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Republic of the Philippines

COURT OF APPEALS
MANILA

TENTH (10th) DIVISION


****

PLDT, INC., CA-G.R. SP No. 155563


Petitioner,
Members:

-versus- VILLON, S.E.,


Chairperson,
SORONGON, E.D., and
HON. SECRETARY OF LABOR SINGH, M.F.D., JJ.
AND EMPLOYMENT SILVESTRE
H. BELLO III, in his capacity as the Promulgated:
Secretary of the Department of 31 JUL 2018
Labor and Employment, and
MANGGAGAWA SA
KOMUNIKASYON NG
PILIPINAS,
Respondents.
x--------- ------------------------------------x
DECISION

SORONGON, E.D., J.:


This is a Petition for Certiorari (with Urgent Application for the
Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction) filed by petitioner PLDT, Inc. (PLDT)1 which seeks to annul the
following issuances of the public respondent Secretary of Labor and
Employment (public respondent), to wit: (a) Resolution dated January 10,
20182 in the case entitled “In Re: Special Assessment or Visit of the
Establishment (SAVE) in Philippine Long Distance Telephone Company
(PLDT)”, and docketed as OS-LS-0120-0804-2017; and (b) Resolution dated
April 24, 20183 which denied PLDT’s Motion for Reconsideration dated
January 22, 2018. The assailed issuances affirmed with modification, the
July 3, 2017 Compliance Order, issued by the Regional Director (Regional
1
rollo, pp. 3-106
2
Id., pp. 115-314
3
Id., pp. 323-377
CA-G.R. SP No.155563
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Director) of the National Capital Regional Office of the Department of Labor


and Employment (DOLE).

The antecedent facts as alleged in the petition are as follows:

PLDT is engaged in the telecommunications business. For its


operation, it procured the services of contractors or service providers
(contractors)4 in various areas or phases of its operations and/or to provide it
with services that are customarily contracted out by any other business
entity, including the following: janitorial and maintenance, messengerial and
clerical services; information technology (IT) firms and services; IT support
services, both hardware and software; and applications development; back
office support and office operations; business process outsourcing or call
centers; sales; medical, dental, engineering and other professional services;
and installation, repair and maintenance of PLDT lines.

As an incident in the negotiation of the collective bargaining


agreement between PLDT and the exclusive bargaining agent of its rank-
and-file employees, the herein private respondent Manggagawa ng
Komunikasyon ng Pilipinas (MKP), the DOLE intervened and conducted a
Special Assessment and Visit of Establishment (SAVE) in PLDT 5 to assess
the latter's compliance with DOLE Department Order No. 18-A 6 (DO 18-A).
Several PLDT work stations or offices in the National Capital Region (NCR)
were visited and inspected by the DOLE Assessment Team from February to
June 2016. Thereat, interviews of PLDT regular employees and individuals
deployed by service contractors (contractor workers) were conducted. A
total of 1,104 organic and deployed employees, and 37 contractors’
representatives were interviewed and documents relating to PLDT’s
contracting activities were likewise reviewed by the DOLE Assessment
Team.
4
Based on the Compliance Order, the following contractors have been engaged by PLDT: Active One
Health Inc.; Archon Consulting And System Services Inc.; AE Reasearch; Aremay Enterprises; BBS-
VPV Allied Services Corp.; Best Options Assistance Inc.; Centennial Technologies and Marketing
Corporation; Comworks Inc; Consolidated Management Resources; Cores, Inc; Curo Teknika; Diar’s
Assistance Inc.; El Grande Messengerial Services Inc; Fastel; Goodline Staffers and Allied Services
Inc.; Hibizcom Corp.; Implicare International Mgt Resources Inc.; Information Professionals
Incorporated; Iplus Intelligent Network, Inc; JFM Installation & Telecom Svcs Inc; LBP Service
Corporation; M.D. Tambungi Splst (Mdts) Inc; Meralco Industrial Engineering Services Corporation
(MIESCOR); MG Exeo Networks; Mirof; Occupational Dental Health Care and Services; Pc Tech;
Pointman Placement Specialist Inc; Proserve Multi Resources Specialists Inc; Searchers And Staffers
Corporation; Servflex, Inc.; Sitetel Marketing; Software Laboratories, Incorporated; SPI CRM Inc
(Global, Inforcom Technologies); Tejo Management Service Inc.; Transbio, Inc.; Trends & Technologies
Service Maintenance, Inc.; Unison Systems Computer Inc.; Upsight Construction Incorporated; We
Support, Inc.; Mirof Resources Inc.
5
DOLE Administrative Order No. 648-15; Annex F of the petition
6
Rules on Implementing Articles 106 to 109 of the Labor Code, as Amended. DO 18-A governed
contracting and contracting and subcontracting arrangements at the time of the SAVE inspection.
CA-G.R. SP No.155563
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In a conference held on December 5, 2016, the DOLE presented its


SAVE Report containing various tentative findings on labor standards
violations amounting to Php104,219,273.61 affecting 3,590 contractors’
employees and the regularization of about 9,120 contractor workers (from 48
PLDT contractors) on the ground that PLDT contractors were engaged in
labor-only contracting.

On January 6, 2017, PLDT filed a Manifestation and Motion, asking


the DOLE to refer the regularization claims to the NLRC for appropriate
adversarial fact-finding proceedings and to provide PLDT with copies of the
affidavits referenced by the DOLE in the SAVE Report.7

Thereafter, mandatory conferences were called by the DOLE


Assessment Team. Forty-four (44) contractors were summoned and given
copies of the Notice of Results pertaining to each of them, and they were
asked to provide documents of their compliance with the noted labor
standards violations. The contractors provided proof of payment of noted
deficiencies and at the same time presented documentation and affidavits to
challenge the finding that they were labor-only contractors. PLDT submitted
the said Manifestation and Motion and response on the findings of the DOLE
Assessment Team. The mandatory conferences were held on January 6, 10
and 17, 2017. On February 22, 2017, PLDT filed a Manifestation and
Motion to Resolve its Manifestation and Motion dated January 6, 2017 to
which MKP filed a Comment. However, no action was made by the DOLE
Team on PLDT’s said Manifestation and Motion dated January 6, 2017.

On March 14, 2017, PLDT received a letter dated February 8, 2017


requiring it to submit employment agreements, payrolls of deployed
contractor workers for the past three (3) years and other pertinent
employment records of the 40 contractors listed therein to which PLDT
submitted a response via its letters dated March 27, 2017 and April 17, 2017.

On April 19, 2017, public respondent through a press briefing,


announced that he “will order the regularization of close to 10,000 workers
under contracting and subcontracting arrangements but are performing
jobs that are directly related to PLDT business.”

On July 3, 2017, the Regional Director issued a Compliance Order


in this manner: (a) PLDT and its contractors are solidarily liable for unpaid
7
Report on the Special Assessment and Visit of Establishment at Philippine Long Distance Telephone
Co., as Annex C to PLDT Memorandum on Appeal.
CA-G.R. SP No.155563
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monetary benefits in the aggregate amount of Php78,699,983.71; and (b)


PLDT’s contractors are engaged in labor-only contracting, and thus, 8,719
contractor workers must be regularized.

Displeased with the ruling of the Regional Director, PLDT and some
of its contractors filed their respective appeals with the public respondent to
which the MKP filed an Answer/Opposition and Supplement to Opposition
to the Appeal, essentially defending the mandate of the Compliance Order.
MKP also presented affidavits of various contractor workers.

By Resolution dated January 10, 2018, public respondent affirmed


with modification the Compliance Order by ordering the regularization of
7,416 workers and reduced the monetary award to Php66,348,369.68.

Not satisfied with the aforesaid ruling, PLDT and some of its
contractors filed their respective Motions for Reconsideration with the public
respondent. In its Resolution dated April 24, 2018, the public respondent
modified his earlier resolution by further reducing the monetary award to
P51,801,729.80 and the number of contractor workers to be regularized to
7,344.

Unrelenting, PLDT went to this Court via the present petition putting
to challenge the foregoing ruling of the public respondent based on these
grounds:

I. THE PUBLIC RESPONDENT GRAVELY ABUSED HIS


DISCRETION AND EXCEEDED HIS JURISDICTION WITH AN
IMPROPER AND OPPRESSIVE EXERCISE OF THE VISITORIAL
POWER THAT: (A) RELIED ON LEGAL CONCLUSIONS RATHER
THAN ADMINISTRATIVE FACT-FINDING; (B) IMPROPERLY
DELEGATED AND DEVOLVED EXECUTIVE DISCRETION; AND
(C) FAILED TO REQUIRE A QUASI-JUDICIAL APPRECIATION
OF EVIDENCE.

II. THE PUBLIC RESPONDENT GRAVELY ABUSED HIS


DISCRETION AND EXCEEDED HIS JURISDICTION IN ISSUING
THE ASSAILEDORDERS, IN VIOLATION OF PLDT’S AND ITS
CONTRACTORS’ DUE PROCESS RIGHTS, PARTICULARLY:
CA-G.R. SP No.155563
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(A) WHEN THEPUBLIC RESPONDENT RELIED ON


ALLEGED EVIDENCE WHICH: (I) WAS NEVER MADE
AVAILABLE TO PLDT DESPITE PLDT'S REQUESTS
FOR PRODUCTION AND ACCESS; (II) PLDT WAS
NEVER CONFRONTED WITH; AND (III) WAS NEVER
REFERENCED BY AND DID NOT SEEM TO EXIST
BEFORE THE COMPLIANCE ORDER WAS ISSUED;

(B) WHEN THE PUBLIC RESPONDENT APPRECIATED THE


ALLEGED PIECES OF “EVIDENCE” IN A PLAINLY
SELECTIVE, BIASED AND INCONSISTENT WAY; AND

(C) WHEN EVEN PRIOR TO THE ISSUANCE OF THE


ASSAILED ORDERS, THE PUBLIC RESPONDENT MADE
PUBLIC STATEMENTS ORDERING THE
REGULARIZATON OF “CLOSE TO 10,000 WORKERS IN
PLDT”.

III. THE PUBLIC RESPONDENT GRAVELY ABUSED HIS


DISCRETION AND EXCEEDED HIS JURISDICTION WHEN,
CONTRARY TO LAW AND JURISPRUDENCE, HE DECLARED
LEGITIMATE CONTRACTING-OUT MEASURES AND
PRACTICES, AS ILLEGAL.

PLDT also seeks a temporary restraining order and writ of preliminary


injunction premised on the ground that the assailed issuances are void and
that it stands to suffer grave and irreparable damage from the implementation
of the same if it is not reversed and if in the meantime, no restraining order
or injunction is issued thereon. It claims that from its current headcount of
6,470 employees, the assailed issuances of the public respondent intend to
add to PLDT's payroll some 7,344 additional workers, which (a) more than
double the current workforce; and (b) translates to an annual recurring
impact of an additional Php3 billion in compensation and benefits, on top of
the current manpower budget of about Php13.5 billion. According to PLDT,
these additional costs will necessarily be passed on to its clients or
subscribers – the public in general.

PLDT pointed out that the assailed issuances were rendered without
jurisdiction or with grave abuse of discretion by the public respondent based
on the following arguments:

1. It did not pass through the fact-finding, evidence-


CA-G.R. SP No.155563
DECISION
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based adversarial process of a regularization suit that is properly


cognizable by the National Labor Relations Commission
(NLRC). The regularization of employees is under the
jurisdiction of the NLRC in the exercise of its quasi-judicial
power under Article 217 of the Labor Code and not within the
ambit of the jurisdiction of the Secretary of Labor and
Employment (public respondent) or his subordinates in the
exercise of the visitorial and enforcement power under Article
128.

2.It violates its right to due process because the


evidence relied upon by the public respondent was never made
available to PLDT despite its request and in fact was never
confronted with the same. It would even appear it was never
referenced by and did not seem to exist when the Regional
Director issued the Compliance Order which was the subject of
the appeal to the public respondent, i.e. the affidavits presented
for the very first time on appeal by MKP were considered and
given evidentiary weight as shown by the following Table:8

Contractor Affidavit Cited Annex referred to in Footnote citation in


MKP Supplement Assailed Decision
Aremay Joebert Francisco C 33
Robert Tadong C 34
BBS Sharon T. Molero D 45
Digital Solutions Virgilio Abapo T 76
Goodline Rowell Gaudan Y 94
Tarsanilo Yriarte AA 94
Josephine Bosque Z 96
Jaycan Tampilic Z 96
Deolitos Butlig Z 96
Michael Bustamante Z 97
Liw Reyes AA 97
Rey Barrameda Z 97
LBP Maria Carina Garcia UU 127
Servflex Mary Ann Sioson LLLL 197
Rachel Rubiller LLLL 197
Ricardo Paladan III WWW 197
Caitlin Espayos VVV 197
Gian Carlo Vicencio LLLL 197
Fernando Pascua KKKK 197
Jevier Rovillo NNNN 197
Remelyn Alipio WWW 200

8
Id., pp. 30-34 (Petition, at pp. 28 to 32).
CA-G.R. SP No.155563
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Public respondent appreciated the alleged pieces of evidence in


a plainly selective, biased and inconsistent way. He disregarded
the evidence presented by the contractors while giving credence
to anecdotal declarations of only a handful of contractor workers
and relying on legal conclusions made thereon by the labor
inspectors. He did not appreciate the same in a uniform manner;
hence, a handful of contractors were found to be compliant with
the contracting rules and regulations while most were
considered to have engaged in labor-only contracting.9
9
Rollo, pp. 34-48 (Petition, at pp. 32 to 46). To support this Position, PLDT asserted that:

70. For instance, the Public Respondent disturbingly dismissed the submissions, including copies
of workflow, organizational structure, and sworn statements of the managers and authorized representatives,
of PLDT and its contractors as bare and self-serving allegations, which are insufficient to controvert the
statements of the interviewed workers.

