The announced plan to ban contractualization has merits if it means enforcement of the Supreme

Court ruling in 1997 in a case involving a well-known food manufacturing company. The ruling
struck down as “contrary to public policy” the company’s practice of employing workers batch-by-
batch; each batch stays for only five months, to be replaced by the next five-month batch. A quick
way to explain this is by quoting from the book Everyone’s Labor Code:

“The court emphasized that fixed-term employment will not be considered valid, where, from the
circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee. If it is shown that that is the purpose of the contract, then it will be
declared null and void from the beginning or ab initio. Such periods should be struck down or
disregarded as contrary to public policy…”

Following this summarization of the Supreme Court ruling, the author explains: “What [this court
ruling] struck down immediately is the all-too-common practice of hiring operating personnel
batch-by-batch, each batch under a five-month contract. At the end of the period, the workers will
be replaced by the next five-month employees because of “E.O.C.” (end of contract or “endo”).
The ruling has the effect (hopefully) of making “5-5-5” and “E.O.C.” things of the past in
numerous workplaces.” (2012 edition, p.327; 2015 edition, p. 329)

Unfortunately, after the court’s ruling came out on December 12, 1997, contractualization (a term
coined and popularized probably by workers) did not stop. Rather, it spread and multiplied. As far
as I know, no DOLE advisory has been issued to inform or to warn employers and employees
about the court’s declaration of nullity of the “endo” scheme. And I am not sure whether the labor
inspectors (now called LLCO – labor law compliance officer) have been alerted or instructed to
enforce the ruling. Note that the ruling was issued nineteen years ago.

“Endo” is an abusive or corrupted use of the law. But hiring of employees on temporary basis is
not altogether illegal where such kind of hiring is really needed by the business. The law allows
employment in a project with pre-agreed termination date as well as seasonal employment, and
fixed-period employment. Even the hiring of temporary replacements of striking employees is
allowed.

The other meaning of contractualization is in the form of “deceptive contractorship”. It is done by

hiring a person and making him/her work as an employee but treating him/her as a “contractor”.
A contractor is not an employee and therefore not covered by the Labor Code. Employee status, on
the other hand, puts the worker under the Labor Code’s protective umbrella. Supervision or control
of the manner, means and details of work execution and even of the worker’s conduct at the
workplace, is the hallmark of an employment relationship. By considering an employee as a
contractor, the hirer is able to evade the obligations of an employer, such as the SSS registration,
payment of Labor Code employment benefits, e.g., holiday pay, 13th month pay, etc.

But contractorship in contrast to employment is not necessarily wrong. Contractorship is often a

legitimate pursuit of a particular line of business. The contractor should be government-registered,
adequately capitalized to operate independently, and capable of supervising its employees who
render a particular line of work to client-contractees. That is the essence of independent
contractorship. The contractor, as employer, and its workers, as its employees, are covered by the
Labor Code. All the obligations of an employer are on the shoulders of the contractor because a
legitimate contractor is himself/itself an employer.

The problem is that there are people who hire people but label them as “contractors” although in
fact they are employees. The worker, badly in need of a job, has no choice, but to sign a
contractorship contract. In effect, the employee becomes “contractual”. This is “deceptive
contractorship”. It is as reprehensible as the “endo contractualization” but much harder to
delineate. To draw the dividing line between employment relationship and contractorship is not at
all easy. The difficult task has “bedevilled” the court for decades.

Deceptive contractorship should not be mistaken for independent contractorship which is perfectly
legal. This is entrepreneurship, protected and supported by law. It promotes specialization and
competition. Striking against deceptive contractorship might mistakely dampen or kill
entrepreneurism. (This unwanted damage is the reason, incidentally, why the law on so-called
“labor-only contracting” is ill-conceived and retrogressive. It invalidates a two-way business
contract and forcibly makes the client-contractee the employer of the contractor’s employees.)

In the 1800s entrepreneural enterprises – small and medium contractors and subcontractors –
brought America to the road to progress. Rather than discouraging and punishing small contractors,
we should help them grow.

Read more: http://business.inquirer.net/215071/contractualization-which-meaning-do-we-

mean#ixzz5FXVJSYK8
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‘Endo’ in the Philippines

During the past few months, contractualization and endo (short for ‘end of contract’) have
become two of the hottest and most sensitive topics in the Philippines. Ranking high among the
major issues during the presidential elections last year, labor groups and presidential candidates
weighed in on these subjects and argued about the effects of contractualization and endo on
Filipino workers.

As the debates continue, more and more people begin to offer their opinion. However, common
misconceptions about what endo and contractualization actually are, may sometimes lead to
confusing arguments – an issue Asiapro strives to resolve by defining what both first.

What is Endo?

End of contract or endo refers to the scheme that corrupt companies exercise to abuse their
workers. In the Philippines, the law requires companies to regularize their workers after six
months. Unfortunately, some corporations terminate their workers a month or two before their
sixth month of employment. Why? Because this means that they do not have to regularize those
workers. Instead, they just hire then terminate their contracts within this five-month period and
continually repeat this process to create a vicious cycle of ‘end of contract’ or ‘endo.
This has two results: one, it will prevent these laborers from enjoying the full benefits of regular
employment such as 13th month pay. Two, it will allow companies to utilize the skills and talents
of these workers without properly compensating them for their efforts.

However, it must be made clear that endo – otherwise known as 555 – still falls
under contractualization. Simply put, it is an abuse of contractualization’s inherently temporary
nature of employment.

