Republic of the Philippines
HOUSE OF REPRESENTATIV!
Quezon City

EIGHTEENTH CONGRESS,
First Regular Session

HOUSE BILL NO, oe

Introduced by Rep. AURELIO “DO!

D. GONZALES, JR.

EXPLANATORY NOTE

‘The 1987 Constitution provides for the following State Policies in Article II, Sections 9,
18, and 20:

SECTION 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through policies
that provide adequate social services, promote full employment, a rising standard of living,
and an improved quality of life for all.

SECTION 18. ‘The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare

SECTION 20. The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments

The principal consideration of our Overseas Filipino Workers (OFWs) in working abroad
is to provide for their families, These OFWs endure living away from their families and work in a
foreign land to provide a better life for their loved ones by sending a portion of their earnings, in a
form of remittances.

According to the Governer of Bangko Sentral ng Pilipinas, Amando M. Tetangco, Jr.,
personal remittances from OFWs for the first ten (10) months of the year reached US$24.4 billion
in 2016, equivalent to a 3.9 percent growth year-on-year. These remittances sent by OFWs to their
families in the Philippines are then used to cover household expenses, educational expenses, and
other expenses of the family.

These OFW remittances are transferred from the OFWs to the intermediaries, such as
financial and non-bank financial institutions, before it reaches beneficiaries. In the course of the
transfer of the funds, the amount remitted is subjected to several fees and high remittance charges
which result to the depletion of the amount to be remitted and received by beneficiaries.

In view of the effect of high remittance charges on the hard-earned wages of OFWs, which
should instead be enjoyed by them and their respective families, it becomes a matter of utmost
urgency and necessity for Congress to enact a law that will adequately and effectively put a stop

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to the imposition of high remittance charges and safeguard the remittances sent by OFWs, which
includes providing educational programs on how these OFWs can manage their finances,

‘The proposed measure seeks to (1) provide for a limit on the amount of remittance charges
to be imposed by intermediaries; (2) provide discounts on remittance fees to be shouldered by
OFWs based on a graduated scale and; (3) provide for tax incentives to intermediaries which shall
provide for such discounts. It likewise mandates government agencies, such as the Department of
Finance and the Overseas Workers Welfare Administration, to provide for financial management
programs to OFWs and their families

It is for this reason that the early approval of the Bill is earnestly sought.

AU Gi

M ZALES, JR.
Reprpsenthtive! 3rd

istrict of Pampanga


Republic of the Philippines
HOUSE OF REPRES TIVES
Quezon City

EIGHTEENTH CONGRESS,
First Regular Session

HOUS 826

2 BILL NO.

Introduced by Rep. AURELIO “DONG” D, GONZALES, JR.

AN ACT PROVIDING FOR PROTECTION OF THE REMITTANCES
OF OVERSEAS FILIPINO WORKERS, AND FOR OTHER PURPOSES

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 “Overseas Filipino Workers
(OFWs) Remittance Protection Act.”

SEC. 2, Declaration of Policy. ~ The State upholds the dignity of all its citizens, whether
residents of the Philippines or overseas.

The State shall afford full protection to labor, local and overseas, organized and
unorganized and shall promote full employment and equality of employment opportunities for all

The State recognizes the significant contribution of Overseas Filipino Workers to the
national economy through their foreign exchange remittances, Towards this end, the State shall
ensure that effective mechanisms be instituted to ensure the protection of the rights and interests
of Overseas Filipino Workers, particularly, the protection of their foreign exchange remittances
‘The State likewise guarantees the protection of OF W remittances from usurious interest rates and
fees charged by financial institutions.

‘The State guarantees protection of the foreign exchange remittances of Overseas Filipino
Workers. With this regard, the State recognizes the right of Overseas Filipino Workers to access
to courts, quasi-judicial bodies and adequate legal assistance, Towards this end, the State ensures
that no OFW shall be denied access to the courts, quasi-judicial bodies and to adequate legal
assistance by reason of poverty,

‘The State recognizes the need to educate Overseas Filipino Workers and their families on
financial planning, management of finances and savings. ‘Towards this end, the State undertakes
to provide programs and seminars to ensure the education of OFWs and their families


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SEC. 3, Definition of Terms. ~ For putposes of this Act, the following terms shall be
defined as follows

(a) “Overseas Filipino Worker” refers to a person who is to be engaged, is engaged or has
been engaged in a remunerated activity in a state of which he or she is not a citizen or
on board a vessel navigating the foreign seas other than a government ship used for
military or non-commercial purposes or on an installation located offshore or on the
high seas; to be used interchangeably with migrant worker.

(b) “Overseas Filipino Workers’ (OFW) Remittance” refers to the foreign exchange
earnings sent home by overseas Filipinos working abroad or their employees or agents
through formal channels,

(c) “Remittance Fee” is defined as the service fee or charge imposed by financial
intermediaries and non-bank financial intermediaries for sending money of OFWs
through formal channels

SEC, 4. Applicability of this Act. ~ ‘The provisions of this Act shall be applicable to all
OFW remittances, whether voluntary or mandated by law, orders, issuances or rules and
regulations.