70.1 In the Assailed Decision, the Public Respondent made the following findings:

Contractor Ruling on Contractor’s Submissions in the Assailed Decision Curo Teknika“This Office
sustains the findings of the Regional Director. Aside from its mere self-serving statements, there is no clear
evidence supporting Curo Teknika’s claim of exclusive control that could controvert the statements of the
interviewed workers who clearly noted in their affidavits that they are supervised both by Curo Teknika
coordinators and PLDT team leaders. Some were even employed by PLDT or its other contractors before
being transferred and absorbed by Curo Teknika while others were repeatedly hired by Curo Teknika.”
(underscoring supplied)
Iplus“Aside from its mere self-serving statements, there is no substantial evidence supporting this claim of
exclusive control that could controvert the statements of the interviewed workers who clearly noted in their
affidavits that they are supervised both by Iplus coordinators and PLDT supervisors. Some were even
employed by PLDT before being transferred to Iplus while others are repeatedly hired by Iplus. The
workers are either referred by Iplus to PLDT or screened by PLDT before they are officially hired by Iplus.
Their individual performances are also evaluated by PLDT, which then notifies Iplus of the results.
Therefore, we affirm the finding of the Regional Director that Iplus does not exercise control over the
deployed workers, hence, it is a labor-only contractor. (underscoring supplied)
Information Professionals“The Office affirms the findings of the Regional Director that IPI is a labor-only
contractor. Notwithstanding, the registration under D.O. 18-A and substantial capital, IPI’s bare allegation
of control is not sufficient to invalidate the finding of control between PLDT and the deployed workers. The
Supreme Court held in the case of GSIS v. Prudential Guarantee and Assurance, Inc. et al., it is a hornbook
doctrine that mere allegations do not constitute proof. Bare allegations, unsubstantiated by evidence, are not
equivalent to proof. In short, allegations are not evidence. IPI failed to substantiate its claims on the issue of
control because there is no copy of the update service agreement which is the basis of IPI control.”
(underscoring supplied)
Upsight“This Office upholds the Regional Director’s finding that Upsight is a labor-only contractor because
it failed to controvert the same. In Villanueva vs. Philippine Daily Inquirer, the Supreme Court ruled that ‘It
is basic in the rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to
proof’. In this case, Upsight’s bare allegation that it exercises control over the work of its deployed workers
cannot validly overcome the categorical statements of the latter that it is PLDT’s supervisors checks their
work.” (underscoring supplied)

70.2 In the Assailed Resolution, the Public Respondent also made the following
findings:

Contractor Ruling on Contractor’s Submissions in the Assailed Resolution Best Options“On


contracting, the Office finds no compelling reason to reverse or modify the assailed resolution. The
CA-G.R. SP No.155563
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3. The public respondent prejudged the case


constituting violation of its right to due process. Even prior to
the issuance of the Compliance Order by the Regional Director,
he already made public declaration that “he will order the
regularization of close to 10,000 workers in PLDT.”10

4. The public respondent did not apply the law and


jurisprudence when he declared certain legitimate contracting-

affidavits submitted by Best options are insufficient to rebut the findings of the Regional Director because it
is highly improbable that Cherry Calilap can exercise supervision all of its deployed workers from 49
different work sites all at the same time. Best options failed to present corroborative evidence to support its
allegation of supervision by one person. Further, it is worthy to emphasize that the deployed workers under
the alleged supervision of Cherry Calilap perform different specialized tasks.”
Diar’s“On contracting, this Office finds no compelling evidence or argument to modify the assailed
Resolution. Despite the Affidavits of the supervisors, claiming that they have sole control over the work of
the deployed workers, Diar’s failed to present evidence to support its bare allegation of control.”
Pointman“This Office sustains the finding of labor-only contracting because Pointman failed to present
substantial evidence to prove its claim that it exclusively exercises control over the deployed workers and it
directs the means and manner by which the outsourced service is executed. The Affidavits of the supposed
supervisors are bare allegations which are not supported by evidence.”

71. Yet, the Public Respondent favored and gave credence to the general, inaccurate, misleading,
unsubstantiated, and erroneous statements of the interviewed workers – the veracity and truthfulness of
which were never verified and established, as PLDT and the contractors were not provided with copies of
the supposed statements of the interviewed workers.

71.1 In the Assailed Decision, the Public Respondent made the following findings:

Contractor Ruling on Contractor’s Submissions in the Assailed Decision AE Research“Likewise, the


deployed workers who executed the Affidavits affirmed that they applied with PLDT but was referred to
Archon; that their supervisor is PLDT; and that they think that it is PLDT which has authority to terminate
their employment.”
Aremay“In his Affidavit, Reynald Loyola stated that PLDT deploys him through email, while Randie
Garcia stated that the PLDT/Helpdesk deploys him as network support, and Joebert Francisco manifested
that it is PLDT’s supervisor who checks and supervises his work. All indicia of PLDT’s control over the
deployed workers.”
Centennial Technologies“The Office affirms the Regional Director’s findings that Centennial is a labor-only
contractor because PLDT exercises supervision and control over the former’s deployed workers and it is not
compliant with general labor standards. Centennial presented its Team Leader’s Affidavits to prove that it
has control and supervision over the deployed workers, however the same failed to overturn some of the
deployed workers claim that they are also supervised by Ms. Victoria Sanchez or a certain Mr. Magallanes
of PLDT.”
Curo Teknika“In fact, it was revealed in the interview of Curo Teknika’s team leader during the SAVE that a
PLDT supervisor checks the performance of the team, the computers are provided by PLDT, and only the
staff are provided by Curo Teknika. On hiring, most workers are sourced from the other PLDT projects and
that the PLDT team leader recommends to the service delivery manager of Curo Teknika the regularization
or termination of employment of a deployed worker. The contractor also seeks approval from PLDT before
allowing the deployed workers to avail of their leave. Considering the foregoing circumstance, we affirm
the finding of Regional Director that Curo Teknika does not exercise control over the deployed workers.”
Diar’s“Furthermore, Diar failed to controvert the deployed workers’ allegations on repeated hiring. The said
workers claimed that their employment has been renewed several times for one year period of employment.
Isagani Ebora, Jr. (Ebora), a maintenance service employee, narrated in his Affidavit that he has been
deployed to PLDT since 1997 under five different agencies, including Diars which deployed him to PLDT
CA-G.R. SP No.155563
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out measures and practices as illegal.11 The evidence presented


by service contractors that they exercised “means and manner”
control over their workers i.e. the contractors had supervisory
mechanisms in place, and actually oversaw, the workers they
deployed to PLDT was completely ignored and set aside by the
public respondent. Instead, he considered PLDT’s results-based
or results-oriented measures as indicative of control. He should
have applied the jurisprudential distinction between control over
the means and manner of achieving the result and control as to

for years 2008-2009 and 2011-2016. Ebora also claims that it is PLDT which supervises his work.”
El Grande“Furthermore, the affidavits of the interviewed workers, who were data encoders of bill reprints,
show that PLDT checks their output and that they perform functions similar to those performed by PLDT
employees.”
Fastel“Perusal of the case records shows that some of the interviewed workers deployed by Fastel claim
that their contract of employment is renewed either every six months or one year.”
Implicare“This Office affirms the findings of the Regional Director that Implicare is not an independent
contractor because PLDT joins it in the supervision of the work of the deployed workers. Perusal of the
Affidavits of the deployed workers show that they are required to work for three to eight hours per day; that
Implicare gives them orientation prior to deployment; that their work is supervised by Implicare; that during
Saturdays and Sundays, Ms. Leah Tan or Sir Joven Cruz of PLDT prepares their works schedule xxx”
JFM Installation“While it is true that JFM registered under D.O. 18-A, it failed to present controverting
evidence to overturn the finding in the Assailed Order, based on the affidavits and interview of the deployed
workers, that PLDT takes charge and exercises control over the deployed workers, through over-the-phone
monitoring and conversations.”
LBP Services“The Affidavits executed by its HR Senior Associate and Project Coordinator and the
employment contract of a resigned Project Coordinator to prove that LBPSC has control over the deployed
workers in the conduct of the contracted services are insufficient to overturn the plain and direct statements
of the interviewed deployed workers, stating that PLDT’s control over the performance of their work.”
Pointman“A careful review of the affidavits also confirms that the workers are supervised by PLDT
personnel.”
Proserve“Affidavits of the deployed workers show that it is PLDT which provides them training, prepare
their work schedules, and supervises their work. Likewise, interviewed workers stated that it is PLDT
which can sever their employment relationship with Proserve.”
Searchers and Staffers“Perusal of the Affidavits of the deployed workers show that it is PLDT which
supervises their work.”
Servflex“The deployed workers, on the other hand, in their affidavits stated that PLDT personnel supervised
them in the performance of their job. Most of them even manifested that PLDT personnel are providing or
approving their schedule.”
Sitetel“The workers manifested in their affidavits that they are supervised by both Sitetel and PLDT
Supervisors.”
Software Laboratories“All these, however, failed to overturn the plain and specific statements of the
deployed workers that PLDT personnel supervised their work.”

71.2 In addition to the foregoing contractors, the Public Respondent, in the Assailed
Resolution, also favored and gave credence to the general, inaccurate, misleading, unsubstantiated,
and erroneous statements of the interviewed workers:

Contractor Ruling on Contractor’s Submissions in the Assailed Decision SPI“Second, several deployed
workers, through their affidavits, explicitly state that both SPI and PLDT exercise control over their
activities. To controvert, SPI claims that it has its own management team taking charge of its deployed
workers and their activities. However, it did not present any member of the said team or any other evidence
proving its claim. Hence, the finding stands.

….
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the results intended to be achieved.12

5. Finally, it was error on his part to include services


that under the law and jurisprudence can be validly contracted
out, such as janitorial and messengerial services. 13

In its Comment,14 MKP asserted that the Petition should be dismissed


for lack of merit. MKP argued that contrary to PLDT's claim, the public
respondent and the Regional Director had jurisdiction over the dispute. MKP

73. Worse, the Assailed Orders are replete with instances where the Public Respondent completely
ignored and made no mention of the submissions of PLDT and its contractors, without citing any reason as
to why such pieces of evidence were not considered.

73.1 In the Assailed Decision, beyond the mechanical enumeration of the submissions
of the contractors, there were no reference in the discussion to the submissions of AE Research,
Archon Consulting, Aremay, Best Options, Fastel, Implicare, JFM Installation, Proserve, Searchers
and Staffers, and Sitetel, as the Public Respondent only cited the statements of the deployed
workers in arriving at its finding of labor-only contracting. Thus, PLDT and its contractors were
left to wonder whether their respective submissions were even considered by the Public
Respondent. Moreover, in the dispositive portion of the Assailed Decision, the Public Respondent
directed PLDT to regularize the employees of CORES, Hibizcom, Occupational Dental, PC Tech,
and SPI, without any discussion as to why these service providers were deemed as labor-only
contractors.

73.2 In the Assailed Resolution, the contentions and submission of the following
contractors were not even discussed and were simply dismissed as mere “rehash” – AE Research,
Archon, Consolidated Management Resources, Curo Teknika, El Grande, JFM, MD Tambungui,
MIESCOR, Pointman, Proserve, Servflex, Transbio, and Upsight.

74. Curiously, in the Assailed Orders, the Public Respondent reversed the finding of labor-only
contracting by the Regional Director for Protek, Active One, and Unison, which have similar submissions
with the other contractors. It is therefore inexplicable why the same and similar submissions of the other
contractors were not afforded with the same treatment by the Public Respondent.

74.1 In the Assailed Decision, the Public Respondent ruled that Protek was able to
present sufficient evidence to prove that it solely exercises control over the manner and method by
which its deployed workers perform their job, with the presentation of the affidavit of Protek’s
Operations Manager, stating that Protek has complete charge and control of the workers, including
the assignment of their daily tasks, deployment to the assigned areas, evaluation of the
accomplishment of their assigned tasks, and management of their tasks in accordance with the
agreed standards.

74.2 In the Assailed Resolution, the Public Respondent found Active One to have
complied with all the requirements of Section 4 of DO 18-A. Active One submitted photocopies of
its general information sheet, audited financial statements, and inventories of tools and equipment.
Active One also submitted photocopies of their work manual, employment records, and affidavits
of their coordinator.