However, there are companies in certain industries that hire contractual laborers for various
reasons that do not necessarily violate the basic rights of these workers. For instance, a
publishing company might hire contractual workers during the last month of school, throughout
summer, and up until the first few months of a new school year. Why? Because during this time,
schools will be making their orders and textbooks have to be delivered swiftly. However, the
demand for book deliveries will not be that high for the rest of the year. Therefore, it will make
more sense to hire contractual workers only during the peak season. Otherwise, the company
may find itself employing and compensating unproductive staff during idle stretches of the year.

Here’s another example: a certain department in a company is experiencing some problems with
its personnel. To fix the situation, management decides to hire an HR expert as a contractual
worker who can provide professional insight on the issue and offer solutions to help remedy the
problem. Since this is purely situational, it would make no sense to hire an HR expert as a full-
time employee.

This is what contractualization is – a practice where a company hires contractual workers only
when is necessary. This does not only benefit the company, but the workers as well. After all,
how will workers grow professionally if a company hires them to work during limited periods of
the year only? Instead of working full time for one business, contractual workers may work on
other projects when they want to continue earning money and enhance if not learn new skills to
advance their careers. This will not just give them total control over their schedule, but expand
their knowledge and experience readily as well.

Meanwhile, endo operates under the guise of contractualization to exploit workers. In endo,
companies hire workers for full-time positions, only to terminate their contracts before they are
regularized, and then hire them again for another five months.

How Does Endo Affect Filipinos?

Why do various labor groups in the country want to end the practice of endo? The answer is
simple: endo is an abuse of the Filipino workers’ rights. It is an unfair labor practice that should
be prohibited to protect marginalized workers.
Endo has a huge negative impact on Filipinos’ lives. Through this unjust practice, companies
refrain from regularizing their workers who have been employed for six months or longer. Aside
from not receiving due compensation, they are deprived of the benefits enjoyed by full-time
employees such as paid leaves, 13thmonth pay, and government mandated SSS, Philhealth, and
Pag-IBIG coverage, among other mandatory requirements.

Minimum wage earners and student workers are the ones who are often victimized by this unfair
labor practice.
Ate Faith, a contractual worker, told me that she has been with an agency for 14 years and is not
aware whether or not she will receive retirement pay other than what she is entitled to under the
Philippine Social Security System (SSS) when she retires. For her annual five-day vacation
leave entitlement, she is given the cash equivalent after each year of service; but throughout the
year the agency adheres to a policy of no-work-no-pay policy with time keeping which reduces
her take-home pay. She receives her 13th-month pay while all government mandated deductions
such as SSS, HDMF, and Philhealth are taken out of her monthly pay. She mentioned having
been hospitalized at once and managed to get a subsidy from Philhealth; nonetheless, she had to
shell out a huge amount. If there are other benefits that she can get from her agency, Ate Faith is
not aware or has no recollection of any that has been explained to her or if there is anything
stated in her employment contract.
Millions of contractual workers are in the same boat as Ate Faith, a boat bereft of a few things
that would help them cope better with daily life and assure them of at least augmentation funds
as they age beyond retirement. These millions have long been hoping that someone will come to
their rescue and as fate would have it, came the promise of President Duterte. With his 100th
day in office approaching, the President’s army are probably gathering facts to report on the
progress of making this a reality soon enough.
What is ENDO
ENDO or end of the contract is the term used for contractualization of workers in the
Philippines. As differentiated from a regular employee, a contractual worker serves a particular
company for a limited period that is anchored on a project (project-based) or fixed-term, most
often not exceeding six months.
The most common set up for companies needing a huge number of contractual workers is to
commission an agency providing such workers. These agencies become the party responsible
for the welfare and ‘employment’ if at all there is one, of such contractual workers and their
costs are billed/charged to their clients. In practice, one set of contractual workers is replaced by
another set of contractual workers before they exceed service of six months in any particular
company. As to why contract workers can serve a particular company for a continuous period of
more than six months—at times extending to years—has yet not been able to establish, an
employee-employer relationship that would allow an employee to become a regular member of
the company is something that I have not attempted to rationalize in this article; but this
condition, I believe, exists.
What does “end” mean for contractual workers
Ending ENDO can mean regularization of a contractual worker; thus belonging to a company
that one can call a second home. This home comes with, probably, some benefits if not a higher
base compensation. For contractual workers becoming regular employees of generous
companies, increment benefits can include mandatory pension benefits under Republic Act
7641 or based on the company’s terms besides SSS pension benefits, improved medical
coverage, more vacation, and sick leave credits, life insurance, de minimis benefits, allowances
or other forms of benefits. The regularized employee can even get performance-based bonuses,
merit increase during salary reviews, or be entitled to profit share. The benefits (or the lack of
it) widely differ among companies and industries. While there is hope for higher compensation,
no one is assured of this given the overarching impact on operations of ending ENDO. I am
personally hoping that an end to ENDO does not increase the unemployment rate in the
Philippines.
What does “end” mean for regular employees
Regular employees should not be unaware of ENDO ending implications to them. Since ending
ENDO may eat up company resources, a regular employee may have to contend with the
company’s reallocation of resources among its larger number of regular employees. This,
however, is based on the assumption that regularization does not bring about better productivity
for companies/employers. As every human capital person knows, the sense of belonging and
good working conditions are effective performance enhancers. Who knows, it just might be the
multiplier effect a company needs to show better results of operation. I am keeping my fingers
crossed on huge productivity plus of ending ENDO to cushion its increment cost.
What does “end” mean for employers
If and when contractualization is put to a halt and companies are forced to regularize its entire
workforce, the cost increase can be huge for manufacturing, construction, services, and many
other employers that heavily rely on contractual workers. These companies should factor in
benefits such as those mentioned above and may have to redesign its compensation structure for
incoming employees while being careful about not committing diminution for pre-ENDO era
employees. Support services—human capital, finance, etc.—may also need additional
headcount to support and manage new employees. Agencies supplying workers may also have
to review their business models to make sure they survive this “end.”
Companies should, if they haven’t yet, start working on their simulations or sensitivity analyses
for “end ENDO” scenario to manage its shareholders’ expectations or protect shareholder value.
While companies can pass up the cost increase to consumers, they have to strike a balance
between profit management and market’s price sensitivity.
What does “end” mean for consumers
As the cost of processing, manufacturing, building, or servicing increases, consumers could
expect higher prices for goods and services. Honestly, I do not think I am ready for the higher
cost of living in the Philippines than what is currently prevalent.
What are the possible government interventions
After the age of 65, an SSS beneficiary’s maximum monthly pension of about P16,000 is hardly
adequate for an aging, sometimes even sickly, adult.
Ending ENDO brings good tidings and challenges as well. The lawmakers voting for ending
ENDO may win some and lose a few votes but are not free from seemingly harmless questions
as Why is private pension needed; Can SSS be simply modified to become the solution to all
post-retirement needs of retirees? Can the government create programs to address at least the
basic needs of its citizenry—housing, health, education, etc.? Can traffic woes be minimized to
improve productivity not just for employers’ gain but also for workers work-life balance? I dare
you to ask more questions in the hope that our leaders will take action.
At the end of it all, if all stakeholders to this ENDO are currently religiously delivering on their
share of responsibilities in managing and “taking care” of their people, the end of ENDO would
only mean a change of payment responsibility—from agencies to their clients. Agree or agree to
disagree?

