May the Executive Department Handle the Certification Election of Judiciary?

ISSUE
We are asked in this petition to ascertain the power, if any, of the Department of Labor and Employment (DOLE), more specifically the Bureau of Labor Relations (BLR), to supervise the activities of government employees; in this case, unions of judiciary personnel who serve in the Court of Appeals.

The question of power is quite significant. Hitherto, the BLR has concentrated on labor relations in the private sector. Its enforcement machinery and the mass of law and jurisprudence governing its functions are entirely geared to the handling of the peculiar problems arising in private employment. In this case, the BLR has tasked itself to intervene not only in a quarrel between two groups of government employees but more important, in a quarrel between employees working for an independent branch of government, the Judiciary.

The issue of what governs and who supervises unions of government employees is of more than passing concern especially when those who organize and hope to engage in certain forms of concerted action are court employees.

What is the law which governs certification elections in the Court of Appeals?

RULING:  YES

All this does not mean that the separation of powers doctrine requires us to supervise the details of self-organization activities in the courts. In the same way that CSC validly conducts competitive examinations to grant requisite eligibilities to court employees, we see no constitutional objection to DOLE handling the certification process in the Court of Appeals, considering its expertise, machinery, and experience in this particular activity. Executive Order No. 180 requires organizations of government employees to register with both CSC and DOLE. This ambivalence notwithstanding, the CSC has no facilities, personnel, or experience in the conduct of certification elections. The BLR has to do the job.

Executive Order No. 180 states that certificates of registration of the legitimate employee representatives must be jointly approved by the CSC Chairman and the DOLE Secretary. Executive Order No. 180 is not too helpful in determining whose opinion shall prevail if the CSC Chairman and the DOLE Secretary arrive at different conclusions. At any rate, we shall deal with that problem when it occurs. Insofar as power to call for and supervise the conduct of certification elections is concerned, we rule against the petitioner.

References:

Association of Court of Appeals vs Ferrer - Calleja (Union of Concerned Employees of the Phils.)
GR 94716 (1991, Third Division)

Executive Order No. 180 issued on June 1, 1987
"Providing Guidelines for the Exercise of the Right to Organize of Government Employees; Creating a Public Sector Labor-Management Council; and for Other Purposes."

Do the Government Employees Enjoy the Right to Form and Join Union?

Yes. There is no question that government employees may organize provided the purposes behind such organization are legitimate.

While the Labor Code is silent, the 1987 Philippine Constitution under Article 3 - Bill of Rights provides :

Section 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.

Note: 
Employee Association is to Public Sector as Labor Organization or Union to Private Sector


References:

Executive Order No. 180 issued on June 1, 1987
"Providing Guidelines for the Exercise of the Right to Organize of Government Employees; Creating a Public Sector Labor-Management Council; and for Other Purposes."

Section 2. All government employees can form, join or assist employees’ organizations of their own choosing for the furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities, labor-management committees, works councils and other forms of workers’ participation schemes to achieve the same objectives.

Association of Court of Appeals vs Ferrer - Calleja (Union of Concerned Employees of the Phils.)
GR 94716 (1991, Third Division)

ISSUE
We are asked in this petition to ascertain the power, if any, of the Department of Labor and Employment (DOLE), more specifically the Bureau of Labor Relations (BLR), to supervise the activities of government employees; in this case, unions of judiciary personnel who serve in the Court of Appeals.

The question of power is quite significant. Hitherto, the BLR has concentrated on labor relations in the private sector. Its enforcement machinery and the mass of law and jurisprudence governing its functions are entirely geared to the handling of the peculiar problems arising in private employment. In this case, the BLR has tasked itself to intervene not only in a quarrel between two groups of government employees but more important, in a quarrel between employees working for an independent branch of government, the Judiciary.

The issue of what governs and who supervises unions of government employees is of more than passing concern especially when those who organize and hope to engage in certain forms of concerted action are court employees.

What is the law which governs certification elections in the Court of Appeals?

RULING
On BLR authority:

All this does not mean that the separation of powers doctrine requires us to supervise the details of self-organization activities in the courts. In the same way that CSC validly conducts competitive examinations to grant requisite eligibilities to court employees, we see no constitutional objection to DOLE handling the certification process in the Court of Appeals, considering its expertise, machinery, and experience in this particular activity. Executive Order No. 180 requires organizations of government employees to register with both CSC and DOLE. This ambivalence notwithstanding, the CSC has no facilities, personnel, or experience in the conduct of certification elections. The BLR has to do the job.

Executive Order No. 180 states that certificates of registration of the legitimate employee representatives must be jointly approved by the CSC Chairman and the DOLE Secretary. Executive Order No. 180 is not too helpful in determining whose opinion shall prevail if the CSC Chairman and the DOLE Secretary arrive at different conclusions. At any rate, we shall deal with that problem when it occurs. Insofar as power to call for and supervise the conduct of certification elections is concerned, we rule against the petitioner.

Do the Government Employees Enjoy the Right to Strike?

RULING:

In contrast, other labor experts and delegates to the 1971 Constitutional Convention enlightened the members of the Committee on Labor on the divergent situation of government workers under the 1935 Constitution, and called for its rectification. Thus, in a Position Paper dated November-22, 1971, submitted to the Committee on Labor, 1971 Constitutional Convention, then Acting Commissioner of Civil Service Epi Rev Pangramuyen declared:

It is the stand, therefore, of this Commission that by reason of the nature of the public employer and the peculiar character of the public service, it must necessarily regard the right to strike given to unions in private industry as not applying to public employees and civil service employees. It has been stated that the Government, in contrast to the private employer, protects the interests of all people in the public service, and that accordingly, such conflicting interests as are present in private labor relations could not exist in the relations between government and those whom they employ.