74.3 In the Assailed Resolution, the Public Respondent likewise found Unison exempt
from DO 18-A, with the submission of its Service Agreement, Articles of Incorporation, and
Affidavit of deployed workers, all showing that Unison is engaged strictly in hardware and/or
software support, which are exempt under Department Circular No. 1.
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also insisted that PLDT was not denied its right to due process, and that the
assailed DOLE findings were supported by substantial evidence.

Relying on the Supreme Court’s ruling in People’s Broadcasting


Service v. Secretary of Department of Labor and Employment, G.R. No.
179652, March 6, 2012, MKP asserted that the power of the DOLE to
determine the existence of employer-employee relationship while carrying
out its mandate under Article 128 of the Labor Code has been established
beyond cavil. According to MKP, PLDT was given the opportunity to be
75 Moreover, a careful perusal of the Public Respondent’s ruling on the monetary claims in
the Assailed Decision further highlights the inconsistency of the DOLE’s appreciation of pieces of evidence
submitted by PLDT and its contractors.

75.1 In the case of the following contractors, the Public Respondent found that there
is sufficient proof of payment, with the submission of photocopies of vouchers, payrolls, payslips,
and bank authorization to debit, which justifies the deletion of the monetary award.

Contractor Submissions M.D. Tambungui Photocopies of petty cash vouchers, quitclaims and waivers,
and authorization to the bank to debit payroll account
(a) Sitetel Payroll of SL/VL conversion for 2014 and 2015; and
Copies of pay slips of Francisco Noreen, Balmeo Armie and Maliwat Melvin with SL/VL payments.
75.2 Interestingly, the Public Respondent found the similar submissions, with regard
to the monetary claims, of the following contractors as insufficient to prove payment of the
monetary claims:

a. Contractor Submissions Aremay Certification of the administrative head


a. 2015 and 2016 VL conversion list Diar’s Company policy and notification form of Paternity Leave;
b. Notarized acknowledgment receipt as proof of refund/reimbursement of uniform/tools; and
a. Proof of payment of overtime pay Goodline Certification of payment of incentive leave and 13 th
month pay;
b. Bank Transaction Receipts;
c. Payroll List;
a. Checks issued as payments Iplus Payroll register
b. Proof of payment of Service Incentive Leave
c. Manifestation letter of the workers on receipt of 13th month pay and SIL
d. Policy on paternity leave, sick leave, and vacation leave
a. Sick leave conversions Information Professionals Daily Time Records;
b. Payroll register
c. Proof of payment of 13th month pay
1. Proof of entitlement and availment of Paternity LeaveServflex13th month pay;
2. payment of service incentive leave
1. payment of paternity leave Software Laboratories proof of payment of Service Incentive
Leave; and
a. proof of payment of 13th month pay WeSupport pay slip of Francis Pastoral;
b. Copies of timesheets; and
Leave forms
10
Id., pp. 48-49 (Petition, at pp. 46 to 47).
11
Id., pp. 56 (Petition, at p. 54).
12
Id., pp. 57-73 (Petition, at pp. 55 to 71). PLDT supports this assertion in its Petition as follows:

96. The clearest example of this misappreciation is where the Assailed Decision treats quality
inspection measures - of final output - and results validation, as “means and manner” control.
CA-G.R. SP No.155563
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heard by the DOLE, which is the essence of due process. PLDT was
represented in the mandatory conferences called by the DOLE Assessment
Team and was in fact even allowed to adduce all the documentary evidence it
wanted to present in support of PLDT's stand. But PLDT refused to
participate when it could have easily discharged its burden of disproving
the SAVE Report. MKP belied PLDT's claim that the public respondent only
relied on the affidavits or interviews in sustaining the findings of the
Regional Director. The findings were supported by additional substantial
evidence. Besides, the affidavits or interviews were by themselves

96.1 For instance, in the Assailed Decision, the Public Respondent held –

Name of Contractor Ruling in the Assailed Decision Transbio Incorporated On labor-only contracting,
Transbio does not exercise control and supervision over its deployed workers. During the 10 January 2017
mandatory conference, Transbio confirmed that service tickets are relayed through the system portal which
the SPOC will then dispatch to the technicians. Trainings for technicians are provided by Transbio but
validation of results and quality is still being conducted by the PLDT supervisory and Transbio
inspector. As the Transbio SPOC explained in the 17 January 2017 mandatory conference they review
10% of all installations while PLDT reviews 100% of all the installations.
Upsight Construction Inc.In this case, Upsight’s bare allegation that it exercises control over the work of its
deployed workers cannot validly overcome the categorical statements of the latter that it is PLDT’s
supervisors checks their work. Perusal of the Affidavits of the interviewed workers show that it is PLDT
which checks if their work is correct and it is PLDT which checks if their final output is correct.
Diar’s. This Office affirms the finding of the Regional Director that Diar is engaged in labor-only
contracting. Although, Diar was able to register as legitimate contractor, interview with its deployed
workers shows that it is PLDT’s supervisor or PLDT’s organic employee who checks if their work and final
output are correct.
97. To state the obvious, these cited findings in the Assailed Decision are all indicative of
“results” control. In no way do they support the conclusion of the Public Respondent that PLDT exercises
“means and manner” control. Validating whether the contractor performed the job agreed upon is limited to
the “result” of the work - an assessment which is absolutely consistent with legitimate job contracting. Put
simply, “output” and “result” validation does not mean that the principal interferes with or directs the
working process and methods used by the contractor to achieve that result.

98. There is no factual finding – as there is none – that PLDT directed how Transbio, Upsight,
Diar, and certainly not their workers, are to accomplish their responsibilities under their respective service
agreements - i.e. “means and manner control”. Rather, these findings are limited to establish the glaring fact
that PLDT’s interest is with respect to securing quality results from its contracts as it checked if these
results complied with PLDT service standards.

99. Another area of supposed “means and manner” control is in the use of Technical Protocols
and Implementing Guidelines.

99.1 In the Assailed Decision, the Public Respondent made the following “findings”–

Name of Contractor Ruling in the Assailed Decision MIESCOR. Also, for the "Works” MIESCOR has to
undertake for PLDT, the latter provides the former Technical Protocols, Implementing Guidelines, and
Process Flow in order to complete and implement the desired output. A closer look on these documents
reveals the procedure on how the work/service must be rendered.

xxx xxx xxx

The detailed procedures, the particularity of the materials to be used such as the color and length of
mouldings and even the brand of an adhesive tape; all these indicate PLDT’s control on how the “Work”
should be performed by the deployed workers. MD Tambungui MD Tambung[u]i does not exercise control
CA-G.R. SP No.155563
DECISION
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substantial evidence of employment relationship, which were not “non-


existent” prior to appeal and neither were there anecdotal self-declarations of
deployed employees about PLDT's control. Also these affidavits were taken
during the SAVE proceedings.

In fine, MKP opined that the Compliance Order issued by the


Regional Director did not solely rely on the affidavits or interviews about
PLDT's control over the work done by worker deployed to it by its
contractors. For one, the Compliance Order also sustained the Report's

and supervision over its workers as it merely follows PLDT's instruction in performing the outsourced
services. The Technical Protocols, which are integral parts of their Service Agreement, lists all the activities
to be conducted and by whom for each of the outsourced services. These Technical Protocols are extremely
detailed lists complete with instructions that effectively control the means and manner of performing the
assigned work. To be sure, following these instructions exemplifies control over the means and manner of
performance and not merely on the results, as what PLDT and MD Tambung[u]i would have us believe.

xxx The list of Obligations of Contractor’s Project Support Assistant (PSA) proves that the performance of
outsourced work is closely monitored by PLDT.BBS VP-VPN. The Technical Protocols, which are integral
parts of their Service Agreement, list all the activities to be conducted and by whom for each of the
outsourced services. These Technical Protocols are extremely detailed lists complete with instructions that
effectively control the means and manner of performing the assigned work. To be sure, following these
instructions exemplifies control over the means and manner of performance and not merely on the results,
as what PLDT and BBS would have us believe. MG ExeoThe annexes to the Service Agreement outline the
scope of work and the technical protocol sequence to be followed by MG Exeo in undertaking the work
contracted out, from receipt of the service order, to the actual conduct of installation works, to coordination
with the principal, until the housekeeping and pack-up, and submission of report to the PLDT supervisor.
Tejo Management Services Annex A of the Memorandum of Agreement between Tejo and PLDT provides
for specific instruction on how the services shall be conducted, to wit:

The CSF AGENCY commits to ensure that its Field Agents shall thoroughly inspect the original
documents presented by the applicant and indicate in the photocopies of such documents that the
photocopies are true copies of the original documents presented to the CSF AGENCY, with the
Field Agent's name, signature, and date when such documents were presented and photocopied.

Further, the CSF AGENCY shall ensure that the landline and/or other contact number provided by
the applicant for PLDT Home products and services is working by calling such numbers and
verifying if the same are the applicant’s contact numbers.

After thoroughly inspecting the documents submitted by an applicant for PLDT Home products
and services, the Field Agent shall endorse the same to his/her Team Leader. The Team Leader
shall thereafter endorse the inspected documents to PLDT’s Retail Sales Specialist for further
handling. xxx

These are indicia that the field agents are not independent in the conduct of services Tejo provides for
PLDT. Unison This Office affirms the findings of the Regional Director. Perusal of the case records shows
that PLDT exercises control over the deployed workers. Among the roles outlined in their General Scope of
Work for PC Support Service is for the service delivery manager to "ensure policies and procedures of
PLDT/Smart/Sun are being followed by the PC Support Service" and specifies the time wherein the
deployed service engineers “are expected to report based on their assigned and designated work area.” The
service engineers are also instructed to file reports to PLDT/Smart/Sun IT in case of possible damage to
computers and provide assistance to any IT project that need PC installation rollout or deployment.
99.2 In the Assailed Resolution, the Public Respondent also made a stretched
conclusion that product training and knowledge, akin to compliance with technical protocols and
guidelines, is an indication of control:
CA-G.R. SP No.155563
DECISION
Page 14

findings upon available documents which showed that – (a) several of


PLDT's contractors had no valid DO 18-A registration; and (b) some had not
adduced proof of substantial capital or investments in tools, equipment,
machineries, work premises when the SAVE inspection was conducted.
Also, MKP significantly noted that the said order had found that 34
contractors had their contractual employees deployed with regular
employees of PLDT to perform also the latter's jobs. These findings were
not only separate and distinct from the findings that PLDT had control and
supervision over the contractual employees' work; these were peculiar to

Name of Contractor Ruling in the Assailed Resolution SPI-CRM, Inc. Further, the finding of labor-only
contracting is bolstered by the provision of the Service Agreement between PLDT and SPi, which states
that:

PLDT 177 (PLDT) shall adequately train selected employees/ trainers of Ventus (SPi) on
the matters specifically pertaining to PLDT’s operations which will form part of the information
necessary for SPi to satisfactorily perform the services based on the criteria, curriculum, and
schedule set forth in the Statement of Work. Unless otherwise agreed by the Parties, PLDT will
develop and conduct the training program at least six (6) Business Days before deploying and/or
launching a new system, technology, activity, service, promotional campaign or product, which
shall form part of the Services.

It can be deduced from the foregoing provision that PLDT dictates to SPi and in turn, to the latter’s
deployed workers, the manner by which such workers should perform their job.

100. Even the ordinary prerogative of the principal to evaluate the performance of its
contractor – as an entity, and not the individual workers of the contractor – was considered against PLDT as
a badge of control.

100.1 In the Assailed Decision, the Public Respondent made the following “findings” –

Name of Contractor Ruling in the Assailed Decision MD Tambungui. Also, the Scorecard Form, where
PLDT rates the contractor on reliability/responsiveness and Manpower Availability and Competence belies
the claim that MD Tambungi exercises control on its workers.

xxx

“Even the performance evaluation includes factors such as sufficiency of resources and manpower to
complete work on time and validated incidence of grave complaints and minor customer complaints.”
BBS VP-VPN. Also, the Incident Restoration Report (IRR) Form, where PLDT rates the contractor on
reliability/responsiveness belies the claim that BBS exercises control on its workers. The list of Obligations
of Contractor's Project Support Assistant (PSA) proves that the performance of outsourced work is closely
monitored by PLDT Considering all the foregoing, it is clear that BBS is a labor-only contractor.
El Grande PLDT … evaluates the contractor’s performance based on factors including effective
coordination with PLDT, honesty, integrity, behavior, and proper decorum of its personnel; compliance with
PLDT’S Corporate Governance Guidelines, and recommendations and suggestions for improvement of its
service.

101. Ironically, in stark contradiction to its conclusion, the Assailed Decision remarked that, in
all these cases, it is readily apparent that the evaluation made by PLDT on the contractor is not an
evaluation on the contractor’s employee; but rather an evaluation on the services rendered by the contractor.

