174 17
174 17
174 17
1) For best results set your scanner to 300 DPI , 200 DPI is the minimum setting to achieve acceptable
results.
2) Use the rotate buttons (to the left of the image) if your image is upside down or rotated
3) If your document has columns or pictures then just select the text area by drawing a box on the image
with the left mouse button
4) After OCR you can use the export button to Word or copy/paste the text into any Windows
application.
Note: You can press the red X to clear this text window before OCR'ing
3&1
Republic of the Philippines
" ' " DEPARTMENT OF LABOR AND EMPLOYMENT
, . __ . I . AJA
P ~ -' - ntramuros, Manila .. . H
""- '**5"/'v;i';:"=;i;._.;=;~"';*..ti' / '
A15-OM} f.\') " 1
lirK2r{*%?~W_1"" T"" ~. @'"F:~l L i
" "f" . .4 W" , ...l110
..j:f..-..~___.___-_ ._ DEPARTMENT ORDER NO. l dim C
~H
< ,........s. ............,._-...
RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS
AMENDED
By virtue of the power vested in the Secretary of Labor and Employment under Articles
5 and 106 to 109 of the Labor Code of the Philippines, as amended, the following
regulations governing contracting and subcontracting arrangements are hereby
issued:
Section 1. Guiding Principle. Non-permissible forms of contracting and
subcontracting arrangements undermine the Constitutional and statutory right to
security of tenure of workers.
Section 2. Coverage. These Rules shall apply to all parties in an arrangement where
employer-employee relationship exists.
Contractors and subcontractors referred to in these Rules are prohibited from
engaging in recruitment and placement activities as defined in Article 13(b) of the
Labor Code, whether local or overseas employment.
Section 3. Definition of terms. The following terms, as used in these Rules, shall
mean:
a) Bond refers to the bond under Article 108 of the Labor Code that the
principal may require from the contractor to be posted equal to the cost of labor
under contract.
b) Cabo" refers to a person or group of persons or to a labor group which,
under the guise of a labor organization, cooperative or any entity, 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.
c) Contracting or Subcontracting refers to an arrangement whereby a
principal agrees to farm out to a contractor the performance or completion of a
specific job or work within a definite or predetermined period, regardless of
whether such job or work is to be performed or completed within or outside the
premises of the principal.
d) Contractor - refers to any person or entity engaged in a legitimate
contracting or subcontracting arrangement providing services for a specific job
or undertaking farmed out by principal under a Service Agreement.
S t"W X1
_,;-,.:;. 1-.2
l l~1.;?<Y Ell?
REPUBLIC OF THE PHILIPPINES
DEPARTMENT o|= LABOR AND EMPLOYMENT '=13r"
INTRAMUROS, MANILA Joan
DEPARTMENT ORDER N0. I
Series of 2017
RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS
AMENDED
By virtue of the power vested in the Secretary of Labor and Employment under Articles
5 and 106 to 109 of the Labor Code of the Philippines, as amended, the following
regulations governing contracting and subcontracting arrangements are hereby
issued:
Section 1. Guiding Principle. Non-permissible forms of contracting and
subcontracting arrangements undermine the Constitutional and statutory right to
security of tenure of workers.
Section 2. Coverage. These Rules shall apply to all parties in an arrangement where
employer-employee relationship exists.
Contractors and subcontractors referred to in these Rules are prohibited from
engaging in recruitment and placement activities as defined in Article 13(b) of the
Labor Code, whether local or overseas employment.
Section 3. Definition of terms. The following terms, as used in these Rules, shall
mean:
a) Bond refers to the bond under Article 108 of the Labor Code that the
principal may require from the contractor to be posted equal to the cost of labor
under contract.
b) Cabo refers to a person or group of persons or to a labor group which,
under the guise of a labor organization, cooperative or any entity, 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.
c) Contracting or Subcontracting refers to an arrangement whereby a
principal agrees to farm out to a contractor the performance or completion of a
specific job or work within a definite or predetermined period, regardless of
whether such job or work is to be performed or completed within or outside the
premises of the principal.
d) Contractor refers to any person or entity engaged in a legitimate
contracting or subcontracting arrangement providing services for a specific job
or undertaking farmed out by principal under a Service Agreement.
W, Q? jg./vuk/Y,
ii. The contractor or subcontractor does not have investments in the form
of tools, equipment, machineries, supervision, work premises, among
others,
and
m. The contractors or subcontractors employees recruited and placed are
performing activities which are directly related to the main business
operation of the principal;
OT
b) The contractor or subcontractor does not exercise the right to control over
the performance of the work of the employee.
