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PRESIDENTIAL DECREE NO. 442
- (AS AMENDED) A DECREE INSTITUTING A LABOR CODE, THEREBY REVISING AND
CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD PROTECTION TO LABOR,
PROMOTE EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT AND ENSURE
INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE
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| PRELIMINARY
TITLE CHAPTER I General Provisions ARTICLE 1. Name of Decree. — This Decree shall be known as the "Labor Code of the Philippines," ARTICLE 2. Date of effectivity. — This Code shall take effect six months after its promulgation. ARTICLE 3. Declaration of basic policy. — The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure and just and humane conditions of work. ARTICLE 4. Construction in favor of labor. — All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. ARTICLE 5. Rules and regulations. — The Department of Labor and Employment and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen days after announcement of their adoption in newspapers of general circulation. ARTICLE 6. Applicability. — All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural. CHAPTER II Emancipation of Tenants ARTICLE 7. Statement of objectives. — Inasmuch as the old concept of land ownership by a few has spawned valid and legitimate grievances that gave rise to violent conflict and social tension and the redress of such legitimate grievances being one of the fundamental objectives of the New Society, it has become imperative to start reformation with the emancipation of the tiller of the soil from his bondage. ARTICLE 8. Transfer of lands to tenant workers. — Being a vital part of the labor force, tenant-farmers on private agricultural lands primarily devoted to rice and corn under a system of share crop or lease tenancy whether classified as landed estate or not shall be deemed owner of a portion constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated. In all cases, the landowner may retain an area of not more than seven hectares if such landowner is cultivating such area or will now cultivate it. ARTICLE 9. Determination of land value. — For the purpose of determining the cost of the land to be transferred to the tenant-farmer, the value of the land shall be equivalent to two and one-half (2 ½) times the average harvest of three (3) normal crop years immediately preceding the promulgation of Presidential Decree No. 27 on October 21, 1972. The total cost of the land, including interest at the rate of six percent (6%) per annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations. In case of default, the amortizations due shall be paid by the farmer's cooperative of which the defaulting tenant-farmer is a member, with the cooperative having a right of recourse against him. The government shall guarantee such amortizations with shares of stock in government-owned and government-controlled corporations. ARTICLE 10. Conditions of ownership. — No title to the land acquired by the tenant-farmer under Presidential Decree No. 27 shall be actually issued to him unless and until he has become a full-fledged member of a duly recognized farmers' cooperative. Title to the land acquired pursuant to Presidential Decree No. 27 or the Land Reform Program of the Government shall not be transferable except by hereditary succession or to the Government in accordance with the provisions of Presidential Decree No. 27, the Code of Agrarian Reforms and other existing laws and regulations. ARTICLE 11. Implementing agency. — The Department of Agrarian Reform shall promulgate the necessary rules and regulations to implement the provisions of this chapter. BOOK ONE Pre-Employment ARTICLE 12. Statement of objectives. — It is the policy of the State: (a) To promote and maintain a state of full employment through improved manpower training, allocation and utilization; (b) To protect every citizen desiring to work locally or overseas by securing for him the best possible terms and conditions of employment; (c) To facilitate a free choice of available employment by persons seeking work in conformity with the national interest; (d) To facilitate and regulate the movement of workers in conformity with the national interest; (e) To regulate the employment of aliens, including the establishment of a registration and/or work permit system; (f) To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives; (g) To insure careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad. Title I Recruitment and Placement of Workers * CHAPTER I General Provisions ARTICLE 13. Definitions. — (a) "Workers" means any member of the labor force, whether employed or unemployed. (b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. (c) "Private employment agency" means any person or entity engaged in the recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both. (d) "License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency. (e) "Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers. (f) "Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. (g) "Seaman" means any person employed in a vessel engaged in maritime navigation. (h) "Overseas employment" means employment of a worker outside the Philippines. (i) "Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in the country of destination. ARTICLE 14. Employment promotion. — The Secretary of Labor and Employment shall have the power and authority to: (a) To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the need arises; (b) To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular employment office of job opportunities in other parts of the country as well as job opportunities abroad; (c) To develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance in the relocation of workers from one area to another; and (d) To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the Secretary of Labor. ARTICLE 15. Bureau of Employment Services *. — (a) The Bureau of Employment Services shall be primarily responsible for developing and