FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
INTRODUCED BY SEN. JINGGOY EJERCITC ESTRADA 
E X P L A N A T O R Y  N O T E  
Arguably, the gravest threat to our workers‘ right to security of tenure 
comes from the current trend towards contractualization and de-regularization. 
Workers settle for intermittent and short term employment affecting not only 
their ability to earn livelihood but also their productivity and quality of work. 
The present proposal recognizes subcontracting as a valid business 
practice but also protects workers from unscrupulous and unnecessary 
subcontracting. Hence, it balances legitimate business interest with the need to 
protect workers from insecure employment conditions. 
In particular, the present proposal is characterized by the following: 
1. Many of the concepts and processes contained in the proposal 
reflect current practice as provided by Department Order No. 18 
series of 2002 (DO 18). While some refinements have been made 
to DO 18 provisions, core concepts have been retained such as: 
9 Definition of subcontracted work and labor only contracting 
9 Recognition of rights of subcontracted workers 
9 Maintenance 
of 
registration 
system 
for 
legitimate 
subcontractors 
2. The salient innovations introduced by this proposal includes the 
following: 
9 Principals can engage a maximum of 10% subcontracted 
employees. 
D Violation of contracting rules is made an unfair labor 
practice. 
9 Violation of contracting rules is penalized by a fine. 
Hence, the support of this bill is earnestly sought. 
A
N
G
~
Y
 
EJERCITO ESTRADA 
Senator 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
__^I 
S E N A T E  
S. B. No. 2212 
INTRODUCED BY SENATOR JINGGOY EJERCITO ESTRADA 
AN ACT TO STRENGTHEN SECURITY OF TENURE AND FOR THAT 
PURPOSE, AMENDING CERTAIN PROVISIONS OF 
PRESIDENTIAL DECREE NO. 442 
Be it enacted by the Senate and the House of Representatives of the Phihppines 
in Congress assembled: 
Section 1. Subcontracting. Article 106 of the Presidential Decree No. 
442 is hereby amended to read as follows: 
ARTICLE 106. CONCEPT AND NATURE OF SUBCONTRACTING 
ARRANGEMENT. I N  LEGITIMATE SUBCONTRACTING, THERE EXISTS A 
TRILATERAL RELATIONSHIP UNDER WHICH THERE IS A CONTRACT FOR A 
SPECIFIC JOB, 
WORK OR SERVICE BETWEEN THE PRINCIPAL AND THE 
SUBCONTRACTOR, AND A CONTRACT OF EMPLOYMENT BETWEEN THE 
SUBCONTRACTOR AND ITS WORKERS. 
HENCE, THERE ARE THREE PARTIES 
INVOLVED I N  THESE ARRANGEMENTS, THE PRINCIPAL WHICH DECIDES TO 
FARM OUT A JOB OR SERVICE TO A SUBCONTRACTOR, THE SUBCONTRACTOR 
WHICH HAS THE CAPACIlY TO INDEPENDENTLY UNDERTAKE AND ACTUALLY 
UNDERTAKES THE PERFORMANCE OF THE JOB, WORK OR SERVICE, AND THE 
CONTRACTUAL 
WORKERS 
ENGAGED 
BY 
THE 
SUBCONTRACTOR 
TO 
ACCOMPLISH THE JOB WORK OR SERVICE. 
FOR PURPOSES OF THIS CODE, 
"SUBCONTRACTING" 
REFERS TO AN 
ARRANGEMENT WHEREBY 
(a)A PRINCIPAL AGREES TO PUT OUT OR FARM OUT WITH A 
SUBCONTRACTOR THE PERFORMANCE OR COMPLETION OF A 
SPECIFIC JOB, 
WORK OR SERVICE WITHIN A DEFINJTE OR 
PREDETERMINED PERIOD, REGARDLESS OF WHETHER SUCH JOB, 
WORK OR SERVICE IS TO BE PERFORMED OR COMPLETED WITHIN 
OR OUTSIDE THE PREMISES OF THE PRINCIPAL OR 
(b) A PERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION WHICH, 
NOT BEING A PRINCIPAL, CONTRACTS WITH A SUBCONTRACTOR 
FOR THE PERFORMANCE OF ANY WORK, TASK, JOB OR PROJECT. 
