FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 672 
) 
) 
) 
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 insec~re 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 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 672 
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. 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 PAY AND 
SEPARATION PAY; 
(c) SOCIAL SECURITY AND WELFARE BENEFITS; 
(e) SECURITY OF TENURE; 
(d) 
SELF-ORGANIZATION, 
COLLECTIVE 
BARGAINING 
AND 
PEACEFUL CONCERTED ACTION; AND 
IN ADDITION, SUBCONTRACTED EMPLOYEES SHALL HAVE A RIGHT 
TO A WRITTEN CONTRACT WHICH SHALL INCLUDE THE FOLLOWING 
TERMS AND CONDITIONS: 
(i) THE SPECIFIC DESCRIPXON OF THE JOB, WORK OR SERVICE TO 
BE PERFORMED BY THE CONTRACTUAL EMPLOYEE; 
(ii) THE PLACE OF WORK AND TERMS AND CONDITIONS OF 
EMPLOYMENT, 
INCLUDING 
A 
STATEMENT 
OF 
THE 
WAGE 
RATE 
APPLICABLE TO THE INDIVIDUAL CONTRACTUAL EMPLOYEE; AND 
(iii). 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 SHALL BE DEEMED THE EMPLOYER OF THE 
CONTRI\CTUAL EMPLOYEE IN ANY OF THE FOLLOWING CASES: 
·(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 
106·B. 
PROHIBITION 
AGAINST 
LABOR·ONLY 
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 THAT END. 
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. 
(b) 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; 
(c) 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; 
(d) 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 
(ii) REQUIRING HIM TO SIGN A CONTRACT FIXING THE PERIOD OF 
EMPLOYMENT TO A TERM SHORTER THAN THE TERM OF THE 
CONTRACT BETWEEN THE PRINCIPAL AND THE SUBCONTRACTOR, 
UNLESS,THE LATTER CONTRACT IS DIVISIBLE INTO PHASES FOR WHICH 
SUBSTANTIALLY DIFFERENT SKILLS ARE REQUIRED AND THIS IS MADE 
KNOVYN TO THE EMPLOYEE ATTHE TIME OF ENGAGEMENT; 
(e) CONTRACTING OUT OF A JOB, WORK OR SERVICE THROUGH 
AN INHOUSE AGENCY WHICH REFERS TO A: 
(i). 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. 


(f) 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; 
(g) CONTRACTING OUT OF A JOB, WORK OR SERVICE BEING 
PERFORMED 
BY 
OR 
PREVIOUSLY 
PERFORMED 
BY 
REGULAR 
EMPLOYEES AND/OR MEMBERS OF THE BARGAINING UNIT. 
SEC. 5. Registration of Subcontractors. Article 106-0 is hereby inserted 
in Presidential Decree No. 442 as follows: 
ARTICLE 106 - D. REGISTRATION OF SUBCONTRACTORS. 
1) MANDATORY REGISTRA TlON. 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 REGISRAUON. 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 (ITR) 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 (DTI), 
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 DONS 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 
DEEMED 
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 
FOR 
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; 
(e) AN ANNUAL REPORT INCLUDING A SWORN UNDERTAKING THAT 
THE BENEFITS FROM THE SOCIAL SECURJTY SYSTEM (SSS), THE HOME 
DEVELOPMENT MUTUAL FUND (HDMF), 
PHILHEAL TH, 
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 DUL Y-
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) DELISTTNG 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 REG/STRAT70N 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: 
Af\ticle 248. Unfair labor practices of employers. - It shall be 
. (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 
AND/OR 
REGULAR 
RANK-AND-FILE 
AND 
SUPERVISORYEMPLOYEES [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. 
U) 
TO 
DENY 
THE 
EXISTENCE 
OF 
EMPLOYER-EMPLOYEE 
RELATIONSHIP AND/OR 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 (P1,OOO.00) nor more than Ten Thousand Pesos (P10,OOO.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, 106-A, 106-B, 106-C, 106-0 AND 106-E SHALL BE SOLIDARILY LIABLE 
TO INDEMNIFY EACH SUBCONTRACTED EMPLOYEE NO LESS THAN 
P50,000.OO 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 WRITTEN 
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,