102. A performance evaluation of a third party service entity is not inconsistent with
permissible job contracting. On the contrary, it is a logical consequence of the contractual relation between
CA-G.R. SP No.155563
DECISION
Page 15

different contractors. For another, these other findings similarly debunk


PLDT's theory of a finding of labor-only contracting based on “single
template finding” of its control of the deployed workers in some affidavits or
interviews. The findings of the assailed resolution on appeal – that
concerned contractors were labor-only contractors, as found by the Regional
Director – were also not based merely on the affidavits of the deployed
workers about PLDT's control over the work they did. Apart from these
affidavits, public respondent considered as well that – there were no extant
service contracts between PLDT and several contractors, as in the cases of

the principal PLDT and its contractors. The principal cannot be expected to continue contractual relations
with a contractor which is not able to deliver on the agreed results or which does not possess the skills and
requirements to render the services.

103. In a glaring display of inconsistency, the Assailed Decision faults PLDT for providing
detailed schedules and scope of work, citing this as proof of “control”. When the opposite is true, however,
the Assailed Decision still finds fault where the specific works to be performed are not detailed at the start
of the engagement of the Contractor, as it did in the case of MIESCOR. To wit:

MIESCOR's Agreement for the Provision of Work (Agreement) showed that


PLDT engages its services for customer line installation, repair, rehabilitation and
maintenance activities collectively referred to as ‘Work” within an identified period
covering various areas in Metro Manila and rest of the country. Further examination
shows that the "Works” constitute various sub-Works that are only specified under each
Special Order/Work Order (SO/WO) issued to MIESCOR within the period. This
suggests that while there is a general contract for installation or repair or maintenance, the
details of which are not identified at the start of the agreement. This in turn means that the
deployed workers perform the contracted services at the instance of PLDT through the
SO/WO, a clear form of control of the principal over the deployed workers.”

104. The Assailed Decision also focused on the fact that at least one disciplinary case involving
contractor MG Exeo involved “PLDT subscribers.” Because of this, the Assailed Decision breezily
concluded that PLDT has the power to discipline MG Exeo’s employees.

104.1 Yet, it is not disputed that it was MG Exeo which presented its own internal
notices and memoranda in relation to that one particular disciplinary measure against its employee.
Even as these documents pertain to MG Exeo and the employees’ violation of its Code of
Conduct, still, the Assailed Decision held that the disciplinary was conducted by PLDT simply
because the offense was in relation to services rendered to PLDT. To wit:

MG Exeo, as proof that it is the one imposing disciplinary actions on its


workers, submitted copies of the proceedings against one of its workers,
whereby all notices and memoranda were issued by MG Exeo. A scrutiny of the
submitted documents actually show that the violation attributed to the worker
was for “taking advantage of PLDT subscribers" which allegedly constituted a
serious misconduct and “fraud or wilful breach by the employee of the trust
reposed in him by his employer or duly authorized representative.” If at all, this
only shows that MG Exeo was merely disciplining the worker on behalf of
PLDT.

104.2 Never mind that MG Exeo established that it has the power to discipline its
employees, presenting notices and memoranda issued in relation to disciplinary measures against
its employees, or that there was no mention of PLDT’s participation in the disciplinary process of
MG Exeo. Even as these documents pertain to MG Exeo and the employees’ violation of its Code
of Conduct, still, the Assailed Decision held that the discipline was conducted by PLDT simply
CA-G.R. SP No.155563
DECISION
Page 16

IPI Mirof Resources, Upsight Construction, and We Support. The contractor


had repeatedly rehired the deployed workers for terms shorter than the
relevant service contract term, as in the cases of AE Research, Aremay,
Consolidated, Curo Teknika Inc., Diar, Fastel, Implicare Iplus, LBPSC,
Proserve, Searches and Staffer Corporation, Servflex, Software, and Upsight
Construction. The contractor had no DOLE license, only a PCAB license,
but was engaged by PLDT to do customer line installation, repair,
rehabilitation, and maintenance activities, or non-construction work, as in the
cases of BBS VP-VPN Allied Service Corp., MD Tambungui, MIESCOR
and Transbio. The contractor had no DOLE license, as in the cases of MG
Exeo and Software. Other documents such as service contracts or
memorandums of agreement, or technical protocols, scopes of work, or
service descriptions confirm PLDT's control as these provide complete work
instructions that effectively control the means and manner of performing the
assigned work, as in the cases of Active One, BBS VP-VPN Allied Services
Corp., Comworks, MG Exeo, MIESCOR, El Grande, Pointman Placement
Specialists, Tejo Management Service, Inc., Transbio, and Unison Computer
System. The contractor had only one or a few supervisors in several work
sites to effectively control the means and methods of work of the deployed
workers, as in the cases of Best Options, Diar and JFM. The contractor
lacked the required capitalization, as in the case of Active One. The
contractor's information technology-enabled services involved no entire
business process, as in the case of Archon. The contractor had violated
general labor standards, as in Goodline and Trends and Technologies.

All the foregoing circumstances, according to MKP, constitute more


than substantial compliance to establish employer-employee relationship
between PLDT and the workers deployed by its contractors, or of the
prohibited contracting activities PLDT and its contractors committed.15

because the offense was in relation to services rendered to PLDT.

104.3 While the cause for the dismissal of the MG Exeo employee may have been
related to services rendered for PLDT, it does not follow that PLDT is the employer of the
dismissed employee, especially in the absence of any evidence to support the DOLE’s misplaced
conclusion. That the cause for the dismissal of the employee was in relation to MG Exeo’s service
to PLDT should not be counted against PLDT who had no part in the dismissal of the employee. It
is only natural for the employer to consider and/or pursue dismissal proceedings where the
continuance in the service of the employee would patently be inimical to his employer’s interest.

105. It is discernible from the above excerpts taken from the Assailed Decision that the Public
Respondent mistook general guidelines, service level agreements, and results validation, for “means and
manner control.” Unfortunately, for Public Respondent, jurisprudence says otherwise.
13
Rollo, pp. 73-75 (Petition, at pp. 71 to 73).
14
Id., pp. 3684-3717
15
Comment, 3700-3703
CA-G.R. SP No.155563
DECISION
Page 17

Moreover, MKP also asserted that PLDT had made no evidentiary


submissions with its refusal to participate in the mandatory conferences
while the contractors' submissions were mostly rejected by the public
respondent for being self-serving.

Also, MKP insisted that resort to the instant certiorari proceeding to


assail the public respondent's decisions or orders is misplaced. A special
civil action for certiorari being an extraordinary remedy, its use is available
only and restrictively in exceptional cases – those wherein the action of an
inferior court, board or officer performing judicial or quasi-judicial acts is
challenged for being wholly void on grounds of jurisdiction. The sole office
of the writ of certiorari is the correction of errors of jurisdiction, including
the commission of grave abuse of discretion amounting to lack or excess of
jurisdiction. It does not include correction of the public respondent's error in
its evaluation of the evidence and factual findings based thereon, which
evaluation and findings are generally accorded not only great respect but
even finality.16

Lastly, MKP branded as hearsay and without basis PLDT's claim that
the public respondent was not neutral in considering PLDT's appeal.

On the part of the public respondent, the Office of the Solicitor


General (OSG) for and on his behalf alleged,17 among others, that PLDT has
not even made a case sufficient to prove prima facie that the assailed
issuances of the public respondent were invalid. The assailed issuances
which consist of the Compliance Order issued through Regional Director
Atty. Johnson G. Cañete and the twin Resolutions of the public respondent,
resolving the appeals of PLDT and its contractors and affirming the
Compliance Order were handed down after proper proceedings and within
the statutory authority of both the public respondent and the concerned
Regional Director.

To buttress its claim, the OSG sought refuge in the mantle of Article
18
128 of the Labor Code which expressly granted upon the Secretary of
16
Id., pp. 3705-3706 (Comment)
17
Opposition to the TRO & Preliminary Injunction Application of PLDT, rollo, pp. 3741 to 3756 and
Comment to the Petition, rollo, pp. 4306 to 4346.
18
ART. 128. Visitorial and Enforcement Power. (a) The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation officers, shall have access to employer's records and
premises at any time of the day or night whenever work is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any fact, condition or matter which may be necessary
to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order
or rules and regulations issued pursuant thereto.
CA-G.R. SP No.155563
DECISION
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Labor and his representatives (such as the Regional Directors) to have


visitorial and enforcement powers over the establishments of employers, to
ensure compliance with relevant labor standards. Thus, pursuant to such
mandate, the OSG contended, the Regional Director issued the assailed
Compliance Order, after reviewing the findings made during the SAVE
proceeding conducted by the authorized Labor Laws Compliance Officers
(DOLE Assessment Team), in coordination with the Bureau of Working
Conditions. As explained in the Compliance Order, the SAVE was followed
by mandatory conferences where the labor standard deficiencies were
explained to PLDT and its related contractors. They were then given
opportunities to rectify or respond to the identified deficiencies. Then the
Regional Director made his own findings based on the assessment of the
DOLE Assessment Team and responses of PLDT and its contractors. As
regards the specific issue of labor-only contracting, the OSG pointed out that
Compliance Order adequately explained the justification from its findings to
PLDT and each of its contractors.

The OSG added that during the conferences, PLDT did not actively
contest the findings of labor-only contracting. It only filed a Manifestation
and Motion on January 6, 2017, which addressed some of the issues raised
with its compliance with Occupational and Health Standards, and
furthermore insisted that the matters on regularization of employees be
instead referred to the National Labor Relations Commission (NLRC). On
the same date, it submitted the Registry of Establishment for its 49 branches,
and additional documents in support of its argument that it was fully
compliant with Occupational and Health Standards. At the end of the
mandatory conferences, the Regional Director issued the Compliance Order,
holding among other things that PLDT was engaged in labor-only
contracting and that the involved contractors 19 were not legitimate but labor-
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and
in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment
or his duly authorized representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority
for the enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
19
Active One Health Inc., AE Research Exponents, Inc., Aremay Enterprises, BBS-VPN Allied Services
Corporation, Best Options Assistance, Inc., Centennial Technologies & Marketing Corporation,
Comworks, Inc., Consultancy, Outsourcing, Recovery, and Equivalent Services (CORES) Inc.,
Consolidated Management Resources, Curo Teknika, Inc., Diar's Assistant, Inc., El Grande
Messengerial Services, Inc., Hibizcom Corporation, Fastel Services Inc., Goodline Staffers and Allied
Services, Inc., Implicare International Management Resources, Inc., Information Professionals, Inc.,
Iplus Intelligent Network Inc., JFM Installation and Telecom Services, Inc., LBP Services Corporation,
MG Exeo Network, Inc., Mirof Resources, Inc., Occupational Dental Health Care and Services Inc.,
Pointman Placement Specialist, Pro Tek Telecoms Support, Inc., Proserve Multi Resources Specialists,
CA-G.R. SP No.155563
DECISION
Page 19

only contractors.

The OSG likewise theorized that the subjects of the exercise of the
visitorial and enforcement powers of the Regional Director principally on the
nine (9) branches of PLDT in the National Capital Region were not meant to
be exhaustive reviews of each of the thousands of employees working for
and within PLDT but rather they were meant to evaluate the establishments
and the employers' observance of proper labor standards to its workers. The
OSG opined that the benefits of any findings therefor will extend to all the
workers therein not only to those specifically or individually investigated
employees. The OSG further elaborated by citing an accepted labor law
precept, thus: “visitorial and enforcement powers are relevant to, and may
be exercised over, establishments, not over individual employees thereof, to
determine compliance by such establishments with labor standards laws.”
Thus, the OSG pointed out that in case of an award from such violation by
the establishment, all its existing employees should be benefited thereby.
Hence, the arguments of PLDT that the findings of the Regional Director
was invalid because not all the employees contracted were investigated nor
interviewed will not hold. Besides, no law, rule, or jurisprudence requires
that a full and conclusive investigation on every affected employee be made
before a contractor can be found to be a labor-only contractor.

Traversing PLDT's imputation of unlawful delegation of public


respondent's power to the Regional Director, the OSG countered that such
argument is erroneous. It explained that the visitorial and enforcement
powers granted by the law to public respondent and his representatives were
properly exercised in this case and therefore all the actions undertaken in
pursuit thereof and the findings which were the consequence of the same
were all within the scope of the statutory powers. The OSG furthermore
contended that there is no requirement under the law to subject the findings
made through visitorial and enforcement powers to completely separate
quasi-judicial proceedings for the same to be valid and enforceable.20

The OSG added that in coming up with the Compliance Order the
Regional Director was sufficiently thorough in his findings and while it may
have adopted the majority findings of the DOLE Assessment Team, this,
however, does not mean that he did not subject the same to scrutiny. In fact,

Inc., Searchers and Staffers Corporation, Servflex, Inc., Sitetel Marketing, SL Temp, Software
Laboratories, Inc., SPi CRM Inc., St. Clair Security and Investigation, Inc., Tejo Management Services,
Inc., Transbio Incorporated, Trends and Technologies Service Maintenance, Inc., Unison Systems
Computer Inc., Upsight Construction Inc., Trigold Security & Investigation Agency, Inc., and We
Support, Inc. were all labor-only contractors, rollo, pp. 4308 to 4309.
20
Supra, note 17, pp. 4311.
CA-G.R. SP No.155563
DECISION
Page 20

contrary to PLDT's assertion of wholesale and indiscriminate findings, the


Compliance Order showed otherwise as may be disclosed by the legal
conclusions of DOLE Assessment Team on the factual matters, i.e. what
tasks and functions the related employees performed, whether the proper
wages and benefits were being paid the employees vis-a-vis the work they
performed, whether the proper wages and benefits were being paid, whether
the subject contractors are registered in accordance with DO 18-A, or
whether the contractors were the ones who supplied the employees with their
tools, uniforms, and equipment.