Section 2. Parties. Article 106-A is hereby inserted in Presidential Decree No. 
442 as follows: 
2 


ARTICLE 106 - A. RIGHTS AND LIABILITIES OF PARTIES. 
A. THE SUBCONTRACTED EMPLOYEE I N  ALL CASES, SUBCONTRACTED 
EMPLOYEE SHALL BE ENTJTLED TO ALL THE RIGHTS AND PRIVILEGES DUE 
REGULAR EMPLOYEES INCLUDING THE FOLLOWING: 
(a) SAFE AND HEALTHFUL WORKING CONDITIONS; 
(b) LABOR STANDARDS SUCH AS SERVICE INCENTIVE LEAVE, 
REST DAYS, OVERTIME PAY, HOLIDAY PAY, i3M MONTH PAY 
AND SEPARATION PAY; 
PEACEFUL CONCERTED ACTION; AND 
(c) SOCIAL SECURJTY AND WELFARE BENEFITS; 
(e) SECURITY OF TENURE; 
(d) SELF-ORGANIZATION, 
COLLECTIVE 
BARGAINING 
AND 
IN ADDITION, SUBCONTRACTED EMPLOYEES SHALL HAVE A RIGHT TO A 
WRJTTEN CONTRACT WHICH SHALL INCLUDE THE FOLLOWING TERMS AND 
CONDITIONS: 
(i) THE SPECIFIC DESCRIPXON OF THE JOB, WORK OR SERVICE TO BE 
PERFORMED BY THE CONTRACTUAL EMPLOYEE; 
(ii) 
THE PLACE OF WORK AND TERMS AND CONDITIONS OF 
EMPLOYMENT, INCLUDING A STATEMENT OF THE WAGE 
RATE 
APPLICABLE TO THE INDIVIDUAL CONTRACTUAL EMPLOYEE; AND 
(iii) THE TERM OR DURATION OF EMPLOYMENT, WHICH SHALL BE 
COEXTENSIVE WITH THE CONTRACT OF THE 
PRINCIPAL AND 
SUBCONTRACTOR, OR WITH THE SPECIFIC PHASE FOR WHICH THE 
CONTRACTUAL EMPLOYEE IS ENGAGED, AS THE CASE NAY BE. 
THE 
SUBCONTRACTED 
EMPLOYEE 
SHALL 
BE 
INFORMED 
BY 
THE 
SUBCONTRACTOR OF THE FOREGOING TERMS AND CONDmONS ON OR 
BEFORE THE FIRST DAY OF HIS EMPLOYMENT. 
6. THE PRINCIPAL AND THE SLJBCONTQ4CTOR. THE LEGJTIMATE 
SUBCONTRACTOR SHALL 
BE 
CONSIDERED THE 
EMPLOYER OF THE 
CONTRACTUAL EMPLOYEE FOR PURPOSES OF ENFORCING THE PROVISIONS OF 
THE LABOR CODE AND OTHER SOCIAL LEGISLATION. I N  ALL CASES OF 
SUBCONTRACTING, HOWEVER, THE PRINCIPAL SHALL BE SOLIDARILY LIABLE 
WITH THE CONTRACTOR I N  THE EVENT OF ANY VIOLATION OF ANY 
PROVISION OF THE LABOR CODE, INCLUDING THE FAILURE TO PAY WAGES. 
THE PRINCIPAL SHALL BE DEEMED THE EMPLOYER OF THE CONTRACTUAL 
EMPLOYEE I N  ANY OF THE FOLLOWING CASES: 
(a) WHERE THERE I S  LABOR-ONLY CONTRACITNG; OR 
(b)IN THE ABSENCE OF THE WRIlTEN CONTRACT REQUIRED BY 
ARTICLE 106-A; OR 
(c) I N  CASES OF VIOLATION OF ARTICLE 106 - B. 
