the principle that repeated hiring for periods shorter than the probationary period evidences intent to thwart security of tenure.

• Article 280, Labor Code (as amended) — Defines regular and casual employment. Provides that an employment shall be deemed regular where the employee is engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, except where the employment is fixed for a specific project or undertaking with a predetermined completion date, or where the work is seasonal. Also provides that any employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which employed. The Court applied this provision to hold that petitioners, as route helpers performing necessary and desirable work, were regular employees by nature of work regardless of the brevity or intermittency of their service.

Maria Lourdes P.A. Sereno (Chief Justice, designated Acting Member in lieu of Justice Francis H. Jardeleza per Raffle dated February 2, 2015), Presbitero J. Velasco, Jr. (Associate Justice, Chairperson), Martin S. Villarama, Jr. (Associate Justice), and Bienvenido L. Reyes (Associate Justice) concurred.