Anent the determination of the existence of employee-employer


relationship by the NLRC, the OSG has this to say—that power is not
exclusive to NLRC. Contrary to petitioner's position, the OSG insisted that
as settled by jurisprudence the determination of the existence of employer-
employee relationship is not exclusive to the NLRC as held in the case of
M.Y. Sans Biscuits Inc. vs. Laguesma,21 where the Supreme Court stated that
both med-arbiters and the Secretary of Labor have the power to determine
the existence of employer-employee relationships independent of any
finding made by labor arbiters or the NLRC. In Laguesma, the High
Tribunal even noted that a contrary position would be absurd and would
result in situations where the two officers may not be able to exercise their
statutory powers. Thus, the public respondent did not refer this case to the
NLRC. The determination of the existence of the employer-employee
relationships between PLDT and the workers of its contractors and their
subsequent affirmation were correct and properly made within the scope of
the public respondent's visitorial powers.

Finally, the OSG posited that even assuming arguendo that the DOLE
Assessment Team made some erroneous conclusions, this does not
automatically equate to incorrect judgments and findings on the part of the
Regional Director or public respondent to make it proper for certiorari.

THE COURT’S RULING

I. The Regional Director or the Secretary of Labor can determine the


Existence of Employer-Employee Relationship in the exercise of his
Visitorial and Enforcement Power

At the onset, it bears noting that the July 3, 2017 Compliance Order
of the Regional Director and the assailed January 10, 2018 and April 24,
21
G.R. No. 95011, Apr. 22, 1991
CA-G.R. SP No.155563
DECISION
Page 21

2018 Resolutions of the Secretary of Labor were issued pursuant to Article


128 of the Labor Code, to wit:

ART. 128. Visitorial and enforcement power. - (a) The Secretary


of Labor and Employment or his duly authorized representatives,
including labor regulation officers, shall have access to employer's
records and premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to question
any employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this


Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall
issue writs of execution to the appropriate authority for the enforcement
of their orders, except in cases where the employer contests the findings
of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the
course of inspection. (As amended by Republic Act No. 7730, June 2,
1994). xxx

Under the aforequoted provision, the Secretary of Labor, or any of his


or her authorized representatives, is granted visitorial and enforcement
powers for the purpose of determining violations of, and enforcing, the Labor
Code and any labor law, wage order, or rules and regulations issued pursuant
thereto. Indispensable to the DOLE'S exercise of such power is the existence
of an actual employer-employee relationship between the parties22.

The power of the DOLE to determine the existence of an employer-


employee relationship in order to carry out its mandate under Article 128 has
been established beyond cavil in People's Broadcasting (Bombo Radyo,
Phils., Inc.) v. The Secretary of Labor and Employment, et al.23, thus:

It can be assumed that the DOLE in the exercise of its visitorial


and enforcement power somehow has to make a determination of the
existence of an employer-employee relationship. Such prerogatival
determination, however, cannot be coextensive with the visitorial and
enforcement power itself. Indeed, such determination is merely
22
South Cotabato, et al. v. Hon. Secretary of Labor, G.R. No. 217575, June 15, 2016.
23
G.R. No. 179652, May 8, 2009
CA-G.R. SP No.155563
DECISION
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preliminary, incidental and collateral to the DOLE'S primary function of


enforcing labor standards provisions. The determination of the existence
of employer-employee relationship is still primarily lodged with the
NLRC. This is the meaning of the clause “in cases where the relationship
of employer-employee still exists” in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128,
two important questions must be resolved: (1) Does the employer-
employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (2) Are there violations
of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a


statutory prerequisite to and a limitation on the power of the
Secretary of Labor, one which the legislative branch is entitled to
impose. The rationale underlying this limitation is to eliminate the
prospect of competing conclusions of the Secretary of Labor and the
NLRC, on a matter fraught with questions of fact and law, which is best
resolved by the quasi-judicial body, which is the NRLC, rather than an
administrative official of the executive branch of the government. If the
Secretary of Labor proceeds to exercise his visitorial and enforcement
powers absent the first requisite, as the dissent proposes, his office confers
jurisdiction on itself which it cannot otherwise acquire. (Emphases
supplied)

The foregoing ruling was further reiterated and clarified in the


resolution of the reconsideration of the same case, wherein the jurisdiction of
the DOLE was delineated vis-a-vis the NLRC where the employer-employee
relationship between the parties is at issue:

No limitation in the law was placed upon the power of the DOLE
to determine the existence of an employer-employee relationship. No
procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The
law did not say that the DOLE would first seek the NLRC's determination
of the existence of an employer-employee relationship, or that should the
existence of the employer-employee relationship be disputed, the DOLE
would refer the matter to the NLRC. The DOLE must have the power to
determine whether or not an employer-employee relationship exists,
and from there to decide whether or not to issue compliance orders in
accordance with Art. 128(b) of the Labor Code, as amended by RA
7730.

The DOLE, in determining the existence of an employer-


employee relationship, has a ready set of guidelines to follow, the
same guide the courts themselves use. The elements to determine the
existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
CA-G.R. SP No.155563
DECISION
Page 23

of dismissal; (4) the employer's power to control the employee's


conduct. The use of this test is not solely limited to the NLRC. The
DOLE Secretary, or his or her representatives, can utilize the same test,
even in the course of inspection, making use of the same evidence that
would have been presented before the NLRC.24 (Emphasis supplied)

Like the NLRC, the DOLE has the authority to rule on the existence of
an employer-employee relationship between the parties, considering that the
existence of an employer-employee relationship is a condition sine qua non
for the exercise of its visitorial power. Nevertheless, it must be emphasized
that without an employer-employee relationship, or if one has already been
terminated, the Secretary of Labor is without jurisdiction to determine if
violations of labor standards provision had in fact been committed 25, and to
direct employers to comply with their alleged violations of labor standards26.

The parameters of the visitorial and enforcement power of the


Secretary of Labor now settled, the next point of inquiry is whether the order
of the Secretary of Labor is subject to judicial review.

The answer is yes, through a special civil action of certiorari27. To


assail the findings of the Secretary of Labor, the aggrieved party may file a
petition for certiorari with the Court of Appeals. In PIDLTRANCO Service
Enterprises, Inc. v. PIDLTRANCO Workers Union-Association of Genuine
Labor Organizations28, it was held that it is procedurally feasible as well as
practicable that petitions for certiorari under Rule 65 against the decisions of
the Secretary of Labor rendered under the Labor Code and its implementing
and related rules be filed initially in the Court of Appeals29. Paramount
consideration is strict observance of the doctrine on the hierarchy of the
courts, emphasized in St. Martin Funeral Homes v. NLRC30, on “the judicial
policy that [the Supreme] Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of our primary jurisdiction.”31

II. Substantive Aspect of the Petition


24
People's Broadcasting (Bombo Radyo, Phils., Inc.) v. The Secretary of Labor and Employment, et al.
G.R. No. 179652, March 6, 2012.
25
Id.
26
South Cotabato, et al. v. Hon. Secretary of Labor, G.R. No. 217575, June 15, 2016.
27
PIDLTRANCO Service Enterprises, Inc. v. PHILTRANCO Workers Union-Association of Genuine
Labor Organizations, G.R. No. 180962, February 26, 2014.
28
G.R. No. 180962, February 26, 2014.
29
Id.
30
G.R. No. 130866, September 16, 1998.
31
National Federation of Labor v. Hon. Laguesma, G.R. No. 123426, March 10, 1999.
CA-G.R. SP No.155563
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The Court affirms with modifications the findings of public


respondent.

Public respondent is correct in prohibiting PLDT from contracting out


activities of services, jobs or functions that are usually necessary and
desirable in the usual course of its business. Thus, individuals deployed by
contractors performing installation, repair and maintenance services of
PLDT lines should be considered regular employees of PLDT. Nevertheless,
individual workers of contractors engaged in: (a) janitorial services,
messengerial and clerical services; (b) information technology (IT) firms and
services; (c) IT support services, both hardware and software; and
applications development; (d) back office support and office operations; (e)
business process outsourcing or call centers; (f) sales; and (g) medical,
dental, engineering and other professional services; should remain
employees of the independent contractors.

We now explain our ruling.

A. Contracting out of Services is not Illegal Per


Se; Janitorial, Maintenance, Security and
Messengerial Services may be contracted out

First, We lay down the rules on legitimate and labor-only contracting.

The pertinent Labor Code provision on legitimate and labor-only


contracting states:

ART. 106. Contractor or subcontractor. Whenever an employer enters


into a contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be paid
in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or


prohibit the contracting out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting
as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for
CA-G.R. SP No.155563
DECISION
Page 25

purposes of this Code, to prevent any violation or circumvention of any


provision of this Code.

There is “labor-only” contracting where the person supplying workers to


an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited
and placed by such person are performing activities which are directly related to
the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were
directly employed by him. (Emphasis and underscoring supplied.)

Section 5 of D0 18-A which treats of legitimate contracting


states:

Section 3. Trilateral Relationship in Contracting Arrangements;


Solidary liability. In legitimate contracting, there exists:

(a) An employer-employee relationship between the contractor and the


employees it engaged to perform the specific job, work or service
being contracted; and

(b) A contractual relationship between the principal and the contractor as


governed by the provisions if the Civil Code.

In the event if any violation of any provision of the Labor Code,


including the failure to pay wages, there exists a solidary liability on the
part of the principal and the contractor for purposes of enforcing the
provisions of the Labor Code and other social legislation, to the extent of
the work performed under the employment contract.

However, the principal shall be deemed the direct employer of the


contractor’s employee in cases where there is a finding by a competent
authority of labor-only contracting, or commission of prohibited activities
as provided in Section 7, or a violation of either Sections 8 and 9 hereof.

Section 8 of DO 174 added a list of requirements for a permissible


contracting or subcontracting arrangement, thus:

Section 8. Permissible Contracting or Subcontracting


Arrangements. Notwithstanding Sections 5 and 6 hereof, contracting or
subcontracting shall only be allowed if all the following circumstances
concur:

a) The contractor or subcontractor is engaged in a distinct and


independent business and undertakes to perform the job or work on its own
responsibility, according to its manner and method;
CA-G.R. SP No.155563
DECISION
Page 26

b) The contractor or subcontractor has substantial capital to carry


out the job farmed out by the principal on his account, manner and
method, investment in the form of tools, equipment, machinery and
supervision;

c) In performing the work farmed out, the contractor is free from


the control and/or direction of the principal in all matters connected with
the performance of the work except as to the result thereto; and

d) The Service Agreement ensures compliance with all the rights


and benefits for all the employees of the contractor or subcontractor under
the labor laws. (Underlining supplied)

On the other hand, Section 5 of DO 174 enumerates the elements of


labor-only contracting, viz:

Section 5. Absolute Prohibition against Labor-only Contracting.


Labor-only contracting, which is totally prohibited, refers to an
arrangement where:

1.

i. The contractor or subcontractor does not have substantial capital,


or

ii. The contractor or subcontractor does not have investments in the


form of tools, equipment, machineries, supervision, work premises,
among others,

and

iii. The contractor’s or subcontractor’s employees recruited and


placed are performing activities which are directly related to the
main business operation of the principal;

or

b) The contractor or subcontractor does not exercise the right to control


over the performance of the work of the employee. (Underlining supplied)

From the aforequoted provisions, the two possible relations that may
arise among the parties are: (1) the permitted legitimate job contract; or (2)
the prohibited labor-only contracting32.

Contracting out of services is not illegal per se33. Our laws allow
32
Coca-Cola Bottlers Phils., Inc. v. Agito, et al., G.R. No. 179546, February 13, 2009.
33
BPI Employees Union-Davao City-FUBU v. Bank of the Philippine Islands, G.R. No. 174912, July 24,
CA-G.R. SP No.155563
DECISION
Page 27

contracting arrangements for the performance of specific jobs, works or


services. To be sure, it is an exercise of business judgment or management
prerogative34. Nonetheless, for such outsourcing to be valid, it must be made
to an independent contractor because the current labor rules expressly
prohibit labor-only contracting35. In another case, the Supreme Court also
ruled that absent proof that the management acted in a malicious or arbitrary
manner, courts will not interfere with the exercise of judgment by an
employer36.