Bill putting end to ‘endo’ approved

44SHARES700
Delon Porcalla (The Philippine Star) - January 31, 2018 - 12:00am
MANILA, Philippines — The House of Representatives approved on Monday the measure
seeking an end to labor-only contracting.

Voting 199-7, lawmakers approved on third and final reading House Bill 6908, a measure
seeking to strengthen the security of tenure of employees in the private sector to address
perennial problems of labor-only contracting, known as “endo” or end of contract.

“This will help strengthen the security of tenure of private sector employees to end labor-only
contracting and end of contract,” said one of the authors, House Deputy Speaker Raneo Abu.
The seven lawmakers who opposed the measure comprise the militant Makabayan bloc from
party-list groups Bayan Muna, Anakpawis, women’s group Gabriela, Kabataan and Alliance for
Concerned Teachers.

Gabriela Rep. Arlene Brosas complained the bill would in effect amend Presidential Decree 442,
otherwise known as the “Labor Code of the Philippines,” thereby still allowing
contractualization for recognizing the job contractor and/or middleman system.

HB 6908 was approved on second reading last week that will also amend PD 442.

It seeks to amend Article 106 of PD 44 titled “contractor” so that whenever an employer enters
into a contract with a person for the performance of work, the employees will be paid in
accordance with the Labor Code and other related laws.

The “contracting out” of the same work rolled out by the employer is now prohibited.

The secretary of Labor, upon consultation with the National Tripartite Industrial Peace Council,
will now restrict or prohibit the contracting out of labor to protect the rights of workers
established under the Labor Code.

The Department of Labor and Employment (DOLE) may also make appropriate distinctions
between labor-only contracting which is now prohibited, and legitimate job contracting, which
is permitted in accordance with the Labor Code.

Read more at https://www.philstar.com/headlines/2018/01/31/1783129/bill-putting-end-endo-

approved#xmOjTK6htp7fR1eC.99

C.D. DELA CRUZ, CPA

Monday, October 26, 2009
Labor Policies and Rights in the Constitution
Chapter II Labor Policies and Rights in the Constitution

1. SIGNIFICANCE OF THE CONSTITUTION TO LABOR LAW. Aside from being one of

two sources of the State’s authority to enact labor laws, the Constitution is of fundamental
significance in this field of law. The 1987 Constitution embodies new provisions directly
affecting the tights and welfare of labor.
The present Constitution introduces new provisions which are significant to labor law. These
may be summarized as follows: a) It defines new State policies on labor, b) It guarantees
individual and collective rights of workers; and c) It contains nationalistic provisions protecting
Filipino labor.

2. NEW CONSTITUTIONAL POLICIES CONCERNING

LABOR. The Constitution adopts the following new policies regarding labor:
Art XII, Sec. 18. The state affirms labor as a primary social economic force. It shall protect the
right of workers and promote their welfare.

This is the first time that a Philippine Constitution gives explicit recognition to the role of labor
in social and economic development. It also states a policy of protection for the rights and
welfare of notices.

Art. XII, Sec. 12. The State shall promote the preferential use of Filipino labor domestic
materials and locally produced goods, and adopt measures that help make them more
competitive.

This is a strongly nationalistic policy favoring Filipino labor, raw materials and finished products
which the State seeks to promote and strengthen.

Art. XIII, Sec. 3.”... The State shall promote the principle of said responsibility between
workers and employers, and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance the, with to foster industrial
peace.”
For the first time the Constitution expresses a -preference in the method of resolving industrial
disputes. This is through the use of voluntary modes such as negotiation, collective bargaining,
voluntary arbitration, mediation and conciliation. The reason is that these modes are less
frictional and entail less social costs to the parties, to government, and to society as a whole.

