SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 1985 
) 
) 
) 
'13 
NOV 27 .r 3 :32 
lUX'EIVEIl h Y ' .. of 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
This proposed law seeks to grant workers and employees the right to own 
initially, free of charge and subsequently buy certain percentage of the shares of 
stocks in business enterprises and other institutions and to enable them to 
participate in the Board of Directors or any other equivalent corporate or policy-
making body in the establishment they work for. 
This proposed legislation therefore, will make workers part or co-owners of 
the corporations or institutions they have worked with through the years. 
The passage of this bill into law will bring about the following benefits, among 
others: 
(1) Workers' co-ownership will induce or spur domestic trade or activity, The 
increase in disposable income will translate into consumption or increases 
in savings which in turn would find their ways into the financial market to 
fund expansion or investment in new plants and factories. This in turn 
implies greater income,· employment and marketable products or 
merchandise. 
(2) With inspired workers, the quality of goods produced will also improve. 
Quality produce enhances competitiveness in both domestic and foreign 
markets. The desire for increased earnings will motivate the worker-owner 
produce quality goods. 
(3) Plans for low-cost housing can easily be implemented at the corporate 
level with workers able to address both the problems of financing and 
affordability. 
(4) Unnecessary strikes and work stoppages will soon become a thing of the 
past Wasteful production can be avoided and efficient and effective use 
of corporate resources ensured. 
(5) Fraudulent and deceptive transfer of corporate profits and resources will 
be discouraged, 
(6) Increased incomes for millions of workers will broaden the tax base for 
government revenue generation. 


(7) The newly acquired status of being "co-owners" will encourage workers to 
study further to cope with changing knowledge and technology. This in 
turn will make for an enlightened citizenry. 
(8) The right of workers to "co-determination" as envisioned in the 
Constitution will now be operationalized. 
The basis for proposed workers co-ownership are amply provided for in the 
various sections of the Philippine Constitution specifically in Article XII on the 
National Economy and Patrimony, Alticle XIII on Social Justice and Human 
Rights, and finally in Article lion the Declaration of Principles and State Policies. 
This proposed bill therefore seeks to provide an "enabling law"and transform 
into concrete policy and program the afore-quoted provisions on "workers co-
ownership" in the Philippine Constitution. 
Workers' experience under an unbridled capitalism is most agonizing. It 
consigns the workers to live forever in the depths of poverty. Workers under this 
system work like slaves for their employers. "Collective Bargaining" may have 
alleviated their suffering but the clamor for better treatment remains unsolved. 
The State therefore, must intervene in order to promote distributive justice. 
The enactment of this proposed bill on workers' co-ownership is one such 
intervention to "humanize" work and the production process. Thus, the immediate 
passage of this bill is most earnestly sought. 
V EJERCITO ESTRADA 


SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 1985 
) 
) 
) 
"13 
IllV 27 P 3 :32 
ItJi;CEIVEI> BY;-~r 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
GRANTING WORKERS THE RIGHT TO OWN AND SUBSEQUENTLY TO BUY 
A CERTAIN PERCENTAGE OF AUTHORIZED SHARES OF STOCKS OF ANY 
COMMERCIAL, INDUSTRIAL, AGRICULTURAL ENTERPRISES, INCLUDING 
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS AS WELL AS 
RELIGIOUS, MEDICAL OR EDUCATIONAL INSTITUTIONS OPERATED FOR 
PROFIT AND TO ENSURE WORKERS' REPRESENTATION IN NON-PROFIT 
CORPORATIONS 
AND 
ENTERPRISES, 
AND 
TO 
ENCOURAGE 
PRODUCTIVITY, PROMOTE AND MAINTAIN INDUSTRIAL PEACE 
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 "Workers Co-
ownership Act". 
SEC. 2. Declaration of Policy. - It is the policy of the State to regulate the 
acquisition, ownership, use and disposition of property and its increments for the 
common good, promote the principle of shared responsibilities between workers 
and employers to foster industrial peace, recognizing the rights of labor to its just 
share in the fruits of production and the right of enterprises to reasonable returns 
of investments, expansion and growth, affording the rights of the workers to 
participate in policy and decision-making processes affecting their rights, benefits 
and general welfare in line with the duty of the State to promote distributive and 
social justice in all phases of national development. 
SEC. 3. Coverage. - This Act shall apply to all business enterprises, 
corporations and cooperatives, including government-owned or controlled 
corporations performing proprietary functions or purely governmental or quasi-
proprietary function as well as religious, medical or educational institutions 
operated for profit or not. It shall cover all employees and workers including 
casual, regular, supervisor and non managerial employees who have rendered at 
least one (1) year of continuous service and who are members of labor unions or 
cooperatives existing in their establishments or agencies. 
SEC. 4. Definition of Terms. - For the purposes of this Act, the following 
definitions shall apply: 


