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First Regular Session

HOUSE BILL Noe 554

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INTRODUCED BY REPRESENTATIVE ROMEO S. MOMO, SR.

EXPLANATORY NOTE

Section 3, Article XIII of the Constitution explicitly provides that “the State
shall afford full protection to labor, local and overseas, organized and
unorganized and promote full employment opportunities for all.”

In pursuance of this expressed Constitutional mandate, Congress has the
bounden duty to enact legislative measures that will protect and promote the
welfare and safety of the people in the labor sector, especially the neglected and
demeaned construction workers.

The bill therefore seeks to provide for a magna carta for all construction workers
in order to protect their rights to a just and sufficient living wage, to self-
organization and collective bargaining, security of tenure, and just and humane
conditions of work. Non-compliance with this mandate will be penalized
accordingly.

In view of the foregoing reasons, the approval of this important piece of
legislation is earnestly sought.

1" District of Surigao del Sur


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL No,_ 2594

AN ACT

PROVIDING FOR A MAGNA CARTA FOR WORKERS IN THE CONSTRUCTION
INDUSTRY

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. . This Act shall be known as the “Magna Carta for Workers in the
Construction Industry”.

SEC. 2. Declaration of Policy. - The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers. The State shall ensure the rights of
construction workers to livable and sufficient salary, to self-organization and collective
bargaining, security of tenure, and just and humane conditions of work. Toward this end, the
employers shall provide a mandatory accident insurance coverage to construction workers
for a speedy and efficient delivery of services to compensate for any injury, disability or
death arising from any job-related accident or illness suffered during the course of
employment.

SEC. 3. Coverage. - This Act shall apply to all operations and undertakings in the
construction industry and its subdivisions, namely: general building construction, general
engineering construction and special trade construction, as classified by the Philippine
Construction Accreditation Board of the Construction Industry Authority of the Philippines;
companies and entities involved in demolition works; and other construction industries as
determined by the Secretary of Labor and Employment.


SEC. 4. Definition of Terms. - As used in this Act, the following terms shall mean:

a. Accident Insurance - refers to an insurance against bodily injury or death of
construction worker arising from an accident. It is a form of insurance that
undertakes to indemnify the construction worker against expense, loss of time
and suffering resulting from accidents causing him physical injury, including the
payment of a fixed sum to workers’ heirs in case of death by accident within the
term of the policy.

b. Casual employees - refer to those employed to perform work not related to
the main business of the employer. Casual employees who are employed for
at least one year, whether continuous or broken, shall be considered regular
with respect to the nature of employment. The employment shall continue
‘except for a just or authorize cause, or voluntary termination by the employee.

c. Construction - refers to the following:

i. building including excavation and the construction, structural alteration,
renovation, repair, maintenance (including cleaning and painting) and
demolition of all types of buildings or structures;

ii. civil engineering including excavation and construction, structural alteration,
repair, maintenance and demolition of airports, docks, harbors, inland
waterways, dams, river and sea defence works, roads and highways,
railways, bridges, tunnels, viaducts and works related to the provision of
services such as communications, drainage, sewerage, water and energy
supplies; and

iii, the erection and dismantling of prefabricated buildings and structures, as
well as the manufacturing of prefabricated elements in the construction site.

d. Construction Site - refers to any site at which any of the processes or
operations described in Section 4a are carried on.

e. Construction Workers - refer to persons engaged in construction like
tradesmen, laborers, or skilled workers employed in the physical construction
of a built environment and its infrastructures such as carpenter, electrician,
heavy equipment operator, ironworker, laborer, mason, painter, plasterer,
plumber, pipe fitter, sheet metal worker, steel fixer and welder.


f. Employer or Contractor - refers to a contractor or subcontractor who employs
at least ten (10) construction workers to perform construction works or services
for hire, including corporation, partnership, limited liability company,
association or group of persons.

