,,~~ i} tUft t' 
fQHl!- f l'f t!!(' .;t aff't:li~ 
SIXTEENTH CONGRESS OF THE 
) 
'13 
JUL 17 ;19:10 
REPUBLIC OF THE PHILlPPINl'-:S 
) 
First Regular Session 
) 
SENATE 
840 
SENATE BILL NO, ___ _ 
INTI~ODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
EXPLANATORY NOTE 
Section 3 Article XII of the Constitution states that, "The state 
shall afford full protection to labor, local and overseas, organized, and 
promote full employment and equality of employment opportunities 
for all." 
This bill seeks to amend Article 106 of Presidential Decree 442, 
as amended, otherwise known as the Labor Code of the Philippines. 
This measure mandates indirect employers to ensure that all benefits 
of employees hired through job contractors be paid, If the cmployees 
cannot get their benefits from their agencies, they can turn to the 
company for relief. 
The passage of this legislative measure is earnestly requested. 
, 
JOSEPH VICTOR G. EJERCITO 


SIXTEENTH CONGRESS 0]1' THE 
) 
REPUBLIC 0]1' THJi~ PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
SENATE BILL NO. 840 
j)enllh 
(~Ih;t ~lr H)4- jtttftlbfll 
"13 
JIJLI 7 :19:10 
INTEODUCED BY SENATOR JOSEPH VICTOJR G. EJERCITO 
AN ACT 
EXPANDING 
THE 
LIABILITIES 
OF 
INDIRECT 
EMPLOYERS IN JOB CONTRACTING, COVERING O'fHER 
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. Articlc 106 of Presidential Decree 442, as amended, is 
hereby further amended by adding a new 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 subcoJ1ltractor fails to 
pay the wages of his employees in accordance with this 
Code, the employer shall be joinlly 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 
CONTRACTOlZ 
OR 
SUBCONTRACTOR I-lAVE RENDERED AT LEAST ONE (I) 
YEAR 
OF 
SERVICE 
TO 
THI<; 
SAME 
EMPLOYER, 
WHE:THER 
OR 
NOR 
SUCH 
EMPLOYMENT 
IS 


CONTINUOUS, SUCH EMPLOYER SHALL ALSO BE 
JOINTLY AND 
SEVEl~ALLY BE LIABLE WlTH THE 
CONn~ACTOR 
OR 
SUBCONTRACTOR 
FOR 
THE 
PAYMENT OF THE EMPLOYEES' BENEFlTS, INCLUDING, 
BUT 
NOT 
LIMITED 
TO 
THEIR 
SEPARATION 
OR 
RETIREMENT 
BENEFTTS; 
PROVlDED, 
THAT 
THE 
LIABILITY Oli' THE INDIRECT EMPLOYER SHALL BE 
LIMITED ONLY TO THE PEI~IOD THAT SUCH EMPLOYEE 
RENDERED 
SERVICES 
TO 
THE 
SAID 
INDIRECT 
EMPLOYER. 
THE 
AVAILMENT 
AND 
GRANT 
OF 
SJLPARATJON, RETIREMENT AND OTHER BENEFITS 
SHALL BE IN ACCORDANCE WITH EXISTING LAWS. 
The Secretary of Labor may, by appropriate regulations, 
restrict or 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 suppJying 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." 
SECTION 2. If any provlslOn of this Act is held unconstitutional, 
other provisions not affected thereby shall remain valid and binding. 
SECTION 3. 
All laws, presidential decrees, rules and regulations 
insofar as they are inconsistent with this Act, are hereby repealed, 
amended or modified accordingly. 
SECTION 4. This Act shall take effect fifteen (15) days following its 
publication in the Official Gazette or two (2) newspapers of general 
circulation, whichever comes first. 
Approved,