Professional Documents
Culture Documents
Handout No. 04
Prescribed Reading
At this juncture, let us take a look at these provisions of Section 6, D.O. #10,
which were revoked by D.O. #3. Under the revoked Order, the permissible contracting
or subcontracting services that a principal may engage a contractor or subcontractor to
perform were the following:
Does it mean that just because D.O. #10 was revoked by D.O. #3 that the
company has no more remedy? There is a remedy.
However, in the event the increase in the demand of the products or services is
not seasonal, the Company may hire the required employees under a contract
of temporary employment on a fixed term basis.
Fixed term employment contracts are lawful as held by our Supreme Court en
banc in the case of Brent School vs. Zamora, 181 SCRA 702. Term employment has not
been outlawed by the Labor Code.
The decisive determinant in term employment should not be the activities that
the employee is called upon to perform but the day certain agreed upon by the parties
for the commencement and the termination of their employment relation.
However, contracts of employment for a fixed term should not be used in order
to prevent an employee from ever becoming regular or permanent thus precluding
security of tenure.
Where from the circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employees, they should be struck down
or/disregarded as contrary to public policy. (Cielo vs. NLRC, 193 SCRA 410.)
These two working arrangements under the provisions of the revoked D.O. #10,
contemplates of a situation where highly technical services requiring special expertise
or equipment are needed by the company in the operation of its enterprise.
In the case of Kimberly vs. Drilon (185 SCRA 191), it was held that the Court has
already taken judicial notice of the general practice adopted in several government and
private institutions and industries of hiring independent contractors to perform special
services. These services may even include technical and other specific services such as
those performed by radio/telex operators. While these services may be considered
directly related to the principal business of the company, nevertheless, they are not
necessary in the conduct of the principal business of the company. What is important is
that the duties being performed by these employees are not independent and integral
steps in or aspects of the essential operations of the company.
In any case, these highly technical personnel can also be hired under a fixed
term employment contract.
In this particular case, the Supreme Court held that the contractor was not
engaged in job-contracting but in “labor-only” contracting because of the following
considerations:
a) The contractor which is engaged in “manpower services” merely
contracted out labor in favor of California Manufacturing. As a placement
agency, it had simply supplied California with the manpower using its premises
and equipment. In other words, the contractor merely provided California with
workers to pursue its business.
The question that may be asked in this connection is: If you are a manufacturer
and you want to promote a new product for a limited period, or you want to display
your products in some sales outlets, what can you possibly do without incurring the
risk of having these workers promoting your products from being declared as
your employees? These are the things you can do:
Firstly, you can hire a promotions firm to promote your products under a
specific contract for a limited period.
In the words of the Supreme Court itself: “It would have been different, we
believe, had (the Contractor) been discretely a promotions firm, and that California had
hired it to perform the latter’s merchandising activity. For then, (the Contractor) would
have been truly the employer of its employees, and California, its client. The client, in
that case, would have been a mere patron, and not an employer. The employees would
not in that event be unlike waiters, who, although at the service of customers, are not
the latter’s employees, but of the restaurant.”
Secondly, you can hire the services of workers to promote your products as
project employees under a contract which is co-terminus with the promotion period.
The basic issue to be considered here is whether or not these workers hired to
promote the products can properly be characterized as “project employees”. In the
consideration of this issue, it is important to clearly understand the meaning and scope
of the word “project”
In the case of ALU-TUCP vs. NLRC (234 SCRA 678), it was held that the term
“Project” in the realm of business and industry can refer to a particular job or
undertaking that is within the regular or usual business of the employer, but which is
distinct and separate, and identifiable as such, from the undertaking of the company.
Such job or undertaking begins and ends at determined or determinable times. Taken
within this context, the workers hired to promote the products of a company can
properly be denominated as “project employees”.
Project employees are those workers hired (1) for a specific project or
undertaking, and (2) the completion or termination of such project has been
determined at the time of the engagement of the employee. The principal test for
determining whether particular employees are “project employees” as distinguished
from “regular employees” is whether or not the “project employees” were assigned to
carry out a “specific project or undertaking,” the duration and scope of which were
specified at the time theemployees were engaged for that project. (Philex Mining Corp.
vs. NLRC, 312 SCRA 199.)