Section 6. Other Illicit Forms of Employment Arrangements. In addition to Section
5 of these Rules, the following are hereby declared prohibited for being contrary to the
law or public policy:
a) When the principal farms out work to a Cabo".
b) Contracting out of job or work through an in-house agency.
c) Contracting out of job or work through an in-house cooperative which merely
supplies workers to the principal.
d) Contracting out of a job or work by reason of a strike or lockout whether actual
or imminent.
e) Contracting out of a job or work being performed by union members and such
will interfere with, restrain or coerce employees in the exercise of their rights to
self-organization as provided in Article 259 of the Labor Code, as amended.
f) Requiring the contractors/subcontractors employees to perform functions
which are currently being performed by the regular employees of the principal.
g) Requiring the contractors/subcontractors employees 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 or contractor from
liability as to payment of future claims; or require the employee to become
member of a cooperative.
h) Repeated hiring by the contractor/subcontractor of employees under an
employment contract of short duration.
i) Requiring employees under a contracting/subcontracting arrangement to sign
a contract fixing the period of employment to a term shorter than the term of the
Service Agreement, unless the contract is divisible into phases for which
substantially different skills are required and this is made known to the
employee at the time of engagement.
j) Such other practices, schemes or employment arrangements designed to
circumvent the right of workers to security of tenure.
Section 7. When principal is deemed the direct employer of the contractor's or
subcontractors employees. In the event that there is a finding that the contractor or
subcontractor is engaged in labor-only contracting under Section 5 and oth r illicit
, l 40 3
0 /r
ii. The place of work and terms and condition of employment, including a
statement of the wage rate applicable to the individual employee.
The contractor/subcontractor shall infomt the employee of the foregoing
stipulations in writing on or before the first day of his/her employment.
b) Service Agreement between the principal and the contractor. The Service
Agreement shall include the following:
i. The specific description of the job or work being subcontracted, including
its term or duration;
ii. The place or work and terms and conditions governing the contracting
arrangement, to include the agreed amount of the contracted job or work
as well as the standard administrative fee of not less than ten percent
(10%) of the total contract cost; and
m. A provision on the issuance of the bond/s as defined in Section 3(a)
renewable every year.
Section 12. Effect of Violation of the Provisions on the Rights of Contractors
Employees and Required Contracts. A finding of violation of either Sections 10 or
11 hereof, shall render the principal the direct employer of the employees of the
contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended.
Section 13. Effect of Termination of Employment. The termination of employment
of the contractors/subcontractors employee prior to the expiration of the Service
Agreement shall be governed by Articles 297, 298 and 299 of the Labor Code.
In case the termination of employment is caused by the pre-termination of the Service
Agreement not due to authorized causes under Article 298, the right of the
contractor's/subcontractors employee to unpaid wages and other unpaid benefits
including unremitted legal mandatory contributions, e.g., SSS, PhilHealth, Pag-IBIG,
ECC, shall be borne by the party at fault, without prejudice to the solidary liability of
the parties to the Service Agreement.
Where the termination results from the expiration of the Sen/ice Agreement, or from
the completion of the phase of the job or work for which the employee is engaged, the
latter may opt to wait for re-employment within three (3) months to resign and transfer
to another contractor-employer. Failure of the contractor to provide new employment
for the employee shall entitle the latter to payment of separation benefits as may be
provided by law or the Service Agreement, whichever is higher, without prejudice to
his/her entitlement to completion bonuses or other emoluments, including retirement
benets whenever applicable. The mere expiration of the Service Agreement shall not
be deemed as a termination of employment of the contractor's/subcontractors
employees who are regular employees of the latter.
Section 14. Mandatory Registration and Registry of Legitimate Contractors.
Consistent with the authority of the Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the rights of workers, it shall be
mandatory for all persons or entities acting as contractors to register with the Regional
Office of the Department of Labor and Employment (DOLE) where it principally
I W M//gs
Failure to register shall give rise to the presumption that the contractor is engaged in
labor-only contracting.
Accordingly, the registration system, governing contracting arrangements and
implemented by the Regional Offices of the DOLE is hereby established, with the
Bureau of Working Conditions (BWC) as the central registry.
Section 15. Requirements for Registration. The verified application for registration
as a contractor shall be filed at the DOLE Regional Ofce in the region where it seeks
to principally operate. Whenever applicable, the applicant shall provide in the
application form the following information:
a) The name and business address of the applicant and the areas where it seeks
to operate;
b) The names and addresses of ofcers, if the applicant is a corporation,
partnership, cooperative or a labor organization;
c) The nature of the applicants business and the industry or industries where the
applicant seeks to operate;
d) The number of regular workers and the total workforce;
e) The list of clients, if any, the number of personnel assigned to each client, if
any, and the services provided to the client;
f) The description of the phases of the contract, including the number of
employees covered in each phase, where appropriate; and
g) Proof of compliance with substantial capital requirement as defined in Section
3(1) of these Rules.