monitoring a comprehensive employment program. It shall have the power and duty: 1. To formulate and develop plans and programs to implement the employment promotion objectives of this Title; 2. To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of workers, locally and overseas, and to secure the best possible terms and conditions of employment for Filipino contract workers and compliance therewith under such rules and regulations as may be issued by the Minister of Labor; 3. To formulate and develop employment programs designed to benefit disadvantaged groups and communities; 4. To establish and maintain a registration and/or work permit system to regulate the employment of aliens; 5. To develop a labor market information system ind of proper manpower and development planning; 6. To develop a responsive vocational guidance and testing system ind of proper human resources allocation; and 7. To maintain a central registry of skills, except seamen. (b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided, That the Bureau of Employment Service may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices or the Bureau of Employment Services if so authorized by the Secretary of Labor and Employment as provided in this Article, shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and unappealable.(Superseded by Exec. Order 797.) (c) The Minister of Labor shall have the power to impose and collect fees, based on rate recommended by the Bureau of Employment Services. Such fees shall be deposited in the National Treasury as a special account of the General Fund, for the promotion of the objectives of the Bureau of Employment Services, subject to the provisions of Section 40 of Presidential Decree No. 1177. ARTICLE 16. Private recruitment. — Except as provided in Chapter II of this Title, no person or entity, other than the public employment offices, shall engage in the recruitment and placement of workers. ARTICLE 17. Overseas Employment Development Board. — [Art. 17 and Art. 20 (National Seamen Board) were repealed by Executive Order 797, May 1, 1982 and Executive Order No. 247, July 24, 1987. Exec. Order 797 created the Philippine Overseas Employment Administration which assumed the functions of the OEDB and NSB and the overseas employment functions of the Bureau of Employment Services, which were abolished. Exec. Order 247 provided for the following POEA functions (Sec. 3): (a) Regulate private sector participation in the recruitment and overseas placement of workers by setting up a licensing and registration system; (b) Formulate and implement, in coordination with appropriate entities concerned, when necessary, a system for promoting and monitoring the overseas employment of Filipino workers taking into consideration their welfare and the domestic manpower requirements; (c) Protect the rights of Filipino workers for overseas employment to fair and equitable recruitment and employment practices and ensure their welfare; (d) Exercise original and exclusive jurisdiction to hear and decide all claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas employment including the disciplinary cases; and all pre-employment cases which are administrative in character involving or arising out of violation of requirement laws, rules and regulations including money claims arising therefrom, or violation of the conditions for issuance of license or authority to recruit workers. All prohibited recurrent activities and practices which are penal in character as enumerated and defined under Administrative shall also establish and maintain joint projects with private organizations, domestic or foreign, in the furtherance of its objectives.] ARTICLE 18. Ban on direct-hiring. — No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempt from this provision. ARTICLE 19. Office of Emigrant Affairs. —* (a) Pursuant to the national policy to maintain close ties with Filipino migrant communities and promote their welfare as well as establish a data bank ind of national manpower policy information, an Office of Emigrant Affairs is hereby created in the Department of Labor. The Office shall be a unit at the Office of the Secretary and shall initially be manned and operated by such personnel and through such funding as are available within the Department and its attached agencies. Thereafter, its appropriation shall be made part of the regular General Appropriation Decree. (b) The Office shall, among others, promote the well-being of emigrants and maintain their close link to the homeland by: 1. serving as a liaison with migrant communities; 2. provision of welfare and cultural services; 3. promote and facilitate re-integration of migrants into the national mainstream; 4. promote economic, political and cultural ties with the communities; and 5. generally to undertake such activities as may be appropriate to enhance such cooperative links. [*Abolished by BP 79 and replaced by the Commission on Filipino Overseas.] ARTICLE 20. National Seamen Board. — [Repealed by Exec. Order No. 797, except letter (b).] (b) The Board (POEA) shall have original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee relations, arising out of or by virtue of any law or contracts involving Filipino seamen for overseas employment. The decisions of the Board (POEA) shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and unappealable. ARTICLE 21. Foreign service role and participation. — To provide ample protection to Filipino workers abroad, the labor attaches, the labor reporting officers duly designated by the Secretary of Labor and the Philippine diplomatic or consular officials concerned shall, even without prior instruction or advice from the home office, exercise the power and duty: (a) To provide all Filipino workers within their jurisdiction assistance on all matters arising out of employment; (b) To insure that Filipino workers are not exploited or discriminated against; (c) To verify and certify as requisite to authentication that the terms and conditions of employment in contracts involving Filipino workers