(1) "Business Enterprises" refer to commercial, industrial, agricultural or 
agro-industrial 
establishments 
engaged 
in 
the 
production, 
manufacturing, processing, repacking or assembly and distribution of 
goods, including service-oriented enterprises duly registered as such 
by appropriate government agencies. 
(2) "Government-owned 
and 
controlled 
corporations 
performing 
proprietary functions" refer to corporations registered under the 
Corporation Code whose charters invest them with proprietary or 
pecuniary interest and those which actually operate for profit. 
(3) "Medical Institutions" refer to hospitals, clinics or any medical facilities 
that dispense health care services as contemplated in the Magna 
Carta of Health Workers. 
(4) "Educational Institutions" refer to privately owned technical, vocational 
or special schools, colleges and universities, including state colleges 
and universities but excluding the primary and secondary public school 
system and pre-need educational institutions or corporations that 
provide education related services. 
(5) "Workers co-ownership" refer to a system whereby workers are made 
part or joint owners of the means of production in a given business 
enterprise, establishment, including non-stOCk corporations. Ownership 
shall be in the form of shares of stocks entitlements or any form of 
conveyance as to confer title of a thing or object. 
(6) "Workers Cooperatives" refer to certified labor organizations whether in 
the private or public sector, organized for the purpose of representing 
their members in collective bargaining or negotiations and duly 
registered with the Department of Labor and Employment or the Civil 
Service Commission. 
SEC. 5. Automatic Transfer of Shares of Stocks and Rights to 
Corporate Management Board. - Any commercial, industrial, agricultural, or 
agro-industrial enterprises or cooperatives, including any government owned or 
controlled corporations as well as any religious, medical or educational institution 
operated for profit with at least ten (10) years of corporate existence is hereby 
required to allocate or cede free of monetary consideration, ten percent (10%) or 
such other percentage not less than ten percent (10%) of its authorized stock to 
its workers' cooperatives or labor union. Provided, that such workers 
cooperatives or labor unions shall be duly registered with the Cooperative 
Development Authority or the Securities and Exchange Commission, as the case 
may be. 
SEC. 6. Option to Buy another Thirty Percent (30%) of Authorized 
Shares of Stocks. - The workers' cooperative or labor unions mentioned in the 
preceding section shall have the further right and option to buy another thirty 
percent (30%) of the authorized capital stock of the said business enterprises or 
establishment. 
Consideration for the issuance of the shares of stock to the workers' 
cooperatives or labor unions pursuant to this section shall be paid for by the 
Philippine government through any of its government financial institutions by 
means of loan granted by the latter to the former through financial intermediation 


negotiated for the purpose, which the former will pay at subsidized lending rate of 
not more than five percent (5%) per annum. 
SEC 7. Stock Purchase beyond Forty Percent (40%) of the Authorized 
Capital Stock. - Purchase by the workers cooperatives or labor unions beyond 
forty percent (40%) of the authorized capital stock of business enterprises and 
institutions shall be made through voluntary negotiations between the existing 
owners of the shares of stocks and the workers cooperatives or labor unions. 
SEC. 
8. 
Purchase of Stocks of Newly-Organized Business 
Enterprises or Institutions. - Any newly-organized commercial, industrial, 
agricultural 
or 
agro-industrial 
enterprise 
or cooperative, 
including 
any 
government-owned or controlled corporations as well as any religious, medical or 
educational institutions operated for profit is hereby required to allocate and offer 
to sell the same to the workers' cooperative or labor union forty percent (40%) of 
its authorized capital stock. The union or cooperatives can avail of this option to 
purchase said shares of stock within a period of one (1) year from the 
corporation's organization and registration. 
Consideration for the issuance of said shares of stocks ,to the workers 
cooperatives or labor unions shall be made in cash to be paid by the Philippine 
Government thru a government financial institution by means of a loan granted 
by the latter to the former through financial intermediation negotiated for such 
purpose which the workers' cooperative or labor union will repay at subsidized 
lending rates of not more than five percent (5%) per annum. 
SEC. 
9. 
Government-Owned and Controlled Corporations. 
Employees of Government-owned and controlled corporations performing 
proprietary functions shall be entitled to at least ten percent (10%) profit sharing 
and a seat in the Board of Directors thru their duly elected union representative. 
SEC. 10. Non-Stock, Non Profit Corporations, Institutions and 
Cooperatives. - In non-stock government-owned or controlled corporations, 
religious, 
medical educational institutions, 
including state colleges and 
universities and cooperatives not organized for profit, the duly recognized and 
certified labor organizations shall be entitled to at least one (1) seat in the Board 
of Directors or any other equivalent corporate or policy-making body with full 
voting rights. Provided, That in case there is no recognized or certified labor 
union or organization in the corporation or institution, the workers' representative 
shall be elected from among their ranks. Provided further, That in the case of 
non-stock government corporations, the workers' representatives therein shall be 
appointed by the President of the Philippines. 
SEC. 11. Non-Diminution of Rights and Benefits. - Nothing in this Act 
shall be construed as a waiver of the workers' right to self organization, collective 
bargaining and negotiation and peaceful concerted activities, including the right 
to strike; nor to diminish or reduce any benefits and other privileges enjoyed by 
the workers under the existing laws, decrees, executive orders, company policy 
or practice or any other agreement or contract between the employer and 
employees. 


SEC. 12. Sanction. - Any violation or circumvention of this Act shall be 
considered an unfair labor practice and punishable in accordance with Title VI of 
P.O. 442, otherwise known as "The Labor Code of the Philippines", as amended 
by B.P. Big. 70 and B.P. Big. 130. 
Foreign nationals found violating or circumventing the provisions of this 
Act shall be deported immediately from the country. 
SEC. 13. Implementing Rules and Regulations. - The Secretary of the 
Department of Labor shall, within thirty (30) days from effectivity of this Act, 
constitute and convene a tripartite body for the purpose of formulating the rules 
and regulations as are necessary to carry out the provisions hereof. 
SEC. 14. Separability Clause. - If any provision or part hereof is held 
invalid or unconstitutional, the remainder of the law or the provision not otherwise 
affected shall remain valid and subsisting. 
SEC. 15. Repealing Clause. - Any laws, decrees, executive orders, letter 
of instructions and rules and regulations or any part thereof which is inconsistent 
with any of the provisions of this Act is hereby repealed or modified accordingly. 
SEC. 16. Effectivity Clause. - This Act shall take effect fifteen (15) days 
following its complete publication in at least two (2) newspapers of general 
circulation. 
Approved,