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SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
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First Regular Session 
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I\UG 29 A9:42 
SENATE 
Senate Bill No. 1393 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
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: 
• 
Definition of subcontracted work and labor only contracting 
• 
Recognition of rights of subcontracted workers 
• 
Maintenance of registration system for legitimate subcontractors 
2. The salient innovations introduced by this proposal include the 
following: 
• 
Principals can engage a maximum of 10% subcontracted employees. 
• 
Violation of contracting rules is made an unfair labor practice. 
• 
Violation of contracting rules is penalized by a fine. 
Hence, the support of this bill is earnestly sought. 
Senator 


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SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
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First Regular Session 
SENATE 
Senate Bill No. 13 9 3 
'13 
~UG 29 
1\ 9 :42 
INTRODUCED BY SEN. 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 House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Subcontracting. Article 106 of the Presidential Decree No, 
442 is hereby amended to read as follows: 
"[Article 106. Contractor or sub-contractor. 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 sub-contractor, if any, shall be paid in accordance with the 
provisions of this Code. 
I n the event that the contractor or sub-contractor 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. 
The Secretary of Labor and Employment 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 
and restricting, he may make appropriate distinctions between 
labor-only 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, to prevent 
any violation or circumvention of any provision 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 tool, equipment, machineries, work 
premises, among others, and the workers recruited and placed by 
such person are performing activities which are directly reiated 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 extend as if the latter were directly employed by him.] 


"ARTICLE 
106. 
CONCEPT 
AND 
NATURE 
OF 
SUBCONTRACTING 
ARRANGEMENT. 
IN 
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 
IN THESE ARRANGEMENTS, THE PRINCIPAL WHICH DECIDES 
TO FARM OUT A JOB OR SERVICE TO A SUBCONTRACTOR, 
THE SUBCONTRACTOR WHICH HAS THE CAPACITY 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." 
SEC. 2. Parties. Article 106-A is hereby inserted in Presidential Decree 
No. 442 as follows: 
"ARTICLE 106 - A. RIGHTS AND LIABILITIES OF 
PARTIES. 
"A. THE SUBCONTRACTED EMPLOYEE. IN ALL CASES, 
SUBCONTRACTED EMPLOYEE SHALL BE ENT JTLED 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, 
13TH MONTH pAYAND SEPARATION PAY; 
(c) SOCIAL SECURITY AND WELFARE BENEFITS; 
(d) SECURITY OF TENURE; AND, 


(e) SELF-ORGANIZATION, 
COLLECTIVE 
BARGAINING 
AND PEACEFUL CONCERTED ACTION. 
"IN ADDITION, SUBCONTRACTED EMPLOYEES SHALL 
HAVE A RIGHT TO A WRITTEN CONTRACT WHICH SHALL 
INCLUDE THE FOLLOWING TERMS AND CONDITIONS: 
(a) THE SPECIFIC DESCRIPXON OF THE JOB, WORK 
OR 
SERVICE 
TO 
BE 
PERFORMED 
BY 
THE 
CONTRACTUAL EMPLOYEE; 
(b) THE 
PLACE 
.OF 
WORK 
AND 
TERMS 
AND 
CONDITIONS OF 
EMPLOYMENT, 
INCLUDING A 
STATEMENT OF THE WAGE RATE APPLICABLE TO 
THE INDIVIDUAL CONTRACTUAL EMPLOYEE; AND, 
(c) 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 MAY BE. 
"THE 
SUBCONTRACTED 
EMPLOYEE 
SHALL 
BE 
INFORMED BY THE SUBCONTRACTOR OF THE FOREGOING 
TERMS AND CONDITIONS ON OR BEFORE THE FIRST DAY OF 
HIS EMPLOYMENT. 
"B. THE PRINCIPAL AND THE SUBCONTRACTOR. THE 
LEGITIMATE SUBCONTRACTOR SHALL BE CONSIDERED THE 
EMPLOYER 
OF 
THE 
CONTRACTUAL 
EMPLOYEE .FOR 
PURPOSES OF ENFORCING THE PROVISIONS OF THE LABOR 
CODE AND OTHER SOCIAL LEGISLATION. IN ALL CASES OF 
SUBCONTRACTING, HOWEVER, THE PRINCIPAL SHALL BE 
SOLIDARIL Y LIABLE WITH THE CONTRACTOR IN THE EVENT 
OF ANY VIOLATION OF ANY PROVISION OF THE LABOR 
CODE, INCLUDING THE FAILURE TO PAY WAGES. 
"THE PRINCIPAL SH1t~t BE DEEMED THE EMPLOYER 
OF THE 
CONTRACTUAL;]I'E,MPLOYEE IN ANY OF 
THE 
FOLLOWING CASES: 
ill:\11 
(a) WHERE THERE IS LABOR-ONLY CONTRACITNG; OR 
(b) IN THE ABSENCE OF THE WRITTEN CONTRACT 
REQUIRED BY ARTICLE 106-A; OR 
(c) IN CASES OF VIOLATION OF ARTICLE 106 - B. 
"IN ADDITION, THE PRINCIPAL SHALL BE SOLIDARIL Y 
LIABLE 
WITH 
THE 
SUBCONTRACTOR 
IN 
CASE 
THE 
CONTRACT 
BETWEEN 
THE 
PRINCIPAL 
AND 
SUBCONTRACTOR IS PRETERMINATED FOR REASONS NOT 
ATTRIBUTABLE TO THE FAULT OF THE SUBCONTRACTOR." 
SEC. 3. Prohibition against labor only contracting. Article 106-B is 
hereby inserted in Presidential Decree No. 442 as follows: 