are in accordance with the Labor Code and rules and regulations of the Overseas Employment Development Board and the National Seamen Board (POEA); (d) To make continuing studies or researches and recommendations on the various aspects of the employment market within their jurisdiction; (e) To gather and analyze information on the employment situation and its probable trends, and to make such information available ; and (f) To perform such other duties as may be required of them from time to time. ARTICLE 22. Mandatory remittance of foreign exchange earnings. — It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor. ARTICLE 23. Composition of the Boards. — (Repealed by Executive Order No. 247, July 24, 1987, Section 4 of which provides as follows: Structural Organizations. — The Administration shall consist of the Governing Board, the Office of the Administrator, the Offices of such number of Deputy Administrators as may be necessary, Office of the Director for each of the principal subdivisions of its internal structure. (a) The governing Board shall be composed of the Secretary of Labor and Employment as Chairman, the Administrator and a third member, considered well-vested in the field of overseas employment who shall be appointed by the President to serve for a term of two (2) years; (b) The Administrator and such Deputy Administrator and Directors as may be necessary shall be appointed by the President upon recommendation of the Secretary; (c) The functional structure of the Administration shall be established along the areas of: market development, employment, welfare, licensing, regulation and adjudication. Each of the principal substantive subdivisions of the Administration shall be headed by a Director and shall have such departments and units as may be necessary.) ARTICLE 24. Boards to issue rules and collect fees. — The Boards shall issue appropriate rules and regulations to carry out their functions. They shall have the power to impose and collect fees from employers concerned, which shall be deposited to the respective accounts of said Boards and be used by them exclusively to promote their objectives. CHAPTER II Regulation of Recruitment and Placement Activities ARTICLE 25. Private sector participation in the recruitment and placement of workers. — Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations, as may be issued by the Secretary of Labor. ARTICLE 26. Travel agencies prohibited to recruit. — Travel agencies and sales agencies ofrline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. ARTICLE 27. Citizenship requirement. — Only Filipino citizens or corporations, partnerships or entities at least 75 percent of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas. ARTICLE 28. Capitalization. — All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. ARTICLE 29. Non-transferability of license or authority. — No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued at any place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. ARTICLE 30. Registration fees. — The Secretary of Labor and Employment shall promulgate a schedule of fees for the registration of all applicants for license or authority. ARTICLE 31. Bonds. — All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor and Employment to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate. ARTICLE 32. Fees to be paid by workers. — Any person applying with a private fee charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through his efforts or has actually commenced employment. Such fee shall be always covered with appropriate receipt clearly showing the amount paid. The Secretary of Labor and Employment shall promulgate a schedule of allowable fees. ARTICLE 33. Reports on employment status. — Whenever the public interest so requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies; details of job requisitions, separation from jobs, wages, other terms and conditions, and other employment data. ARTICLE 34. Prohibited practices. — It shall be unlawful for any individual, entity, licensee or holder of authority: (a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act or misrepresentation for the purpose of securing a license or authority under this Code; (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; (g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor; (i) To substitute or alter employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor. (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; (k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. ARTICLE 35. Suspension and/or cancellation of license or authority. — The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Secretary of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violations of the provisions of this and other applicable laws, General Orders and Letters of Instructions. CHAPTER III Miscellaneous Provisions ARTICLE 36. Regulatory power. — The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. ARTICLE 37. Visitorial power. — The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violations of any provisions of this Title. ARTICLE 38. Illegal Recruitment. — (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authorities shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction , enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (c) The Minister of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Minister shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so. ARTICLE 39. Penalties. — (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein: (b) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000 or both such imprisonment and fine, at the discretion of the court; (c) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; (d) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; (d) In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives. Title II Employment of Non-Resident Aliens ARTICLE 40. Employment permit of non-resident aliens. — Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor and Employment. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. ARTICLE 41. Prohibition against transfer of employment. — (a) After the issuance of employment permit, the alien shall not transfer to another job or change his employer without prior approval of Secretary of Labor. (b) Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code. In addition, the alien worker shall be subject to deportation after service of his sentence. ARTICLE 42. Submission of list. — Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor and Employment within 30 days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor and Employment shall then determine if they are entitled to an employment permit. BOOK TWO Human Resources Development Program TITLE I National Manpower Development Program CHAPTER I National Policies and Administrative Machinery for their Implementation ARTICLE 43. Statement of objective. — It is the objective of this Title to develop human resources, establish training institutions and formulate such plans and programs that will ensure efficient allocation, development and utilization of the nation's manpower and thereby promote employment and accelerate economic and social growth. ARTICLE 44. Definitions. — As used in this Title: (a) "Manpower" shall mean that portion of the nation's population which has actual or potential capability to contribute directly to the production of goods and services. (b) "Entrepreneurship" shall mean training for self-employment or assisting individual or small industries within the purview of this Title. ARTICLE 45. National Manpower and Youth Council Composition. — To carry out the objectives of this Title, the National Manpower and Youth Council, which is attached to the Department of Labor and Employment for policy and program coordination and hereinafter referred to as the Council, shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Secretary of Education, Culture and Sports as ex-officio vice-chairman, and as ex-officio members: the Director-General of the National Economic and Development Authority; the Secretary of Agriculture; the Secretary of Natural Resources; the Chairman of the Civil Service Commission; the Secretary of Social Welfare; the Secretary of Local Government and Community Development, the Chairman of the National Science Development Board; the Secretary of Trade and Industry and the Director-General of the Council. The Director-General of the Council shall have no vote. In addition, the President shall appoint the following members from the private sector; two representatives of national organizations of employers; two representatives of national workers organizations and one representative of national family and youth organizations, each for a term of three years. ARTICLE 46. National Manpower Plan. — The Council shall formulate a long-term national manpower plan for the optimum allocation, development and utilization of manpower for employment, entrepreneurship and economic and social growth. This manpower plan shall, after adoption by the Council, be updated annually and submitted to the President for his approval. Thereafter, it shall be the controlling plan for the development of manpower resources for the entire country in accordance with the national development plan. The Council shall call upon any agency of government or the private sector to assist in this effort. ARTICLE 47. National Manpower Skills Center. — The Council shall establish a National Manpower Skills Center and regional and local training centers for the purpose of promoting the development of skills. The centers shall be administered and operated under such rules and regulations as may be established by the Council. ARTICLE 48. Establishment and formulation of skills standards. — There shall be national skills standards for industry trades to be established by the Council in consultation with employers and workers organizations and appropriate government authorities. The Council shall thereafter administer the national skills standards. ARTICLE 49. Administration of training programs. — The Council shall provide through the Secretariat instructor training, entrepreneurship development, training in vocations, trades and other fields of employment, and assist any employer or organization in training schemes designed to attain its objectives under rules and regulations which the Council shall establish for this purpose. The Council shall exercise, through the Secretariat, authority and jurisdiction over, and administer, on-going technical assistance programs and/or grants-in-aid for manpower and youth development including those which may be entered into between the Government of the Philippines and international and foreign organizations and nations, as well as persons and organizations in the Philippines. In order to integrate the national manpower development effort, all manpower training schemes as provided for in this Code shall be coordinated with the Council particularly those having to do with the setting of skills standards. For this purpose, existing manpower training programs in government and in the private sector shall be reported to the Council which may regulate such programs to make them conform with national development programs. This Article shall not include apprentices, learners and handicapped workers as governed by appropriate provisions of this Code. ARTICLE 50. Industry boards. — The Council shall establish industry boards to assist in the establishment of manpower development schemes, trades and skills standards and such other functions as will provide direct participation of employers and workers in the fulfillment of the Council's objectives, in accordance with guidelines to be established by the Council and in consultation with the National Economic and Development Authority. The maintenance and operations of the Industry Boards shall be financed through a funding scheme under such rates or fees and manners of collection and disbursement as may be determined by the Council. ARTICLE 51. Employment service training functions. — The Council shall utilize the employment service