Prescinding from the above, We rule that janitorial, maintenance,


security and messengerial services may be contracted out by PLDT. While
the activities performed by the employees falling under these category of
workers may be directly related to PLDT's business, they do not mean
necessity to its principal business. In one case, it was declared that while the
services rendered by the workers as janitors, messengers and drivers are
considered directly related to the principal business of a bank, nevertheless,
they are not necessary in the conduct of its principal business.37 In the case of
Manila Electric Company vs. Benamira,38 the workers cannot be considered
as regular employees of the MERALCO for, although security services are
necessary and desirable to the business of MERALCO, it is not directly
related to its principal business and may even be considered unnecessary in
the conduct of MERALCO's principal business, which is the distribution of
electricity. Worth noting in this case is the implied doctrine made by the
Court for services which although necessary to the business may be
unnecessary to the principal business.

By legal tradition, specifically, under Section 6 of Department Order


No. 10, Series of 1997 – the forerunner regulation on contracting out – the
following were considered as permissible areas of contracting activities:

xxx xxx xxx

(d) Works or services not directly related or not integral to the


main business or operation of the principal, including casual work,
janitorial, security, landscaping, and messengerial services, and work
not related to manufacturing processes in manufacturing establishments;
(Emphasis supplied)

xxx xxx xxx


2013.
34
Manila Electric Company v. Secretary Quisumbing, 383 Phil. 47, 60 (2000).
35
Aliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, March 9, 2010.
36
Manila Electric Company v. Secretary Quisumbing, 383 Phil. 47, 60 (2000).
37
Sasan, Sr. vs. National Labor Relations Commission 4th Division, G.R. No. 176240, October 17, 2008
38
G.R. No. 145271, July 14, 2005.
CA-G.R. SP No.155563
DECISION
Page 28

The aforementioned functions appear to be not in any way directly


related to the core activities of PLDT. PLDT provides telecommunications
and digital services to its clients. The outsourced janitorial, maintenance,
security and messengerial services are not inherent in the industry to which
PLDT belongs, and thus, are well within the permissible services which may
be contracted out under the law. Consequently, the janitors, security guards
and messengers belong to that class or group of employees of the contractors
that should not be regularized by PLDT.

B. The law does not require the


engagement of full-time medical
personnel as regular employees of the
company

As regards medical and dental services, it bears stressing that as part of


occupational safety and health compliance, and as required by the Labor
Code and Occupational Health and Safety Standards, companies like PLDT
are mandated to provide appropriate medical services to its employees.
Article 157 of the Labor Code provides:

Article 157. Emergency Medical and Dental Services. It shall be


the duty of every employer to furnish his employees in any locality with
free medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of


employees exceeds fifty (50) but not more than two hundred (200) except
when the employer does not maintain hazardous workplaces, in which
case, the services of a graduate first-aider shall be provided for the
protection of workers, where no registered nurse is available. The
Secretary of Labor and Employment shall provide by appropriate
regulations, the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by appropriate
order, hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time


physician and dentist, and an emergency clinic, when the number of
employees exceeds two hundred (200) but not more than three hundred
(300); and

(c) The services of a full-time physician, dentist and a full-time


registered nurse as well as a dental clinic and an infirmary or emergency
hospital with one bed capacity for every one hundred (100) employees
when the number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the


CA-G.R. SP No.155563
DECISION
Page 29

services of a physician or a dentist who cannot stay in the premises of the


establishment for at least two (2) hours, in the case of those engaged on
part-time basis, and not less than eight (8) hours, in the case of those
employed on full-time basis. Where the undertaking is non-hazardous in
nature, the physician and dentist may be engaged on retainer basis, subject
to such regulations as the Secretary of Labor and Employment may
prescribe to insure immediate availability of medical and dental treatment
and attendance in case of emergency. (As amended by Section 26,
Presidential Decree No. 570-A, November 1, 1974).

At any rate, the requirement of the law that every employer must
provide or make available such medical and allied services to its employees
does not necessarily mean to actually employ a service provider. As held in
Philippine Global Communications v. De Vera39:

xxx while it is true that the provision requires employers to engage the
services of medical practitioners in certain establishments depending
on the number of their employees, nothing is there in the law which
says that medical practitioners so engaged be actually hired as
employees, adding that the law, as written, only requires the employer to
retain, not employ, a part-time physician who needed to stay in the
premises of the non-hazardous workplace for two (2) hours. (Emphasis
and underscoring supplied)

The term “full-time” in Article 157 of the Labor Code cannot be


construed as referring to the type of employment of the person engaged to
provide the services, for Article 157 must not be read alongside Article 280 40
in order to vest employer-employee relationship on the employer and the
person so engaged. The phrase services of a full-time physician, dentist or
full-time registered nurse should be taken to refer to the kind of services that
the nurse will render in the company’s premises and to its employees, not the
manner of his or her engagement41.

It is also worth mentioning that the maintenance of a clinic and


provision of medical services to its employees as required under Art. 157 is
39
G.R. No. 157214, June 7, 2005.
40
Art. 280. The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where the employee has been
engaged to perform in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one (1) year of service, whether such is continuous or
broken, shall be considered a regular with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
41
Escasinas v. Shangri-la’s Mactan Island Resort, G.R. No. 178827, March 4, 2009.
CA-G.R. SP No.155563
DECISION
Page 30

not directly related to PLDT’s principal business of telecommunications.


Hence, PLDT is not required to hire doctors, nurses and dentists as its
regular employees and these are services or functions that may be validly
contracted out.

C. Persons who render “Professional Services”


should not be regularized

Jurisprudence has recognized another kind of independent contractor:


individuals with unique skills and talents that set them apart from ordinary
employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the
principal. In other words, the relationship is bilateral42. Here, the various
professional services of engineers, planners, etc. are highly technical and
require several years of education and experience, and are governed by rules
of professional ethics that must be complied with. The same equally applies
to medical and dental professionals. In these cases, the workers were found
to be independent contractors because of their unique skills and talents and
the lack of control over the means and methods in the performance of their
work43. As such, this group of employees is expected to provide professional
service based on their independent discretion as such professionals.

We also note that under the second paragraph of item V (Non-


Applicability of DO 174, Series of 2017, to Other Contractual Relationships)
of DOLE Department Circular No. 001-17, which became effective on June
9, 2017, it explicitly states that “xxx DO 174 does not also cover the
contracting out of job or work to a professional, or individual with unique
skills and talents who himself or herself performs the job or work for the
principal.”

To be sure, individuals with special skills, expertise or talent enjoy the


freedom to offer their services as independent contractors. The right to life
and livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot operate to deprive
an individual, possessed with special skills, expertise and talent, of his right
to contract as an independent contractor44.

D. Contractual workers engaged in


information technology-enabled services
and Sales Agents who are paid on
42
Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014.
43
Id.
44
Sonza v. ABS-CBN Broadcasting Corporation, G.R. No. 138051, 10 June 2004.
CA-G.R. SP No.155563
DECISION
Page 31

commission basis should not be


regularized

Perhaps through oversight or mere inadvertence, the Regional Director


and the Secretary may have overlooked that DOLE Department Circular No.
1, Series of 2017 – almost an identical reproduction of Department Circular
No. 1, Series of 2012, in relation to DO 18-A, which actually exempts the
following services from the application of DO 174:

a. Business Process Outsourcing


b. Knowledge Process Outsourcing
c. Legal Process Outsourcing
d. IT Infrastructure Outsourcing
e. Application Development
f. Hardware and/or Software Support
g. Medical Transcription
h. Animation Services
i. Back Office Operations / Support

Item II (Non-Applicability of D.O. No. 174, Series of 2017, to


BPO/LPO/KPO) of the Department Circular No. 01, Series of 201745
clarified that DO 174 applies only to “trilateral relationship” which
characterizes contracting or subcontracting arrangement. “Trilateral
relationship” refers to the relationship in a contracting or subcontracting
arrangement where there is a contract for a specific job, work or service
between the principal and the contractor, and a contract of employment
between the contractor and its workers46. There are three (3) parties involved
in these arrangements: (a) the principal who decides to farm out a job, work
or service to a contractor; (b) the contractor who has the capacity to
independently undertake the performance of the job, work or service; and (c)
the contractual workers engaged by the contractor to accomplish the job,
work or service. The said item specifically states that DO 174 does not
contemplate information technology-enabled services involving an entire or
specific business process. The foregoing services actually cover an entire
gamut of operations which heavily utilize information technology for
improving efficiency of an organization. Consequently, companies engaged
in business, knowledge, or legal processes are governed by other applicable
provisions under the Labor Code and the Civil Code 47. It is therefore clear
45
Clarifying the Applicability of D.O. No. 174, Series of 2017.
46
Section 3 (m), D.O. No. 18-A.
47
Kyna C. Pasamba, The applicability of Department Order No. 174, Series of 2017
<http://www.bworldonline.com/content.php?section=Opinion&title=the-applicability-of-department-
order-no.-174-series-of-2017&id=147122> (last accessed July 19, 2018).
CA-G.R. SP No.155563
DECISION
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that the employees of contractors rendering Information Technology (IT)


-enabled and -related services and business office operations and support are
not subject to regularization with PLDT. These services are not covered by
DO 174 and, previously, by DO 18-A; hence, there is no basis for their
inclusion in the roster of workers subject to regularization.

E. Contractors' Sales Workers should not


be regularized

In regard to the contracted sales force which is comprised of sales


agents who are paid on commission basis, We cite the first paragraph of item
V (Non-Applicability of DO 174, Series of 2017, to Other Contractual
Relationships) of DOLE Department Circular No. 001-17, Series of 2017,
which states that DO 174 “xxx does not contemplate to cover contractual
relationships such as in contract of sale or purchase, contract of lease,
contract of carriage, contract growing/growership agreement, toll
manufacturing, contract of management, operation and maintenance and
such other contracts governed by the Civil Code of the Philippines and other
special laws.” Those who are paid on commission basis fall within the
aforecited rule.

Besides, the consistent and long settled rule in jurisprudence is that


those who are paid on commission basis are NOT employees. The Supreme
Court ruled that this is so in Singer Sewing Machine Company vs. Drilon,48
thus:

A thorough examination of the facts of the case leads us to the


conclusion that the existence of an employer-employee relationship
between the Company and the collection agents cannot be sustained.

The plain language of the agreement reveals that the designation as


collection agent does not create an employment relationship and that the
applicant is to be considered at all times as an independent contractor. This
is consistent with the first rule of interpretation that the literal meaning of
the stipulations in the contract controls (Article 1370, Civil Code; La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor,
Relations, 123 SCRA 679 [1983]). No such words as "to hire and employ"
are present. Moreover, the agreement did not fix an amount for wages nor
the required working hours. Compensation is earned only on the basis of
the tangible results produced, i.e., total collections made (Sarra v.
Agarrado, 166 SCRA 625 [1988]). In Investment Planning Corp. of the
Philippines v. Social Security System, 21 SCRA 924 [1967] which
involved commission agents, this Court had the occasion to rule, thus:

48
G.R. No. 91307, January 24, 1991
CA-G.R. SP No.155563
DECISION
Page 33

We are convinced from the facts that the work of petitioner's


agents or registered representatives more nearly approximates that of
an independent contractor than that of an employee. The latter is paid
for the labor he performs, that is, for the acts of which such labor consists
the former is paid for the result thereof . . . .

xxx xxx xxx

Even if an agent of petitioner should devote all of his time and


effort trying to sell its investment plans he would not necessarily be
entitled to compensation therefor. His right to compensation depends upon
and is measured by the tangible results he produces."

Moreover, the collection agent does his work "more or less at his
own pleasure" without a regular daily time frame imposed on him
(Investment Planning Corporation of the Philippines v. Social Security
System, supra; See also Social Security System v. Court of Appeals, 30
SCRA 210 [1969]). (Emphases supplied)

In other words, the members of the Sales Force outsource personnel


could not be the subject of control by PLDT, and cannot be considered
regular employees of PLDT.

F. Length of service cannot always ripen


to regular employment

Under Article 280 of the Labor Code, “regular employment” refers to


that arrangement whereby the employee “has been engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer”49. Under the definition, the primary standard that
determines regular employment is the reasonable connection between the
particular activity performed by the employee and the usual business or trade
of the employer;50 the emphasis is on the necessity or desirability of the
49
Article 280 of the Labor Code reads in full:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.
50
De Leon v. National Labor Relations Commission, 257 Phil. 626, 632 (1989). See also Hda. Fatima v.
Nat’l Fed. of Sugarcane Workers-Food and Gen. Trade, 444 Phil. 587, 596 (2003); Abasolo v. National
CA-G.R. SP No.155563
DECISION
Page 34

employee’s activity. Thus, when the employee performs activities considered


necessary and desirable to the overall business scheme of the employer, the
law regards the employee as regular51. Prescinding from this princple, and as
elaborated earlier, individuals deployed by the contractors who are
performing installation, repair and maintenance services of PLDT lines are
considered regular employees of PLDT.

