SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session. 
) 
SENATE 
366 
Senate Bill No. _..;::';,...;;.._ 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
It is a declared policy of the State to affirm labor as a primary social economic 
force and to protect the rights of workers and promote their welfare. 
Accordingly, 
Section 3, Article XIII of the 1987 Philippine Constitution provides that: 
"The State shall afford full protection to labor, local and overseas, 
organized and unorganized, and promote full employment and equality of 
employment opporlunities for all. 
Xxx." 
Job=contracting or sub"contracting was previously confined to security, janitorial, 
maintenance and other services incidental to the business of the employer. But this has 
changed in recent years. Now, job-contracting or sub-contracting has expanded to a 
wider scope of work, thus, covering more members of the labor force. This expansion, 
however, caused the exploitation of certain protective labor legislation and standards. 
While job-contracting and sub-contracting are allowed by law, it should be 
subjected regulations to minimize its exploitive aspects. This bill, therefore, seeks to 
mandate indirect employers to ensure that all benefits of employees hired through job 
contractors are paid. 
Approval of this initiative is earnestly sought. 
JERCITQ ESTRADA 
Senator 


\ -
SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
366 
Senate Bill No. __ 
_ 
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'13 
JUL -3 P,1 :06 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 
employee;:; to the extent of the work performed under the oontraot, in the 
same manner and extent that he, is liable to employees direotly employed 
by him. 
"IF 
THE 
EMPLOYEES 
OF 
THE 
CONTRACTOR 
OF 
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 ~U9h empl9yer. In such 9a~es, the per!:>9n 9r 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 shall take effect fifteen (15) days following its publication in the 
Official Gazette or two (2) newspapers of general circulation, whichever comes first. 
Approved,