REFERENCE:
Alliance of Government Workers vs Minister of Labor and Employment
GR L-60403 (1983, En Banc)

Is the Government Considered An Employer With Regard to 13th Month Pay?

ISSUE:

Are the branches, agencies, subdivisions, and instrumentalities of the Government, including government owned or controlled corporations, included among the 4 "employers"" under PD 851 which are required to pay their employees receiving a basic salary of not more than P1,000 a month, a thirteenth (13th) month pay not later than December 24 of every year?

RULING:
"It is an old rule of statutory construction that restrictive statutes and acts which impose burdens on the public treasury or which diminish rights and interests, no matter how broad their terms do not embrace the Sovereign, unless the Sovereign is specifically mentioned. (See Dollar Savings Bank v. United States, 19 Wall (U.S.) 227; United States v. United Mine Workers of America, 330 U.S. 265). The Republic of the Philippines, as sovereign, cannot be covered by a general term like "employer" unless the language used in the law is clear and specific to that effect."


REFERENCES:

Alliance of Government Workers vs Minister of Labor and Employment
GR L-60403 (1983, En Banc)

DOLE's FAQs on 13th Month Pay

1987 Philippine Constitution, Article 9 (b) Civil Service:

Section 5. The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or controlled corporations with original charters, taking into account the nature of the responsibilities pertaining to, and the qualifications required for their positions.

Sonza Case: Employee or Independent Contractor?

G.R. No. 138051             June 10, 2004

JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.

SC Ruling: WHEREFORE, we DENY the petition.

The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the elements of an employer-employee relationship, this is the first time that the Court will resolve the nature of the relationship between a television and radio station and one of its "talents." There is no case law stating that a radio and television program host is an employee of the broadcast station.

Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished.1

4-Fold Test #1 - Selection Test (Emphasis provided)

Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee.

4-Fold Test #2 - Wage Test (Emphasis provided)

SONZA’s talent fees, amounting to ₱317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent and celebrity status not possessed by ordinary employees 

4-Fold Test #3 - Dismissal Test (Emphasis provided)

For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws. 

4-Fold Test #4 - Control Test (Emphasis provided)

Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBN’s sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZA’s work.

SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over the means and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZA’s show, ABS-CBN was still obligated to pay SONZA’s talent fees... Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZA’s performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZA’s show but ABS-CBN must still pay his talent fees in full.

Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the obligation to continue paying in full SONZA’s talent fees, did not amount to control over the means and methods of the performance of SONZA’s work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBN’s approval. This proves that ABS-CBN’s control was limited only to the result of SONZA’s work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZA’s talent fees in full until the expiry of the Agreement.

Different Tax Treatment of Talents and Broadcasters

The National Internal Revenue Code ("NIRC") in relation to Republic Act No. 7716, as amended by Republic Act No. 8241, treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are subject to the 10% value-added tax ("VAT") on services they render. Exempted from the VAT are those under an employer-employee relationship. This different tax treatment accorded to talents and broadcasters bolters our conclusion that they are independent contractors, provided all the basic elements of a contractual relationship are present as in this case.

Kasambahay Law four years later: ‘masaket poh koyah’

Kasambahay Law four years later: ‘masaket poh koyah’


Four years after the Kasambahay Law (RA 10361) took effect, this column is sorely tempted to say “I told you so.” But the mature individuals that we are, we won’t.

Instead, as we wrote before the law took effect, “if we must have such laws, let it be that which promotes accountability, responsibility, and merit. But if a Kasambahay Law (as it’s drafted now) gets enacted, then it would be better, particularly for those of the middle class, not to hire maids anymore. Better save your money and just do the chores you can do better anyway.”

So far, that comment seems more and more prescient everyday.

The problem with the Kasambahay Law is that it works on the bizarre assumption that most employers and household owners are complete jerks.

One sees this in the Declaration of Policies, which focuses in giving the household help protection against violence, exploitation, abuse, discrimination, and even going so far as to mention -- again, bizarrely -- “gender sensitive measures.”

No requirement whatsoever of professional development, skills training, and personal accountability.

It’s all about doling more rights without demanding any form of personal responsibility.

RA 10361 ignores the fact that in the Philippines, household helps have a special relationship with their employers not present in the developed or Western world (whose laws the Kasambahay Law seem patterned after).

That’s why they’re called Kasambahay: household helps are not merely employed servants, they’re considered part of the employer’s extended family.

Hence, if the household help gets sick, physically or emotionally (i.e., heartbroken), the employer cares and consoles, an uncle dies the employer handles the funeral costs, the help’s grandmother gets sick and she’s allowed immediate vacation leave to visit. Even without RA 10361 Filipino employers gets the willing (and able) household help through school, paying for her tuition, books, and allowance.

No Western (and perhaps even developed ASEAN country) employer would generally go through that crap. The relationship is purely contractual and professional. And the Kasambahay Law blithely ignores this.

Instead, it self-righteously demands that the employer give the household help professional treatment and compensation but without requiring reciprocal professionalism and competence from the latter.

Remember, this is within the unbelievable context -- despite a supposed national literacy rate of 99% -- that many of those applying to be household helpers don’t even know how to cook, boil water, clean furniture, launder clothes.

And breakages in dishes, ceramics, and appliances would be common.