Meanwhile, by way of an exception, paragraph 2, Article 280 of the


Labor Code also considers regular a casual employment arrangement when
the casual employee’s engagement has lasted for at least one (1) year,
regardless of the engagement’s continuity. Note that the controlling test in
this arrangement is the length of time during which the employee is
engaged52.

Understood in the above sense, the exception, cannot apply to


individual workers of contractors providing the following services: (a)
janitorial services, messengerial and clerical services; (b) information
technology (IT) firms and services; (c) IT support services, both hardware
and software; and applications development; (d) back office support and
office operations; (e) business process outsourcing or call centers; (f) sales;
and (g) medical, dental, engineering and other professional services.

First, the engagement of the above-enumerated group of workers, no


matter how long cannot ripen into regular employment with PLDT as the
law is clear that the exception only applies to casual employees who
rendered at least one (1) year of service or, based on jurisprudence, to
project employees who were continuously rehired even after the cessation of
the project to which they were assigned 53. The said group of workers are
neither casual nor project employees of PLDT but rather are employees of
independent contractors which supply services to the company under
permitted legitimate job contracts. Thus, the length of service standard will
not be fair if applied to them and to PLDT which merely exercised its
business judgment to contract out services which are not necessary and
desirable to its business. To rule otherwise is to effectively deprive PLDT of
its prerogative granted by the law.

Second, in dealing with the employment status of an individual, the


Court should bear in mind that said issue is not governed solely by the Labor

Labor Relations Commission, 400 Phil. 86, 103 (2000); and Hacienda Bino/Hortencia Starke, Inc. v.
Cuenca, 496 Phil. 198, 209 (2005).
51
Universal Robina Sugar Milling Corporation v. Acibo, et al., G.R. No. 186439, January 15, 2014.
52
Id.
53
Id.; see also Maraguinot, Jr. v. NLRC, 348 Phil. 580, 600-601 (1998).
CA-G.R. SP No.155563
DECISION
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Code as the law is supplemented by other rules. Corollarily, the group of


workers enumerated above are governed by different provisions of the Labor
Code and its applicable implementing rules. For instance, the contractual
workers engaged by PLDT in information technology-enabled services are
explicitly governed by DOLE Department Circular No. 1, Series of 2017
which, on the other hand, are excluded from the application of D.O. No. 174.

III. Legal Consequences of Regularization

To go back to the regularization of individuals performing installation,


repair and maintenance services of PLDT lines, the Court finds that there are
unavoidable legal consequences pertaining to the said regularization as
regular employees of PLDT.

First, under the tenor of the assailed issuances and the Compliance
Order, the contractor workers will be allowed to receive salaries and benefits
beyond the prescriptive period provided under the Labor Code, the
governing law in this case.

Second, there will arise a situation in which the contractor workers


will receive double compensation which, in accordance with existing
jurisprudence, is not allowed, viz.,

i. in Arlo Aluminum v. Pinon,54, the Supreme Court has prohibited


double compensation by an employee, to wit –

The Court cannot sanction the ruling of the CA that despite


receiving the P150,000.00 from the quitclaim, which clearly covers the
salary and benefits that Vic Edward is entitled to, Arlo Aluminum must
still pay the amount of P145,276.22 as a monetary award. This will amount
to double compensation considering that said monetary award was already
covered by the quitclaim. Hence, the Court is of the view that Arlo
Aluminum already satisfied its liabilities to Vic Edward insofar as his
unpaid wages and other labor benefits are concerned.

ii. considering that PLDT and the contractors are solidarily liable
for whatever monetary claims the individuals have in case of a finding of
labor-only contracting, the payment by the contractors of the salaries of
the workers extinguishes PLDT’s obligation to pay for the said salaries.

54
G.R. No. No. 215874, Jul 5 2017
CA-G.R. SP No.155563
DECISION
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In Vigilia v. Philippine College of Criminology, Inc.,55 the Supreme Court


held:

Considering that MBMSI, as the labor-only contractor, is solidarily


liable with the respondents, as the principal employer, then the NLRC and
the CA correctly held that the respondents' solidary liability was already
expunged by virtue of the releases, waivers and quitclaims executed by
each of the petitioners in favor of MBMSI pursuant to Article 1217 of the
Civil Code which provides that "payment made by one of the solidary
debtors extinguishes the obligation.

Clearly, the application of these legal provisions to the facts of the


case requires an inquiry into factual issues, such as the years of service of the
contractors' workers and their period of actual deployment with PLDT, their
receipt of salaries from the respective contractors, the amount and level
thereof, and the payment of other benefits. These are factual issues which
the Court in a certiorari proceeding under Rule 65 of the Rules of Court –
being limited in scope and inflexible in character and limited to jurisdictional
errors56 - cannot wade into.

More importantly, the determination of which contractors and


individuals deployed by these contractors are performing installation, repair
and maintenance services of PLDT lines, likewise, requires an inquiry into
facts that are presently not available to this Court and is a matter that is
precluded by the present Rule 65 petition.

Given all the above, a remand of the case for further conduct of
proceedings by the Regional Director for the determination of these factual
issues is in order.

IV. The Assailed Issuances are tainted with grave abuse of discretion and
the petition is partly granted on this ground

In its petition, PLDT challenged the assailed issuances of the public


respondent on various due process grounds, the lack of impartiality or
alleged prejudgment on the part of the public respondent, the absence or lack
of opportunity to present its evidence and to be provided with the basis for
the findings of the Compliance Order and the assailed issuances, and the
55
G.R. No. 200094, Jun 10 2013
56
PMI Colleges v. NLRC, G.R. No. 121466 August 15, 1997, holds:
Certiorari is a remedy narrow in its scope and inflexible in character. It is not a
general utility tool in the legal workshop. Factual issues are not a proper subject for
certiorari, as the power of the Supreme Court to review labor cases is limited to the issue
of jurisdiction and grave abuse of discretion.
CA-G.R. SP No.155563
DECISION
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selective or biased appreciation of the evidence presented in the inspection


proceedings.

On this point, this Court is constrained to side with PLDT. The case of
South Cotobato57 is apropos, viz:

In determining the existence of an employer-employee relationship,


Bombo Radyo specifies the guidelines or indicators used by courts, i.e. (I)
the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the employer's power to control the
employee's conduct. The DOLE Secretary, or his or her representatives,
can utilize the same test, even in the course of inspection, making use of
the same evidence that would have been presented before the NLRC.

As can be gleaned from the above-quoted Order, the Regional


Director merely noted the discovery of violations of labor standards
provisions in the course of inspection of the DXCP premises. No such
categorical determination was made on the existence of an employer-
employee relationship utilizing any of the guidelines set forth. In a word,
the Regional Director had presumed, not demonstrated, the existence of
the relationship. Of particular note is the DOLE's failure to show that
petitioners, thus, exercised control over private respondents' conduct in the
workplace. The power of the employer to control the work of the
employee, or the control test, is considered the most significant
determinant of the existence of an employer-employee relationship.

Neither did the Orders of the Regional Director and Secretary of


Labor state nor make reference to any concrete evidence to support a
finding of an employer-employee relationship and justify the monetary
awards to private respondents. Substantial evidence, such as proofs of
employment, clear exercise of control, and the power to dismiss that prove
such relationship and that petitioners committed the labor laws violations
they were adjudged to have committed, are grossly absent in this case.
Furthermore, the Orders dated May 20, 2004 and November 8, 2004 do
not even allude to the substance of the interviews during the inspection
that became the basis of the finding of an employer-employee relationship.

The Secretary of Labor adverts to private respondents' allegation in


their Reply to justify their status as employees of petitioners. The
proffered justification falls below the quantum of proof necessary to
establish such fact as allegations can easily be concocted and
manufactured. Private respondents' allegations are inadequate to support a
conclusion absent other concrete proof that would support or corroborate
the same. Mere allegation, without more, is not evidence and is not
equivalent to proof private respondents' allegations, essentially self-serving
statements as they are and devoid under the premises of any evidentiary
weight, can hardly be taken as the substantial evidence contemplated for
57
South Cotabato, et al. v. Hon. Secretary of Labor, G.R. No. 217575, June 15, 2016.
CA-G.R. SP No.155563
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the DOLE's conclusion that they are employees of petitioners.

Based on the jurisprudential standard of South Cotobato, the


Compliance Order did not comply with the foregoing standards. We will
explain:

First, as in the South Cotabato case, the Regional Director had


presumed, not demonstrated, the existence of control. To begin with, the
conclusion or finding was based on interviews conducted by the labor law
compliance officers of not more than a thousand (1,000) individuals, which
figure also includes regular PLDT employees, but the results of which were
made to apply to at least 9,120 individuals listed in the SAVE Report, 8,719
listed in the Compliance Order, 7,416 under the 10 January 2018 Resolution
and 7,344 under the 24 April 2018 Resolution.

On the matter of the existence of employer-employee relationship, the


Supreme Court has ruled in Javier v. Fly Ace Corporation,58 that:

It must be noted that the issue of Javier’s alleged illegal dismissal


is anchored on the existence of an employer-employee relationship
between him and Fly Ace. This is essentially a question of fact. ...In
dealing with factual issues in labor cases, substantial evidence that amount
of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion is sufficient.

As the records bear out, the LA and the CA found Javier’s claim of
employment with Fly Ace as wanting and deficient. The Court is
constrained to agree. Although Section 10, Rule VII of the New Rules of
Procedure of the NLRC allows a relaxation of the rules of procedure
and evidence in labor cases, this rule of liberality does not mean a
complete dispensation of proof. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with
little regard to technicalities or formalities but nowhere in the rules
are they provided a license to completely discount evidence, or the lack
of it. The quantum of proof required, however, must still be satisfied.
Hence, when confronted with conflicting versions on factual matters, it is
for them in the exercise of discretion to determine which party deserves
credence on the basis of evidence received, subject only to the requirement
that their decision must be supported by substantial evidence. Accordingly,
the petitioner needs to show by substantial evidence that he was indeed an
employee of the company against which he claims illegal dismissal.

Expectedly, opposing parties would stand poles apart and proffer


allegations as different as chalk and cheese. It is, therefore, incumbent
upon the Court to determine whether the party on whom the burden to
58
G.R. No. 192258, February 15, 2012
CA-G.R. SP No.155563
DECISION
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prove lies was able to hurdle the same. No particular form of evidence is
required to prove the existence of such employer-employee relationship.
Any competent and relevant evidence to prove the relationship may be
admitted. Hence, while no particular form of evidence is required, a
finding that such relationship exists must still rest on some substantial
evidence. Moreover, the substantiality of the evidence depends on its
quantitative as well as its qualitative aspects. Although substantial
evidence is not a function of quantity but rather of quality, the x x x
circumstances of the instant case demand that something more should have
been proffered. Had there been other proofs of employment, such as x x x
inclusion in petitioners payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-employee relationship.
(Emphases and underlinings supplied)

In the case under consideration, the Regional Director came out with
the Compliance Order, as affirmed by the public respondent, by relying
heavily on the interviews of some employees and then applied them to all
other workers and employees who were not actually interviewed. It is highly
conjectural, if not purely speculative to consider the individual
circumstances of some workers who were interviewed to be exactly similar
to the factual circumstances pertaining to the other contractors' workers.
Such findings cannot constitute the substantial evidence required to prove
the existence of employer-employee relationship or labor-only contracting.

Indeed, no reasonable mind can accept the oversimplified conclusion


that what is true for one is true as well for seven or eight others. The assailed
issuances, without concrete evidence, simply assumed that every contractor's
worker is similarly, if not exactly, situated as with the rest.

Second, as in the South Cotabato case, the assailed issuances neither


stated nor made reference to any concrete evidence to support a finding of an
employer-employee relationship. Further, the assailed issuances can only
refer to inconclusive and general declarations made by a handful of
individuals who were interviewed during the inspection.

As PLDT correctly asserted, there must be evidence of when, where,


how and what instructions were given to these individuals who claimed to
have received work instructions from PLDT and also, who, from PLDT
actually gave such instructions. In short, the findings and conclusions of the
Regional Director and the public respondent were largely based on what
PLDT referred to as anecdotal evidence. Again, in the absence of facts
supporting a general allegation or broad claim that employment relationship
existed, the evidentiary standard could not be said to have been satisfied.
CA-G.R. SP No.155563
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The Supreme Court has rejected evidence of this kind, i.e., anecdotal
evidence, in the case of Tongko v. The Manufacturers Life Insurance Co.,
Inc.,59 as proof of the existence of employer-employee relationship, as
follows:

A disturbing note, with respect to the presented affidavits and


Tongkos alleged administrative functions, is the selective citation of the
portions supportive of an employment relationship and the consequent
omission of portions leading to the contrary conclusion. For example, the
following portions of the affidavit of Regional Sales Manager John Chua,
with counterparts in the other affidavits, were not brought out in the
Decision of November 7, 2008, while the other portions suggesting labor
law control were highlighted. Specifically, the following portions of the
affidavits were not brought out:

1.a. I have no fixed wages or salary since my services are


compensated by way of commissions based on the computed
premiums paid in full on the policies obtained thereat;

1.b. I have no fixed working hours and employ my own


method in soliticing insurance at a time and place I see fit;

1.c. I have my own assistant and messenger who handle my


daily work load;

1.d. I use my own facilities, tools, materials and supplies in


carrying out my business of selling insurance;

xxxx

6. I have my own staff that handles the day to day


operations of my office;

7. My staff are my own employees and received salaries


from me;

xxxx

9. My commission and incentives are all reported to the


Bureau of Internal Revenue (BIR) as income by a self-employed
individual or professional with a ten (10) percent creditable
withholding tax. I also remit monthly for professionals.