I N  ADDITION, THE PRINCIPAL SHALL BE SOLIDARILY LIABLE WITH THE 
SUBCONTRACnR I N  CASE THE CONTRACT BETWEEN THE PRINCIPAL AND 
SUBCONTRACTOR I S  PRETERMINATED FOR REASONS NOT ATTRIBUTABLE TO 
THE FAULT OF THE SUBCONTRACTOR. 
3 


Section 3. Prohibition against labor only contracting. Article 106-B is 
hereby inserted in Presidential Decree No. 442 as follows: 
ARTICLE 
106-B. 
PROHIBITION 
AGAINST 
LABOR-ONLY 
SUBCONTRACTING. 
ENGAGING 
IN 
LABOR-ONLY 
CONTRACTING 
OR 
CONTRACTING WITH A LABOR-ONLY CONTRACTOR IS STRICTLY PROHIBITED. 
FOR 
THIS 
PURPOSE, 
LABOR-ONLY 
CONTRACTING 
REFERS 
TO 
AN 
ARRANGEMENT WHERE THE SUBCONTRACTOR MERELY RECRUITS, SUPPLIES 
OR PLACES WORKERS TO PERFORM A JOB, WORK OR SERVICE FOR A 
PRINCIPAL, INCLUDING INSTANCES WHERE ANY OF THE FOLLOWING ARE 
PRESENT: 
THE SUBCONTRACTOR DOES NOT HAVE SUBSTANTIAL CAPITAL 
AND INVESTMENT WHICH RELATES TO THE JOB, WORK OR 
SERVICE TO BE PERFORMED; 
THE EMPLOYEES RECRUITED, SUPPLIED, OR PLACED BY SUCH 
SUBCONTRACTOR ARE PERFORMING ACTIVITIES WHICH ARE 
DIRECTLY RELATED TO THE MAIN BUSINESS OF THE PRINCIPAL; 
OR 
iii) 
THE SUBCONTRACTOR DOES NOT EXERCISE THE RIGHT TO 
CONTROL OVER THE PERFORMANCE OF THE WORK OF THE 
CONTRACTUAL EMPLOYEE. 
i) 
ii) 
AS USED I N  THIS CODE, 'SUBSTANTIAL CAPITAL AND INVESTMENT" I N  
SUBCONTRACTING ARRANGEMENTS 
REFERS 
TO 
TOOLS, 
EQUIPMENT, 
IMPLEMENTS, MACHINERIES AND WORK PREMISES, ACTUALLY AND DIRECTLY 
USED BY THE SUBCONTRACTOR IN THE PERFORMANCE OR COMPLETION OF 
THE JOB, 
WORK OR SERVICE CONTRACTED OUT. 
THE USE OF THE 
SUBCONTRACTOR OF THE EQUIPMENT, FACILITIES, MACHINERIES, AND 
TOOLS OF THE PRINCIPAL IS AN INDICATION THAT THE SUBCONTRACTOR 
HAS NO SUBSTANTIAL CAPITAL AND INVESTMENT. 
THE EXISTENCE OF 
CAPITAL STOCKS AND SUBSCRIBED CAPITALIZATION I N  RELATION TO 
CORPORATIONS ENGAGED IN SUBCONTRACTING DOES NOT BY ITSELF 
CONSTITUTE SUBSTANTIAL CAPITAL AND INVESTMENT. 
AS 
USED 
I N  THIS 
CODE, 
THE 
"RIGHT 
TO 
CONTROL" 
I N  
SUBCONTRACTING ARRANGEMENTS SHALL REFER TO THE RIGHT RESERVED 
TO THE PERSON FOR WHOM THE SERVICES OF THE CONTRACTUAL WORKERS 
ARE PERFORMED, TO DETERMINE NOT ONLY THE END TO BE ACHIEVED, BUT 
ALSO THE MANNER AND MEANS TO BE USED I N  REACHING THAT END. 
Section 4. Prohibitions. Article 106-C is hereby inserted in Presidential Decree 
No. 442 as follows: 
ARTICLE 
106-C. 