Yet these are the people who demand substantial rest periods, cellphone loads, cable TV, and Wi-Fi access. But most only get their skills after they’re employed, assuming they stay long enough.

Regarding that last sentence, a peculiar trend is seemingly sweeping the country and coincidentally it gathered force after the enactment of the Kasambahay Law: that of absconding maids.

By which we mean those applying to be household helps from the provinces (and even through agencies) demand they be given transportation and allowance money first before moving to Manila. The good employer, after cabling the funds, would then never hear of that applicant again.

Or the applicant does arrive in Manila, stays for a few days with her employer, then suddenly develops an obsession for education, a needy husband, or a relative gets terminally ill, and she has to go home.

In both instances, the prospective employer will be unable to recover his money (normally in the thousands of pesos).

Whoever made the Kasambahay Law apparently has delusions about our Philippine criminal justice system.

Frankly, I don’t mind giving professional compensation, contractual arrangements, etc., so long as the maid herself is competent and professional. That is but reasonable.

A glance at one of the recruitment pages in the US reveal the following capabilities demanded of domestic helpers: competent housekeeping; prepare family meals; garden maintenance; supervising children, grocery shopping; knowledge of cleaning procedures; experienced caregiver to elderly adults; ability to read and follow instructions; and knowledgeable of safety practices.

A review of such recruitment pages and related US laws would show that their meals are not part of the compensation. Furthermore, breakages and other result of negligent or incompetent acts could (under specific conditions) lead to a deduction from the wages. Let’s have that.

And let’s have a national database system to track down household helps who cheated, stole, did incompetent work, etc., so that they can be blacklisted and never have the opportunity to harm another prospective employer.

And let’s have a non-appealable fast track judicial system that can immediately fine, impose damages, or imprison (after all, absconding with someone else’s money as described above is actually swindling) wayward household helps.

There are (according to some estimates) around 2.5 million domestic helps in the country today. That’s potentially 2.5 million Filipinos the Kasambahay Law is signaling they are entitled to do whatever they want without consequences.

So, yes, let us indeed protect the rights of Kasambahays. But we should never forget that employers have rights too.

Jemy Gatdula is a Senior Fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.

jemygatdula@yahoo.com

www.jemygatdula.blogspot.com

facebook.com/jemy.gatdula

Twitter @jemygatdula

source:  Businessworld

ECoP: Labor contracting penalties ‘unconstitutional’

THE security of tenure of workers is “not an absolute right,” the Employer’s Confederation of the Philippines (ECoP) said, noting that businesses also have a right to pursue a reasonable return on investment.

In a 15-page position paper on 25 measures pending at the House of Representatives, which all seek to strengthen the security of tenure of workers, the employers’ group cited jurisprudence in defending the industry’s right to pursue “expansion and growth.”

“Jurisprudence has reiterated time and again that the exercise of management prerogative is not subject to interference so long as it is done in good faith based on the exigencies of business and not intended to circumvent the legal rights of labor,” the ECoP said in its position paper submitted to the House committee on labor and employment.

A total of 25 versions of the measure are pending in the House panel, which seek to strengthen the security of tenure of employees by prohibiting the practice of labor contracting and promote regular employment.

“Security of tenure is not an absolute right. It cannot be pleaded to avoid the exercise of management prerogative. Such exercise becomes objectionable only when it is not for ‘reasonable returns on investments,’ and for ‘expansion and growth’ which are constitutionally recognized employer’s rights, but is sought merely as a convenient cover for oppression,” the employers group added.

The ECoP said that some of the 25 bills seek to “prohibit fixed-term employment” which is contrary to the established jurisprudence.

“Prohibiting fixed-period employment violates the freedom of contract of both parties who knowingly, willingly and without any moral pressure gave their consent to the execution of the contract guaranteed by the Constitution,” the ECoP said.

The group also said that job contracting is “invariably legitimate” as long as the right to contract out is motivated by good faith based upon the exigencies of business; not resorted to circumvent the law; or not the result of malicious or arbitrary action.

TUCP party-list Rep. Raymon Democrito C. Mendoza filed House Bill (HB) 4444, which prohibits all forms of contractualization and fixed-term employment.

However, the ECoP said that the proposal is “ultra vires and unconstitutional,” reiterating that it is the right of the employers to exercise an “inherent prerogative and its best business judgment to determine whether it should contract out performance of some if its work to independent contractors.”

HB 1208, filed by Bayan Muna Rep. Carlos Isagani T. Zarate, seeks a penalty of between P1 million and P10 million or imprisonment of at least six months for violators.

However, the ECoP said that the proposed penalties are “oppressive and unconstitutional.”

“Excessive fines especially if imposed on employers of micro establishments is violative of Section 19 of the Bill of Rights of the Constitution which prohibits the imposition of excessive fines,” the ECoP noted. Moreover, the ECoP said that provisions in some of the bills to allow contractual arrangements which are “not usually necessary or desirable, or directly related to the usual business of the principal” will result to prohibition of any form of contracting or outsourcing, because what is being contracted out is part of the work of the employer.

source:  Businessworld

The hand that rocks the idle

“The margin of the capitalist is directly proportionate to the level of exploitation of the laborer,” said my left-leaning classmate in college.

“But isn’t a capitalist entitled to a return on his capital?” I asked back. That academic exchange is an example of the polarity of the idea between a left and a right. In the real world, I learned that every capitalist is indeed concerned with profit, but in their best behavior will say that “our people are our best assets.”

With tomorrow being Labor Day, I objectively say that each one of us is a worker. True, some are paid more than others for their unique skills, or for being the trustworthy one, or simply lucky for being at the right place at the right time.