g. Group Personal Accident Insurance - refers to a type of insurance coverage
for construction workers to entitle them or their beneficiaries insurance benefits
in case of injury, permanent disability or death

h. Insurance Company - refers to a corporation that provides coverage, in the
form of compensation resulting from loss, damages, injury, treatment or
hardship in exchange for premium payment.

i. Non-project employees - refer to those employed without reference to any
particular construction project.

j. Probationary employees - refer to those who, upon the completion of the
probationary period, are entitled to regularization. Upon their engagement,
probationary employee should be informed of the reasonable standards under
which they will qualify as regular employees.

k. Project employees - refer to those employed in connection with a particular
construction project and whose employment is co-terminus with its project.

|. Regular employees - refer to those workers who completed the probationary
period or those assigned to fill up regular positions vacated as a result of death,
retirement, resignation or termination of employment of the regular holders
thereof.

m. Trade union - refers to a combination or workers of the same trade or of
several allied trades, for purpose of united action for favorable conditions
regarding wages, hours of work and other terms and conditions of employment

for its members.
SEC. 5. Employment Status. -

5.1. Classification of employees. - The employees in the construction industry are
generally categorized as:

a. project employees; and
b. non-project employees.

5.2. Requisite of Project employment. - Either one or more of the following
circumstances, among others, may be considered as requisite for project employee:

a. The duration of the specific/identified undertaking for which the worker is
engaged is reasonably determinable.


b. Such duration, as well as the specific work/service to be performed, is defined
in an employment agreement and is made clear to the employee at the time of
hiring.

c. The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.

d. The employee, while not employed and awaiting engagement, is free to offer
his services to any other employer.

e. The termination of his employment in the particular project/undertaking is
Teported to the Department of Labor and Employment (DOLE) Regional Office
having jurisdiction over the workplace within 30 days following the date of his

separation from work, using the prescribed form on employees’
terminations/dismissals/suspensions.

f. An undertaking in the employment contract by the employer to pay completion
bonus to the project employee as practiced by most construction companies.

5.3. Project completion and rehiring of workers. -

a. The workers of a particular project are assigned in different phases. The
completion of a specific phase of a project is considered a completion by the
employee.

b. Upon completion of a phrase or project, the project employee may be rehired
for another undertaking. The last day of service of the employee in the
preceding project shalll be indicated in the contract.

5.4. Types of non-project employees. - The types of non-project employees:

a. Probationary employees;
b. Regular employees; and
c. Casual employees.

5.5. Contracting and subcontracting. - The practice of contracting out certain phases
of a construction project is recognized by law. P.D. 442, as amended, otherwise known

as the “Labor Code of the Philippines” and its Implementing Regulations and Regulations
specifically Department Order No. 174, allows the contracting out of jobs under certain
conditions. Where such job contracting is permissible, the construction workers are
generally considered as employees of the contractor or subcontractor, as the case may be.

SEC. 6. Conditions of Employment. -

6.1. Security of tenure. - Project employees who have become regular shall enjoy
security of tenure in their employment as provided under Article 280 of the Labor Code,
as amended. Where their services are terminated for a cause/causes, they are not by law
entitled to separation pay. The just causes for terminating employment are enumerated
under Article 282 of the Code. Where the services of regular employees are terminated
for any of the authorized causes under Article 283, as distinguished from just causes,
they are entitled to separation pay.


6.2. Project employees not entitled to separation pay. - The project employees are
not entitled to separation pay if their services are terminated as a result of the completion
of the project or any phase thereof in which they are employed. Likewise, project
employees whose services are terminated because their services are no longer needed
in the particular phase of the project are not by law entitled to separation pay.

6.3. Project employees entitled to separation pay. - Project employees who have
rendered at least one year of service shall be considered as regular employees and are

entitled to separation pay.

A “day” as used herein, is understood to be that which must necessarily come, although
it may not be known exactly when. This means that where the final completion of project
or phase thereof is in fact determinable and the expected completion is made known to
the employee, such project employee may not be considered regular, notwithstanding
the one-year duration of two or more employments in the same projects or phase of the
project.

