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GLOBAL FREE TRADE: THE SECURITY OF TENURE OF THE WORKERS

AND LABOR CONTRACTUALIZATION IN THE ROGATIONIST

SEMINARY CEBU UTILITY PERSONNEL

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A Thesis Proposal

Submitted to: Mrs. Anita F. Alisaca

Rogationist Seminary College-Cebu

Punta Princesa, Cebu City

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In Partial Fulfillment of the

Requirements for the Subject

Contemporary World

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By:

Sem. Francis B. Bangalando

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Chapter 1

THE PROBLEM AND ITS SETTING

1.1 Rationale

Labor is basically manifested through work that involves hard work in order to earn

wages. Many of the workers nowadays suffered maltreatment and unjust wages in their

job. Subsequently, labor contractualization is a widespread phenomenon in the Philippines.

As defined, labor contractualization is the practice of replacing regular workers with

temporary workers who receive lower wages, with little or no benefits. Labor

contractualization can be also intertwined with labor-only-contracting or LOC. It is clear

that industrial companies practiced this form of employment for many years since it was

signed by the late-President Ferdinand E. Marcos on May 1, 1974.

However, through the pervasive practiced of contractualization in the Philippines

many labor groups opposed and complained about the unequal treatment of the employers

to their employees. The rise of child labor is also prevalent in the country. Furthermore,

regular and non-regular workers protested to the government in order to give equal

treatment and just wages to their job.

Meanwhile, on May 01, 2018 President Rodrigo Duterte has signed the executive

order that prohibits the illegal labor contracting but still allow some forms of

contractualization. The “ENDO” or end of contract scheme is considered as illegal labor

contracting, which is a strategy used by numerous companies in the Philippines to avoid

regularization of the employees.

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Here, the problem of inequality lies between the employer and the employee. The

employer has all the authority over all his employees, thus the latter can be easily be

discharged anytime. For this reason, the employees have nothing to do against their

employer, but to be of his service. However, these facts clearly manifest the inequalities

between the employer and the employee in the realm of labor. These inequalities can be

settled through standard of policies and guidelines, which are laws relative to the right to

Security of Tenure. Thus, these laws protect the employee not to be terminated anytime by

his employer without just cause and due process. The Security of Tenure, then is made to

preserve the dignity of the employees and the rights to work. However, if these inequalities

cannot be settled, injustices and troubles emerge.

Article XIII, Section 4 of the Philippine Constitution stated that, “the Congress shall

give highest priority to the enactment of measures that protect and enhance the right of all

people to human dignity, reduce social economic and political inequalities, and equitable

equities by equitably diffusing wealth and political power for the common good.” “Far

from being mere economic activity…, labor is the existential activity of man, ‘his free

conscious activity’ not a means for maintaining life … but for developing his universal

nature.” It is clear that through labor man can fulfill authentic liberation from industrial

domination. Moreover, workers can now freely exercise their authority. In this way, labor

is no longer an alienated activity, but all-around self-realization and self-expression. Varied

reports explained that their security of tenure was being violated by some employment

agencies in the country. Likewise, many labor groups complain about this kind of situation

in our industrial evolution.

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This study is indeed a highly significant drive to liberate the workers from their

plea to abolish labor contractualization in the Philippines. Furthermore, this will lead to a

better economy of the country. Hence, the researcher will expound the value of

emancipation to aid the lives of the workers in their endeavors.

1.2 Statement of the Problem

This proposal aims to interpret the basic notion of the Security of Tenure to the

Workers and Labor Contractualization. Thus, the researcher formulates some questions as

guides for explaining the real essence of globalization in relation to Security of Tenure and

Labor Contractualization.

1. What are the principles, laws, and probations that strengthened the Security of

Tenure of the Workers?

2. What are the loopholes of Labor Contractualization in the Philippines?

3. How can global free trade synthesize the inequalities and problems of Security

of Tenure and Labor Contractualization?