Hence, it is necessary that the workers must have been informed that they are to
be assigned to a “specific project or undertaking”. And they must likewise be informed
about the duration and scope of such project or undertaking at the time of their
engagement.
It has been held that the length of service of a project employee is not the
controlling test of employment tenure but whether or not the employment has been
fixed for a specific project or undertaking the completion of which has been determined
at the time of the engagement of the employee. (Hilario Rada vs. NLRC, 136 SCRA 674.)
By reason of the fact that the services of project employees are co-terminus with
the project, their employment may be terminated upon the end or completion of the
project for which they were hired. (ALU-TUCP vs. NLRC, supra.) Upon completion of
the project, the company cannot be required to maintain them in the payroll. (Luis de
Ocampo vs. NLRC, 186 SCRA 360.) Otherwise, if their services are not terminated and
their employment is extended long after the supposed project had been finished, the
workers are removed from the scope of project employees and they shall be considered
as regular employees. (Phesco, Inc. vs. NLRC, 239 SCRA 446; Audion Electric Co. vs.
NLRC, 308 SCRA 340.)
Considering that the workers were employed as “project employees”, the
company should submit a report of termination to the nearest public employment office
everytime their employment is terminated due to completion of each project. (Ochoco
vs. NLRC, 120 SCRA 774; Philippine National Construction Corporation vs. NLRC, 174
SCRA 191; Magante vs. NLRC, 188 SCRA 21; Aurora Land Projects Corp. vs. NLRC, 266
SCRA 48.)
Article 280 of the Labor Code treats casual employment vis-à-vis regular,
seasonal and project employments. These matters were succinctly explained by the
Supreme Court in the case of Mercado vs. NLRC (201 SCRA 332).
A project employee has been defined to be one whose employment has been
fixed for a specified 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
service to be performed is seasonal in nature and the employment is for the duration of
the season (PNCC vs. NLRC, 174 SCRA 191.)
The provision is applicable only to the employees who are deemed "casuals" but
not to the "project" employees nor the regular employees treated in paragraph one of
Art. 280.
The provisions of Department Order No. 3 notwithstanding, the Labor Code and
jurisprudence on the matter consider janitorial, security, landscaping and messengerial
services, as well as work not directly related or not integral to the principal business of
the company, as proper subjects of job-contracting. What is prohibited by law is “labor-
only” contracting.
The pertinent provision of Article 106 of the Labor Code provides as follows:
“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.”
It does not necessarily follow that just because all formal requisites for the
validity of the strike have been complied with that this concerted action will remain
legal and valid up to the very end of the strike. There is no guarantee that lawful
means would always be used in carrying out the strike. If the strike is attended by acts
of violence, coercion and intimidation, it can be declared illegal notwithstanding
compliance with all formal requisites for its validity. Moreover, defiance of an
assumption or certification order issued by the Secretary of Labor will render the strike
illegal. An assumption or certification order is executory in character and
automatically results in a return-to-work order, whether or not a corresponding order
is issued by the Secretary of Labor. A strike that is undertaken despite the issuance of
an assumption or certification order becomes a prohibited activity and thus illegal,
pursuant to the second paragraph of Article 264 of the Labor Code. In such a case, the
union officers and members, as a result, are deemed to have lost their employment
status for having knowingly participated in an illegal act. (Union of FiliproEmployees vs.
Nestle Philippines, 192 SCRA 396.) With or without D.O. #10, and even in the light of
D.O. #3, these union officers and members can immediately be replaced by new hirees
or employees. And it has been held that this replacement by reason of violation of a
return-to-work order does not require a hearing. (Free Telephone Workers Union vs.
PLDT, 133 SCRA, 663,678.)
Thus far, we have considered the different contracting or subcontracting
services which have been revoked by D.O. #3 and what can possibly be done legally to
remedy the situation. Our discussion is, or course, without prejudice to the provisions
of Section 3 of D.O. #3, as follows:
“Section 3. Non-impairment of existing contracts: Non-
diminution of benefits. Subject to the provisions of Articles 106 to
109 of the Labor Code, as amended, the applicable provisions of the
Civil Code and existing jurisprudence, nothing herein shall impair
the rights or diminish the benefits being enjoyed by parties to
existing contracting or subcontracting arrangements.”
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