Case Summary (G.R. No. 244695)
Petitioners and Respondents
G.R. No. 244695
• Petitioner: MKP
• Respondent: PLDT, Inc.
G.R. No. 244752
• Petitioner: PLDT, Inc.
• Respondents: Secretary Bello; MKP
G.R. No. 245294
• Petitioner: Secretary Bello
• Respondent: PLDT, Inc.
Key Dates
• December 5, 2016: SAVE Report presented by DOLE Assessment Team.
• January 6–17, 2017: Mandatory conferences and contractor submissions.
• April 19, 2017: Public announcement by Sec. Bello on regularizing 10,000 contract workers.
• July 3, 2017: DOLE-NCR Regional Director’s Compliance Order.
• January 10 & April 24, 2018: Secretary Bello’s Resolutions on appeals.
• July 31, 2018: Court of Appeals Decision in CA-G.R. SP No. 155563.
• February 14, 2024: Supreme Court Decision on consolidated petitions.
Applicable Law
• 1987 Philippine Constitution (post-1990 decisions).
• Labor Code, Articles 106–109 (labor contracting) and Article 128 (visitorial and enforcement powers).
• Rules Implementing Articles 106–109, as amended by Department Orders 18-A (2011) and 174-2017.
• Rules of Court, Rule 45 (Review on Certiorari).
Background
A collective bargaining dispute between PLDT and MKP led to DOLE-initiated SAVE inspections under AO 648. The objective was to assess compliance with labor standards, on-the-job training rules, hiring and working arrangements, and occupational safety across PLDT and its contractors. Over 1,100 workers and 37 contractor representatives were interviewed at multiple PLDT offices in NCR.
DOLE Assessment Team Findings
The team’s preliminary report identified:
- Indicators of labor-only contracting—PLDT’s involvement in applicant screening, training, scheduling, performance reviews, and supervisory control over contractor-supplied workers.
- Violations by 47 contractors of overtime pay, holiday pay, leave benefits, 13th-month pay; unauthorized deductions by 19 contractors.
- Recommendation to regularize contract employees performing work essential to PLDT’s business and to hold PLDT solidarily liable for unpaid benefits.
Regional Director’s Compliance Order (July 3, 2017)
- Confirmed DOLE jurisdiction to determine labor-only contracting under Article 128(b) of the Labor Code.
- Found sufficient evidence of labor-only contracting by several contractors; declared them illegal and ordered their registration revoked.
- Ordered PLDT and erring contractors to regularize affected workers and to pay PHP 78,699,983.71 in unpaid benefits.
Secretary of Labor’s Resolution (January 10 & April 24, 2018)
• Upheld most findings on labor-only contracting; deemed 7,416 contractor workers as PLDT regular employees from initial deployment (later reduced to 7,344).
• Ordered cancellation of DO 18-A registrations of illegal contractors.
• Solidarily liable monetary award reduced to PHP 51,801,729.80 after reconsideration.
• Recognized certain contractors as legitimate and adjusted liabilities where proof of full or partial payment existed.
Court of Appeals Decision (July 31, 2018)
- AFFIRMED with modification Sec. Bello’s Resolutions as to regularizing contractor workers performing installation, repair, and maintenance of PLDT lines.
- SET ASIDE orders deeming labor-only contracting for janitorial, security, clerical, IT, back-office support, BPO, sales, medical/dental/engineering services.
- REMANDED to DOLE-NCR for:
• Factual determination of which installation/repair/maintenance workers qualify for regularization.
• Proper computation of monetary awards.
• ENJOINED enforcement of orders vacated in item 2.
Issues on Review
• MKP: CA allegedly disregarded substantial evidence and misapplied labor-only contracting criteria, unjustly excluding certain contractor groups from regularization.
• PLDT: CA erred in upholding regularization of installation/repair/maintenance workers and in attributing to DOLE the power to determine employer-employee relationships.
• Sec. Bello: CA should have limited its review to jurisdictional errors and grave abuse of discretion without re-evaluating substantial evidence.
Supreme Court Ruling
- Scope of Review: Under Rule 45, limited to questions of law—specifically, whether CA correctly found grave abuse of discretion or jurisdictional error by Sec. Bello.
- DOLE Jurisdiction: Article 128 empowers DOLE (and its Regional Directors) to determine employer-employee relationships in enforcing labor standards; no requirement to defer to NLRC. The “exception clause” for referral to NLRC applies only when contested evidence is not verifiable in a normal inspection.
- Labor Contracting: Legitimate contracting is permitted; labor-only contracting occurs only if the contractor lacks substantial capital and PLDT exercises undue control over the means and methods of work.
- Grave Abuse of Discretion: Sec. Bello’s reliance on interviews of fewer than 1,100 workers to regularize over 7,000, absent specific documentary or on-site evidence, fails the “substantial evidence” test. Anecdotal statements and uniform sample-based awar
Case Syllabus (G.R. No. 244695)
Antecedents
- PLDT, Inc. is a telecommunications corporation that engages contractors and subcontractors for various operational services.
- Manggagawa sa Komunikasyon ng Pilipinas (MKP) is the exclusive bargaining agent for PLDT’s rank-and-file employees.
- A deadlock in collective bargaining led to a “Special Assessment and Visit of Establishment” (SAVE) at PLDT, pursuant to DOLE Administrative Order No. 648.
- The DOLE Assessment Team was tasked to assess compliance with Department Order 18-A, Series of 2011 (DO 18-A), covering training, hiring practices, working arrangements, general labor standards, and occupational safety.
SAVE Inspection and Preliminary Findings
- Between August and December 2016, the Team interviewed 1,104 PLDT employees and contracted workers and 37 contractor representatives in NCR offices.
- The SAVE Report (December 5, 2016) flagged indications of labor-only contracting:
• PLDT defined hiring requirements, conducted initial evaluations, and trained contractor employees.
• PLDT set work schedules, deadlines, and supervised overtime and leave, reviewing work weekly.
• Contractor workers referred problems to PLDT managers; contractors’ special contacts lacked resolution authority.
• Some contractor workers performed tasks identical to regular PLDT staff.
• PLDT recommended the replacement or termination of contractor workers. - The Team also found violations of general labor standards (overtime pay, holiday pay, service incentive leave, maternity and paternity leave, 13th-month pay) and unauthorized deductions.
- Recommendation: PLDT must regularize workers in roles directly tied to its business and pay unpaid benefits solidarily with contractors.
Administrative Proceedings
- January 6, 2017: PLDT filed a Manifestation and Motion to challenge factual and legal conclusions, suggesting an adversarial proceeding at the NLRC.
- Mandatory conferences (Jan 6, 10, 17) allowed contractors to submit proof of compliance and affidavits disputing labor-only contracting findings.
- April 19, 2017: Secretary Bello publicly announced he would order the regularization of 10,000 contractual workers.
Regional Director’s Order (July 3, 2017)
- Denied PLDT’s request to refer regularization issues to the NLRC, affirming DOLE’s power under Article 128(b) of the Labor Code.
- Declared labor-only contracting where contractors lacked capital/investment and performed core activities.
- Solidarily liable PLDT and certain contractors to pay PHP 78,699,983.71 in unpaid benefits.
- Ordered cancellation of DO 18-A registrations and cessation of contracting activities by erring contractors.
- Directed PLDT to regularize affected workers and include them in its payroll.