D.O. 174 Does not Apply to Other Contractual Relationship
D.O. 174 of the Department of Labor and Employment is the Implementing Rules and Regulations of Articles 106 to 109 of the Labor Code, as amended.
It applies to cases where there is contracting or sub-contracting in a trilateral relationship where there is employer-employee tie between the contractor and workers deployed to principal.
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It does not contemplate to cover information technology-enabled services involving an entire or specific business process.
D.O. No. 174, Series of 2017, does not contemplate to cover as well contractual relationships such as in contract of sale or purchase, contract of lease, contract of carriage, contract growing/growership agreement, toll manufacturing, contract of management, operation and maintenance and such other contracts governed by the Civil Code of the Philippines and other special laws.
D.O. No. 174, Series of 2017 does not also cover the contracting out of job or work to a professional, or individual with unique skills and talents who himself or herself performs the job or work for the principal. For instance, a radio host or talent having extraordinary abilities not common to ordinary individuals just like in the case of Jay Sonza vs. ABS CBN.
In all, D.O. 174 is not a silver bullet to address all issues on contracting considering that business is more complex than by saying all “contractualization” practices should end.
The reality of business is that different forms of engagement will be needed to run the business. Contracts will have to be drafted to meet these requirements. There are long-term and short-term contracts. People or individuals will be involved. Thus, not all those contracts where individuals are involved and services have to be rendered and paid have to be registered under D.O. 174.
Business is not a simple undertaking comparable to going from point A to point B. There are several dimensions to it. Business owners have to face losses, low sales, increase in volume, inventories, closure of branches, etc. All of these things affect how the business owners make his decision with respect to personnel. On that score, the government should not intervene in how businesses should be run by enforcing regulations that go against the business judgment.
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