Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS,
First Regular Session

4443

House Bill No.

Introduced by HON. JOHN MARVIN “YUL SERVO” NIETO, HON. EDWARD V.P MACEDA,
HON. VILMA SANTOS-RECTO, HON. ANGELINA TAN, HON. EDCEL C. LAGMAN,
HON. SARAH JANE |. ELAGO, HON. JOSE L. ATIENZA JR, and HON. DENNIS C. LAOGAN

EXPLANATORY NOTE

Article Il, Section 18 of the 1987 Philippine Constitution provides that:

“The State affirms labor as 2 primary s
workers and promote their welfare.”

economic force. It shall protect the rights of

Article II, Section 10 of the 1987 Philippine Constitution provides that:

“The State shall promote social justice in all phases of national development.”

As it is held in the case of Calalang vs Williams (G.R No. 47800), Sov
communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational and objectively
secular conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored
principle of salus populi est suprema lex

With this, it is essential for the State to protect all types and kinds of work force and to
make sure that their rights are being safe quarded by the legislative arm of the State. It is our duty
as Legislators to provide for a stringent law in order for them not to be prejudiced and for us to


make sure that the law is in equilibrium with regard to the rights of both the employer and
employee.

As arule, contracting or outsourcing is allowed by law. This labor contracting arrangement
creates a trilateral relationship: an employer-employee relationship between the contractor and
the employee who shall perform the contracted work, and a contractual relationship (governed by
the New Civil Code) between the contractor and the principal or client that owns the work
contracted for

While this kind of agreements are allowed by law, it should be subjected regulations to
minimize its exploitive aspects. This bil, therefore, seeks to mandate indirect employers to ensure
that all benefits of employees hired through job contractors are given and/ or paid,

Approval of this initiative is earnestly sought.

SARAL/JKNE I. ELAGO
REPRES§NTATIVE, PARTY LIST —
KABATAAN

EDWARDW-PMACEDA
REPRESENTATIVE, 4 DISTRICT OF

Sf
MASANTOS-RECTO
REPRESENTATIVE, 6" DISTRICT OF
BATANGAS

ANGELINA la

REPRESENTATIVE, 4° DSITRICT OF
QUEZON PROVINCE


Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

SEVENTEENTH CONGRESS
First Regular Session

4443

House Bill No.

Introduced by HON. JOHN MARVIN “YUL SERVO” NIETO, HON. EDWARD V.P MACEDA,
HON. VILMA SANTOS-RECTO, HON. ANGELINA TAN, HON. EDCEL C. LAGMAN,
HON. SARAH JANE I. ELAGO, HON. JOSE L. ATIENZA JR, and HON. DENNIS C. LAOGAN

AN ACT
EXPANDING THE LIABILITIES OF INDIRECT EMPLOYERS IN JOB CONTRACTING,
COVERING OTHER BENEFITS DUE THEIR EMPLOYEES, FOR THIS PURPOSE AMENDING
ARTICLE 106 OF PRESIDENTIAL DECREE 442, AS AMENDED, OTHERWISE KNOWN AS
THE LABOR CODE OF THE PHILIPPINES

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

SECTION 1. Article 106 of Presidential Decree 442, as amended is hereby further
amended by adding a paragraph, to read as follows:

"ART. 106. Contractor or subcontractor - Whenever an employer enters
into a contract with another person for the performance of the former's work, the
‘employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.

“In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the extent
of the work performed under the contract, in the same manner and extent that he,
is liable to employees directly employed by him.

“IF THE EMPLOYEES OF THE CONTRACTOR OR SUBCONTRACTOR
HAVE RENDERED AT LEAST ONE YEAR OF SERVICE TO THE SAME


“IF THE EMPLOYEES OF THE CONTRACTOR OR SUBCONTRACTOR
HAVE RENDERED AT LEAST ONE YEAR OF SERVICE TO THE SAME
EMPLOYER, WHETHER OR NOT SUCH EMPLOYMENT IS CONTINUOUS,
SUCH EMPLOYER SHALL ALSO BE JOINTLY AND SEVERALLY BE LIABLE
WITH THE CONTRACTOR OR SUBCONTRACTOR FOR THE PAYMENT OF
THE EMPLOYEES’ BENEFITS, INCLUDING, BUT NOT LIMITED TO THEIR
‘SEPARATION OR RETIREMENT BENEFITS, PROVIDED, THAT THE LIABILITY
OF THE INDIRECT EMPLOYER SHALL BE LIMITED ONLY TO THE PERIOD
THAT SUCH EMPLOYEE RENDERED SERVICES TO THE SAID INDIRECT
EMPLOYER, THE AVAILMENT AND GRANT OF SEPARATION, RETIREMENT
AND OTHER BENEFITS SHALL BE IN ACCORDANCE WITH EXISTING LAWS.

“The Secretary of Labor may, by appropriate regulations, restrict of prohibit
the contracting out of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor only contracting and job contracting as well as differentiations within
these types of contracting and determine who among the parties involved shall be
considered the employer for purposes of this Code. There is “labor only"
contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and be placed by such persons
are performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.”

SEC. 2. If any provision of this Act is held unconstitutional, other provisions not affected
thereby shall remain valid and binding.

SEC. 3. All laws, presidential decrees, rules and regulations insofar as they are
inconsistent with this Act, are hereby repealed, amended or modified accordingly.

SEC. 4, This Act shalll take effect fifteen (15) days following its publication in the Official
Gazette or two (2) newspapers of general circulation, whichever comes first.

Approved,