The completion of the project or any phase thereof is determined on the date originally
agreed upon in the contract. However, it can be extended with the mutual of the contractor
and the project employee.

In case the project employee is terminated without just or authorized cause, and the
project has not been completed, the worker is entitled to reinstatement with back wages.
If the reinstatement is no longer possible, the employee is entitled to salaries for the
unexpired portion of the agreement.

6.4. Completion of the project. - Project employees who are separated from work as a
result of the completion of the project or a phase are entitled to pro-rata completion bonus.
The pro-rate completion bonus shall be based on the industry practice which is one half
(1/2) month salary for every year of service.

6.5. Statutory benefits. - During the period of employment, the construction employees
whether project or non-project shall enjoy all the benefits due to them under the law, both
monetary and non-monetary.

6.6. Regional minimum wage. . The prevailing minimum wage rates of workers where
the construction is located must be implemented.

SEC. 7. Preventive Suspension. - Project and non-project employees may be
preventively suspended if the employee's continued employment poses a serious and
imminent threat to the life or property of the employer or of the co-workers. No preventive
suspension, however, shall last longer than fifteen (15) days. The employer shall
thereafter reinstate the worker's former position or the employer may extend the period
of suspension provided that during the period of extension, he pays the wages and other
benefits due to the worker. The employer shall designate a day, time and place within the
period of preventive suspension, with notice to the employee, to hold a fact-finding
investigation, to enable the suspended employee to be heard and be assisted by his


counsel or representative. Such termination shall not prejudice the right of the employee
to question the severance of the relationship in the appropriate forum.

SEC. 8. Self-Organization and Collective Bargaining. - In recognition of the right of
employees to self-organization and collective bargaining, this Act hereby encourages the
formation of trade unions in the construction industry, provided that the formation or
activities of a recognized trade unions will not prejudice existing bargaining units, subject
to existing laws.

SEC. 9. Responsibilities of the Employer and the Workers.
9.1 Requirements of labor and social legislations. -

a. The construction company and the contractor and subcontractor shall be
responsible for the workers in its employ on matters of compliance with the
requirements of existing laws and regulations on hours of work, wages, wage-
related benefits, health, safety and social welfare benefits including submission
to the DOLE-Regional Office of work accident or illness report, monthly report
‘on terminations, dismissals, suspensions and other reports. The contractor
shall exercise sound judgement and discretion in contracting out projects to
ensure compliance with labor standards.

b. Project and non-project employees shall observe the requirements of labor and
social legislations and reasonable company rules and regulations on matters
pertaining to their obligations.

9.2 Implementation of Safety and Health Standards. - The employer shall strictly
comply with occupational safety and health standards provided for in R.A. No. 11058
(Strengthening Compliance with Occupational Safety and Health Standards). The
worker shall cooperate with the employer in carrying out the provisions of the said law,
and comply with prescribed safety and health procedures to prevent or control work-
related accidents and diseases.

SEC. 10. Wage Increases. - Wage increases, whether mandated or agreed upon by the

parties, the prescribed increase in the wage rates of the workers in construction projects
shall be borne by the principals or clients of the construction contractors and the contracts
shall be deemed amended accordingly. The wage rates of project employees are
dependent on the skills or level of competence of such project employees as determined
by the Technical Education and Skills Development Authority (TESDA) provided that the
rates established shall not be lower than the wage order issued by the Regional Tripartite
and Wages Productivity Board (RTWPB).

SEC. 11. Employer's Responsibility and Liability. - The employer, contractor and
subcontractor, if any, and any person who manages, controls or supervises the work
being undertaken shall be jointly and solidarily liable for compliance with this Act.

SEC. 12. Visitorial and Enforcement Power. . Pursuant to Article 128 of P.D. 442, as
amended, otherwise known as the “Labor Code of the Philippines”, and other applicable
laws, the Secretary of Labor and Employment or the Secretary's authorized


SEC.

SEC.

