Facts:

The case involves Cagayan Electric Power & Light Company, Inc. (CEPALCO) and CEPALCO Energy Services Corporation (CESCO), formerly known as CEPALCO Energy Services & Trading Corporation, as petitioners, and the CEPALCO Employee's Labor Union-Associated Labor Unions-Trade Union Congress of the Philippines (TUCP) as the respondent. The events leading to the case began on February 19, 2007, when CEPALCO and CESCO entered into a Contract for Meter Reading Work, wherein CESCO was tasked with performing CEPALCO's meter-reading activities. This arrangement led to the displacement of several CEPALCO employees, who were either relieved of their duties or assigned to floating positions, prompting the union to file a complaint for Unfair Labor Practice (ULP) against the petitioners, which was docketed as NLRC Case No. RAB-10-07-00408-2007. The union alleged that the contracting out of services was a deliberate attempt by CEPALCO to evade its responsibilities under the Co...

Facts:

Parties and Background

• Petitioners:
• Cagayan Electric Power & Light Company, Inc. (CEPALCO) – a domestic corporation engaged in electric distribution in Cagayan de Oro and municipalities in Misamis Oriental.
• CEPALCO Energy Services Corporation (CESCO), formerly CEPALCO Energy Services & Trading Corporation – a business entity engaged in trading and services.
• Respondent:
• CEPALCO Employee’s Labor Union – the duly certified bargaining representative of CEPALCO’s regular rank-and-file employees.

Contracts and Changes in Employment

• Meter-Reading Work Contract (February 19, 2007)
• CEPALCO contracted CESCO to perform meter-reading activities.
• Following the contract, several CEPALCO employees and union members were relieved, reassigned to floating positions, or replaced by workers supplied by CESCO.
• The change prompted the union to allege that CEPALCO was evading its responsibilities under the Collective Bargaining Agreement (CBA) and labor laws.
• Warehousing Works Contract (January 5, 2010)
• A subsequent Contract of Service was executed for warehousing works.
• Similar issues arose when union members assigned to warehouse tasks were transferred or replaced by CESCO-recruited workers.

Allegations and Labor Tribunal Proceedings

• Allegations of Unfair Labor Practice (ULP)
• The union claimed that the contracting out of meter-reading and warehousing services constituted labor-only contracting in violation of Article 259(c) of the Labor Code, as amended.
• It argued that such arrangements were intended to interfere with the employees’ right to self-organization.
• Initial Proceedings and Rulings
• The Labor Arbiter (LA) dismissed the complaints for lack of merit in separate cases due to substantial evidence presented by petitioners that CESCO operated as an independent contractor.
• The National Labor Relations Commission (NLRC) affirmed the LA’s ruling, noting no interference with the union members’ rights and applying the doctrine of res judicata in the second case.

Evidentiary Issues Raised

• Discrepancies about CESCO’s Substantial Capital
• Petitioners presented evidence of CESCO’s later increases in authorized and paid-up capital; however, there was no documentary evidence of sufficient capital or investment during the time of the meter-reading contract.
• The list of office equipment and vehicles offered by petitioners was found irrelevant as CEPALCO, not CESCO, provided the basic equipment to perform the tasks.
• Control Over Work and Operations
• CEPALCO established the working procedures, supervised, and evaluated the performance of CESCO’s workers, indicating that control rested with CEPALCO and not with CESCO.

Issue:

Whether the declaration by the Court of Appeals that CESCO engaged in labor-only contracting is proper despite petitioners being absolved from ULP charges.

• Did the CA err in characterizing CESCO as a labor-only contractor based on evidence of insufficient capital, equipment, and control?
• Whether the determination of labor-only contracting becomes moot once CEPALCO is cleared of ULP charges.
• Whether respondent, as the union, has standing to invoke the issue of the employment status of workers supplied by CESCO if the benefits would accrue only to those workers.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)