These statements, read with the above comparative analysis of the


Manulife and the Grepalife cases, would have readily yielded the
conclusion that no employer-employee relationship existed between
Manulife and Tongko.
59
G. R. No. 167622, June 29, 2010
CA-G.R. SP No.155563
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As previously discussed, what simply happened in Tongkos case


was the grant of an expanded sales agency role that recognized him as
leader amongst agents in an area that Manulife defined. Whether this
consequently resulted in the establishment of an employment relationship
can be answered by concrete evidence that corresponds to the following
questions:

as lead agent, what were Tongkos specific functions and the


terms of his additional engagement;

was he paid additional compensation as a so-called Area


Sales Manager, apart from the commissions he received from the
insurance sales he generated;
what can be Manulifes basis to terminate his status as lead
agent;

can Manulife terminate his role as lead agent separately


from his agency contract; and

to what extent does Manulife control the means and


methods of Tongkos role as lead agent?

The answers to these questions may, to some extent, be deduced


from the evidence at hand, as partly discussed above. But strictly speaking,
the questions cannot definitively and concretely be answered through the
evidence on record. The concrete evidence required to settle these
questions is simply not there, since only the Agreement and the anecdotal
affidavits have been marked and submitted as evidence.

Third, the appreciation of the evidence appears to have leaned in favor


of the individuals deployed by the service contractors and against PLDT and
the latter's contractors. On this point, it bears stressing that the public
resondent's declaration that “he will order the regularization of 10,000
contractuals in PLDT,” prior to the issuance by the Regional Director of the
Compliance Order (a subordinate of the former), implies partiality, bias and
prejudgment on the part of public respondent.

Finally, public respondent appears to have lost sight of the difference


between control as to the means and methods of achieving the results, which
establishes employer-employee relationship, and control as to the results to
be achieved. The Supreme Court, in Chevron (Phils.), Inc. v. Galit60, held
thuswise:

60
G.R. No. 186114, October 7, 2015
CA-G.R. SP No.155563
DECISION
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Anent the power of control, the Court again finds no cogent reason
to depart from the findings of the NLRC that in case of matters that needed
to be addressed with respect to employee performance, petitioner dealt
directly with SJS and not with the employee concerned. In any event, it is
settled that such power merely calls for the existence of the right to control
and not necessarily the exercise thereof. In the present case, the Job
Contract between petitioner and SJS clearly provided that SJS "shall retain
the right to control the manner and the means of performing the work, with
[petitioner] having the control or direction only as to the results to be
accomplished."

In addition, it would bear to point out that contrary to the ruling of


the CA, the work performed by Galit, which is the "scooping of slop of oil
water separator," has no direct relation to petitioner's business, which is the
importation, refining and manufacture of petroleum products. The Court
defers to the findings of both the LA and the NLRC that the job performed
by Galit, which essentially consists of janitorial services, may be incidental
or desirable to petitioner's main activity but it is not necessary and directly
related to it.

As to whether or not SJS is an independent contractor,


jurisprudence has invariably ruled that an independent contractor
carries on an independent business and undertakes the contract work
on his own account, under his own responsibility, according to his own
manner and method, and free from the control and direction of his
employer or principal in all matters connected with the performance
of the work except as to the results thereof. This embodies what has
long been jurisprudentially recognized as the control test, as discussed
above. In the instant case, SJS presented evidence to show that it had an
independent business by paying business taxes and fees and that it was
registered as an employer with the Social Security System. Moreover,
there was no evidence to show that SJS and its employees were ever
subject to the control of petitioner. On the contrary, as shown above, SJS
possessed the right to control its employees' manner and means of
performing their work, including herein respondent Galit. (Emphasis and
underlining supplied)

In the present case and as amply demonstrated by PLDT in its petition,


the public respondent clearly misappreciated the exercise by PLDT of its
power to control the results intended to be achieved by the contracting
arrangement with the concept of control as to the means and methods of
achieving the said results. By way of example, the validation of results and
quality, checking of final output, the use of Technical Protocols and
Implementing Guidelines, the outline of the “General Scope of Work”,
product training and knowledge, and evaluation of the contractors were all
considered to be “means and methods control”.
CA-G.R. SP No.155563
DECISION
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It would require a leap of faith to so conclude that these are means and
methods control, as easily, these are all intended to ensure that the results –
the satisfactory delivery of the required service – are achieved. In the words
of the Supreme Court in Tongko v. Manufacturer’s Life Insurance
Company,61 these are guidelines to achieve the desired result and therefore
not indicative of labor law control, viz.,

… guidelines indicative of labor law "control" do not merely


relate to the mutually desirable result intended by the contractual
relationship; they must have the nature of dictating the means and
methods to be employed in attaining the result. Tested by this norm,
Manulife's instructions regarding the objectives and sales targets, in
connection with the training and engagement of other agents, are among
the directives that the principal may impose on the agent to achieve the
assigned tasks. They are targeted results that Manulife wishes to attain
through its agents. Manulife's codes of conduct, likewise, do not
necessarily intrude into the insurance agents' means and manner of
conducting their sales. Codes of conduct are norms or standards of
behavior rather than employer directives into how specific tasks are to
be done. These codes, as well as insurance industry rules and
regulations, are not per se indicative of labor law control under our
jurisprudence. (Emphases supplied)

Guided by the cardinal due process rights enunciated by the Supreme


Court in Ang Tibay v. Court of Industrial Relations,62 this Court holds that
the assailed issuances, save with respect to the regularization of employees
engaged in the installation, repair and maintenance of PLDT lines, are
tainted with the following fatal defects:

(1) PLDT was denied the right to a hearing or to


present its own case and submit evidence in support thereof.

(2) The evidence supporting the assailed issuances did


not rise to the level of substantial evidence, or such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion.

(3) The assailed issuances were rendered not on the


basis of the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.

61
G.R. No. 167622. January 25, 2011,
62
69 Phil. 635 (1940)
CA-G.R. SP No.155563
DECISION
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(4) The public respondent in issuing the assailed orders


did not make his own independent consideration of the law and
facts of the controversy rather he simply accepted the views of
the Regional Director.

Equally important, this Court is of the well considered view that the
monetary award on the purported labor standard violations was arrived at
arbitrarily. South Cotabato again instructs:

In a similar vein, the use of the straight computation method in


awarding the sum of P759,752 to private respondents, without reference to
any other evidence other than the interviews conducted during the
inspection, is highly telling that the DOLE failed to consider evidence in
arriving at its award and leads this Court to conclude that such amount was
arrived at arbitrarily.

It is quite implausible for the nine (9) private respondents to be


entitled to uniform amounts of Service Incentive Leave (SIL) pay, holiday
pay premium, and rest day premium pay for three (3) years, without any
disparity in the amounts due them since entitlement to said benefits would
largely depend on the actual rest days and holidays worked and amount of
remaining leave credits in a year. Whoever claims entitlement to the
benefits provided by law should establish his or her right thereto. The
burden of proving entitlement to overtime pay and premium pay for
holidays and rest days lies with the employee because these are not
incurred in the normal course of business. In the case at bar, evidence
pointing not only to the existence of an employer-employee relationship
between the petitioners and private respondents but also to the latter's
entitlement to these benefits are miserably lacking.

It may be that petitioners have failed to refute the allegation that


private respondents were employees of DXCP. Nevertheless, it was
incumbent upon private respondents to prove their allegation that they
were, indeed, under petitioners' employ and that the latter violated their
labor rights. A person who alleges a fact has the onus of proving it and the
proof should be clear, positive and convincing. Regrettably, private
respondents failed to discharge this burden. The pronouncement in Bombo
Radyo that the determination by the DOLE of the existence of an
employer-employee relationship must be respected should not be
construed so as to dispense with the evidentiary requirement when called
for.

The monetary award provided in the Compliance Order, and as


modified by the assailed issuances, is based on the application of the straight
computation method, which is not in accord with South Cotobato ruling, the
same must be remanded to the Office of the Regional Director for the
determination of the proper proceeding to determine the exact amount of
CA-G.R. SP No.155563
DECISION
Page 45

monetary award.

In sum, the application of the straight computation method in


computing the money awards and the extrapolation of, or oversimplified
approach on, the evidence pertaining to labor-only contracting share a
common thread is not in accord with existing jurisprudence.

A final word. We commiserate and appreciate the toil and hardship of


the employees affected by this Decision, and recognize that we should view
with compassion their inadequately addressed plight. Nevertheless, this
sense of compassion should be coupled with a sense of fairness and justice to
all the parties concerned. Hence, while social justice has an inclination to
give protection to the working class, the cause of the labor sector is not
upheld at all times as the employer has also a right entitled to respect in the
interest of simple fair play63. Corollary to this, the distinctions as to the
treatment of the law between the situations of the workers performing
activities, services, jobs or functions that are usually necessary and desirable
in the usual course of PLDT's business and those which are not should be
observed. We admit that existing laws are inadequate; however, the policy-
determining branches of the government may be exhorted peacefully by the
citizenry to effect positive changes. This Court, mandated by the
Constitution to uphold the law, can only go as far as interpreting existing
laws and the spirit behind them. Otherwise, we shall be entering the
dangerous ground of judicial legislation64.

WHEREFORE, premises considered, judgment is rendered as


follows:

1. The Court AFFIRMS with modification, the Assailed Resolution


dated January 10, 2018, and Resolution dated April 24, 2018 in “In Re:
Special Assessment or Visit of the Establishment (SAVE) in Philippine Long
Distance Telephone Company (PLDT)”, and docketed as OS-LS-0120-0804-
2017, of public respondent Hon. Silvestre Bello III in his capacity as
Secretary, Department of Labor and Employment, insofar as the same
ordered the regularization of individuals performing functions and jobs that
are usually necessary and desirable in the usual course of the business of the
petitioner PLDT, Inc., specifically, as regards the installation, repair and
maintenance of PLDT communication lines. Accordingly, and consistent
with this Decision, the Court REMANDS to the Office of the Regional
Director of the Department of Labor and Employment – National Capital
63
Allied Banking Corporation v. NLRC, G.R. No. 116128, July 12, 1996.
64
See In The Matter Of The Petition For Habeas Corpus Of Roberto Umil, v. Fidel V. Ramos, et al.,
Concurring Opinion, Fernan, CJ, G.R. No. 81567, October 3, 1991.
CA-G.R. SP No.155563
DECISION
Page 46

Region the matter of the regularization of these individuals performing


installation, repair and maintenance services for the conduct of the necessary
factual determination on matters dealt with in this Decision.

2. The Court SETS ASIDE the public respondent's Resolution dated


January 10, 2018 and Resolution dated April 24, 2018, insofar as these
issuances have declared that there was labor-only contracting of the
following functions/jobs/ services, viz:

a. janitorial services, messengerial and clerical services;


b. information technology (IT) firms and services;
c. IT support services, both hardware and software; and
applications development;
d. back office support and office operations;
e. business process outsourcing or call centers;
f. sales; and
g. medical, dental, engineering and other professional services;

and, accordingly, in this regard, the respondents Hon. Secretary of Labor and
Employment Silvestre H. Bello III, and Manggagawa sa Komunikasyon ng
Pilipinas, their officers, representatives, agents or any other person(s) acting
on their behalf or under their direction are ENJOINED from implementing,
enforcing and/or executing the Compliance Order dated July 3, 2017 in Case
No. NCROO-TSSD-JA-2017-05-001-GO-SOT/ Ref No. NCROO-TSSD-
1601-JA-004-PLDT, Resolution dated January 10, 2018, and Resolution
dated April 24, 2018 in “In Re: Special Assessment or Visit of the
Establishment (SAVE) in Philippine Long Distance Telephone Company
(PLDT)”, docketed as OS-LS-0120-0804-2017; and

3. The Court REMANDS this case to the Office of the Regional


Director of the Department of Labor and Employment – National Capital
Region for the review and proper determination of the monetary award on
the labor standards violation of petitioner PLDT, Inc., and to conduct further
appropriate proceedings, consistent with this Decision.

SO ORDERED.

EDWIN D. SORONGON
Associate Justice
CA-G.R. SP No.155563
DECISION
Page 47

WE CONCUR:

SESINANDO E. VILLON MARIA FILOMENA D. SINGH


Associate Justice Associate Justice

C E RT I FI CAT I O N

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby


certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court.

SESINANDO E. VILLON
Chairperson, Tenth (10th) Division