1.3 Significance of the Study

The primary intention of this study is to repair the gaps in Security of Tenure Act

and Executive Order NO. 51. Thus this will aid the workers to liberate themselves from

the oppressions of their employers. Secondly, this study presents a global understanding of

free trade in view of the labor contracting and subcontracting arrangements of the workers
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in the Philippines. Consequently, this paper will only expose the rational thought of

globalization with regard to human emancipation. Thus this study is significant to the lives

of the workers who are suffering from various contractual employment schemes in the

Philippines.

Moreover, this study aims to offer relevant information to all for a better

understanding on the contracting and subcontracting arrangements of the workers in the

Philippines. In addition, this study will be useful for the government to have a profound

knowledge necessary for legislation. Furthermore, this research will also serve as a good

reference for those students who want to know more about the notion of global free trade

regarding on human labor. Besides, this study will present the ideas of globalization and

the basis of liberation of the workers as well as their protection to security of tenure.

Lastly, this study will serve as a reference for the future researchers who wish to

undergo similar or related study. Thus, this research will be beneficial to the government,

students, teachers, and workers.

1.4 Definition of Terms

Employee- includes any individual employed by an employer.

Employer- includes any person acting directly or indirectly in the interest of an

employer in relation to an employee.

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Security of Tenure- is that “the employer shall not terminate the service of an

employee except for just or authorized causes as provided by law, and subject to the

agreements and requirements of due process.

Labor Contractualization- is the practice of replacing regular workers with

temporary workers who receive lower wages, with little or no benefits.

Global Free Trade- is a trade policy that does not restrict imports or exports; it

can also be understood as the free market idea applied to international trade.
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Chapter 2

REVIEW OF RELATED LITERATURE

2.1 Review of Related Literature

The researcher uses different books and online articles for him to be guided in his

research study. Subsequently, to deepen the understanding of these two variables, the

researcher will lay down some books and articles that are associated in his study. Thus,

these references are some of the sources which could help the researcher in his study.

International Catholic Migration Commission vs. National Labor Relations

Commission G.R. No. 72222, January 30, 1989.

This court ruling stated, “A probationary employee is one who is on trial by an

employer during which the employer determines whether or not he is qualified for

permanent employment. The probationer should do his best, in accordance to his

employer’s interests and standards, and prove to his employer his excellence in the job

during the probation period.

A.M. Corta and Co., Inc. vs. National Labor Relations Commission G.R. No. 74007,

August 10, 1989.

It has been discussed in this case that on the probationary employment, “the

employer shall make known to the employee at the time he is hired the standards by which
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he qualify as a regular employment.” The inability of the employee to meet the standards

of the employer will be considered as a good ground for his termination, and thus,

disqualified him to be employee. Nevertheless, the termination is not to be made during

the probation period. The employer must see to that, the probation must first expires before

the termination is done. The period of the probation is considered as the employee’s limited

tenure.

Santos vs. National Labor Relations Commission G.R. No. 76721, September 21,
1987.
This court ruling emphasized that, “The rights of the employee who is terminated

without just cause is entitled to reinstatement. Reinstatement refers to the restitution of the

employer after being unjustly dismissed from his position.

Philippine Long Distance Telephone Co. vs. National Labor Relations Commission

G.R. No. 80609, August 23, 1988.

This case tackled about the separation pay to be given to those employees who are

justly dismissed. This case prohibits employers to give separation pay to the employees

who are dismissed due to their “habitual intoxication or an offense involving moral

aptitude.”
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Psyche Mendoza. The Labor Movement: Impact of Herrera law after 28 years. 2017.

This online article written by a journalist presents the shadows of the labor scheme

in the Philippines. It also discusses the different laws which amends to the Labor Code of

the Philippines. This is an important source for the researcher in order for him to be guided

in his study. Thus this is related to the study because it plots the development of the

prohibition of the labor contractualization in the Philippines.

Gillian Cortez. Understanding Executive Order 51. 2018

Gillian Cortez the writer of this online article discusses the brief understanding of

the Executive Order No. 5. Consequently it also explains the nature of the EO 51 and its

relation to the Department Order No. 174 of the Department of Labor and Employment

issued by Secretary Silvestre H. Bello III. This article is related to the study because it

simplifies the discussion of labor contractualization in the country.

