Labor and Employment Secretary Rosalinda Dimapilis-Baldoz yesterday warned employers anew against engaging fly-by-night, or non-DOLE registered subcontractors, saying it has consequences for their businesses.


“Employers owe it to our workers not to engage contractors or sub-contractors not registered with the DOLE under D.O. 18-A. Sooner or later, employers will be at the receiving end of the dire consequences of their action,” she said.


Baldoz particularly warned that employers who are engaging fly-by-night subcontractors could be engaging “dummies” or “in-house” subcontractors that employers may own or operate, which is a clear violation of D.O. 18-A.


Under D.O. 18-A, contracting or sub-contracting is only allowed if the contractor carries a distinct and independent business, and takes full responsibility in the performance of the job, work, or service free from the control and direction of the principal in all matters connected with the performance of the work, except on matters that pertains to results.


She said aside from this, contractors or sub-contractors must have substantial capital or investment, and a service agreement that complies with all the rights and benefits under the labor laws. D.O. 18-A requires contractors and subcontractors to have a paid-up capitalization of P3,000,000 and a net financial contracting capacity (NFCC), which refers to the financial capacity to carry out a job, work, or service.


The NFCC is arrived at by subtracting current liabilities from current assests, multiplied by the equivalent of 10 for a contract duration of one year or less; 15 for more than one year up to two years; and 20 for a contract of more than two years.
Besides this, contractors and subcontractors are required to pay a registration fee of P25,000.


“D.O. 18-A applies as well to cooperatives doing contracting or sub-contracting work. They must also register with the DOLE,” Baldoz emphasized.


She said that as a result of the DOLE’s effort to professionalize the ranks of contractors and sub-contractors through D.O. 18-A, the DOLE has purged the number of fly-by-night subcontractors from a high of 18,000 to 4,975 legitimate ones.


Baldoz said her warning is meant to protect companies and establishment from entering into transactions with contractors and subcontractors of dubious backgrounds. “This is for your protection, but more importantly, for the protection of workers whose rights and benefits must be strictly observed by subcontractors that hire them,” she said.


The labor and employment chief’s warning came as the DOLE-National Capital Region prepares for the mandatory conference on Monday with the management of Kentex Manufacturing Corporation and its sub-contractor.


The DOLE has invited the Social Security System, Pag-Ibig and PhilHealth to the mandatory conference, where the DOLE Regional Office No. 3 will also appear, together with the owner/s of the CJC Manpower Services, the subcontractor based in Meycauayan, Bulacan which deployed workers to Kentex even if it was not registered with the DOLE under D.O. 18-A.


And even while the DOLE is gearing up its investigation, Baldoz has already intimated the long list of penalties that the principal, Kentex Manufacturing Corporation, and its sub-contractor, CJC Manpower Services, including agents and sub-agents, if there were any, might face if they are found liable for the fire and the deaths that cost the lives of 74 workers and injuries to scores of others.


Baldoz, citing a report of DOLE Undersecretary Rebecca Chato, said the direct employer faces possible liabilities and remedies and compensation, such as administrative liability, specifically, solidary liability with the contractor or subcontractor for any violation of any provision of the Labor Code; criminal liability, specifically, reckless imprudence resulting to multiple injury and multiple homicide; violation of the Fire Code; violation of the National Building Code; arson (if it is established that the factory owner/s started the fire); and criminal liability, under Art. 288 of the Labor Code, for possible violation of labor standards, occupational safety and health standards, and social legislations.


The company may also face civil liability, specifically, actual damages (medical expenses, etc.); moral damages; and exemplary damages.


On the part of the contractor/subcontractor, it may be liable administratively under the Labor Code which could lead to cancellation of D.O. 18-A registration if found to have violated labor standards, occupational safety and health standards and social legislations (Note: The DOLE Regional Director in Central Luzon already noted the sub-contractor is not registered under D.O. 18-A).


The sub-contractor could also be held criminally-liable for violation of Articles 112-119 of the Labor Code, in relation to Art. 288, if found to have committed prohibited acts regarding wages; for violation of R.A. 8282, or the Social Security Act of 1997, under Sec. 28 (e) of which provides that “the failure or refusal of an employer to register their employees, or to deduct contributions from the employee’s compensation and remit the same to the SSS, constitutes criminal offenses”.


“The penalties prescribed by R.A. 8282 ranges from a fine of P5,000 to P20,000 and imprisonment from six years to 12 years,” Chato informed Secretary Baldoz.




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