Introduced by Representative WES GATCHALIAN

EXPLANATORY NOTE

Section 3, Article XII of the Constitution in bold letters declare the rights of labor:
“The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equaiity of empioyment opportunities for all
They shall be entitled to security of tenure, humane conditions of work. and a living
wage. They shall also participate in policy and decision-making processes affecting their
Tights and benefits as may be provided by law.”

‘When we enshrined these rights in the constitution, we as a people made a solemn
commitment to guarantee that these will be enjoyed by the working force of our country.
When we enshrined these rights in our constitution, we are saying that these rights are now
beyond dispute, not subject to any debates or controversies. These rights are immutable and
these rights we should uphold and with vigor fight for. This therefore brings me to the subject
of this bill which is to end a plague which has for so long been the bane of labor in the
Philippines — Contractualization

For so long, employers have been able to get away with not providing the proper
benefits and just due to employees enshrined in our constitution and our statutes to people
who perform work for them by the simple exigency of contracting out labor. The approach
is to not create an employer-employee relationship, thus barring the application of the laws
regarding labor standards as to said employer. As an aside, the author of this bill is not
oblivious or naive to the fact that business exigencies would at times necessitate the
contracting out of certain work. There is also a societal utility in the idea of business

however, it cannot be that they override, outweigh, and
defeat the rights of labor. The old adage remains true that the rights of one person ends
when the rights of another person begins.

In view of all that was discussed above. the approach of this bill is to strike the
balance between the competing rights of capital and labor by limiting the positions which can
be contracted out to those positions which are not considered to be regular positions. This to
the author is a proper compromise as on the one hand, employers would still be allowed to
contract out business processes which are not core thus allowing the interest of
specialization to kick in, while on the other hand ensuring that those laborers who perform for
them functions which are necessary and beneficial to their usual business or trade would be
enjoying the full benefits of employment.

In conclusion | harken back to the commitment of the president to put an end to
‘endo. A year after his ascension to the presidency the mandate is still as loud as ever. We in
congress should take this onus 2s well as we tum into reality with the laws that we enagt the
dreams and visions of our people as enshrined in the constitution.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17% CONGRESS
First Regular Session

House Bill vo._9899

Introduced by Representative WES GATCHALIAN

ANACT
PROHIBITING THE SUBCONTRACTING
OF POSITIONS WHICH ARE REGULAR AS DEFINED
BY ARTICLE 295 OF PD 442 AS AMENDED
AMENDING FOR THIS PURPOSE
ARTICLE 106 OF PD 442 OTHERWISE KNOWN
‘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 the Labor Code shall hereby be amended 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 emplayees 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 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, 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 tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person 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

Section 2. Repealing Clause. - All laws, executive orders, presidential decrees or issuances, letter
of instruction, administrative orders, rules, and regulations contrary to or inconsistent with the
provisions of this Act are hereby repealed, amended, or modified accordingly.

Section 3. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in a newspaper of general circulation.

Approved.