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Republic of the Philippines Lx RECEIven

HOUSE OF REPRESENTATIVES 2 CEIVED @\

Quezon City | as 2 Aus 2013 |
SIXTEENTH CONGRESS =
First Regular Session of
2547 <i

House Bill No.

Introduced by TUCP Party-List Representative
RAYMOND DEMOCRITO C. MENDOZA

EXPLANATORY NOTE

The Philippine Constitution affirms “labor as primary social and economic force,” and
mandates the State to “protect the rights of workers and promote their welfare.”
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines, declares as a State policy to “afford protection to labor”.

‘One such protection to labor is to satisfy their claims against the employer's
business. Republic Act No. 6715 provides in Article 110 of the Labor Code that
workers’ unpaid wages and benefits and/or money claims enjoy preference over all
other claims of creditors and the government.

Supreme Court decisions in interpreting Article 110 of the Labor Code vary. The
proposed amendment in this bill seeks to institutionalize jurisprudence upholding the
principle laid down in the said provision of the Labor Code. Workers should be given
first lien in case of bankruptcy to satisfy their money claims against the business.

Workers are at a disadvantage even more when employers start non-payment of
their wages, benefits and other entitlements. Such money claims and entitlements
should not require formal declaration of bankruptcy or insolvency to save workers
and their families from slipping into the quagmire of mere subsistence or poverty.

The proposed amendment will be consistent with the constitutional mandate of full
protection to labor.

RA’ RITO C, MENDOZA
Representative, TUCP Party-List


Republic of the Phil
HOUSE OF REPRESENTATIVES
‘Quezon City

SIXTEENTH CONGRESS
FirstRegular Session

House Bill No,_ 2047

Introduced by TUCP Party-List Representative
HON. RAYMOND DEMOCRITO C. MENDOZA

AN ACT

INSTITUTING WORKER'S CLAIM AS STATUTORY FIRST LIEN ON THE ASSETS
OF THE BANKRUPT EMPLOYER, AMENDING FOR THIS PURPOSE ARTICLE 110
OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS
THE LABOR CODE OF THE PHILIPPINES.

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

Section 1.Short title.-- This Act shall be known as the “Worker's First Lien in
Bankruptcy Act of 2010”.

Section 2.First Lien in Bankruptcy. -- Article 110 of the Labor Code is hereby
amended to read as follows:

“ARTICLE 110.Worker [preference]FIRST LIEN in case of bankruptcy. - In
the event of bankruptcy or liquidation of an employer's business, his workers shall
enjoy first [preference]LIENas regards their wages and other monetary claims,
any provisions of law to the contrary notwithstanding. Such unpaid wages and
monetary claims shall be paid in full EVEN WITHOUT FORMAL DECLARATION OF
BANKRUPTCY OR INSOLVENCYbefore claims of the government and other
creditors may be paid. WHEN THE BUSINESS IS NO LONGER EXISTING
AND/OR UNABLE TO SATISFY THE MONETARY CLAIMS OF THE WORKER OR
WORKERS, THE OFFICERS SHALL BE HELD LIABLE FOR ACTING ON BEHALF
OF THE BUSINESS.”

Section 3.Repealing Clause. --All laws, decrees, executive orders, rules and
regulations or parts thereof, which are inconsistent with this Act, are hereby
repealed,amended or modified accordingly.

Section 4.Effectivity. - This Act shall take effect fifteen (15) days after its
publication in at least two newspapers of general circulation.

Approved,