Jay Nelz. Malacañang Palace Officially Releases EO Against “Endo”. 2018

Jay Nelz the writer of this online article emphasizes the essential enunciation of the

Executive Order No. 51 by President Rodrigo Duterte on May 1, 2018. It talks about the

announcement of the Executive Order on Labor Day. This article also exhibits the general

observations and comments from public and social domains. Consequently, this article

manifests a coherence and clarity to the researcher’s future undertakings about his study.
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Presidential Communications Operations Office. President Duterte Signs EO vs

Illegal Contractualization. 2018

Presidential Communications Operations Office released the official statement of

President Rodrigo Duterte regarding Endo or End of Contract scheme in the Philippines.

This online article discusses the errors of Endo with regards to employment repression.

Moreover, it also presents a solid evidence about illegal engagement on contractualization

in the country. Thus, this article is related to the study and an essential source to the

researcher’s latter endeavors.

Pia Ranada. Look: Duterte's Executive Order on Contractualization. 2018

Pia Ranada the writer of this online report presents a brief background on Executive

Order No. 51 series of 2018 which President Rodrigo Duterte signed on May 1, 2018. This

online report displays the concrete intention of the EO 51 in relation to labor

contractualization in the Philippines. Moreover, it also deliberates the plea of the people

regarding social, industrial, economical, and technological oppression.

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Chapter 3

RESEARCH METHODOLOGY AND THEORETICAL FRAMEWORK

3.1 Research Respondents

The total number of respondents in this study will be 20 utility personnel. They are

mainly laundrywoman, cook, maintenance, and the workers in- charged in the Rogate

Water Refilling Station. Likewise, the ages of the respondents are 25-60 years old. They

are from Barangay Buhisan and Barangay Quiot, Cebu City. Moreover, the respondents of

this study are male and female workers. Thus, the respondents are essential in this research

proposal.

3.2 Research Environment

The data from this study will be gathered from the utility personnel of the

Rogationist Seminary Cebu. Thus, they are ask to present their opinions, in order for this

research to become attainable and feasible to the workers. Henceforth, the respondents are

recognized and respected in their views and opinions. Lastly, they are requested to present

their honest and sincerest plea about their situation as workers.

3.3 Research Instrument

Interviews range from highly structures, where specific questions and the order in

which they are asked are determined ahead of time. Thus, the instrument that will be used
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in this research proposal is survey questionnaire. A survey questionnaire is a set of

questions used in a survey. This survey questionnaire is a type of data gathering method

that is utilized to collect, analyze and interpret the different views of a group of people

from a particular population.

3.4 Research Procedure

3.4.1 Gathering of Data

Survey questionnaires will be given to 20 utility personnel of Rogationist Seminary

Cebu. They will be given instructions in answering the instrument. Moreover, the content

of the survey questionnaires are simplified in order for the respondents to answer the survey

questions clearly and legibly. Therefore, the survey questionnaires are disseminated in

order to collate vivid ideas from the respondents.

3.4.2 Treatment of Data

Data gathered from the survey will be subjected to a qualitative analysis. Basic

interpretive qualitative study exemplifies all the characteristics of qualitative research.

Likewise, data are inductively collected through interviews, observations, or document

analysis. These data inductively analyzed to identify the recurring patterns that cut across

the data. Henceforth, data gathered from the survey will be subjected to a qualitative data

analysis, specifically it will use the narrative analysis.

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3.5 Theoretical Framework

The Executive Order No. 51 series of 2018 was signed by President Rodrigo

Duterte on May 1, 2018. It implements Article 106 of the Labor Code of the Philippines,

as amended, to protect the right to security of tenure of all workers based on social justice.

However, this order has been criticized and condemned by various labor unions. It was

also been scrutinized that this executive order has several deficiencies. Subsequently,

security of tenure has been compromised, as a result oppression arises.

Additionally, the Executive Order No. 51 encounters various issues and challenges.