PROHIBITIONS 
I N  
SUBCONTRACTING 
ARRANGEMENTS. REGARDLESS OF COMPLIANCE WITH THE IMMEDIATELY 
PRECEDING ARTICLE, THE FOLLOWING ARE HEREBY DECLARED PROHIBITED 
FOR BEING CONTRARY TO LAW OR PUBLIC POLICY: 
(a) ENGAGING OR MAINTAINING BY THE PRINCIPAL OF SUBCONTRACTED 
EMPLOYEES I N  EXCESS OF 10% OF THE PRINCIPAL'S TOTAL 
WORKFORCE INCLUDING, BUT NOT LIMITED TO. 
(b)CONTRACnNG OUT OF A JOB, WORK OR SERVICE WHEN THE SAME 
RESULTS I N  THE TERMINATION OF REGULAR EMPLOYEES AND 
4 


REDUCTION OF WORK HOURS OR REDUCTION OR S P L m N G  OF THE 
BARGAINING UNIT; 
(c) CONTRACITNG OUT OF WORK WITH A “CABO”. 
FOR THIS PURPOSE, 
“CABO” REFERS TO A PERSON OR GROUP OF PERSONS OR TO A LABOR 
GROUP WHICH, I N  THE GUISE OF A LABOR ORGANIZATION, OR 
COOPERATIVE, SUPPLIES WORKERS TO AN EMPLOYER, WITH OR 
WITHOUT ANY MONETARY OR OTHER CONSIDERATION WHETHER I N  
THE CAPACITY OF AN AGENT OF THE EMPLOYER OR AS AN OSTENSIBLE 
INDEPENDENT CONTRACTOR; 
(d)TAKING UNDUE ADVANTAGE OF THE ECONOMIC SITUATION OR LACK 
OF BARGAINING STRENGTH OF THE CONTRACTUAL EMPLOYEE, OR 
UNDERMINING HIS SECURITY OF TENURE, OR BASIC RIGHTS, OR 
CICUMVENTING THE PROVISIONS OF REGULAR EMPLOYMENT, IN ANY 
OF THE FOLLOWING INSTANCES: 
i. I N  ADDITION TO HIS ASSIGNED FUNCTIONS, REQUIRING THE 
CONTRACTUAL EMPLOYEE TO PERFORM FUNCTIONS WHICH 
ARE 
CURRENTLY BEING PERFORMED BY 
THE 
REGULAR 
EMPLOYEES OF THE PRINCIPAL OR OF THE SUBCONTRACTOR; 
ii. REQUIRING 
HIM TO 
SIGN, 
AS 
A 
PRECONDITION TO 
EMPLOYMENT OR CONTINUED EMPLOYMENT, AN ANTEDATED 
RESIGNATION LElTER; A BLANK PAYROLL; A WAIVER OF LABOR 
STANDARDS INCLUDING MINIMUM WAGES AND SOCIAL OR 
WELFARE BENEFITS; 
OR A QUITCLAIM RELEASING THE 
PRINCIPAL, SUBCONTRACTOR FROM ANY LIABILITY AS TO 
PAYMENT OF FUTURE CLAIMS; AND 
iii. REQUIRING HIM TO SIGN A CONTRACT FIXING THE PERIOD OF 
EMPLOYMENT TO A TERM SHORTER THAN THE TERM OF THE 
CONTRACT 
BETWEEN 
THE 
PRINCIPAL 
AND 
THE 
SUBCONTRACTOR, 
UNLESS 
THE 
LAlTER 
CONTRACT 
IS 
DIVISIBLE 
INTO 
PHASES 
FOR 
WHICH 
SUBSTANTIALLY 
DIFFERENT SKILLS ARE REQUIRED AND THIS IS MADE KNOWN 
TO THE EMPLOYEE ATTHE TIME OF ENGAGEMENT; 
(e)CONTRACTING OUT OF A JOB, WORK OR SERVICE THROUGH AN IN- 
HOUSE AGENCY WHICH REFERS TO A: 
i. SUBCONTRACTOR ENGAGED I N  THE SUPPLY OF LABOR WHICH 
I S  OWNED, MANAGED OR CONTROLLED BY THE PRINCIPAL; OR 
ii. SUBCONTRACTOR I N  WHICH THE PRINCIPAL OWNS OR 
OTHERWISE REPRESENTS ANY SHARE OF STOCK; OR 
iii. SUBCONTRACTOR 
WHICH 
OPERATES 
SOLELY 
FOR 
THE 
PRINCIPAL. 