Art. XIII, Sec. 14, “The State shall project working women by providing safe and healthful
working conditions, taking into account their maternal functions, and provide such facilities and
opportunities that will enhance their welfare and enable them to realize their full potential in the
service of the nation.”

The protection of working women, which the previous Constitution mentioned only incidentally,
is now given a separate title in view of the important role of women in Filipino society.

3. RESTATEMENT OF OTHER CONSTITUTIONAL POLICIES. The Constitution also

restates and rephrases policies established in the previous Constitution, and readapts them for
further implementation.

These policies are:

“The State shall afford fish protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for...

” (Art. XIII, Sec.3) This is a more positive and comprehensive restatement of the Protection to
Labor clause. “. . . The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production, and the right of
enterprises to reasonable returns on investments, and to expansion and growth.”

(Art. XIII, Sec3) This policy precludes the State from adopting a laissez faire policy on labor
relations due to the public interest involved therein, it also provides guidelines by which the
State’s regulatory power shall be exercised.

4. CONSTITUTIONAL RIGHTS OF LABOR. The Constitution is the bedrock of the most

fundamental rights of labor. These rights guaranteed by the Constitution may be classified into
two, namely: a) individual rights of workers; and b) collective rights of labor in general.

The individual rights of workers are found in Art. III, Bill of Rights, which is described as “the
charter of individual liberties.” While all persons enjoy these rights, their particular application
to workers carries a certain significance which requires special consideration.

The collective rights of labor in general are enshrined in the Protection to Labor clause, Art.
XIII, Sec. 3.These two sets of rights are not identical. In fact they may possibly conflict with
each other, as will be noted later.

A. INDIVIDUAL RIGHTS OF WORKERS

5. RIGHT TO DUE PROCESS Sect. I - “No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the equal protection of the
laws.” (Art. 111, Const.) This is the due process/equal protection clause. An early application of
the due process clause interpreted the right to property to include a worker’s right to his labor
and to the fmits of his industry. Hence, a worker cannot be deprived of his job or his wages
without die process of law (Philippine Moving Pictures Workers Association vs. Premier
Productions, 92 Phil 843). In a more recent case the Supreme Court declared that “It is a
principle well recognized in this jurisdiction, that one’s employment, profession, trade or calling
is a property right, and the wrongful interference therewith is an actionable wrong. The right is
considered to be property within the protection of the Constitutional guarantee of due. process of
law (Calianta vs. Carnation Phil., 145 SCRA 268 citing Femandt, Constitution of the Phil. 2nd
Ed. ‘pp. 512-513).

6. FREEDOM OF EXPRESSION. Sec. 4 - - No law shall be passed abridging the freedom of

speech, of expression, or of the press, or the right of the people peaceably to assemble and
petition the government for redress of grievances. (Art. III, Const.) The freedom of expression
clause quoted above is derived from the Philippine Bill of 1902 which replicated verbatim the
corresponding provision in the U. S. Constitution (1935), reaffirmed in the 1972 Constitution,
and now appears in the 1987 Constitution which adds “expression” to the freedoms protected.
American jurisprudence interpreting this provision has applied it to cover the labor practice of
picketing. Hence, it has been declared that “by peaceful picketing, working men communicate
their grievances.” As a means of communicating the fact of a labor dispute, peaceful picketing
may be a phase of the Constitutional right of free utterance. But recognition of peaceful picketing
as an exercise of free speech does not imply that the States must be without power to confine the
sphere of communication to that directly related to the dispute. (Carpenters and Joiners Union vs.
Ritters Cafe, 315 U.S. 722) In a more direct statement, it has been held that “what is protected is
the element of communication, not the act of patrolling or marching which may be subject to
reasonable regulation.” (International Brotherhood of Teamsters vs. Hanke, 1950).

The first local application of this guarantee to a case of peaceful picketing is recorded in Mortera
vs. CIR (79 Phil. 345). This protection was expanded to apply to cases even where employer-
employee relationship was absent. (de Leon vs. NLU, 100 Phil. 789, PAFLU ‘‘s. Barot, 99 Phil.
1008) However, subsequent doctrines have established the power of the court to limit the
exercise of the right to parties involved in the labor dispute, or having a direct interest to the
context of this issue. (PAFLU vs. Cloribel, 27 SCRA 465 ; RPM Workers Association vs. Reyes,
124 Phil. 1442) In the later case of Liwayway Publications vs. Permanent Concrete Workers
Union. et al (108 SCRA 16), the Supreme Court, while allowing that peaceful picketing is a
phase of the freedom of expression guaranteed by the Constitution and could not be curtailed
even in the absence of employer-employee relationship, maintained that this is not an absolute
right. The courts, it ruled, are not without power to localize the sphere of demonstration, whose
interest are foreign to the context of the dispute. Thus the right may be recognized at the instance
of an “innocent - bystander” who is not involved in the labor dispute if it appears that the result
of the picketing is to create an impression that a labor dispute exists between him and the
picketing union. (See also TUPAS vs. Cóscolluela, 140 SCRA 302) The prohibition against
injunction does not apply when petitioned by a third party whose property is sought to be levied
in satisfaction of a judgment debt against another (Penalosa vs. Villanueva, 177 SCRA 778).
Courts, in the exercise of their equity jurisdiction, may issue injunction where the concerted
activities are aimed at compelling the employer to ignore a clear mandate of the law. (Bulletin
Publishing Corp. vs. Sanchez, 144 SCRA 628) These antecedent rulings amortize the limitation
of the exercise of picketing in certain cases allowed by law or equity.

