FOURTEENTH CONGRESS OF THE REPUBLIC) 
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OF THE PHILIPPINES 
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L.8.’ 
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First Regular Session 
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SENATE 
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Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
Republic Act No. 6715 took effect on March 21, 1989. The said Act amends several 
provisions of Presidential Decree No. 442, as amended, also known as the Labor Code of the 
Philippines. One of the amended provisions is Article 110 which deals with the worker’s 
preference in case of bankruptcy or liquidation of the employer’s business. Upon reading of the 
said provision one is led to think that the unpaid wages and/or money claims of workers enjoy 
preference over all other claims of creditors and the government. 
In the case of Development Bank of the Philippines v. National Labor Relations 
Commission, 183 SCRA 328 (1990), the Supreme Court held that, “Because of its impact on the 
entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be 
read in relation to the Civil Code scheme on classification and preference of credit.” The highest 
tribunal of the land has repeatedly enunciated this doctrine in several other cases. 
Due to the present state of our jurisprndence, Article 110 is misleading. This bill seeks to 
remove any ambiguity in the interpretation of Article 110 of the Labor Code of the Philippines.* 
* This bill was re-filed during the Thirteenth Congress, First Regular Session, 


FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
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p!-j1/ 1 :! ;> 2 .-4*: 
First Regular Session 
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SENATE 
S.No. 1842 
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Introduced by Senator Miriam Defensor Santiago 
AN ACT 
AMENDING PRESIDENTIAL DECREE NO. 442, AS AMENDED, ALSO KNOWN AS THE 
LABOR CODE OF THE PHILIPPINES, ARTICLE 110, ON THE CLASSIFICATION, 
CONCURRENCE AND PREFERENCE OF WORKERS’ UNPAID WAGES IN CASE OF 
THEIR EMPLOYERS’ BANKRUPTCY 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. The Labor Code as amended, Article 110 is hereby amended to read as 
follows: 
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“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 unpaid 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, PROVIDED THAT THE PROVISION OF THIS 
ARTICLE MUST BE READ IN RELATION TO THE PROVISIONS OF THE 
CIVIL CODE CONCERNING THE CLASSIFICATION, CONCURRENCE 
AND PREFERENCE OF CREDITS.” 
SECTION 2. Repealing Clause. - Any law, presidential decree or issuance, executive 
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order, letter of instruction, administrative order, rule or regulation contrary to, or inconsistent 
with, th.e provisions of this Act is hereby repealed, modified or amended accordingly. 


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SECTION 3. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation. 
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Approved, 
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