of the Department of Labor and Employment for the placement of its graduates. The Bureau of Employment Services shall render assistance to the Council in the measurement of unemployment and under-employment, conduct of local manpower resource surveys and occupational studies including an inventory of the labor force, establishment and maintenance without charge of a national register of technicians who have successfully completed a training program under this Title, and skilled manpower including its publication, and maintenance of an adequate and up-to-date system of employment information. ARTICLE 52. Incentive scheme. — An additional deduction from taxable income of one-half of the value of labor training expenses incurred for development programs shall be granted to the person or enterprise concerned provided that such development programs, other than apprenticeship, are approved by the Council and the deduction does not exceed ten percent (10%) of direct labor wage. There shall be a review of the said scheme two years after its implementation. ARTICLE 53. Council Secretariat. — The Council shall have a Secretariat headed by a Director-General who shall be assisted by a Deputy Director-General, both of whom shall be career administrators appointed by the President of the Philippines on recommendation of the Secretary of Labor. The Secretariat shall be under the administrative supervision of the Secretary of Labor and shall have an Office of Manpower Planning and Development, an Office of Vocational Preparation, a National Manpower Skills Center, regional manpower development offices and such other offices as may be necessary. The Director-General shall have the rank and emoluments of an undersecretary and shall serve for a term of ten (10) years. The Executive-Directors of the Office of Manpower Planning and Development, the Office of Vocational Preparation and the National Manpower Skills Center shall have the rank and emoluments of a bureau director and shall be subject to Civil Service Law, rules and regulations. The Director-General, Deputy Director-General and Executive Directors shall be natural-born citizens, between thirty and fifty years of age at the time of appointment, with a master's degree, or its equivalent, and experience in national planning and development of human resources. The Executive Director of the National Manpower Skills Center shall, in addition to the foregoing qualifications, have undergone training in center management. Directors shall be appointed by the President on the recommendations of the Secretary of Labor. The Director-General shall appoint such personnel necessary to carry out the objectives, policies and functions of the Council subject to Civil Service rules. The regular professional and technical personnel shall be exempt from WAPCO rules and regulations. The Secretariat shall have the following functions and responsibilities: (a) To prepare and recommend the manpower plan for approval by the Council; (b) To recommend allocation of resources for the implementation of the manpower plan as approved by the Council; (c) To carry out the manpower plan as the implementing arm of the Council; (d) To effect the efficient performance of the functions of the Council and the achievement of the objectives of this Title; (e) To determine specific allocation of resources for projects to be undertaken pursuant to approved manpower plans; (f) To submit to the Council periodic reports on the progress and accomplishment of work programs; (g) To prepare for approval by the Council an annual report to the President on plans, programs and projects on manpower and out-of-school youth development; (h) To enter into agreements to implement approved plans and programs and perform any and all such acts as will fulfill the objectives of this Code as well as ensure the efficient performance of the functions of the Council; and (i) To perform such other functions as may be authorized by the Council. ARTICLE 54. Regional manpower development offices. — The Council shall create regional manpower development offices which shall determine the manpower needs of the industry, agriculture and other sectors of the economy within their respective jurisdictions; provide the Council's central planners with the data for updating the national manpower plan; recommend programs for the regional level agencies engaged in manpower and youth development within the policies formulated by the Council; administer and supervise Secretariat training programs within the region and perform such other functions as may be authorized by the Council. ARTICLE 55. Consultants and technical assistance, publication and research. — In pursuing its objectives, the Council is authorized to set aside a portion of its appropriation for the hiring of services of qualified consultants, and/or private organizations for research work and publication. It shall avail itself of the services of the Government as may be required. ARTICLE 56. Rules and regulations. — The Council shall define its broad functions and issue appropriate rules and regulations necessary to implement the provisions of this Code. TITLE II Training and Employment of Special Workers CHAPTER I Apprentices ARTICLE 57. Statement of objective. — This Titlems: (1) To help meet the demand of the economy for trained manpower; (2) To establish a national apprenticeship program through the participation of employers, workers, and government and non-government agencies; and (3) To establish apprenticeship standards for the protection of apprentices. ARTICLE 58. Definition of terms. — As used in this Title: (a) "Apprenticeship" means practical training on the job supplemented by related theoretical instruction. (b) An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual employer or any of the entities recognized under this Chapter. (c) An "apprenticeship occupation" means any trade, form of employment or occupation which requires more than three (3) months of practical training on the job supplemented by related theoretical