Without them though, fertile land will be barren, the best building design plans will be useless pieces of paper, and grand ambitions will just be beautiful thoughts that bring despair without implementation.

Without the worker, there can be no government for nothing is plainer than the fact that without profit, what is left to tax is capital – unsustainable, ruthless and chaotic taxation.

Roughly 40 percent of our country’s population are income earners and that fraction supports the rest of us. My point this Sunday is that something minimal is owed to these individuals, and while owed to all, is owed to them more because they are the ones who really work and pay for it. I refer to the debt of public service. Better public service.

There is a difference between simply buying or accessing a service in general vs. accessing a public service. In the former, you can be refused by the seller or service provider. In the latter, you have the right to demand it. In fact, the Supreme Court said that the test of whether one is a public service is that once it is made available to all, it cannot be refused to anyone, even if it is a private enterprise running it.

Understanding this is important because private companies to which the public service was delegated or contracted is just as obligated as the government who should provide that service. Even more so, in fact, because they operate on authority of the government but without the power like the government.

This is the reason why a taxi driver who refuses to take a passenger because it is inconvenient – to the taxi driver – is violating the franchise granted and should be dealt with; or why patrons who get charged by the minute even on calls lasting less than a minute deserve reprieve; or why an increase in train rates without the improvement in the service to the passenger would feel underhanded.

The issue is public service. While customers pay for service, they shouldn’t be at the mercy of the providers because they are taxpayers, too, who have the right to that service. And it will never feel right for them to pay for a service that they do not get, or pay extra for an alleged improvement that they do not feel.

Filipinos can complain a lot – in person, in social media, and in their own circles – but they are not litigious, or not as litigious as their Western friends. To the thick-skinned, gripes are just words that don’t really threaten and they simply breed complacency.

You see, corporations, including government-owned corporations, can be sued as they are considered “persons” under the law. The government though is tough to sue because per our Constitution, the government cannot be sued without its consent. This is meant to protect the government from the crippling effects of a lawsuit and to allow them to dwell instead on providing the public service vs. spending time defending left and right against lawsuits.

Lawsuit or not, it is really high time for the government to know its place vs. the workers. We expect everyone to work and contribute to the economy and to pay taxes, but we cannot even bring them convenient public transport to their work places and back to their homes.

If we cannot give more in law to those who have less in life, at the very least, we owe them the respect of better public service. Whether the powers that be admit it or not, they are the hands that feed us, not the other way around.

* * *

Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the Tax Committee of the Management Association of the Philippines (MAP). Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Behind the dark clouds

I recently called attention to “dark clouds” that we need to watch, seen in weakening numbers on the economy, particularly accelerating price inflation, rising unemployment, and slowing growth. These weakening signs must be arrested before they turn into a trend. Let’s take a closer look to understand where the weaknesses are coming from.

Let’s start with rising prices. Last month’s year-on-year inflation rate of 3.4 percent was the fastest seen in 28 months. It went as low as 0.4 percent in late 2015, but sped up last year, especially in the latter half, mostly owing to faster increases in food and energy prices. What’s bad about inflation that’s driven more by food prices is that it takes a heavier toll on the poor, for whom food makes up a dominant portion of the family budget. As a general category, food prices rose by 4.2 percent last month, and even though it actually slowed down slightly from 4.3 percent in February, it still rose significantly faster than overall inflation.

Price rises were notably faster in rice and meat, which led Socioeconomic Planning Secretary Ernesto Pernia to eye the government’s import constraints as the likely culprit. “Inflationary pressure may ease following the removal of quantitative restrictions on rice importation, and the timely augmentation of supplies,” he noted. Rice alone takes up almost a tenth of the average Filipino family budget, and for poor families, an even bigger share. This is why the ongoing debate on rice importation is so critical, given the profound impact of the price and accessibility of the commodity on the welfare and nutritional status of the poor. Analysts have attributed the much higher incidence of child malnutrition and stunting among Filipinos relative to our neighbors to the much higher prices Filipinos pay for rice, rendering it less accessible to large numbers of people.

The other major reversal has been in the jobs situation. After three years of successive decline in the officially measured unemployment rate, and having already dropped below 5 percent in the last few quarters, joblessness jumped anew to 6.6 percent in January. The quarterly Labor Force Survey reports an overall loss of 700,000 jobs over the past year (from January 2016 to January 2017). This is alarming given that an average of one million new workers join our labor force yearly. The
data clearly show agriculture to be the main reason, with a recorded loss of nearly 800,000 jobs, while services also lost 64,000 jobs. The silver lining was industry’s gain of 149,000 net new jobs, almost all of it in construction. Utilities also gained 17,000 new jobs, but mining lost 36,000 jobs for reasons now well known, and manufacturing similarly lost 9,000 jobs.

Did new restrictions on contractualization have a role in the jobs decline? At first glance, it would appear otherwise; there was actually a net gain of 361,000 jobs in wholesale and retail trade (where contract employment is common), and vehicle repair. But the data don’t distinguish trade jobs in large retail establishments from those of self-employed vendors in the informal sector or “underground economy.” One gets a clue from the statistic on individually self-employed workers, whose numbers rose by 370,000, suggesting that the rise in trade jobs was mainly in the informal sector. The numbers could thus still be consistent with thousands of jobs having been lost in the formal retail trade sector, where contractuals tend to be most prevalent—but more detailed data need to be gathered for more conclusive evidence.

