CA junks DOLE ‘endo’ suit vs. PLDT, subcontractor

In an 18-page decision dated January 24 penned by Associate Justice Luisa Quijano-Padilla, the appellate court’s Seventeenth Division granted the petition filed by Meralco Industrial Engineering Services Corporation (MIESCOR), seeking the reversal of the January 10, 2018 and April 24, 2018 resolutions signed by Labor Secretary Silvestre Bello III. (Photo By Ramon FVelasquez – Own work, CC BY-SA 3.0)

MANILA — The Court of Appeals (CA) reversed the Department of Labor and Employment (DOLE) decision which found an engineering and construction company along with the Philippine Long Distance Telephone Company (PLDT) guilty of unfair labor practices.

In an 18-page decision dated January 24 penned by Associate Justice Luisa Quijano-Padilla, the appellate court’s Seventeenth Division granted the petition filed by Meralco Industrial Engineering Services Corporation (MIESCOR), seeking the reversal of the January 10, 2018 and April 24, 2018 resolutions signed by Labor Secretary Silvestre Bello III.

In the said resolutions, Bello affirmed the findings of the DOLE-National Capital Region (NCR) that MIESCOR and PLDT were engaged in labor-only contractor activities.

The DOLE likewise ordered them to pay 279 workers a total of PHP2.36 million representing payment for service incentive leave conversion and refund deductions for tools and uniform.

Bello also affirmed the ruling of the DOLE-NCR’s ruling which held that the workers of MIESCOR deployed in PLDT are deemed regular employees of the latter from the time of their engagement.

The labor department held that MIESCOR’s workers should be included in PLDT’s payroll of regular employees and be paid of the benefits enjoyed by regular employees.

PLDT entered into several agreements with MIESCOR for the installation of line works and splicing works, construction of manholes and other related engineering and civil works.

The two companies also entered into an agreement for work customer line installation, repair, rehabilitation, and maintenance activities of PLDT’s cable and line networks.

In May 2016, several labor law compliance officers conducted a special assessment and visit of the establishments at various PLDT branches where several violations were noted, including the prohibition on labor-only contracting scheme.

The CA held that the DOLE erred in finding that MIESCOR and PLDT were engaged in labor-only contracting activities noting that the prohibition of engaging in labor-only contracting is found in Section 6 of Department Order (DO) 18-A Series of 2011.

The said provision states that labor-only contracting refers to an arrangement where the contractor does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and the contractor does not exercise the right of control over the performance of the work of the employees.

In 2017, the DOLE issued DO 174 which provides for stricter rules in the regulation of contracting and subcontracting through an in-house cooperative which merely supplies workers to the principal; requiring the contractor’s or subcontractor’s employees to perform functions which are currently being performed by the regular employees of the principal; and other schemes designed to violate the right of workers to security of tenure.

In siding with MIESCOR, the CA held that the DOLE erred in holding that labor-only contracting scheme exists between MIESCOR and PLDT considering that the former’s employees are performing the same functions as the latter’s regular employees.

The CA noted that Article 106 of Labor Code allows contracting arrangements for the performance of specific jobs, works or services and did not qualify as to the kind of work that may be contracted out.

It also held that since MIESCOR is an engineering and construction company duly accredited by the Philippine Contractors Accreditation Board (PCAB), any allegations of violation of labor or occupational health and safety standards against it should be coordinated with agency for action, which may include cancellation or suspension of its license.