FOURTEENTH CONGRESS OF THE 
Republic of the Philippines 
c 
5econd Regular Session 
s 
Tk kl ; 
SENATE 
P 
i 
Senate Bill No. 3 0 0 8 
Introduced by Honorable JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
In cases of corporate mergers, consolidations and acquisitions, including the sale 
of all the assets or the entire business enterprise or a going concern, the rules on the 
liability of the transferee to the employees of the transferor are quite confusing. 
Sometimes, the transferee is liable; other times the transferee is not. Some transferees 
are made to absorb the employees, while others are not. 
As a general rule, except when the creditors are the workers, the transferee of a 
business enterprise that is a going concern, is liable for payment of the credits and 
loans due to the transferor. This bill seeks to equalize the status of the workers and 
other creditors by making the transferee of all or substantially all of the assets liable to 
the workers, but only to the extent that they cannot collect from the transferor and only 
up to the amount of the assets transferred. 
Also, in case of the transfer of a business enterprise of a going concern, whether 
at the assets level or at the stock level, the transferee and/or the corporation that has a 
new owner should continue the employer-employee relationship. 
One of the major excuses used to dismiss workers is that the corporation now 
has new owners, or that the company has just been purchased or will be bought by 
another group of owners. 
This bill seeks to make the transferee in certain cases liable for the money claims 
and also compels the transferee to continue the employer employee relationship. 


This bill borrows heavily from Supreme Court jurisprudence on the liability of the 
transferee to the non-employee/worker creditors and to the employees and workers. It 
is very much consistent with the constitutional obligation of the State to promote the 
welfare of workers. 
Finally, the bill also seeks to make labor relations more predictable and 
harmonious in cases of mergers, consolidations, acquisitions, sales, and 
leases. 
In view of the foregoing, the immediate passage of the bill is earnestly sought. 
Senator 
I 


FOURTEENTH CONGRESS OF THE 
Republic of the Philippines 
Second Regular Session 
SENATE 
Introduced by Honorable JINGGOY EJERCITO ESTRADA 
AN ACT PROMOTING THE WELFARE OF WORKERS I N  CASES OF MERGERS, 
ACQUISITIONS, CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL 
ASSETS, BUSINESS ENTERPRISE TRANSFER, OR TRANSFER OF A GOING 
CONCERN AND OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Phifippines in 
Congress assembled. 
SECTION 1. Definition of terms. - 
a) "Corporation" means those entities organized under the Corporation Code 
or those with original charters granted by law. 
directly or indirectly. 
b) "Employer" includes any person acting in the interest of an employer, 
c) "Transferor" means the employer which sells or transfers its assets to 
another employer, or one of the corporations that is a party to a 
consolidation, or the corporation which was merged into another 
corporation. 
d) "Transferee" means the employer which received the assets from another 
employer, or the corporation into which one or more corporation was 
merged, or the consolidated corporation. 
e) "Merger" is the process by which two or more corporations merge into a 
single corporation which shall be one of the constituent corporations. For 
example, 
if Corporation A is merged with Corporation 
B, 
the 
merged/surviving corporation will shall either be Corporation A or 
Corporation B. 
1 


9 “Consolidation” is the process by which two or more corporations may 
consolidate into a new single corporation which shall be the consolidated 
corporation. For example, if Corporation A is consolidated with Corporation 
B consolidated corporation shall be Corporation C. 
g) “Lease“ - a written agreement in which the owner of property (real, 
personal, intangible) allows use of the property for a specified period of 
time (term) for specific periodic payments (rent), and other terms and 
conditions. 
h) “Bargaining Unit“ refers to a group of employees sharing mutual interests 
within a given employer unit, comprised of all or less than all of the entire 
body of employees in the employer unit or any specific occupational or 
geographical grouping within such employer unit. 
SECTION 2. 
Liability of the transferee for money claims to the employees 
of the transferoor. - In cases of mergers, consolidations, acquisitions, sales or lease 
of all or substantially all assets, or business enterprises or going concern transfers, 
the transferee shall be liable for money claims pertaining to the period when the 
transferor corporation was still the employer. 
In cases where the employer is a corporation organized under the Corporation 
Code or one with original charter, the change of stockholders shall not affect the 
relationship between the corporation and its employees. The corporation shall 
continue to be regarded as the real owner and employer. 
Maintenance of the employer-employee relationship. - In cases 
of mergers, consolidations, acquisitions, sales of all or substantially all assets, or 
business enterprises or going concern transfers, the transferee shall have the 
obligation to continue the employment of the transferor‘s employees, without loss of 
seniority rights and other privileges. 
SECTION 4. Recognition of existfng bargaining agents, - 
In 
cases 
of 
mergers, consolidations, acquisitions, sale or lease of all or substantially all assets, or 
business enterprises or going concern transfers, where both the transferor and the 
transferee are organized, the appropriate bargaining units and the corresponding 
sole and exclusive bargaining agents (SEBAs) in the transferor and the transferee 
shall be merged. Thereafter, local elections shall be held among all of the members 
of the merged SEBA. 
If either or both the transferee or the transferor are unorganized, both 
bargaining units shall be merged and a petition for certification election may be filed 
only by any legitimate labor organization existing in either establishment at the time 
of the merger, consolidation, acquisition, sale of all or substantially all assets, or 
business enterprises or going concern transfer. Should there be no legitimate labor 
organization existing in either establishment at the time of the merger, 
consolidation, acquisition, sale or lease of all or substantially all assets, or business 
SECTION 3. 


enterprises or going concern transfer, any legitimate labor organization (LLO) may 
file a Petition for Certification Election (PCE). 
Those employees who are part of the bargaining unit of merged, 
consolidated, joined bargaining units, or other similar fusion are eligible to join the 
union, or may be compelled to join as provided for by law and the collective 
bargaining agreement (CBA). Those who legally opt not to join shall be assessed 
agency fees. 
SECTION 5. Effect on Collective 5argaining Agreements - In case of 
a 
merger, consolidation, acquisition, sale of all or substantially all assets, or business 
enterprises or going concern transfer, where the transferee and transferor 
bargaining units have their own CBA's, the said CBA's shall likewise be merged. In 
case of conflict, the those provisions which are more favorable to workers shall 
prevail, as determined by the majority of the workers. 
SECTION 6. Applicability - This law shall apply to both corporations with 
original charters as well as those organized under the Corporation Code. Each of the 
terms and conditions of employment in the transferee, transferor, merged, or 
consolidated employers shall be deemed incorporated in the terms and conditions of 
the merged, consolidated or transferee corporation. In case there is a conflict with 
the different terms and conditions, those which are more favorable to the employees 
shall prevail. 
SECTION 7. Implementing Rules. - The Secretary of Labor and Employment 
shall issue the pertinent rules with regard to this Act, including but not limited to, the 
administration of union funds, the administration of collective bargaining agreements 
CBAs, 
SECTION 8. Separability Clause. - I f  any provision of this Act, or any parts 
thereof, is declared unconstitutional, the same shall not affect the validity and 
effectivity of the other portions. 
SECTION 9. Repealing Clause. - All laws, executive orders, presidential 
decrees, proclamations, rules, regulations, issuances and enactments of parts 
thereof inconsistent with this Act are hereby repealed or modified accordingly. 
SECTION 10. ERecfiVity. - This Act shall take effect after fifteen (15) days 
from its complete publication in the Official Gazette of in a newspaper of general 
circulation in the Philippines, whichever comes earlier. 
APPROVED.