As for slowing economic growth, agriculture has been the main culprit, having declined by 1.3 percent last year, even as industry and services grew briskly. The sad truth is that the observed weaknesses, whether in presyo, trabaho or kita, all point to bad agricultural performance. That is how important the sector is. We simply need to stop neglecting agricultural products with high income potential because of an inordinate preoccupation with rice, and instead emulate the fast growing and much more diversified agriculture our neighbors have had. Every Filipino will be all the better off for it.

cielito.habito@gmail.com

source:  Philippine Daily Inquirer

Govt ‘won’t abolish contractualization’

The government will not likely abolish the entire system of contractualization in the country but restrict it, according to a former Labor undersecretary.

Contractualization, also known as “endo” (end of contract) and “5-5-5,” is the illegal practice of hiring and firing workers at the end of their five-month employment, enabling employers to avoid regularizing and giving them benefits such as pension coverage.

Josephus Jimenez, also former president of People Management Association of the Philippines Inc. (PMAP), told reporters at the sidelines of the 6th P&A Grant Thornton Business Forum on Wednesday that the Department of Labor and Employment (DOLE) will not likely deliver its promise to abolish contractualization by 50 percent by the end of this year, and 100 percent by 2017.

“This is my bottomline expectation: They [government]won’t abolish contractualization. They’ll only put restrictions,” Jimenez said.

Removing the contractualization system would hurt the economy as this system gives the Philippines “competitive advantage” over other regional economies, he added.

“My position is very simple, if 5-5-5 or ‘endo’ is illegal, then we have to stop it. But do not stop the entire system of outsourcing, because outsourcing is the thing that gives you competitive advantage. Without outsourcing, all the investors will go to Malaysia, Indonesia, Thailand, Vietnam, Cambodia, Myanmar, Laos, Brunei Darussalam,” Jimenez said.

He noted that a number of local companies with foreign investors have held back with their expansion and investment plans in the Philippines because of potential risks from policies of the Duterte administration.

“Yes, the economy will suffer [without contractualization]. In fact, some investors have already said, ‘[Look, we’re unstable here. Let us not put further investments because the policies are still unclear],’” Jimenez said.
He added that he knows of five companies that have withheld their expansion plans in the Philippines that would have employed 100,000 contractual workers in the transportation, food and packaging sectors.

Citing the latest Labor Force Survey (LFS) in July, Jimenez estimated that 60 percent of the 42.5 million Filipinos who are employed are regular, while 40 percent are working under contracts.

Jimenez cited 10 reasons why “legitimate” contractualization “could not be, should not be and would not be abolished in the country.”

He said “endo” contributes to the country’s competitiveness, provides employment opportunities, serves as first door to regular employment, allows on-the-job training, offers viable alternative to migration, adopts enough safety nets and gives adequate social protection, among others.

With its promise to abolish “endo,” the government through DOLE is amending Department Order No. 18-A — dubbed as the “Endo Law” — which is set to be released by the end of this month.

When asked about the Department of Trade and Industry’s proposed “win-win solution” on contractualization, Jimenez said he agrees with the DTI proposal, suggesting some improvements.

source:  Manila Times

Women not legally married can avail of maternity benefits

Dear PAO,
My application for paternity leave was denied by my company for the reason that I am not yet legally married to the mother of my child. Does this mean that since we are not yet married, my girlfriend can also not avail of her maternity leave benefits?

Sincerely yours,
Yulo

Dear Yulo,
For your information, Article 14-A of Republic Act (RA) 8282 or the Social Security Law states:

SEC. 14-A. Maternity Leave Benefit. – A covered female employee who has paid at least three monthly maternity contributions in the twelve-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100 percent) of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for sixty (60) days subject to the following conditions:

a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS [Social Security System] in accordance with the rules and regulations it may provide;

b) That the payment shall be advanced by the employer in two equal installments within thirty (30) days from the filing of the maternity leave application;

c) That in case of caesarian delivery, the employee shall be paid the daily maternity benefit for seventy-eight (78) days;

d) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same compensable period of sixty (60) days for the same childbirth, abortion or miscarriage;

e) That the maternity benefits provided under this Section shall be paid only for the first four deliveries after March 13, 1973;

f) That the SSS shall immediately reimburse the employer one hundred percent (100 percent) of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof; and,

g) That if an employee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits, which said employee would otherwise have been entitled to, and the SSS shall in turn pay such amount to the employee concerned.

Unlike in RA 8187 or the Paternity Leave Act of 1996, none in the above-stated provision of law does it state that the mother giving birth to a child or the one who suffered a miscarriage is required to be lawfully married first, before she could avail of the maternity benefits. Hence, since there is no restriction or distinction, your girlfriend can rightfully avail of the said benefit provided she qualifies to all the other requirements of the law.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Negative economics of no-contractualization

One of the principal socio-economic issues that were raised during the 2016 electoral campaign was labor contractualization, i.e., the practice of employers’ signing workers to renewable contracts of less than six months’ duration instead of making them regular employees. Realizing that from the standpoint of competitiveness they had no choice but to match the other candidates’ commitment, all of the five presidential candidates promised to work for the ending of labor contractualization immediately upon election.

The issue of putting an end to contractualization brings to mind the old saying, “The road to hell is paved with good intentions.” With regard to the contractualization issue, the saying should be changed to “The road to no-more-contractualization is paved with good intentions. Here the good intention is to provide all workers with the legally mandated benefits—chiefly coverage by SSS, Philhealth and Pag-IBIG—that come with regular-employee status. No conscientious and fair-minded employer wants to deprive his employees of these and other legally mandated benefits.

