Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS:
First Regular Session

House aiuto, 2913

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-ao

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.

ML

WALDEN F. BELLO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

FIFTEENTH CONGRESS
First Regular Session

House sito. 2513

Introduced by AKBAYAN Representatives Walden F. Bello and Kaka J. Bag-ao

AN ACT
PROMOTING THE WELFARE OF WORKERS IN CASES OF MERGERS,
ACQUISITIONS, CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL
ASSETS, BUSINESS ENTERPRISE TRANSFER OR TRANSFER OF A GOING
CONCERN AND FOR OTHER PURPOSES

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

SECTION 1. Definition of terms.

2) “Corporation” means those entities organized under the Corporation
Code or those with original charters granted by law;

») "Employer" includes any person acting in the interest of an employer,
directly or indirectly;

9) "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;

) "Transferee" means the employer which received the assets from
another employer, or the corporation into which one or more coporation
was merged, or the consolidated corporation;

©) "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 8;

"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 8 consolidated corporation shall be Corporation C;

9) "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;

n) "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
transferor. — 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.

SECTION 3. 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 existing 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’ in the transferor and the transferee shall be merged. Thereafter, local
elections shall be held among all of the members of the merged sole and exclusive bargaining
agent.

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 enterprises or going concern transfer, any legitimate
labor organization may file a petition for certification election.

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 CBAs - 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, 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.

SECTION 8. Separability Clause. — if 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. Effectivity. — 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,