The Supreme Court has upheld the Department of Labor and Employment’s order to PLDT Inc. to regularize its employees engaged in the installation, repair, and maintenance services of the telecommunication giant’s lines.
In a decision written by Associate Justice Rodil Zalameda, the SC’s First Division dismissed the consolidated petitions for certiorari assailing the ruling of the Court of Appeals, which affirmed, with substantial modifications, the resolutions issued by then-Labor Secretary Silvestre Bello III, finding labor violations by PLDT and its contractor.
The petitions were filed by Manggagawa sa Komunikasyon ng Pilipinas, PLDT, and Bello Ill in his capacity as then-DOLE secretary.
Reacting to the ruling, PLDT Inc. confirmed in a statement to thePhilippine Stock Exchange that the Supreme Court upheld the CA decision setting aside the order of the DOLE under Bello III to regularize 7,344 workers of PLDT’s service contractors.
“With regard to those workers performing installation, repair and maintenance functions, we clarify that the Supreme Court remanded the case to the DOLE regional director to determine whether or not regularization is appropriate,” PLDT said.
In its decision, the High Court explained that labor contracting—which means a non-employee of a company is contracted to work based on a specific rate and period—is not necessarily illegal.
Article 106 of the Labor Code allows an employer to engage in legitimate labor contracting, the High Court said, adding that the DOLE implements this through its Department Order No. 18-A and 174-2017.
Although it contracted out specific jobs, PLDT had argued that this did not mean the contractors’ employees are direct employees of the telecommunications company.
But the SC ruled that employees assigned in installation, repair, and maintenance services of PLDT lines perform work directly related to the company’s business, and thus should be regularized.
The High Court explained that under Article 295 of the Labor Code, regular employment is determined through the connection between the employee’s work and the “usual” business or trade of the employer.
“It cannot be denied that without the work performed by these employees, PLDT would not be able to carry on its business and deliver the services it promised its consumers,” the SC added.
The DOLE had conducted a “special assessment and visit of establishment” in PLDT, where the Labor department found that the company and its contractors were engaged in labor-only contracting.
The DOLE then recommended to PLDT to regularize contractual employees who perform jobs directly related to its business.
Labor-only contracting is done when a contractor or sub-contractor merely recruits, supplies, or places workers, or when the following elements are present, according to the High Court:
— The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.
— The contractor does not exercise the right to control over the performance of the work of the contractual employee.
PLDT was also declared solidarily liable with the contractors to pay the unpaid monetary benefits of the contractors’ workers, amounting to P66,348,369.68.
Contractors that were able to show proof of compliance with Department Order (DO) No. 18-A implementing Articles 106 to 109 of the Labor Code were declared as legitimate contractors.
Contractors who were able to show sufficient proof of full or partial payment of the unpaid monetary benefits of their workers had their monetary liability either deleted or reduced.
Bello subsequently issued another resolution reducing PLDT’s and the contractors’ total monetary liability to P51,801,729.80. The number of employees regularized was also reduced to 7,344.
The PLDT then filed a petition before the CA, which upheld the jurisdiction of the DOLE-National Capital Region Regional Director and Bello to determine the existence of employer-employee relationship, which is a condition sine qua non in the exercise of their visitorial and enforcement power.
The appellate court also agreed with Bello’s ruling to prohibit PLDT from contracting out activities, services, jobs, or functions that are usually necessary and desirable in the usual course of its business.
The CA held that individuals deployed by contractors performing installation, repair, and maintenance services of PLDT lines should be considered regular employees of PLDT.
However, the CA reversed Bello’s ruling on the regularization of the following groups of workers of the contractors: (1) those performing janitorial, maintenance, security, and messengerial services; (2) medical services provider of PLDT; (3) individuals who render professional services; (4) contractual workers engaged in information technology-based services; and (5) employees engaged in sales who are paid on commission basis.