These problems are manifested through oppressions, abuses, lower wages, and

contractualizations. Likewise, the researcher endeavors to integrate these problems into

one by focusing on contractualization as the impediment of regularization. As stated in the

previous chapter, the Executive Order No. 51 prohibits the illegal labor contracting but still

allow some forms of contractualization. For instance, “ENDO” or the end of contract

scheme is considered as illegal labor contracting, which is a strategy used by numerous

companies in the Philippines to avoid regularization of the employees. Likewise, the

following loopholes will be elaborated in chapter 4 of this research.

Labor contractualization was already a provision in Presidential Decree [PD] 442,

or the Labor Code of the Philippines, which Marcos signed on May 1, 1974. This decree is

ratified: A Decree Instituting a Labor Code, Thereby Revising and Consolidating Labor

and Social Laws to Afford Protection to Labor, Promote Employment and Human

Resources Development and Ensure Industrial Peace Based on Social Justice.

Furthermore, this decree has undergone several amendments. The most notable

amendment was brought about by Republic Act [RA] 6715, also known as the Herrera law,
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which took effect on March 21, 1989. The Herrera Law made substantial amendments to

the Labor Code but did not touch Article 106 to 109 on contracting and subcontracting

labor. According to Atty. Sonny Matula a president of the Federation Free workers Union,

“Article 106 was intended to balance the interest of capital and labor but as the years go by

it was used by capital to circumvent the worker’s constitutional right to security of tenure.”

Employers contend, however, that contractualization or outsourcing is an employment

strategy recognized by Article 106 of the Labor Code and that it is a valid exercise of

management prerogative and business judgment.

On May 7, 1987, almost two years before the passage of the Herrera Law, then-

Labor Secretary Franklin M. Drilon issued Department Order 007-87. The Department

Order contained the guidelines that operationalized the “Accord on Industrial Harmony”,

forged during the April National Tripartite Conference involving labor leaders, employers

and the Aquino administration. It included a “no strike/no lockout clause as a standard

provision” in collective bargaining agreements (CBAs) between labor and management.

In June 1989 Congress passed the Republic Act 6727 or Wage Rationalization Act,

leading to the creation of various Regional Tripartite Wage and Productivity Boards or

Regional Boards that became responsible for prescribing minimum wages per region.

Republic Act 6727 ended for good the practice of legislated wages, where Congress

determined the amount of minimum wage to be given to workers and thereafter passed a

law for its implementation.

In 1997 then-Labor Secretary Leonardo Quisumbing issued Department Order 10-

97. That order amended the rules implementing Books III and IV of the Labor Code as

amended, in particular the rules on labor contractualization. It was the first time the
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Department of Labor and Employment issued a Department Order expressly stating that,

“labor-only-contracting, as defined herein, shall be prohibited”, while at the same time

saying that “contracting and subcontracting arrangements are expressly allowed by law”.

The wording of the Department Order was such that contracting and subcontracting

was allowed by law, but that it may be subject to regulations “consistent with the promotion

of employment, protection of workers’ welfare and enhancement of industrial peace and

rights of workers to self-organization and collective bargaining.

It was also stated in Department Order 10 that “contractors and subcontractors, as

well as their employees, are entitled to all the rights and privileges, and are subject to all

the duties and responsibilities which the Labor Code, as amended, attaches to every

employee-employer relationship”.

The discourse on whether contracting and subcontracting arrangements are legal

and based on the law resurfaced during the time of former President Gloria Macapagal-

Arroyo. Under Labor Secretary Patricia Santo Tomas, the Department of Labor and

Employment issued on February 21, 2002, the rules implementing Articles 106 to 109, as

contained in Department Order 18-02.

Still, the Santo Tomas’ Department Order also stated that, “contracting and

subcontracting arrangements are expressly allowed by law and are subject to promotion of

employment and the observance of the rights of workers to just and humane conditions of

work, security of tenure, self-organization and collective bargaining”.

Department Order 18-02 defined labor-only-contracting as “an arrangement where

the contractor or subcontractor merely recruits, supplies or places workers to perform a

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job, work or service for a principal”. Likewise, the Department Order defined such

arrangement as acceptable if the contractor or subcontractor does not have substantial

capital or investment that relates to the job, work, or service to be performed and the

employees recruited, supplied or placed by such contractor or subcontractor are performing

activities that are directly related to the main business of the principal.