"ARTICLE 1 06·B. PROHIBITION AGAINST LABOR·ONL Y 
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: 
(i) 
THE 
SUBCONTRACTOR 
DOES 
NOT 
HAVE 
SUBSTANTIAL CAPITAL AND INVESTMENT WHICH 
RELATES TO THE JOB, WORK OR SERVICE TO BE 
PERFORMED; 
(ii) 
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. 
"AS USED IN THIS CODE, SUBSTANTIAL CAPITAL AND 
INVESTMENT" 
IN 
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 IN 
RELATION 
TO 
CORPORATIONS 
ENGAGED 
IN 
SUBCONTRACTING DOES NOT BY ITSELF 
CONSTITUTE 
SUBSTANTIAL CAPITAL AND INVESTMENT. 
"AS USED IN THIS CODE, THE "RIGHT TO CONTROL" IN 
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 IN REACHING THATENO." 
SEC. 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 IN EXCESS OF 
10% OF THE PRINCIPAL'S TOTAL WORKFORCE 
INCLUDING, BUT NOT LIMITED TO: 
i. 
CONTRACTING OUT OF A JOB, WORK OR 
SERVICE WHEN THE SAME RESULTS IN THE 
TERMINATION 
OF 
REGULAR 
EMPLOYEES 
AND 
REDUCTION OF WORK HOURS OR 
REDUCTION 
OR 
SPLITTING 
OF 
THE 
BARGAINING UNIT; 
ii. CONTRACTNG OUT OF WORK WITH A "CABO". 
FOR THIS PURPOSE, "CABO" REFERS TO A 
PERSON OR GROUP OF PERSONS OR TO A 
LABOR GROUP WHICH, IN THE GUISE OF A 
LABOR ORGANIZATION, OR COOPERATIVE, 
SUPPLIES WORKERS TO AN 
EMPLOYER, 
WITH OR WITHOUT ANY MONETARY OR 
OTHER CONSIDERATION WHETHER IN THE 
CAPACITY OF AN AGENT OF THE EMPLOYER 
OR 
AS 
AN 
OSTENSIBLE 
INDEPENDENT 
CONTRACTOR; 
iii. TAKING 
UNDUE 
ADVANTAGE 
OF 
THE 
ECONOMIC 
SITUATION 
OR 
LACK 
OF 
BARGAINING 
STRENGTH 
OF 
THE 
CONTRACTUAL EMPLOYEE, R UNDERMINING 
HIS 
SECURITY 
OF 
TENURE, 
OR 
BASIC 
RIGHTS, 
OR 
CICUMVENTING 
THE 
PROVISIONS OF REGULAR EMPLOYMENT, IN 
ANY OF THE FOLLOWING INSTANCES: 
i. IN 
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 LETTER; 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 BEnNEEN THE 
PRINCIPAL 
AND 
THE 
SUBCONTRACTOR, 
UNLESS 
THE 
LATTER CONTRACT IS DIVISIBLE INTO 
PHASES FOR WHICH SUBSTANTIALLY 
DIFFERENT SKILLS ARE 
REQUIRED 
AND THIS IS MADE KNOWN TO THE 
EMPLOYEE 
ATTHE 
TIME 
OF 
ENGAGEMENT; 
(b) 
ENGAGING OR MAINTAINING BY THE PRINCIPAL 
OF SUBCONTRACTED EMPLOYEES IN EXCESS OF 
10% OF THE PRINCIPAL'S TOTAL WORKFORCE 
INCLUDING, BUT NOT LIMITED TO: 
i. 
CONTRACTING OUT OF A JOB, WORK OR 
SERVICE THROUGH AN INHOUSE AGENCY 
WHICH REFERS TO A SUBCONTRACTOR 
ENGAGED IN THE SUPPLY OF LABOR WHICH 
IS OWNED, MANAGED OR CONTROLLED BY 
THE PRINCIPAL; OR 
ii. SUBCONTRACTOR IN WHICH THE PRINCIPAL 
OWNS OR, OTHERWISE REPRESENTS ANY 
SHARE OF STOCK; OR 
iii. SUBCONTRACTOR 
WHICH 
OPERATES 
SOLELY FOR THE PRINCIPAL. 
(d) 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; 
(e) CONTRACTING OUT OF A JOB, WORK OR SERVICE BEING 
PERFORMED 
BY OR 
PREVIOUSLY PERFORMED BY 
REGULAR 
EMPLOYEES ANDIOR MEMBERS OF 
THE 
BARGAINING UNIT." 
SEC. 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 
REGISRA TlON. 
A 
SUBCONTRACTOR MAY BE LISTED IN THE REGISTRY OF 
SUBCONTRACTORS UPON COMPLETION AND SUBMISSION 
OF 
AN 
APPLICATION 
FORM 
PROVIDED 
BY 
THE 
DEPARTMENT. IN 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, IF 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, IF ANY; THE NUMBER OF PERSONNEL 
