## FACTS:

This case concerns petitions filed by Manggagawa sa Komunikasyon ng Pilipinas (MKP), PLDT, Inc., and Silvestre Bello III, the Secretary of the Department of Labor and Employment (Sec. Bello), challenging a Court of Appeals decision which modified previous resolutions issued by Sec. Bello concerning labor practices at PLDT. The underlying issue began with disputes arising from collective bargaining negotiations between PLDT and MKP. To resolve these, a "Special Assessment and Visit of Establishment" (SAVE) was conducted by the Department of Labor and Employment (DOLE) through Administrative Order No. 648. The SAVE aimed to assess PLDT's compliance with labor and occupational safety standards, particularly verifying the nature of PLDT’s contracting practices.

During the SAVE assessment, the DOLE team interviewed over a thousand employees and contractor representatives from PLDT offices across the National Capital Region, focusing on PLDT’s control over contract workers. The initial findings hinted at potential violations of DOLE regulations suggesting that PLDT might be engaging in labor-only contracting — a scenario where workers, although hired through contractors, are effectively under the control of the principal employer, in this case, PLDT. Investigations revealed that PLDT had significant control over the hiring, training, scheduling, and management operations involving contractors’ employees, suggesting labor-only contracting practices.

Based on these findings, the DOLE recommended that contractual employees performing core business functions should be regularized. PLDT contested these findings, proposing instead that such matters be determined through adversarial proceedings. Despite providing additional documentation, PLDT's contractors were unable to refute findings of labor-only contracting effectively.

Following several hearings, the Regional Director of DOLE-NCR issued an order against PLDT, declaring it and its contractors jointly responsible for paying unpaid monetary benefits and directing the regularization of workers employed through labor-only contracting arrangements. PLDT appealed this decision, but Sec. Bello mostly upheld the Regional Director’s findings, declaring thousands of contracted workers as regular employees of PLDT, and maintaining the monetary penalties against PLDT and its contractors.

Dissatisfied, PLDT sought a review from the Court of Appeals, which upheld the decision to regularize certain contracted workers but set aside other findings, particularly regarding workers engaged in non-core tasks. Thus, complex questions pertaining to employment practices and contractual relationships in large corporations lie at the core of this legal dispute.

Here's a pruned version of the case digest retaining only the sections ISSUES, RULING, and ## PRINCIPLES:

## ISSUES:

1. Whether the Court of Appeals (CA) accurately handled the legitimacy of contractual relationships and the consequential regularization of certain workers.

2. Whether the CA appropriately determined the existence of labor-only contracting, thereby affecting the regular or contractor status of workers.

3. The scope of the CA’s review with regard to findings from labor tribunals or the Secretary of Labor.

4. Whether substantial evidence supported Secretary Bello’s findings and resolutions, particularly concerning the control exerted by PLDT over contractors' workers and other allegations of labor violations.

## RULING:

1. The Supreme Court upheld the CA’s decision, dismissing the petitions filed by MKP, PLDT, and Sec. Bello.

2. The CA correctly confined its review to evaluating the presence of grave abuse of discretion by labor officers and did not reevaluate all factual or evidential bases unless contradictions existed.

3. Workers involved in installation, repair, and maintenance services, which are directly related to PLDT’s main business operations, should be considered regular employees.

4. The calculation of monetary awards for labor violations requires recalibration by the Regional Director of DOLE-NCR following remand.

## PRINCIPLES:

1. Substantial Evidence: Definitions used by tribunals or the Secretary of Labor must be based on evidence deemed adequate by a reasonable mind to support a conclusion.

2. Grave Abuse of Discretion: Established when decisions are capricious, arbitrary, or not supported by substantial evidence.

3. Certiorari Review Standard: The CA's review under certiorari is focused narrowly on identifying grave abuse of discretion, avoiding re-evaluation of evidence.

4. Regular Employment: Tasks that are necessary, desirable, and directly related to main business operations warrant regularization.

5. Employer-Employee Relationship: The investigation of the employer-employee relationship falls under the authority of the Secretary of Labor, within the scope of enforcement powers.

6. Jurisdiction of DOLE: Article 128 empowers DOLE officers to inspect and enforce labor laws, subject to evidence-based challenges by employers.

7. Labor Contracting Principles: Legitimate labor contracting requires the contractor to have substantial capital or investment and control over the performance of its workforce.