(9 CONTRACTING OUT OF A JOB, WORK OR SERVICE DIRECTLY RELATED 
TO THE BUSINESS OR OPERATION OF THE PRINCIPAL BY REASON OF A 
STRIKE OR LOCKOUT WHETHER ACTUAL OR IMMINENT; 
(g)CONTRACTING OUT OF A JOB, WORK OR SERVICE BEING PERFORMED 
BY OR PREVIOUSLY PERFORMED BY REGULAR EMPLOYEES AND/OR 
MEMBERS OF THE BARGAINING UNIT. 
5 


Section 5. Registration of Subcontractors. Article 106-D is hereby inserted 
in Presidential Decree No. 442 as follows: 
ARTICLE 106 - D. REGISTRATION OF SUBCONTRACTORS. 
1) MANDATORY REGISTRATION. IT SHALL BE MANDATORY FOR ALL 
PERSONS OR ENTITIES ACTING AS SUBCONTRACTORS TO REGISTER UNDER A 
REGISTRATION SYSTEM HEREBY ESTABLISHED TO GOVERN CONTRACTING 
ARRANGEMENTS AND TO BE IMPLEMENTED BY THE REGIONAL OFFICES OF 
THE DEPARTMENT OF LABOR AND EMPLOYMENT. 
NON-REGISTERED 
PERSONS 
OR 
ENTITIES 
ACTING 
AS 
SUBCONTRACTORS SHALL BE DEEMED AS LABOR-ONLY CONTRACTORS. MERE 
REGISTRATION, 
WITHOUT 
A 
SHOWING OF 
COMPLIANCE WITH 
ALL 
REQUIREMENTS FOR LEGITIMATE SUBCONTRACTING AND AVOIDANCE OF ALL 
PROHIBITIONS OF SUBCONTRACTING, SHALL NOT INDICATE LEGITIMATE 
SUBCONTRACTING. 
2) REQUIREMENTS FOR REGISRAUON. A SUBCONTRACTOR MAY BE 
LISTED I N  THE REGISTRY OF SUBCONTRACTORS UPON COMPLETION AND 
SUBMISSION OF AN APPLICATION FORM PROVIDED BY THE DEPARTMENT. I N  
THE APPLICATION FORM, THE APPLICANT SUBCONTRACTOR SHALL PROVIDE 
THE FOLLOWING INFORMATION: 
(a)THE NAME AND BUSINESS ADDRESS OF THE APPLICANT AND THE 
AREA OR AREAS WHERE IT SEEKS TO OPERATE; 
(b)THE NAMES AND ADDRESSES OF OFFICERS, I F  THE APPLICANT IS A 
CORPORATION, PARTNERSHIP, COOPERATIVE OR UNION; 
(c) THE NATURE OF THE APPLICANT’S BUSINESS AND THE INDUSTRY OR 
INDUSTRIES WHERE THE APPLICANT SEEKS TO OPERATE; 
(d)THE NUMBER OF REGULAR WORKERS; THE LIST OF CLIENTS, I F  ANY; 
THE NUMBER OF PERSONNEL ASSIGNED TO EACH CLIENT, I F  ANY 
AND THE SERVICES PROVIDED TO THE CLIENT; 
(e)THE DESCRIPTION OF THE PHASES OF THE CONTRACT AND THE 
NUMBER OF EMPLOYEES COVERED I N  EACH PHASE, 
WHERE 
APPROPRIATE; AND 
(9 A COPY OF AUDITED FINANCIAL STATEMENTS I F  THE APPLICANT IS 
A CORPORATION, PARTNESHIP, COOPERATIVE OR A UNION, OR 
COPY OF THE LATEST INCOME TAX RETURN (ITR) I F  THE APPLICANT 
I S  A SOLE PROPIETORSHIP. 