instruction. (d) "Apprenticeship agreement" is an employment contract wherein the employer binds himself to train the apprentice and the apprentice in turn accepts the terms of training. ARTICLE 59. Qualifications of apprentice. — To qualify as an apprentice, a person shall: (a) Be at least fourteen year of age; (b) Possess vocational aptitude and capacity for appropriate tests; and (c) Possess the ability to comprehend and follow oral and written instructions. Trade and industry associations may recommend to the Secretary of Labor appropriate educational requirements for different occupations. ARTICLE 60. Employment of Apprentices. —* Only employers in the highly technical industries may employ apprentices and only in apprenticeable occupation approved by the Secretary of Labor and Employment. ARTICLE 61. Contents of apprenticeship agreements. — Apprenticeship agreements, including main rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The Department shall develop standard model programs of apprenticeship. ARTICLE 62. Signing of apprenticeship agreement. — Every apprenticeship agreement shall be signed by the employer or his agent, or by an authorized representative of any of the recognized organizations, associations or groups and by the apprentice. An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian or, if the latter is not available, by an authorized representative of the Department of Labor and Employment, and the same shall be binding during its lifetime. Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate apprenticeship committees, if any, and a copy thereof shall be furnished both the employer and the apprentice. ARTICLE 63. Venue of apprenticeship programs. — Any firm, employer, group or association, industry organization or civic group wishing to organize an apprenticeship program may choose from any of the following apprenticeship schemes as the training venue of apprentices: (a) Apprenticeship conducted entirely by and within the sponsoring firm, establishment or entity; (b) Apprenticeship entirely within a Department of Labor training center or other public training institution; or (c) Initial training in trade fundamentals in a training center or other institution with subsequent actual work participation within the sponsoring firm or entity during the final stage of training. ARTICLE 64. Sponsoring of apprenticeship program. — Any of the apprenticeship schemes recognized herein may be undertaken or sponsored by a single employer or firm or by a group or association thereof, or by a civic organization. Actual training of apprentices may be undertaken: (a) In the premises of the sponsoring employer in the case of individual apprenticeship programs; (b) In the premises of one or several designated firms in the case of programs sponsored by a group or association of employers or by a civic organization; or (c) In a Department of Labor and Employment training center or other public training institution. ARTICLE 65. Investigation of violation of apprenticeship agreement. — Upon complaint of any interested person or upon its own initiative, the appropriate agency of the Department of Labor or its authorized representative shall investigate any violation of any apprenticeship agreement pursuant to such rules and regulations as may be prescribed by the Secretary of Labor. ARTICLE 66. Appeal to the Secretary of Labor. — The decision of the authorized agency of the Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of Labor within five days from receipt of the decision. The decision of the Secretary of Labor shall be final and executory. ARTICLE 67. Exhaustion of administrative remedies. — No person shall institute any action for the enforcement of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all available administrative remedies. ARTICLE 68. Aptitude testing of applicants. — Consonant with the minimum qualifications of apprentice-applicants required under this Chapter, employers of entities with duly recognized apprenticeship programs shall have primary responsibility for providing appropriate aptitude tests in the selection of apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and Employment may perform the service free of charge. ARTICLE 69. Responsibility for theoretical instruction. — Supplementary theoretical instruction to apprentices in cases where the program is undertaken in the plant may be done by the employer. If the latter is not prepared to assume the responsibility, the same may be delegated to an appropriate government agency. ARTICLE 70. Voluntary organization of apprenticeship program; exemptions. — (a) The organization of apprenticeship programs shall be primarily a voluntary undertaking by employers. (b) When national security or particular requirements of economic development so demand, the President of the Philippines may require compulsory training of apprentices in certain trades, occupations, jobs or employment levels where shortage of trained manpower is deemed critical as determined by the Secretary of Labor. Appropriate rules in this connection shall be promulgated by the Secretary of Labor and Employment as the need arises; and (c) Where services of foreign technicians are utilized by private companies in apprenticeable trades, said companies are required to set up appropriate apprenticeship programs. ARTICLE 71. Deductibility of training costs. — An additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an apprenticeship program: Provided, that such program is duly recognized by the Department of Labor: Provided, further, That such deduction shall not exceed ten (10%) percent of direct labor wage; and provided finally that the person or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the minimum wages. ARTICLE 72. Apprentices without compensation. — The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as a requisite for graduation or board examination. CHAPTER II Learners ARTICLE 73. Learners defined. — Learners are persons hired as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and which may be