SEC.

representatives shall have the authority to enforce mandatory occupational safety and
health standards in all establishments, and conduct, together with labor and employer
representatives, an annual spot audit to ensure compliance with the provisions of this Act.
The Secretary or the Secretary's duly authorized representatives can enter workplaces
at any time of the day or night where work is being performed, to examine records
and investigate facts, conditions or matters necessary to determine compliance with
the provisions of this Act.

No person or entity shall obstruct, impede, delay or otherwise render ineffective the orders
of the Secretary of Labor and Employment or the Secretary's duly authorized
representatives, issued pursuant to the authority granted under Article 128 of the Labor
Code of the Philippines, as amended, and no inferior court or entity shall issue a
temporary or permanent injunction or restraining order or otherwise assume jurisdiction
over any case involving the enforcement orders.

The Secretary of Labor and Employment may likewise order stoppage of work or
suspension of operations of any unit or department of an establishment when
noncompliance with law or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the workplace.

The Secretary of Labor and Employment or the Secretary's duly authorized
representatives shall inspect establishments and workplaces regardless of the size and
nature of operation, and shall disallow seff-inspection or any form of employer discretion-

based compliance with occupational safety and health laws. However, chartered cities
may be allowed to conduct industrial safety inspections of establishments within their
jurisdiction in coordination with the DOLE: Provided, that they have adequate facilities
and competent personnel for the purpose as determined by the DOLE and subject
to national standards established by the latter.

13. Employee's Compensation Claim. - A worker may file claims for
compensation benefit arising out of work-related disability or death. Such claims shall be
processed independently upon the finding of fault, gross negligence or bad faith of the
employer in a proceeding instituted for the purpose.

. 14, Employment Insurance. - A worker who is involuntarily separated from

service or employment due to a violation of this Act shall be entitled to a monthly cash
benefit equivalent to the existing monthly minimum wage for a maximum of six (6) months:
Provided: That the worker has at least six (6) months of contribution prior to
the involuntary separation. For this purpose, the Social Security System (SSS)
shall promulgate the appropriate rules and regulations.

15. Mandatory Insurance Coverage. - All construction workers employed in a
construction project or site shall be provided with a group personal accident insurance
coverage by the employer. The duration of the insurance shall start from the
commencement of the service of the construction worker until the completion of the
construction project or upon the termination of the employment contract.


Nothing in this Act shall be construed to diminish any benefit or privileges which the
workers are entitled under existing laws, decrees, executive orders, company policy,
practice or any agreement or contract between the employer and employees.

SEC. 16. Responsibility for Payment of Insurance Premiums. - The employer or
contractor shall be solely responsible to ensure the prompt payment of the premiums
to the insurance company, which in no case shall be deducted from the wages of
the construction workers.

SEC. 17. Insurance Coverage. Every construction worker shall be covered by the
following benefits under this Act:

1) Death and Burial Benefits. - \n the event of death during the period of his
employment contract, the beneficiaries of the construction worker shall be entitled
to the following benefits: the amount of One hundred fifty thousand pesos
(150,000.00) to deaths occurred in line of work; the amount of Seventy-five
thousand pesos (P75,000.00) for natural death; and the amount of One hundred
thousand pesos (P100,000.00) for accidental death. In addition to the death
benefits herein provided, a burial benefit of Thirty thousand pesos (P30,000.00)
shall be paid to the beneficiaries within forty-eight (48) hours after written notice
and declaration of death;

2) Total and Permanent Disability. -\n the event of total and permanent disability

as determined by the Department of Labor and Employment (DOLE), a
construction worker shall be entitled to Seventy-five thousand pesos (P75,000.00);
Provided, That the disability occurred in a construction site or while performing
work-related tasks. In addition to the death benefits herein provided, a burial
benefit of Thirty thousand pesos (P30,000.00) shall be paid to the beneficiaries in
the event that death occurs within two (2) years from the onset of total and
permanent disability;

Any construction worker who may avail of the benefits under this Section 17 (2) of this Act cannot
benefit from Sections 17 (1) and (3) herein.