THE APPLICATION SHALL BE SUPPORTED BY: 
(a)A CERTIFIED COPY OF A CERTIFICATE OF REGISTRATION OF FIRM 
OR BUSINESS NAME FROM THE SECURITIES AND EXCHANGE 
COMMISSION (SEC), DEPARTMENT OF TRADE AND INDUSTRY (DTI), 
COOPERATIVE DEVELOPMENT AUTHORrPl (CDA), OR FROM THE 
DOLE I F  THE APPUCANT IS A UNION; AND 
(b) A CERTIFIED COPY OF THE LICENSE OR BUSINESS PERMIT ISSUED 
BY THE LOCAL GOVERNMENT UNIT OR UNITS WHERE THE 
SUBCONTRACTOR OPERATES. 
THE APPLICATION SHALL BE VERIFIED AND SHALL INCLUDE AN 
UNDERTAKING THAT THE SUBCONTRACTOR SHALL ABIDE BY ALL APPLICABLE 
LABOR LAWS AND REGULATIONS. 
6 


3) FILING AND PROCESSING OF APPLICA DONS THE APPLICATION AND 
ITS SUPPORTING DOCUMENTS SHALL BE FILED I N  TRIPLICATE I N  THE 
REGIONAL OFFICES WHERE THE APPLICANT PRINCIPALLY OPERATES. 
NO 
APPLICATION FOR REGISTRATION SHALL BE ACCEPTED UNLESS ALL THE 
FOREGOING REQUIREMENTS ARE COMPLIED WITH. 
THE SUBCONTRACTOR 
SHALL BE DEEMED REGISTERED UPON PAYMENT OF A REGISTRATION FEE TO 
BE DETERMINED BY THE REGIONAL OFFICE. 
WHERE ALL THE SUPPORTING DOCUMENTS HAVE BEEN SUBMIlTED, 
THE REGIONAL OFFICE MAY DENY OR APPROVE THE APPLICATION WITHIN 
SEVEN (7) WORKING DAYS AFTER ITS FILING. 
UPON REGISTRATION, THE REGIONAL OFFICE SHALL RETURN ONE SET 
RETAIN ONE SET FOR ITS FILE, AND TRANSMIT THE REMAINING SET TO THE 
BUREAU OF LOCAL EMPLOYMENT. 
THE BUREAU SHALL DEVISE THE 
NECESSARY 
FORMS 
FOR 
THE 
EXPEDITIOUS 
PROCESSING 
OF 
ALL 
APPLICATIONS FOR REGISTRATION. 
OF THE DULY-STAMPED APPLICATION DOCUMENTS TO THE APPLICANT, 
4) 
ANNUAL 
REPORTING OF REGISTERED 
CONTRACTORS. THE 
SUBCONTRACTOR 
SHALL 
SUBMIT 
I N  TRIPLICATE 
THE 
FOLLOWING 
DOCUMENTS: 
(a) A LIST OF CONTRACTS ENTERED WITH THE PRINCIPAL DURING THE 
SUBJECT REPORTING PERIOD; 
(b)THE NUMBER OF WORKERS COVERED BY EACH CONTRACT WITH 
THE PRINCIPAL; 
(c) AN ANNUAL REPORT INCLUDING A SWORN UNDERTAKING THAT THE 
BENEFITS FROM THE SOCIAL SECURJTY SYSTEM (SSS), THE HOME 
DEVELOPMENT MUTUAL FUND (HDMF), 
PHILHEALTH, EMPLOYEES 
COMPENSATION COMMISSION (ECC) AND REMIITANCES TO THE 
BUREAU OF INTERNAL REVENUE (BIR) DUE ITS CONTRACTUAL 
EMPLOYEES HAVE BEEN MADE DURING THE SUBECT REPORTING 
PERIOD. 