For any contractualization-related government action to be widely acceptable and easily implementable, it is necessary to determine the reasons why some employers resort to contractualization. The reasons will determine whether the Department of Labor and Employment will experience much difficulty in enforcing a no-contractualization law. There are three reasons.

The first reason is, quite simply, an employer’s instinctive desire, in the absence of adverse government policy, to derive the maximum profit from his business operations. Additional costs reduce profit and SSS, Philhealth and Pag-IBIG coverage for employees are additional costs. Why, the typical businessman asks himself, should I provide benefits for my workers if with the use of legal savvy, I can get away with not providing them with such benefits? The tactic for such legal evasion is of course the hiring of workers for periods shorter than the six-months threshold for compulsory regularization. “Endo,” the shorthand for end of contract, usually comes after five months’ employment.

The second reason for the resort of many employers to contractualization is pure-and-simple avoidance (not evasion) of the law. The choice for employers has been clear-cut. They can place their employees on regular status after six months in the establishment—and begin incurring the costs of the legally mandated benefits—or they can avoid incurring those costs through the before-six-months “endo” arrangement. Why incur all those additional costs when the nation’s labor laws leave you a way out?

The third reason for many employers’ resort to labor contractualization is the most important because of its virtually certain negative impact on the economy, especially on investment and employment.

The plain truth is that the great majority of contractualizing business establishments—mostly small and medium-scale entities, who, according to the government statisticians account for approximately 99 percent of all business establishments—simply cannot afford the financial trappings that go with regular-status employment. They can afford only the basic costs of operating a business, such as rent, wages, utilities and business fees; they cannot afford separation pay, paid leaves, bonuses and social welfare coverages (SSS, Philhealth and Pag-IBIG) for their employees.

Putting an end to contractualization has been declared to be one of the legislation priorities in the House of Representatives; the Duterte administration should be able to obtain passage of a no-contractualization law. What would be the impact of such legislation and how are prospective investors likely to react to the enactment of a no-contractualization law?

Employees of most of the one percent of business establishments that are classified as big already enjoy the benefits due regular-status employees and those who do not yet enjoy such benefits will be given them once a no-contractualization law is passed. Because they are big—and therefore conspicuous—will have no choice but to comply. The SMEs have a choice: they can either decide to close shop (if their owners are unwilling to break, or are fearful of breaking, the law) or they can decide to defy the law (if their owners are not law-abiding and believe that they can get away with law-breaking).

The danger to the economy will come from the reaction of law-abiding would-be investors to a no-contractualization law. If paying the benefits required by such a law will mean that they will not be able to derive profits from their capital, they will not establish businesses. There are such people; they will not go into business if they will be able to make money only by breaking the law.

A halfway point, a win-win solution, to the negative economic impact of a no-contractualization law would be to replicate what was done by Congress to mitigate the harshness of the Minimum Wage Act, viz., make allowance for SMEs. In the same manner that business establishments with less than a certain number of employees are exempt from the operation of the Minimum Wage Act, so similarly situated business establishments can be made exempt from no-contractualization.

The probable negative impact of a no-contractualization law on investment and employment is one pitfall of legislation placing a ban on contractualization. The other is the usual bugaboo of regulating legislation in this country: enforcement. Not so long ago the head of the Department of Labor and Employment estimated that the agency was able to effectively monitor only around 11 percent of business establishments for compliance with the nation’s labor laws. Given the Labor Department’s present enforcement capability, I doubt very much if a no-contractualization law will be effectively enforced. It has been asked before, but I will ask the question again: what is the point of passing a law that will be widely violated?

If the proposed no-contractualization law is not tweaked so as to not discourage investment in SMEs, such a law should, in my view, not be passed at all. 

source:  Manila Standard Column of Rudy Romero

Placing employee on ‘floating status’ not unlawful per se

Dear PAO,
My sister works as a security guard. She was assigned to a private college in Manila. She was on that assignment for about 15 months already when the school asked her to return to her agency. It turned out that she was assessed to have a poor performance, for which reason the school asked for another guard to replace her.

My sister reported back to her agency but it has been three months now and she has been on floating status. She has not been given another assignment. Is this even valid considering that she is not receiving any salary? Please give us advice on this matter.
Dek

Dear Dek,
The term “floating status” suggests a situation where an employee is temporarily placed out of actual work. Although not particularly mentioned under our Labor Code, it is not per se unlawful or illegal. In fact, the code recognizes instances where an employer is allowed to place an employee on bona-fide suspension, but without severing their employer-employee relationship. As stated under Article 286, Id.:

“The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.”

Furthermore, the Supreme Court has recognized, in a long line of cases, the validity of placing employees, security guards in particular, on floating status. In one case, the High Court ruled:

“x x x While there is no specific provision in the Labor Code which governs the ‘floating status’ or temporary ‘off-detail’ of security guards employed by private security agencies, this situation was considered by this court in several cases as a form of temporary retrenchment or lay-off. The concept has been defined as that period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. As pointed out by the CA, it takes place when the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it, even for want of cause, such that the replaced security guard may be placed on temporary ‘off-detail’ if there are no available posts under the agency’s existing contracts.

As the circumstance is generally outside the control of the security agency or the employer, the court has ruled that when a security guard is placed on a ‘floating status’” he or she does not receive any salary or financial benefit provided by law. x x x” (Exocet Security and Allied Services Corporation vs. Serrano, G. R. No. 198538, September 29, 2014)

In the situation that you have presented, we cannot immediately conclude that your sister’s employer has committed wrong against her by simply placing her on floating status. First, if the contract between her agency and the school allowed the latter to seek a substitute or replacement, then her recall is in order and her employer is bound to place another guard in her post. Second, as mentioned by the court, those on floating status do not receive salary during the period. Finally, the employer may not be forced to deploy her if there is really no other available assignment.