3) Injuries Resulting from Accidents. . For injuries resulting from an accident

occurring during the period of his employment contract, while performing his
assigned tasks, a construction worker shall be entitled to the following benefits:

a. For the permanent loss of sight in both eyes, Fifty thousand pesos (50,000.00);
b. For the permanent loss of sight in one eye, Twenty-five thousand pesos

(25,000.00);
c. For permanent loss of two or more limbs, Fifty thousand pesos (50,000.00);

d. For the loss of one limb, Twenty-five thousand pesos (25,000.00);

e. For the loss or destruction of both hands or above the wrists, Fifty thousand
pesos (50,000.00);


f. For the loss or destruction of both hands or above the wrists, Fifty thousand
pesos (50,000.00);

g. For the loss or destruction of one hand or above the wrists, Twenty-five
thousand pesos (25,000.00);

h. For the loss or destruction of one foot or above the ankles, Fifty thousand pesos
(50,000.00);

i. For the loss or destruction of one foot or above the ankles, Fifty thousand pesos
(50,000.00);

j. For loss of one hand and one foot, the amount of Fifty thousand pesos
(P50,000.00);

k. For loss of one foot and sight of one eye, the amount of Fifty thousand pesos
(P50,000.00);

|. For the loss or destruction of every thumb or great toe, Fifteen thousand pesos
(15,000.00); and

m. For the loss or destruction of every finger or toe, Ten thousand pesos
(10,000.00).

4) Hospitalization. - For any illness developed during the course of employment or

any work-related injury requiring hospitalization of at least thirty (30) days, Twenty
thousand pesos (P20,000.00), and in cases where the hospitalization is less than thirty
(30) days, at such amount not exceeding Ten thousand pesos (P 10,000.00) as
determined by the Department of Labor and Employment.

SEC. 18. Health Insurance. - In addition to the compensation that shall accrue to the
worker in the preceding section, every construction worker shall likewise be entitled to
receive fair and prompt medical benefits in cases where the illness is directly attributable
to or was developed in the course of employment. This is meant to cover loss of wages
due to workplace exposure.

SEC. 19. Limitations of Insurance Coverage. - No construction worker or his
beneficiary shall be entitled to the benefits granted under this Act when the injury,
disability or death is caused by any of the following:

a. intoxication;
b. willful intention to injure or kill himself or another; and
c. gross negligence.

SEC. 20. Penalties. - Any person, partnership or corporation who violates the provisions
of this Act shall suffer the following penalties:


For the first offense - a fine of not less than Two hundred thousand pesos (P200,000.00)
nor more than Three hundred thousand pesos (P300,000.00);

For subsequent violations - an imprisonment of not less than one (1) year but nor more
six (6) years or a fine of not exceeding Five hundred thousand pesos (P500,000.00) or
both, at the discretion of the court.

If the offender is committed by a partnership or corporation, the penalty provided herein
shall be imposed on the president, managing director or chief operating officer.

If the offender is a foreigner, he shall, after payment of the fine and/or service of the
sentence, be subject to deportation.

Upon filing of the appropriate compiaint or information, the Secretary of Labor and
Employment shall request the appropriate local government unit to cancel or revoke the
business permit, permit to operate and other similar privileges granted to any business
entity or person that fails to abide by or violates the provisions of this Act.

The penalties imposed under this Act is without prejudice to the penalty that may be
imposed under the Labor Code.

SEC. 21. Implementing Rules and Regulations. - The DOLE, in coordination with
agencies concerned, shall formulate its rules and regulations within ninety (90) days after
the effectivity of this Act.

SEC. 22. Separability Clause. - \f any provision, or part hereof, is held invalid or

unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid.

SEC. 23. Repealing Clause. - Any law, presidential decree or issuance, executive order,
letter of instruction, administrative order, rule or regulation contrary to or inconsistent with
the provision of this Act is hereby repealed, modified or amended accordingly.

SEC. 24, Effectivity. . This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in two (2) newspapers of general circulation.

Approved.

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