The application shall be supported by:
a) A certified true copy of a certificate of registration of rm 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 applicant is a labor organization;
b) A certified true copy of the license or business permit issued by the local
government unit or units where the contractor operates;
c) A certified listing, with proof of ownership or lease contract, of facilities, tools,
equipment, premises implements, machineries and work premises, that are
actually and directly used by the contractor in the performance or completion
of the specific job or work contracted out. In addition, the applicant shall
submit a photo of the office building and premises where it holds office;
d) A copy of audited financial statements if the applicant is a corporation,
partnership, cooperative or a labor organization, ora copy of the latest ITR
if the applicant is a sole proprietorship; and
e) A sworn disclosure that the registrant, its officers and owners or principal
stockholders or any one of them, has not been operating or previously
operating as a contractor under a different business name or entity or with
pending cases of violations of these Rules and/or labor standards, or with a
cancelled registration. In case any of the foregoing has a pending case, a
copy of the complaint and the latest status of the case shall be attached.
W eta) ac
Section 16. Filing and Processing of Application. The application, with all
supporting documents, shall be filed in triplicate in the Regional Office where the
applicant principally operates. No application for registration shall be accepted unless
all the requirements in the preceding Section are complied with.
Section 17. Verication Inspection. Within two (2) working days upon receipt of the
application with complete supporting documents, the authorized representative of the
Regional Director shall conduct a verification inspection on the facilities, tools,
equipment, and work premises of the applicant.
Section 18. Approval or Denial of the Application. The Regional Ofce shall deny
or approve the application within three (3) working day after the verification
inspection.
Applications that fail to meet the requirements set forth in Section 15 of these Rules
shall be denied.
Section 19. Registration Fee. Payment of registration fee of One Hundred
Thousand Pesos (P100,000.00) shall be required upon approval of the application.
Upon registration, the Regional Office shall return one set of the duly-stamped
application documents to the applicant and retain one set for its le, and transmit the
remaining set to the Bureau of Working Conditions (BWC) within five (5) days from
registration.
Section 20. Validity of Certificate of Registration. The contractor shall be deemed
registered only on the date of issuance of its Certificate of Registration.
The Certificate of Registration shall be effective for two (2) years, unless cancelled
after due process. The same shall be valid in the region where it is registered.
In case the contractor has Service Agreements or operates outside the jurisdiction of
the Regional Office where it is registered, it shall request a duly authenticated copy
of its Certificate of Registration from the registering Regional Office and submit the
same to the DOLE Regional Office where it seeks to operate together with a copy of
its Service Agreement/s in the area, for purposes of monitoring compliance with these
Rules.
Section 21. Renewal of Registration. All registered contractors shall apply for
renewal of their Certificates of Registration thirty (30) days before the expiration of
their registration to remain in the roster of legitimate service contractors. The
applicant shall pay a registration renewal fee of One Hundred Thousand Pesos
(P100,000.00) to the DOLE Regional Office.
Copies of all the updated supporting documents in letters (a) to (e) of Section 15
hereof shall be attached to the duly accomplished application form, including the
following:
a) Certificate of membership and proof of payment of SSS, PhilHealth, BIR, ECC
and Pag-lB|G contributions for the last three (3) years, as well as loan
t'"@W~%* /
amortization; and
b) Certificate of pending or no pending labor standards violation case/s with the
National Labor Relations Commission (NLRC) and Department of Labor and
Employment (DOLE). The pendency of a case will not prejudice the renewal
of the registration, unless there is a finding of violation of labor standards by
the DOLE Regional Director.
Section 22. Semi-Annual Reporting. The contractor shall submit in triplicate its
subscribed semi-annual report using a prescribed fonn to appropriate Regional
Office. The report shall include:
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) Proof of payment of the Social Security System (SSS), the Pag-IBIG Fund,
PhilHealth, Employees Compensation Commission (ECC), and Bureau of
Internal Revenue (BIR) remittances due its employees during the subject
reporting period and of amortization of declared loans due from its employees;
and
d) A certified list of all cases filed against the contractor before the NLRC and
DOLE.
The Regional Office shall return one set of the duly-stamped report to the contractor,
retain one set for its file, and transmit the remaining set to the BWC within five (5)
days from receipt thereof.
Section 23. Grounds for Cancellation of Registration. The Regional Director
shall, upon a verified complaint, cancel or revoke the registration of a contractor after
due process, based on any of the following grounds:
a. Misrepresentation of facts in the application;
b. Submission of falsified or tampered application or supporting documents to
the application for registration;
c. Non-submission of Service Agreement between the principal and the
contractor when required to do so;
d. Non-submission of the required semi-annual report as provided in Section 22
(Semi-Annual reporting) thereof;
e. Final findings that the contractor has engaged in labor-only contracting and/or
other illicit f0|"l'T'lS of employment arrangements as provided in Section 6 hereof;
f. Non-compliance with labor standards and working conditions;
g. Findings of violation of Section 10 (Rights of contractors employees), and
Section 11 (Required contracts);
h. Non-compliance with SSS, the HDMF, Pag-IBIG, PhilHealth, and ECC Laws;
i. Collecting any fees not authorized by law and other applicable rules and
regulations; and
j. Violations of any provisions of the Labor Code.
Section 24. Due Process in Cancellation of Registration. Complaint/s based on
any of the grounds enumerated in the preceding Section against the contractor shall
be filed in writing and under oath with the Regional Office which issued the Certificate
of Registration.
I. O
Wr/" X