THE REGIONAL OFFICE SHALL RETURN ONE SET OF THE DULY-STAMPED 
REPORT TO THE SUBCONTRACTOR, RETAIN ONE SET FOR ITS FILE, AND 
TRANSMIT THE REMAINING SET TO THE BUREAU OF LOCAL EMPLOYMENT 
WITHIN FIVE (5) DAYS FROM RECEIPT THEREOF. 
5) DELISTTNG OF CONTRACTORS OR SUBCONTRACTORS. THE REGIONAL 
DIRECTOR SHALL CANCEL THE REGISTRATION OF SUBCONTRACTORS BASED 
ON ANY OF THE FOLLOWING GROUNDS: 
(a) NON-SUBMISSION OF CONTRACTS BETWEEN THE PRINCIPAL AND 
THE SUBCONTRACTOR WHEN REQUIRED TO DO SO; 
D 4 (C); 
CODE; 
CONDITIONS. 
(b) NON-SUBMISSION OF SWORN DOCUMENTS STATED I N  ARTICLE 106- 
(c) ENGAGEMENT I N  LABOR-ONLY CONTRACTING; 
(d)VIOLATION OF THE PROHIBITED ACTIVITIES PROVIDED BY THIS 
(e) NON-COMPLIANCE WITH LABOR STANDARDS AND WORKING 
7 


6) 
RENEWAL 
OF 
REGISTRAT7ON 
OF SUBCONTMDORS. 
ALL 
REGISTERED SUBCONTRACTORS MAY APPLY FOR RENEWAL OF REGISTRATION 
EVERY TWO YEARS. FOR THIS PURPOSE, THE TRIPARTITE INDUSTRIAL PEACE 
COUNCIL (TIPC) AS CREATED UNDER EXECUTIVE ORDER NO. 49, SHALL SERVE 
AS THE OVERSIGHT COMMITTEE TO VERIFY AND MONITOR THE FOLLOWING: 
(a) ENGAGING I N  ALLOWABLE CONTRACnNG ACTIVITIES; AND 
(b)COMPLIANCE WITH ADMINISTRATIVE REPORTING REQUIREMENTS. 
Section 6. Duty to Produce Contract. Article 106-E is hereby inserted in 
Presidential Decree No. 442 as follows: 
ARTICLE 106-E. DUTY TO PRODUCE COPY OF CONTRACT. THE 
PRINCIPAL OR SUBCONTRACTOR SHALL PRODUCE A COPY OF THE CONTRACT 
BETWEEN THE PRINCIPAL AND THE CONTRACTOR I N  THE COURSE OF 
INSPECTION. THE SUBCONTRACTOR SHALL ALSO PRODUCE A COPY OF THE 
CONTRACT OF EMPLOYMENT OF SUBCONTRACTED WORKERS WHEN DIRECTED 
TO 
DO 
SO 
BY 
THE 
REGIONAL DIRECTOR OR 
HIS AUTHORIZED 
REPRESENTATIVE. 
A COPY OF THE CONTRACT BETWEEN THE SUBCONTRACTED EMPLOYEE AND 
THE SUBCONTRACTOR SHALL BE FURNISHED THE CERTIFIED BARGAINING 
AGENT, I F  THERE I S  ANY. 