Moreover, the law also prescribes the instances when injunction may lie against strikes, and
picketing may be enjoined or restrained. (Art. 318, Sec. 3 (c) Art. 264 LC as amended by BP
227)Apart from these, the principle remains that no general injunction shall lie against peaceful
picketing.
The freedom of expression is available to individual workers subject to the legal limitation of
industrial peace t air their valid grievances. (Kap. Manggagawa ng Camara Shoes vs. Camara
Shoes, 111 SCRA478)

7. FREEDOM OF ASSOCIATION. The pertinent text in the Bill of Rights provides:

Sec. 8 -- The right of the people, including those employed in the public and private sectors, to
form unions, associations, or societies for purposes not contrary to law shall not be abridged
(Art.!!!, Const.).

The freedom of association clause, which now embraces employees in the public sector, carries a
special significance to the rights of the individual worker. The Supreme Court has described this
freedom as “both a right and a privilege.” This implies not only the right to join a labor union,
but also the privilege of not joining one, of selecting which union to join, and of disaffiliating
from a union. (Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54)

The exception to this right arises when it runs into conflict with the collective right of labor to
self-organization as expressed in the union security clause of collective bargaining agreements.
Hence, a closed shop provision in a CBA, while it has a generally prospective application to new
workers, was held to apply to old workers who were not members of any union, but not to those
who already belonged to another union at the time of the signing of the CBA. (Art. 249-e; Juat
vs. CIR, 15 SCRA 395)

The rationale of the collective right of labor was explained thusly: “Petitioners, although entitled
to disaffiliate from their union and to form a new organization of their own must, however, suffer
the consequences of their separation from the union under the security clause of the CBA.
Inherent in every labor union is the right to self-preservation; when they seek the disintegration
of the very union to which they belong, they thereby forfeit their rights to remain as members.
Prudence and equity, as well as the dictates of law and justice, therefore compel mandate of the
adoption by the labor union of such corrective and remedial measures, in keeping with its laws
and regulations, for its preservation and continued existence, lest by its folly and inaction the
labor union amble and fan.” (Milar vs. Inciong, 121 SCRA 444) A closed shop provision in the
CBA, where applicable, does not however mean automatic termination, Actual dismissal based
on this clause should not be characterized with arbitrariness, and must always be with due
process to the employee Manila Mandarin Employees Union vs. NLRC, 154 SCRA 368; Sauyo
vs. Canizares, 211 SCRA 361; Kalaw vs. NLRC, 202 SCRA 7). Under a maintenance of
membership clause, the duty to remain a member of the bargaining union exists only for the
duration of the CBA. Freedom of association is unconstitutionally invaded if such duty is
stipulated beyond that period. This duty ceases to be binding only during the 60-day freedom
period before the expiration of the CBA. (Tänduay Distillery Labor Union vs. Thnduay
Distillery, Inc. and NLRC, 149 SCRA 470).

Another restriction in the application of a union security clause is that the sanction involved
therein must be explicitly stated, and cannot be implied. If the clause does not expressly give the
right to dismiss the worker upon its violation, the employer cannot do so, as the right to dismiss
must be clear, categorical and express. Manila Cordage Co. vs. dR. 78 SCRA 398) In a more
recent case, however, the dismissal of union members for violating a union security clause
requiring membership in good standing ‘as a condition of their continued employment” was held
to be valid and privileged, and did not constitute an unfair labor practice. (Tanduay Distillery
Labor Union vs. Thnduay Distillery, Inc. & NLRC, supra)

For the first time, the Constitution grants government employees individually the freedom of
association (Art. III, Sec. 8), and collectively, the right to self-organization (Art.IX, Sec. 2 [5];
Art.XHI, Sec. 3). These rights are further regulated by Sec. 6, Ex. 0. No. 180.

8. NON-IMPAIRMENT CLAUSE. The Bill of Right provides a guarantee of non-impairment

as follows:

Sec. 10 - No krw impairing the obligation of contracts shall be passed. From the standpoint of a
worker’s right, this guarantee could be described more relevantly as the right to the sanctity of
employment contracts.

The contracts protected by the non-impairment clause are confined to those respecting property
or property rights, such as employment contracts. The obligation of such contracts refers to the
duty of performing the contracts according to their terms and intent. Thus, a subsequent law or
ordinance which destroys or diminishes the value of these contracts or deviates from their terms
impairs their obligation.

However, the principal limitation to this cause is the Police Power of he State. When lawfully
exercised, this inherent power may be justifiably used even to the extent of impairing the
obligation of contracts, because the Police Power is superior to the non-impairment clause.
(Pantranco vs. Public Service Commission, 70 Phil. 221; Abe vs. Foster Wheeler Corp., 110
Phil, 198; Asia Bed Factory vs. National Bed and Kapok Industries Workers Union, 100 Phil.
837)

9. FREE ACCESS TO COURTS AND QUASI - JUDICIAL BODIES. This individual right
is guaranteed in this Bill of Rights provision:

Sec. 11 -- Free access to the courts and quasi - judicial bodies, and adequate legal assistance shall
not be denied to any person by reason of poverty. (Art.III, Const.)

