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a. The Constitution, which mandates that the State shall protect labor
and promote its welfare, and shall guarantee basic labor rights
including just and humane terms and conditions of employment and
the right to self-organization.
b. Article 106 of the Labor Code, which allows the Secretary of Labor to
distinguish between labor-only contracting and job contracting to
prevent any violation or circumvention of the Labor Code.
The objective of the State in prohibiting labor-only contracting is to
ensure that labor laws are followed and to prevent exploitation of
workers. A labor-only contractor is one which presents itself as an
employer even if it does not have capital to run a business or capacity
to ensure that its workers are paid their wages and other benefits as
prescribed by law. As such, it cannot independently undertake to
perform a subcontracted job or service. To allow a labor-only
contractor to operate is to give it an opportunity to circumvent the law
and to exploit workers.
D. O. No. 3 is not the first regulation to prohibit labor-only contracting.
The prohibition was embodied in the original rules implementing
Articles 106 to 109 issued right after the Labor Code took effect in
1974. D. O. No. 10 also contained a similar prohibition. D. O. No.
3merely reiterates the prohibition.
11. D. O. NO. 10 ENUMERATED ACTIVITIES PERMITTED FOR
SUBCONTRACTING. NOW THAT IT HAS BEEN REVOKED, DOES THIS
MEAN THAT SUCH ACTIVITIES MAY NO LONGER BE SUBCONTRACTED?
Not necessarily. These activities may still be subcontracted provided
(a) the laws and rules under Question # 4 are observed; and (b) the
conditions for legitimate contracting under Question # 7 and the
prohibition against labor-only contracting under Question # 9 are met.
12. D. O. NO. 10 ENUMERATED PROHIBITED ACTIVITIES. NOW THAT IT
HAS BEEN REVOKED, ARE THERE STILL ANY PROHIBITED
SUBCONTRACTING ARRANGEMENTS?
Yes. Expressly prohibited are (a) labor-only contracting as defined in D.
O. No. 3; and (b) contracting out of services being performed by union
members when such will interfere with, restrain or coerce employees
in the exercise of their right to self-organization under Article 248 (c)
of the Labor Code.
13. WHAT WILL BE THE EFFECT OF A LABOR-ONLY CONTRACTING
ARRANGEMENT?
The following are the effects:chanroblesvirtualla wlibrary