For all the criticisms heaped on the Arroyo administration by former President

Benigno Simeon Aquino III, his administration also supported contractualization. Former

Labor Secretary Rosalinda Baldoz issued Department Order 18-A, Series of 2011, that also

contained the rules implementing Articles 106 to 109 of the Labor Code as amended.

Signed on November 14, 2011, the Department Order followed previous reiterations

contained in the Department Order 10-97 under Ramos and the Department Order 18-A

under Arroyo.

The Baldoz’ Department Order also defined labor-only-contracting as a prohibited

practice, “an arrangement where the contractor or subcontractor merely recruits, supplies

or places workers to perform a job, work or service for a principal”. Compared to its

predecessor, the Aquino government posted faster increases in nonregular workers or

contractuals.

However, the first nine months of the Duterte presidency saw intense lobbying on

the labor-only-contracting issue from various labor groups. Two Department Orders issued

by Labor Secretary Silvestre H. Bello III were slammed by labor groups from both ends of

the political spectrum. Organized labor criticized Bello’s Department Order 168, of

December 28, 2016, and Department Order 174 on March 15 issued this year. They stressed
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that the inclusion of labor contractors or service agencies in the hiring of workers, as

contained in both Department Orders, was unacceptable.

The President asked labor leaders to propose a draft for a new order against

contractualization which he will consider in his review. There are also house bills that

would take into consideration to totally prohibit contractualization and all its forms,

including all fixed term employment. These are House Bill 444 also known as the “Security

of Tenure Act of 2016”, was filed by Party-list Rep. Raymond Mendoza of Trade Union

congress of the Philippines (TUCP), and House Bill 556 the “Regular Employment” bill

sponsored by the Makabayan Bloc in Congress which promotes regularization.

Meanwhile on May 01, 2018 Tuesday the president signed executive order against

contractualization was enunciated by President Rodrigo Duterte. This order was

proclaimed as Executive Order No. 51 series of 2018. It prohibits the illegal contracting

and sub-contracting of workers. The executive order applies to all parties including

cooperatives engaged in any contracting and sub-contracting.

Prohibition against illegal contracting or sub-contracting, when undertaken to

circumvent the workers’ right to security of tenure, self-organization and collective

bargaining and peaceful concerted activities pursuant to the 1987 Philippine Constitution,

is hereby strictly prohibited. Security of tenure refers to the right of employees not to be

dismissed or removed without just or authorized cause in observance of procedural due

process consistent with the Constitution, the Labor Code as amended, and prevailing

jurisprudence.
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The president admitted that a mere executive order was not enough to put an end to

endo or end of contract and illegal contractualization. He stressed that Congress needs to

enact a law amending the Labor Code in order to implement an effective and lasting

solution to the problems brought about by contractualization. Sought to explain Executive

Order 51, Director Benjo M. Benavidez of Department of Labor and Employment’s Bureau

of Labor Relations said the order just “reinforces existing provisions. So if you notice, there

are provisions there in the executive order that are already found in the Labor Code of the

Philippines.” “The very nature of an executive order is to execute and implement existing

laws, rules, and regulations. It cannot amend or supplant existing provisions of law,” he

added.
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3.6 Conceptual Framework

Global Free Trade

Security of Tenure Labor Contractualization

Employer vs. Employee

Maltreatment

Unjust Compensation

Abuses

Child Labor
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BIBLIOGRAPHY
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Primary Sources

Azucena, C. E. Jr. Everyone’s Labor Code. Manila: Rex Printing Company, Inc. 2001.

De Leon, Hector. Textbook on the Philippine Constitution. Manila: Rex Book Store, Inc.

2005.

Department of Labor and Employment. Department Order No. 174. Intramuros, Manila.

mmmmmDepartment of Labor and Employment Press, 2017.

Foz, Vicente B. The Labor Code of the Philippines As Amended And Its Implementing

Rules and Regulations With Appendices. Manila: Vicente B. Foz, 2001.

Malacañan Palace. Executive Order No. 51. Metro Manila. Malacañan Palace Press, 2018.

_________. Presidential Decree No. 442. Labor Code of the Philippines. Metro Manila.

mmmmmMalacañan Palace Press, 1974.