It should be stressed, however, that the floating status must not go beyond the six (6)-month period allowed by law. If her employer fails to assign her after the expiration of the six (6)-month period, she will be deemed to have been constructively dismissed. Consequently, she will be entitled to receive separation pay pursuant to Section 6.5 of the Department of Labor and Employment Department Order No. 14, Series of 2001.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Prescription determined by date of last written demand for benefits

Dear PAO,
My boyfriend was employed as a private company driver. He had family problems, which greatly affected his work. He unintentionally incurred absences, which later resulted in his termination in February 2012. He accepted the termination but he wanted to insist on the payment of his last salary and other monetary benefits. He tried to demand from his former employer, but all his efforts were in vain.

Can he still legally demand his benefits now? He is contemplating on filing a case, but he is not sure if he can still do it considering that several years have already passed. Your advice will be highly appreciated.
Triza

Dear Triza,
An employee who has rendered service in favor of his employer, in compliance with the provisions of their employment contract, is entitled to receive the adequate salary or compensation as agreed upon by them. They have the right to demand the same once it becomes due. And if there is unjust refusal on the part of the employer to pay such salary or compensation, the employee concerned may bring the necessary legal actions.

You mentioned in your letter that your boyfriend was terminated in February 2012 and, while he accepted his termination, he demanded from his former employer to pay him his last salary and such other monetary benefits that may have accrued in his favor. Such demands were not met by his former employer, however. Thus, he considers filing a case against the latter.

We wish to emphasize that the filing of monetary claims must be done within the three-year prescriptive period provided for under Article 291 of our Labor Code. To be specific, the law states:

“All money claims arising from employer-employee relations accruing from the effectivity of this code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred. x x x”

Accordingly, your boyfriend must institute his monetary claims within three (3) years from the time the same has accrued. But the common question is: When do monetary claims start to accrue? As explained by the Supreme Court:

“x x x The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states:

Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought. (Emphasis supplied)

The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. x x x”(PLDT vs. Pingol,G.R. No. 182622, September 8, 2010)

Accordingly, the three-year period when your boyfriend may file his claims began to run on the date of his termination in February 2012, ending three (3) years thereafter.

It bears stressing, however, that the running of the three-year prescriptive period may be interrupted by the filing of an action in court, by a written extra-judicial demand, and by a written acknowledgment of the debt by the debtor (Article 1155, Civil Code; PLDT vs. Pingol, Ibid.)

Thus, if your boyfriend has made written demands after February 2012, this may have taken its toll on the running of the three-year prescriptive period. The counting of the period will be continued from the date of his last written extra-judicial demand. Correspondingly, he may still file his claim before the Department of Labor and Employment if the total period that has lapsed is still within the three-year prescriptive period.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Examining the proposed extended maternity leave

In January 2016, the Senate approved Senate Bill No. 2981 (SB 2981) or the Expanded Maternity Leave Law of 2015 on its third and final reading. Under the bill, the duration of maternity leave for female employees in government service and in the private sector will be extended to one hundred (100) days, regardless of mode of delivery. Mothers around the country have lauded the bill yet some have expressed fears on the repercussions of the same.

At present, the maternity leave provided under the Section 14-A of Republic Act 1161, as amended, otherwise known as the Social Security Act of 1997, provides that a female employee shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her average daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian delivery.

It should be noted that the International Labour Organization (ILO), specifically the Maternity Protection Convention (Convention 183) prescribes for fourteen (14) weeks or ninety-eight (98) days of maternity benefits. Evidently, the maternity leave provided for in our country is less than the minimum provided under Convention 183.

Comparing with the other ASEAN countries, the Philippines is one of the countries with the least number of maternity leaves granted. Vietnam is the highest granting about one hundred twenty (120) to one hundred eighty (180) days of maternity leave, while Singapore, provides one hundred and twelve (112) days of maternity leave. Cambodia, Indonesia, Laos, Myanmar, and Thailand all provide a maternity leave period of ninety (90) days. Only Malaysia and Brunei provide for a sixty (60) day maternity leave similar to the Philippines.

Aside from extending the maternity leave to one hundred (100) days regardless of mode of delivery, the bill also provides for an additional maternity leave of thirty (30) days without pay provided that due notice, in writing, be given to the employer at least forty-five (45) days before the end of the maternity leave.

Moreover, the bill, in compliance with ILO Convention 183 provides that “employees availing of the maternity leave period and benefits must receive not less than two-thirds (2/3) of their regular monthly wages.” The bill also mandates that employers from the private sector shall be responsible to pay the salary differential between the actual cash benefits received from the SSS by the covered employees and their average weekly or regular wages, for the entire duration of the ordinary maternity leave.

The aim of the bill to provide for greater benefits for pregnant women is consistent with the mandate under our Constitution, particularly Article XIII Section 14, to “protect working women by providing safe and healthful working conditions, taking into account their maternal functions.”

And yet, it is unavoidable that some fear that the expanded maternity leave will in fact cause possible discrimination in terms of employment against women. These apprehensions are brought about by the idea that the employers, particularly small businesses, would feel burdened particularly since there is now a mandate that the employers will be responsible for the salary differential between the SSS grant and what is mandated under the bill.

Understandably, such fears are justified.