Section 7. Unfair Labor Practice. Article 248 of Presidential Decree No. 442 is 
hereby amended to read as follows: 
Article 248. Unfair labor practices of employers. - It shall be 
(a) To interfere with, restrain or coerce employees in the exercise of their 
right to self-organization; 
(b) To require as a condition of employment that a person or an employee 
shall not join a labor organization or shall withdraw from one to which he 
belongs; 
(c) To contract out services or functions being performed by MEMBERS OF 
EMPLOYEES [union members when such will interfere with, restrain or coerce 
employees in the exercise of their rights to self-organization]; 
(d) To initiate, dominate, assist or otherwise interfere with the formation 
or administration of any labor organization, including the giving of financial or 
other support to it or its organizers or supporters; 
(e) To discriminate in regard to wages, hours of work and other terms and 
conditions of employment in order to encourage or discourage membership in 
any labor organization. Nothing in this Code or in any other law shall stop the 
parties from requiring membership in a recognized collective bargaining agent as 
a condition for employment, except those employees who are already members 
of another union at the time of the signing of the collective bargaining 
agreement. Employees of an appropriate bargaining unit who are not members 
of the recognized collective bargaining agent may be assessed a reasonable fee 
unlawful for an employer to commit any of the following unfair labor practice: 
THE BARGAINING UNIT AND/OR REGULAR RANK-AND-FILE AND SUPERVISORY 
8 


equivalent to the dues and other fees paid by members of the recognized 
collective bargaining agent, if such non-union members accept the benefits 
under the collective bargaining agreement: Provided, that the individual 
authorization required under Article 242, paragraph (0) of this Code shall not 
apply to the non-members of the recognized collective bargaining agent; 
(9 To dismiss, discharge or otherwise prejudice or discriminate against an 
employee for having given or being about to give testimony under this Code; 
(g) To violate the duty to bargain collectively as prescribed by this Code; 
(h) To pay negotiation or attorney's fees to the union or its officers or 
agents as part of the settlement of any issue in collective bargaining or any other 
dispute; or 
(i) To violate a collective bargaining agreement. 
(J) TO DENY THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP 
AND/OR 
TO 
CLASSIFY AS CASUAL, 
CONTRACTUAL, 
SUBCONTRACTED 
EMPLOYEES, AGENCY EMPLOYEES, OR OTHER NON-REGULAR CLASSIFICATION 
THOSE EMPLOYEES WHO ARE REGULAR EMPLOYEES BY VIRTUE OF ARTICLE 
280 OF THIS CODE. 
The provisions of the preceding paragraph notwithstanding, only the 
officers and agents of corporations, associations or partnerships who have 
actually participated in, authorized or ratified unfair labor practices shall be held 
criminally liable. 
Section 8. Penalties. Article 288 of Presidential Decree No. 442 is hereby 
amended to read as follows: 
Article 288. Penalties. - Except as otherwise provided in this Code, or 
unless the acts complained of hinge on a question of interpretation or 
implementation of ambiguous provisions of an existing collective bargaining 
agreement, any violation of the provisions of this Code declared to be unlawful 
or penal in nature shall be punished with a fine of not less than One Thousand 
Pesos (P1,OOO.OO) 
nor more than Ten Thousand Pesos (PlO,OOO.OO) 
or 
imprisonment of not less than three months nor more than three years, or both 
such fine and imprisonment at the discretion of the court. 
ANY PRINCIPAL OR SUB-CONTRACTOR WHO VIOLATES ARTICLES 106, 
106-A, 106-B, 106-C, 106-D AND 106-E SHALL BE SOLIDARILY LIABLE TO 
INDEMNIFY EACH SUBCONTRACTED EMPLOYEE NO LESS THAN P50,OOO.OO 
WITHOUT PRUUDICE TO OTHER MONETARY AWARDS TO WHICH SUCH 
SUBCONTRACTED EMPLOYEE MAY BE ENTITLED SUCH AS BACKWAGES, 
MONETARY CLAIMS AND BENEFITS UNDER A COLLECTIVE BARGAINING 
AGREEMENT OR COMPANY POLICY, WHETHER WRITTEN OR OTHERWISE. 
In addition to such penalty, any alien found guilty shall be summarily 
deported upon completion of service of sentence. 
Any provision of law to the contrary notwithstanding, any criminal offense 
punished in this Code, shall be under the concurrent jurisdiction of the Municipal 
or City Courts and the Courts of First Instance. 
9 


Section 9. Separability Provisions. If any provision of this law or the 
application thereof to any person or circumstance, is held invalid, the remainder 
of this law, or the application of such provision or part to other persons of 
circumstances, shall not be affected thereby. 
Section 10. Repealing Clause. Article 107 of the Labor Code as 
amended is hereby expressly repealed. All other provisions of existing laws, 
orders, decrees, rules and regulations inconsistent herewith are hereby repealed. 
Section 11. Effectivity. This Act shall take effect fifteen (15) days after 
its publication in the Uficia/ Gaze& or in at feast two (2) newspapers of general 
circulation. 
Approved. 
10