learned through practical training on the job in a relatively short period of time which shall not exceed three (3) months. ARTICLE 74. When Learners may be hired. — Learners may be employed when no experienced workers are available, the employment of learners is necessary to prevent curtailment of employment opportunities, and the employment does not create unfair competition in terms of labor costs or impair or lower working standards. ARTICLE 75. Learnership agreement. — Any employer desiring to employ learners shall enter into a learnership agreement with them, which agreement shall include: (a) The names and addresses of the learners; (b) The duration of the learnership period, which shall not exceed three (3) months; (c) The wages or salary rates of the learners which shall begin at not less than 75 percent of the applicable minimum wage; and (d) A commitment to employ the learners, if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learner. The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representatives. ARTICLE 76. Learners in piece work. — Learners employed in piece or incentive rate jobs during the training period shall be paid in full for the work done. ARTICLE 77. Penalty clause. — Any violation of this Chapter or its implementing rules and regulations shall be subject to the general penalty clause provided for in this Code. CHAPTER III Handicapped Workers ARTICLE 78. Definition. — Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury. ARTICLE 79. When employable. — Handicapped workers may be employed when their employment is necessary to prevent curtailment of employment opportunities and when it does not create unfair competition in labor costs or impair or lower working standards. ARTICLE 80. Employment agreement. — Any employer who employs handicapped workers shall enter into an employment agreement with them, which agreement shall include: (a) The names and addresses of the handicapped workers to be employed; (b) The rate to be paid the handicapped workers which shall be not less than 75 percent of the applicable legal minimum wage; (c) The duration of employment period; and (d) The work to be performed by the handicapped workers. The employment agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representatives. ARTICLE 81. Eligibility for apprenticeship. — Subject to the appropriate provisions of this Code, handicapped workers may be hired as apprentices or learners if their handicap is not such as to effectively impede the performance of job operations in the particular occupations for which they are hired. BOOK THREE Conditions of Employment TITLE I Working Conditions and Rest Periods CHAPTER I Hours of Work ARTICLE 82. Coverage. — The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. "Field personnel" refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. ARTICLE 83. Normal hours of work. — The normal hours of work of any employee shall not exceed eight in a day. Health personnel in cities or municipalities with a population of at least one million (1,000,000) or in hospitals or clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty (30%) percent of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. ARTICLE 84. Hours worked. — Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. ARTICLE 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty minutes time-off for their regular meals. ARTICLE 86. Night shift differential. — Every employee shall be paid a night shift differential of not less than ten (10%) percent of his regular wage for each hour of work performed between ten o'clock in the evening and six o'clock in the morning. ARTICLE 87. Overtime work. — Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least 30 percent thereof. ARTICLE 88. Undertime not offset by overtime. — Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. ARTICLE 89. Emergency overtime work. — Any employee may be required by the employer to perform overtime work in any of the following cases: (a) When the country is at war or when any other national or local emergency has been declared by Congress or the Chief Executive; (b) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity; (c) When there is urgent work to be performed on machines, installation or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; (d) When the work is necessary to prevent loss or damage to perishable goods; (e) Where the completion or continuation of the work started before the eight (8th) hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter. ARTICLE 90. Computation of additional compensation. — For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer. CHAPTER II Weekly Rest Periods ARTICLE 91. Right to weekly rest day. — (a) It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four consecutive hours after every six consecutive normal work days. (b) The employer shall determine and schedule the weekly rest day of his employees, subject to collective agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. ARTICLE 92. When employer may require work on a rest day. — The employer may require his employees to work on any day: (a) In case of actual or impending emergencies caused by serious accidents, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property or imminent danger to public safety; (b) In cases of urgent work to be performed on the machinery, equipment or installation to avoid serious loss which the employer would otherwise suffer; (c) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; (d) To prevent loss or damage to perishable goods; (e) Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and (f) Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment. ARTICLE 93. Compensation for rest day, Sunday or holiday work. — (a) Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least thirty (30%) percent of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day. (b) When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty (30%) percent of his regular wage for work performed on Sundays and holidays. (c) Work performed on any special holiday