FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Sessiou 
) 
) 
) 
S.B. No. 2595 
Introdnced by SEN. MANNY VILLAR 
EXPLANATORY NOTE 
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'10 
NOV 15 P5 :28 
RECEIVED BY:-@::-
Our fundamental law declares that, "labor is a primary social economic force. It shall protect 
the rights of workers and promote their welfare." 
In . the past, job-contracting or sub-contracting were confined to security, janitorial, 
maintenance and other services incidental to the business of the employer. However in recent years, 
job-contracting or sub-contracting expanded to a wider latitude of work covering more members of 
the labor force. 
With this growth came exploitation of certain protective labor legislation and 
standards. While job-contracting and sub-contracting are allowed by law, it should be subject to 
regulations to minimize its exploitive aspects. 
Sen. Aquilino Q. Pimentel, Jr. crusaded for the protection of sub-contracted employees. 
Hence, this bill which he filed in the previous congress, mandates indirect employers to ensure that 
all benefits of employees hired through job contractors are paid in order to avoid the spectacle of a 
confused and unpaid employee not knowing who to run after for the satisfication of his hard-earned 
wage. 
The approval of this initiative is earnestly sought. 
MANNYVI LAR 
1 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
S.B. No. 2595 
Introduced by SEN. MANNY VILLAR 
AN ACT 
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'10 
NOV 15 P 5 :28 
RECEIVED BY; f 
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 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 ofthe latter's subcontractor, ifany, 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 
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 
A V AILMENT 
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 laboronly 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 
2 


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 provision 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. 
SECTION4. 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, 
3 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
S.B. No. 2596 
Introduced by SEN. MANNY VILLAR 
EXPLANATORY NOTE 
'10 
NOV 15 P 5 :29 
HECEIH:O BY:-@=-
Microcredit is the extension of very small loans (microloans) to those in poverty designed to 
spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit 
history and therefore cannot meet even the most minimal qualifications to gain access to traditional 
credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial 
services to the very pOOL I 
In many developing countries, the self-employed comprise more than 50 percent of the labor 
force. Access to small amounts of credit at reasonable interest rates - instead of the exorbitant ones 
often charged by traditional moneylenders - allows poor people to move from initial, perhaps tiny, 
income-generating activities to small microenterprises. In most cases, microcredit programs offer a 
combination of services and resources to their clients including savings facilities, training, 
networking, and peer support? 
In this way, microcredit allows families to work to end their own poverty - with dignity. 
Microcredit programs around the world, using a variety of models, have shown that poor people 
achieve strong repayment records - often higher than those of conventional borrowers. Repayment 
rates are high because, through a system of peer support and pressure used in many microcredit 
models, borrowers are responsible for each other's success and ensure that every member of their 
group is able to pay back their loans.' In the Philippines, 32.9%4 of the estimated 99,900,177 
Filipinoss live below the poverty line. Of these, nearly three quarters live in rural areas. Despite 
their limited business scopes, micro-enterprises have a significant and positive effect on the 
economy. The most appropriate vehicle for countryside-led growth micro-finance remains the Land 
Bank of the Philippines. As a government universal bank, Landbank's vision is to be a dominant 
financial institution in the countryside leading the nation to economic prosperity. Financial services 
for the poor have proved to be a powerful instrument for poverty reduction that enables the poor to 
build assets, increase incomes, and reduce their vulnerability to economic stress. However, the 
challenge of providing financial services to them remains. 
In view of the foregoing, the approval of this initiative is earnestly sought. 
1 http://en.wikipedia.org!wiki/Mierocredit 
, http://www . m i eroered itsu m m it. org!a bout!what_is _ m i croeredit! 
3 Ibid. 
, http://www.indexmundi.eom/philippines/population_below_povertYJine.htm I 
5 http://www.mahalo.com/population-of-philippines 
1