This right is quite relevant to the individual worker as it affords the worker a double protection
which could otherwise be negated on account of poverty. The protection of free access has been
expanded-- more relevantly to labor -- to include quasi-judicial bodies which have jurisdiction
over labor cases. The second guarantee of “adequate legal assistance’ is a new Constitutional
right of individual workers. It seeks to offset the disadvantage that a worker, due to limited
resources, may not be able to afford competent legal services. This right is now being protected
by both public and private entities.

10. RIGHT TO SPEEDY DISPOSITION OF CASES. The text establishing this right
provides:

Sec. 16 -- All persons shall have the right to a speedy disposition of their cases before all
judicial, quasi-judicial or administrative bodies. (Art. III, Const.) The scope of this right is broad
enough to cover all forms of labor disputes. The right is of particular significance to the worker
whose limited resources do not give him the capability to sustain a protracted litigation.
Oftentimes, the worker finds himself so hard-pressed and subjected to delay that he agrees to
unfair settlements or altogether abandons enforcing his right due to this inability. This guarantee
seeks to prevent such an unjust situation. The right, however, does not mean undue haste in the
proceedings; it means that these are to be conducted with reasonable promptness consistent with
the due administration of justice.

11. RIGHT AGAINST INVOLUNTARY SERVITUDE. This right is embodied in the

following provision:

Sec. 18(2)-- No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted. (Art. III Const.)

This prohibition covers the following practices: a) Slavery or the state of entire subjection of one
person to the will of another and b) Involuntary servitude generally, or a condition of enforced
compulsory service of one to another.
Its purpose, from a labor standpoint is “. . . to make labor free, by prohibiting that control by
which the personal service of one man is disposed of or coerced for another’s benefit, which is
the essence of involuntary servitude.” (Bailey vs. Alabama, 219 U.S. 119)

Hence, gratuitous services to secure payment of a loan is not only denounced, but also subjects
the creditor to criminal prosecution if he shall compel the debtor to work for him, against his
will, as household servant or farm laborer. (de los Reyes vs. Alojado, 16 Phil. 499; Art. 274,
Penal Code) But a return-to-work order in a labor dispute issued under Sec. 19 of C.A. 103 was
upheld when challenged as volatile of this clause. The Court ruled in this regard that “An
employee entering into a contract of employment voluntarily accepts, among other conditions,
those prescribed in said Section 19. . . The voluntaries of the employee’s entering into it or not --
- with such implied condition, negatives the possibility of involuntary servitude ensuing. . .“
(Kaisahan vs. Gotamco Sawsmills, 80 Phil. 521) By extension, this does not justify an employee
from choosing to do certain tasks, and refusing to do others entailed in his job. This is clearly
beyond the pale of this prohibition.

B. COLLECTIVE RIGHTS OF LABOR

12. RIGHT TO SELF-ORGANIZATION. The Protection to Labor clause, Art, XIII Sec. 3,
ensures this right of labor in these words: “It (the State) shall guarantee the rights of all workers
to self-organization...” This right is protected because of the underlying reason that workers and
their employer are placed not upon a position of equality but upon a position of the quality. Only
a well-organized, high-minded labor union speaking with a single, yet potent, voice can hope to
deal with a powerful employer with some semblance of equality. This reason lies at the very root
of unionism. The protection refers to “all workers”, which includes government employees in the
civil service (Art. III, Sec. 8; Art. IX, Sec. 2[5J; Sec.6, Ex. 0. No. 111), and in government-
owned and controlled corporations without original charters. This right is however subject to two
limitations, via:

a) High-level employees whose functions are normally considered as policy-making or

managerial or whose duties are of a highly confidential nature shall not be eligible to join the
organization of rank-and-file government employees (Sec. 3, Ex. 0. No. 180); and

b) The right does not apply to members of the Armed Forces of the Philippines, including police
officers, policemen, firemen and jail guards (Sec. 4, Id.). Certain exclusions are also provided
among employees in the private sector, such as managerial employees, members of cooperatives,
etc.

13.RIGHT TO COLLECTIVE BARGAINING NEGOTIATION.This right, which is also

given by the Protection to Labor clause, is corollary to the right to self-organization. It infers the
existence of a labor organization, and indicates its role in fostering industrial peace. Without this
companion right, a labor union will have no voice or power to represent the workers’ interests
before their employee and it would be inutile. With it, workers are enabled to negotiate with the
employer on the same level and with more persuasiveness than if they were to bargain
individually and independently for the improvement of their respective conditions. The terms
“collective bargaining” and “negotiation” are often used interchangeably. How they differ with
related terms such as grievance procedures and arbitration was well pointed out by Professors
Cox and Dunlop in the Harvard Law Review, thus: Collective bargaining normally takes the
form of negotiation when major conditions of employment to be written into an agreement are
under consideration, and of grievance committee meetings and arbitration when questions arising
from the administration of an agreement are at stake. (Republic Savings Bank vs. CIR, 21
SCRA226, citing Harvard Law Review, 1097,1105 [1950)This right is applicable to government
employees in the civil service, but with certain restrictions. Thus, terms and conditions of
employment, or improvements thereof; except those that are fixed by law, may be the subject of
negotiations between duly recognized employees’ organizations and appropriate government
authorities (Sec. 13, Ex. 0. No. 180, Underscoring supplied). Obviously, terms and conditions
fixed by law cannot be changed by negotiation.