ASSIGNED TO EACH CLIENT, IF ANY AND THE 
SERVICES PROVIDED TO THE CLIENT; 
(e) THE DESCRIPTION OF THE PHASES OF THE 
CONTRACT AND THE NUMBER OF EMPLOYEES 
COVERED IN EACH PHASE, WHERE APPROPRIATE; 
AND, 
(f) A COpy OF AUDITED FINANCIAL STATEMENTS IF 
THE APPLICANT IS A CORPORATION, PARTNESHIP, 
COOPERATIVE OR A UNION, OR COpy OF THE 
LATEST 
INCOME TAX 
RETURN 
(lTR) 
IF THE 
APPLICANT IS 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· (D1'I),· COOPERATIVE DEVELOPMENT 
AUTHORITY (CDA), OR FROM THE DOLE IF 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. 
3) FILING AND PROCESSING OF APPLICA TlONS THE 
APPLICATION AND ITS SUPPORTING DOCUMENTS SHALL BE 
FILED IN TRIPLICATE IN 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 DEI;:MED REGISTERED· UPON 
PAYMENT OF A REGISTRATION FEE TO BE DETERMINED BY 
THE REGIONAL OFFICE. 
"WHERE ALL THE SUPPORTING DOCUMENTS HAVE 
BEEN SUBMITTED, 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 FO~ REGISTRATION. OF THE DULY-
STAMPED APPLICATION DOCUMENTS TO THE APPLICANT, 
4) 
ANNUAL 
REPORTING 
OF 
REGISTERED 
CONTRACTORS. THE SUBCONTRACTOR SHALL SUBMIT IN 
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) 
DEL/STING 
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; 
(b) 
NON-SUBMISSION 
OF 
SWORN 
DOCUMENTS 
STATED IN ARTICLE 106- D 4 (C); 
(c) 
ENGAGEMENT IN LABOR-ONLY CONTRACTING; 
(d) VIOLATION 
OF 
THE 
PROHIBITED 
ACTIVITIES 
PROVIDED BY THIS CODE; 
(e) 
NON-COMPLIANCE WITH LABOR STANDARDS AND 
WORKING CONDITIONS. 
6) RENEWAL OF REGISTRA T70N 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 IN ALLOWABLE CONTRACTING 
ACTIVITIES; AND, 
(b) 
COMPLIANCE WITH ADMINISTRATIVE REPORTING 
REQUIREMENTS. " 
SEC. 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 IN 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, 
IF THERE IS ANY." 
SEC. 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 unlawful: 
(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 THE BARGAINING UNIT ANDIOR 
REGULAR RANK-AND-FILE AND SUPERVISORY 
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 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; 
(f) 
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[.]; OR 
G) 
TO 
DENY 
THE 
EXISTENCE 
OF 
EMPLOYER-
EMPLOYEE RELATIONSHIP ANDIOR 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." 
SEC. 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 
(Pi ,000.00) nor more than Ten Thousand Pesos (P10,000.00) 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, 1D6-A, 106-B, 106-C, 106-0 AND 106-
E SHALL BE SOLIDARIL Y LIABLE TO INDEMNIFY EACH 
SUBCONTRACTED 
EMPLOYEE 
NO 
LESS 
THAN 
FIFTY 
THOUSAND PESOS (P50,000.00) 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 WRITIEN 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." 
SEC. 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. 
SEC. 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. 


SEC. 11. Effectivity. This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in at feast two (2) newspapers of general 
circulation. 
Approved,