Nolledo, Jose. The Labor Code of the Philippines with Implementing Regulations,

Exclusive Issuances and Related Laws, Rev. Ed. Manila: National Book Store,

Inc., 1989.

____________. The New Philippine Constitution Annotated. Manila: National Book Store,

Inc., 1990.
 21

Electronic Sources

Mendoza, Psyche Roxas, “The Labor Movement: Impact of Herrera Law After 28 Years”

mmmmmPart 1 [article online] 30 April 2017, https://businessmirror.com.ph/the-labor-

mmmmmmovement-impactofherrera-law-after-28-years/.

_________, “The Labor Movement: Impact of Herrera Law After 28 Years” Part 2

mmmmm[article online] 30 April 2017, https://businessmirror.com.ph/the-labor-

mmmmmmovement-impactofherrera-law-after-28-years-2/

_________, “The Labor Movement: Impact of Herrera Law After 28 Years” Conclusion

mmmmm[article online] 30 April 2017, https://businessmirror.com.ph/the-labor-

mmmmmmovement-impactofherrera-law-after-28-years-3/

Nelz, Jay, “Malacañang Palace Officially Releases EO Against “Endo,” Philippine News,

mmmmmMay 2, 2018, https://philnews.ph/2018/05/02/malacanang-palace-officially-

mmmmmreleases-eo-a-endo/

Presidential Communications Operations Office, “President Duterte signs EO vs illegal

mmmmmcontractualization” [article online] 1 May 2018,

mmmmmhttps://pcoo.gov.ph/news_releases/presidentduterte-signs-eo-vs-illegal-

mmmmmcontractualization/
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APPENDIX
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Survey Questionnaire of the Respondents

Name: Age: Sex:

Address:

Contact Number:

Instruction: Answer the following questions honestly. Kindly choose the best answer of

your choice among the choices given. Consequently, put a check ( ) on the blank

provided after the choices.

A. Yes B. No C. Maybe D. Not at All

1. Do you love your job? ______ ______ ______ ______

2. Do you like your employer? ______ ______ ______ ______

3. Do you like your companions or

co-workers? ______ ______ ______ ______

4. Do you find your job productive? ______ ______ ______ ______

5. Do you find your job easy? ______ ______ ______ ______

6. Do you find your job interesting? ______ ______ ______ ______

7. Does your employer provide an exact

amount of salary or compensation to

you and your companions? ______ ______ ______ ______

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A. Yes B. No C. Maybe D. Not at All

8. Does your employer gave you a day off

and rest at least once, twice, or thrice a

year? ______ ______ ______ ______

9. Does your employer treat you well in

your job? ______ ______ ______ ______

10. Does your employer provide the

Benefits for your retirement? ______ ______ ______ ______

11. Do you have problems with regard

to your labor contract? ______ ______ ______ ______

12. Do you have the rights of your

security of tenure? ______ ______ ______ ______

13. Do you agree with the global free

trade? ______ ______ ______ ______

14. Does globalization helpful in your job? ______ ______ ______ ______

15. Does new technology makes your job

convenient? ______ ______ ______ ______

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A. Yes B. No C. Maybe D. Not at All

16. Does your job makes your life

comfortable? ______ ______ ______ ______

17. Do you agree with the government’s

decision to end labor contractualization

in the Philippines? ______ ______ ______ ______

18. Do you agree with the government’s

decision to protect the rights of the

worker’s security of tenure? ______ ______ ______ ______

19. Do you affirm with the Department

of Labor and Employment’s rules

and regulations about labor? ______ ______ ______ ______

20. Do you affirm with the terms and

Conditions of Department of Labor

and Employment about the security of

tenure and labor contractualization? ______ ______ ______ ______

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I declare under the oath that this survey questionnaire has been accomplished in

good faith, verified by me and to the best of my knowledge and belief, is a true, correct,

and complete understanding pursuant to the instruction of this survey questionnaire.

I am also fully aware that when I violate any of the rules and regulations of this

survey questionnaire, I will be disqualified and automatically nullified.

____________________

Signature of Respondent