shall be paid an additional compensation of at least thirty (30%) percent of the regular wage of the employee. Where such holiday work falls on the employee's scheduled rest day, he shall be entitled to an additional compensation of at least fifty (50%) percent of his regular wage. (d) Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. CHAPTER III Holidays, Service Incentive Leaves and Service Charges ARTICLE 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishment regularly employing less than ten workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, last Sunday of August, first of November, the thirtieth of November, the twenty-fifth and the thirtieth of December, thirty-first of December, and the day designated by law for holding a general election. [Superseded by Exec. Order 203] ARTICLE 95. Right to service incentive leave. — (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. (b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor after considering the viability or financial condition of such establishment. (c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court of administrative action. ARTICLE 96. Service charges. — All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five (85%) percent for all covered employees and fifteen (15%) percent for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated into their wages. TITLE II Wages CHAPTER I Preliminary Matters ARTICLE 97. Definition. — As used in this Title: (a) "Person" means an individual, partnership, association, corporation, business trust, legal representative or any organized group of persons. (b) "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions or organizations. (c) "Employee" includes any individual employed by an employer. (d) "Agriculture" includes farming in all its branches and among other things includes the cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products. (e) "Employ" includes to suffer or permit to work. (f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging or other facilities customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to the employer or to any person affiliated with the employer. ARTICLE 98. Application of Title. — This Title shall not apply to farm tenancy or leasehold, domestic service and persons working in their respective homes in needlework or in any cottage industry duly registered in accordance with law. CHAPTER II Minimum Wage Rates ARTICLE 99. Regional Minimum Wages. — The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. [ As amended by RA 6727]. ARTICLE 100. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this Code. ARTICLE 101. Payment by results. — The Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other non-time work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers' and employers' organizations. CHAPTER III Payment of Wages ARTICLE 102. Forms of payment. — No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining agreement. ARTICLE 103. Time of payment. — Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the employer's control, payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less frequency than once a month. The payment of wages of employees engaged to perform a task which cannot be completed in two weeks shall be subject to the following conditions in the absence of a collective bargaining agreement or arbitration award: (1) That payments are made at intervals not exceeding sixteen days, in proportion to the amount of work completed; and (2) That final settlement is made upon completion of the work. ARTICLE 104. Place of payment. — Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor may prescribe under conditions to ensure greater protection of wages. ARTICLE 105. Direct payment of wages. — Wages shall be paid directly to the workers to whom they are due, except: (a) In cases of force majeure rendering such payments impossible or under other special circumstances to be determined by the Secretary of Labor in appropriate regulations, in which case the worker may be paid through another person under written authority given by the worker for the purpose; or (b) Where the worker has died, in which case the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimant, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next of kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor or his representative. The representative of the Secretary of Labor shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect to the amount paid. ARTICLE 106. Contractor or sub-contractor. — 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 sub-contractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or sub-contractor 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 sub-contractor 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. 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 employed by him. ARTICLE 107. Indirect employer. — The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. ARTICLE 108. Posting of bond. — An employer or indirect employer may require the contractor or sub-contractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or sub-contractor, as the case may be, fail to pay the same. ARTICLE 109. Solidary liability. — The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. ARTICLE 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. (As amended by R. A. 6715) ARTICLE 111. Attorney's fees. — (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorney's fees which exceed ten percent of the amount of wages recovered. CHAPTER IV Prohibitions Regarding Wages ARTICLE 112. Non-interference in disposal of wages. — No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel or oblige his employees to purchase merchandise, commodities or other property from the employer or from any other person or otherwise make use of any store or services of such employer or any other person. ARTICLE 113. Wage deduction. — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check off has been recognized by the employer or authorized in writing by the individual worker concerned; and |