FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 533 
1 G J!.JL -7 A9 :'1.2 
, INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 are paid. 
If the employees cannot get their benefits from their 
agencies, they can turn to the company for relief. 
The passage of this legislative measure is earnestly requested. 
Y EJERCITO ESTRADA 
Senator 


-
FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 533 
I\) .iIi. -1 Ji. 9 :22 
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 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 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 
OR 
SUBCONTRACTOR HAVE RENDERED AT LEAST ONE (1) YEAR 
OF SERVICE TO THE SAME EMPLOYER, WHETHER OR NOR 
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 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 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 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." 
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,