14. RIGHT TO PEACEFUL CONCERTED ACTIVITIES. This is another corollary to the

right to self-organization as it affords to labor unions the potential for action to enforce their
demands. The right is established in the protection to labor clause which provides in pertinent
part: “It (the State) shall guarantee the rights of all workers to peaceful concerted activities,
including the right to strike in accordance with law. . .“ (Art. XIII, Sec. 3). The term “concerted
activities” is defined as the activities of two or more employees for the purpose of securing
benefits or changes in terms and conditions of employment, or for mutual aid or protection with
respect to their collective interest as employees. This definition comprehensively covers a wide
range of acts from grievances and representations to strikes. Resolution of industrial disputes
through voluntary initiatives has the advantage of simplicity, certainty and privacy. But the
coercive versions of stokes and picketing, because of their far-reaching consequences to the
economy and to the larger interest of society, are subject to regulation. The Constitution itself in
guaranteeing this tight, qualifies it with the condition that concerted activities should be
“peaceful,” and that the right to strike be “in accordance with law.”

In this light, the question has been raised whether government employees in the civil service - -
who have been granted generally the right to self-organization, and qualifiedly, the night to
collective bargaining -also have the right to strike. The Supreme Court, in a 1989 decision,
answered in the negative. It noted that while the Constitution recognizes the right of government
employees to organize, it is silent as to whether such recognition also includes the right to strike.
Resorting to the intent of the framers of the organic law, it observed that the members of the
Constitutional Commission intended to limit the right to the formation of unions and associations
only, without including the right to strike. It cited Executive Order No. 180 regulating the
exercise of the right to organize government employees which provides in Sec. 14 thereof that
the Civil Service law and rules governing concerted activities and strikes in the government
service shall be observed, subject to any legislation that may be enacted by Congress. It stated
that the President was apparently referring to Memorandum Circular No. 6 Series of 1987 of the
Civil Service Law dated April 21, 1987 which, prior to the enactment by Congress of applicable
laws concerning strikes by government employees, enjoins under pain of administrative
sanctions all government employees from staging strikes, demonstrations, mass leaves, walk-
outs and other forms of mass action which with result in temporary stoppage or disruption of
public service. It continued that in the absence of any legislation allowing government
employees to strike, recognizthg their right to do so, or regulating the exercise of the tight, they
are prohibited from striking, by express provision of Memorandum Circular No. 6 and as implied
in Executive Order No.

The court also passed upon the question of which entity had jurisdiction over the case. It held
that the Regional Trial Court, in the exercise of its general jurisdiction under B.P. 129, had
jurisdiction over petitioner’s claim fo1 damages and for the issuance of a writ of injunction to
stop the strike, since the Labor Code did not apply to government employees. (SSS Employees
Association, et. al. vs. Court of Appeals, et al., 175 SCRA 686.)

In a more recent decision, the Court ruled En Banc that as a general rule, even in the absence of
express statutory prohibition like Memorandum Circular No. 6. public employees are denied the
right to strike or engage in work stoppage against a public employer. The right of the sovereign
to prohibit strikes or work stoppages by public employees was clearly recognized at common
law. To grant employees of the public sector the right to strike there must be a clear and direct
legislative authority therefore In the absence of any express legislation allowing government
employees to strike, recognizing their right to do so, or regulating the exercise of the right,
employees in the public service may not engage in strike, walk-outs and temporary work
stoppage like workers in the private sector .(Bangalisan vs. CA, July 31, 1997)
Parenthetically, and to complete our discussion on the rights of government employees in this
context, it is to be noted that employees of government-owned and controlled corporations,
organized under the Corporation Code as well as those working in establishments whose
controlling interests have been acquired by government financial institutions have the same
rights in this regard as employees of private corporations. In the former case because such
employees are engaged in proprietary functions of government (NARIC Workers Union vs.
Alvendia, 107 Phil. 404) and are not members of the civil service, and in the latter because they
are employed in entities which retain their essentially private character and profit motivation.
(AGW vs. Minister of Labor,124SCRA 1)

15. RIGHT TO SECURITY OF TENURE. Under previous laws, an employer could terminate
the services of an employee with or without just cause, by simply giving him one month notice,
or compensation (mesada) in lieu thereof. This placed the employee at the mercy of the employer
on whom he depended for his and his family's livelihood. This tenuous relationship has been
drastically changed and rectified by the Labor Code in view of the right to security of tenure
guaranteed by the Constitution (Art. XIII, Sec. 3). Tenure in employment means the right to
continue in employment until the same is terminated under conditions required by law. Art. XIII,
Sec. 3 of the Constitution guarantees to workers security of tenure. (Palmeria vs. NLRC, 247
SCRA 57)

16. RIGHT TO HUMANE CONDITIONS OF WORK. This collective right ensures that
working conditions take into account the health, safety and welfare of workers. The Labor Code
is replete with provisions that address this concern. For instance, its entire Book IV on Health.
Safety anti Social Welfare Benefits relates to medical and dental services, occupational health
and safety, and a compensation program for employees and their dependents in the event of
work-connected disability or death. The Ill of Book Ill regulates the working conditions for
special groups of employees: working women, minors, house helpers and home workers. The
Code also empowers the Secretary of Labor to order stoppage of work or suspension of
operations of an establishment when non-compliance with the law poses grave and imminent
danger to the health and safety of workers in the workplace (Art. 128-c). These provisions, to
cite only a few examples, illustrate the implementation of this Constitutional right of workers.