It may be worthy to point out, however, that to temper the added responsibility to employers, the bill exempts certain employers or establishments from the payment of the differential. Among them are distressed establishments, retail/service establishments employing not more than ten (10) employees, those who pay their workers on a purely commission or task-basis and micro-businesses or those whose total assets are not more than three (3) million pesos.

Moreover, it must be noted that the Labor Code of the Philippines provides for the protection of women employees against discrimination. Article 135 states that it shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. Discrimination may be in the form of lesser compensation to a female employee as against a male employee, for work of equal value, or in favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. Article 137, in addition, provides that it shall be unlawful to discharge a woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy. It is likewise unlawful to discharge or refuse the admission of a woman employee upon returning to her work for fear that she may again be pregnant.

Despite all these safeguards, it is still apt to recognize that there is, however, a risk that the discrimination may happen prior to being employed.

To avoid the additional costs, the employer may opt to give preferential treatment to male applicants. Such discrimination may be harder to perceive as employers are given the prerogative to set qualifications and standards by which to select their employees. Unless there is a blatant show of discrimination in the hiring of only or mostly male employees, it will be harder to draw the line between management prerogative and actual discrimination.

Hence, should the maternity leave in our country be increased to one hundred (100) days, our government is faced with the duty to ensure that the same will not cause discrimination against women in all stages of employment. Otherwise, the benefits envisioned may be outweighed by the harm.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

Kiarra Nastazsa Adrienne A. Cabile is an Associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

(632) 830-8000

kacabile@accralaw.com.

source:  Businesworld

‘Stop abuses, not contractualization’

The complete elimination of employment through contractualization may have unforeseen negative consequences, according to two top local businessmen, who urged the government to instead focus on stopping abuses of the practice.

During a forum organized by the Economic Journalists Association of the Philippines (EJAP) and ING Bank on Tuesday, DMCI Holdings Inc., Chairman Isidro Consunji said it would be wrong to abolish contractualization as a whole, but rather the abuses associated with it.

“I think its inappropriate to eliminate contractualization per se,” Consunji said “I think that the issue there is in the abuses rather than the elimination of contractualization.”

Phinma Corp., Chairman and Chief Executive Officer Ramon del Rosario Jr., echoed Consunji’s sentiments, agreeing that it is the abuses associated with contractualization that should be condemned and not contractualization as a whole.

“It is fair to say that contractualization has been abused. And there are legitimate reasons to complain about those abuses,” Del Rosario said.

“But on the other hand, I think it is very dangerous to condemn contratualization as a general principle because there are sectors, industries in our economy that are offered on the basis of contracts,” and cannot operate on a non-contract basis, Del Rosario said.

Examples of these kinds of businesses are the construction and business process outsourcing industries, Del Rosario said.

“Construction is an example. Construction projects are always done by contracts. Of course if a project is done by contract, the bulk of the people employed are under a contract basis. I cannot envision how banning contractualization will work in the context of industries like construction, for example. Even business process outsourcing (BPO), many of the engagements are also done by contracts,” he explained.

Del Rosario stressed that in approaching the issue that there should be separation between contractualization and the abuses of it.

“There are many sectors of the economy wherein the only way you can hire people is through contracts. So let’s be very precise about what it is that we are against. I think it’s the abuses,” Del Rosario said.

The Phinma CEO expressed his hope that people are against the abuses of contractualization and not the general principle of it.

“I think when people say endo, it tends to connote the wrong principle of contractualization. What I hope they really mean are the abuses,” Del Rosario concluded.

source:  Manila Times

SM unfazed by calls to end ‘endo’

SM Investment Corp. (SMIC), the holding firm of the Sy family, is unfazed by the presidential candidates’ vow to end job contractualization, saying that they would abide by the law and find ways to survive.

SMIC President Harley Sy, speaking to reporters after the company’s annual stockholders’ meeting on Wednesday, said that the conglomerate is not in any way engaged in contractualization of employees, commonly known as “endo,” a scheme by which employees are hired for less than six months, and thereafter terminated to avoid their employment from ripening into regular employment.

“For the record, we deny that we are hiring on a contractual basis. That is purely speculative. In fact, we are one of the country’s biggest employers,” Sy said.

Under the law, “contractual employees” are those who render services under a contract, which particularly stipulates the period of employment and will not ripen into regular employment. Meanwhile, “seasonal” employees are those engage to work during a particular season in an activity that is usually necessary or desirable to the trade or business of employers.

Although hiring on a contractual basis is legally allowed, the Supreme Court, in a long line of cases, held that contractual hiring becomes “illegal and unconstitutional” when the same employee is repeatedly hired by the same employer and for the same purpose every after each employment contract expires.

Sy explained that SMIC does hire “seasonal” employees, which the holding company needs depending on the period of the year and demand for additional workforce, especially during Christmas season, other holidays, and during the opening of classes.

“Seasonal employment is actually a good opportunity for people who need flexibility,” he said.

“There is this speculation among many people that we do the five, five, five [i.e., five month employment contracts to avoid the six-month mandatory regularization]. We do not do that, we hire seasonal workers in addition to our regular employees,” Sy added.

“We need a lot of people, especially when the demand so requires like during the Christmas season and opening of the school year. Seasonal employment is validly allowed under our laws,” he added.

At present, SMIC has a total of 65,439 employees, regular and probationary combined, across SMIC, SM Retail, SM Prime, BDO and China Bank.

“In the event that the next government ends contractualization, we will abide by the law and find ways to survive,” Sy said.

On Sunday, during the last presidential debate, all five candidates vying for the country’s top post said they are against the practice of job contractualization, and vowed to end it if elected.

source:  Manila Times