17. RIGHT TO A LIVING WAGE. The right to a living wage is a new right established in the
present Constitution (Art. XIII, Sec. 3 ). The term refers not merely to the worker, but to his
family as well, and the intent is to secure the means whereby a worker can secure the health,
decency, well being and an improved quality of life for his family. This sight is therefore imbued
with social justice implications. A living wage is not the same as a minimum wage. For a
minimum wage is a floor wage, fellow which remuneration cannot fall. Thus, it is basically a
quantitative concept which, despite all the factors considered, may still be equated with the term
“subsistence wage”. This has been accurately described in Black’s Law Dictionary as “the least
wage on which an ordinary individual can be self-sustaining, and obtain the ordinary
requirements of life.” (Id. Rev. 4th Ed, citing Asso. Industries of Oklahoma vs. Industrial
Welfare Confirm mission, 185 Ok. 177) But a living wage takes into consideration not only the
worker himself, but also his family. It concerns not only his ordinary requirements of life, like
food and shelter, but all the additional requirements of his family -- like education, clothing,
health care, entertainment, etc. This is therefore a qualitative concept intended to secure the
social end of eventually freeing the people from poverty, and providing an improved quality of
life for all. (Art. II, Sec. 9, Constitution)

18. RIGHT TO PARTICIPATE IN POLICY AND DECISION- MAKING. The Protection

to Labor clause also contains a new provision which states in pertinent part: “. . They (all officers
) shall also participate hi policy and decision-making processes affecting their rights and benefits
as may be provided by law. .“ (Art. XIII, Sec.3) As worded, this provision does not establish a
right; it merely allows such a right if the legislature enacts the corresponding law. This status
was firmed up as a right upon the effectively of Rep. Act. No. 6715 on March 21, 1989. Section
22 of this amendatory law provides on this point. “Any provision of law to the contrary
notwithstanding, workers shall have the right, subject to such rules and regulations as the
Secretary of Labor and Employment: may promulgate, to participate in policy and decision-
making processes of the establishment where they are employed insofar as said processes will
directly affect their rights, benefits and welfare. For this purpose, workers and employers may
form labor- management councils: provided, that the representatives of the workers in such
labor-management councils shall be elected by at least the majority of all employees in said
establishment.” (id.) This right does not apply to all types of policy and decision-making by
management, but only to those that directly affect the rights, benefits and welfare of workers.
Aside from establishing this right, Rep. Act No.6715 also dispelled all doubts about the
legitimacy of labor-management councils which are allowed even in organized establishments
precisely to implement this pailicipatory right. In unorganized establishments, such councils are
allowed to assist in promoting industrial peace. (Sec.33-h, R.A. 6715; Sec. 14-h, BP Big. 130).

19. OTHER FEATURES PROTECTING FILIPINO LABOR. The Constitution also

embodies other new provisions favorable to Filipino labor Specifically, it contains new
nationalistic measures which further augment those currently in force.
THE HOUSE COMMITTEE on labor and employment said that while House Bill (HB) 6908 or the Security of Tenure
bill does not seek to abolish contractualization completely, it clarified the distinction between job contracting and
labor-only contracting to prevent future abuses by companies.

Committee chair and Cagayan Rep. Randolph S. Ting noted that among the 26 bills consolidated under HB 6908,
only HB 4444 by Trade Union Congress of the Philippines (TUCP) party-list Rep. Raymond Democrito C. Mendoza
proposed the complete abolition of contractualization but said that this is not allowed under the Constitution.

“The game-changer in this bill really is just one word: we changed ‘and’ to ‘or.’ Meaning… the presence of any of the
[elements] will [be sufficient to define] labor-only contracting,” Akbayan party-list Rep. Tomasito S. Villarin explained
in a briefing.

Under the proposed amendments, a contractor is considered labor-only if 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; or has no control over the workers’ methods and means of accomplishing their work; or the
workers recruited and placed by such persons are performing activities which are directly related and necessary to
the principal business of such employer.”

Likewise, HB 6908 inserted a provision defining which businesses qualify as job contractors, such as:

• an independent business, separate and distinct from the principal employer;

• paid-up capital or capitalization of at least P5 million;

• an undertaking of financial capacity, and compliance with all labor laws and regulations;

• sufficient knowledge, experience, skills, or competence in the field of contracted job, work or service;

• employment or regular employees, and possession of equipment, machineries or tools necessary to perform or
complete the job, work, or service contracted out;

• control over the performance and completion of the contracted job, work, or service; and

• payment of license fee of P100,000.

Absence of any one of these seven elements will indicate labor-only contracting, Mr. Villarin said.

The bill proposed sanctions on employers who will engage in fixed-term employment except for overseas Filipino
workers (OFWs), workers on probation, relievers, project employees, and seasonal employees.

“Relievers, project employees, and seasonal employees shall enjoy the rights of regular employees for the duration of
the engagement, project, or season, respectively,” HB 6908 further read.

Leyte Rep. Vicente S.E. Veloso said this provision under Article 296 of the proposed HB 6908 would fix 5-5-5 or sub-
contracting.

To secure the tenure of workers, HB 6908 provided that workers cannot be terminated or dismissed without “just
cause” and without due process.

The bill calls for employees who are illegally dismissed to be reinstated without losing their seniority and benefits.
They shall also receive back wages without interest and penalties for late remittance.
Probationary workers, on the other hand, are to have the same benefits as regular employees and those who serve
for more than a month and are terminated without just cause are to be “entitled to a termination pay of one-half month
salary,” according to HB 6908.

Mr. Villarin noted that the passage of this bill will benefit around two million workers.

HB 6908, which seeks to further amend the Presidential Decree 442 or the Labor Code of the Philippines, hurdled
second reading on Jan. 23. It is one of the bills listed under the Common Legislative Agenda of the 17 th Congress. —
Minde Nyl R. dela Cruz