SEC. 5. Discounts on Remittance Fees and Discounts Granted to Establishments.
Financial intermediaries and non-bank financial intermediaries may impose fees for services
rendered in sending money of OF Ws to their immediate family members, subject to the following
discounts,

FNot more than USD 500 or its equivalent in other | 50% of the remittance fee
currencies
USD 500 — not more than USD 1,000 or its equivalent _| 40% of the remittance fee
USD 1,000 ~ not more than USD 1,500 or its | 30% of the remittance fee
equivale ee | _
USD 1,500 — not more than USD 2,000 or its | 20% of the remittance fee
equivalent |

More than USD 2,000 or its equivalent in other | 10% of the remittance fee

[ Amount to be Remitted
|

All establishments providing discounts on remittance fees may claim the discounts granted
as a tax deduction based on the cost of services rendered to OFWs. ‘The discounts granted to
OFWs by financial or non-bank financial intermediaries shall be treated as an ordinary and
necessary expense deductible from the gross income of the seller falling under the category of
itemized deductions. This will make the tax deduction mandatory and thus provide incentives for
remittance establishments to provide the discounts.

In lieu of the tax deductions allowed in the preceding paragraph, financial and non-bank
financial intermediaries may elect a standard deduction in an amount not exceeding forty percent
(40%) of its gross income. Otherwise, these intermediaries shall be considered as having availed
of the above-mentioned tax deductions.

SEC. 6. Requirement of Posting of the Peso Equivalent of the Currency to be Exchanged.
~ All financial intermediaries and non-bank financial intermediaries offering remittance services
to OFWs shall be required to post in a conspicuous place within the establishment’s premises the

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Philippine peso equivalent rate of the foreign currencies being transacted. The Philippine peso
equivalent of the amount to be remitted will be the same amount that will be received by the
beneficiary of the remittance.

SEC. 7. Prohibition from Raising Remittance Fees, ~ All financial intermediaries and non-
bank financial intermediaries offering remittance services to OFWs are prohibited from raising
their current remittance fees without prior consultation with the Department of Finance (DOF),
Bangko Sentral ng Pilipinas (BSP), and the Philippine Overseas Employment Administration
(POBA).

SEC, 8, Prohibited Acts, - The following acts are hereby prohibited:

(a) Misappropriation or conversion, to the prejudice of the OF W or beneficiary, of foreign
exchange remittances received in trust, or on commission, or for administration, or
under any other obligation involving the duty to make delivery of, or to return the
same, or by denying having received such foreign exchange remittance;

(b) Taking of foreign exchange remittances without the consent of the OFW or
beneficiary;

(c) Imposition of remittance fees in excess of those prescribed under Section 5 of this Act;
and

(d) Failure to post in a conspicuous place of the establishment the Philippine Peso rate of
the foreign currency being transacted.

(e) Failure to conduct consultation with the DOF, BSP, and the POEA before raising
remittance fees.

SEC. 9. Penalties.

(a) Any person who will be found guilty of violating the provisions of Section 8 (a) hereof
shall be punished by:

(i) Imprisonment of four (4) years, two (2) months and one (1) day to eight (8) years if
the value of the remittance is over Twelve Thousand Pesos (Php 12,000.00) but
does not exceed Twenty Two Thousand Pesos (Php 22,000.00); and if such amount
exceeds the latter sum, the penalty shall be imprisonment of six (6) years or eight
(8) years, adding one (1) year for each additional ‘Ten ‘Thousand Pesos (Php
10,000.00), but the total penalty which may be imposed shall not exceed
imprisonment of twenty (20) years;

(ii) Imprisonment of two (2) years and four (4) months to four (4) years and two (2)
months, if the value of the remittance is over Six Thousand Pesos (Php 6,000.00)
but does not exceed Twelve Thousand Pesos (Php 12,000.00);

(iid)Imprisonment of four (4) months and one (1) day to two (2) years and four (4)
months, if the value of the remittance is over Two Hundred Pesos (Php 200.00) but
does not exceed Six Thousand Pesos (Php 6,000.00), and

(iv)Imprisonment of two (2) months and one (1) day to six (6) months, if the value of
the remittance does not exceed Two Hundred Pesos (Php 200.00).
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(b) Any person who will be found guilty of violating the provisions of Section 8 (b) hereof
shall be punished by:

(i) Imprisonment of six (6) years and one (1) day to ten (10) years, if the value of the
remittance is over Twelve Thousand Pesos (Php 12,000.00) but does not exceed
‘Twenty Two Thousand Pesos (Php 22,000.00); and if such amount exceeds the
latter sum, the penalty shall be imprisonment of ten (10) years and one (1) day to
twelve (12) years, adding one (1) year for each additional Ten Thousand Pesos
(Php 10,000.00) but the total penalty which may be imposed shall not exceed
imprisonment of twenty (20) years;

(ii) Imprisonment of two (2) years, four (4) months and one (1) day to six (6) years, if
the value of the remittance is over Six Thousand Pesos (Php 6,000.00) but does not
exceed Twelve Thousand Pesos (Php 12,000.00); and

(iii)mprisonment of six (6) months and one (1) day to four (4) years and two (2)
months, if the value of the remittance is over Two Hundred Pesos (Php 200,00) but
does not exceed Six Thousand Pesos (Php 6,000.00).

(c) Any person who will be found guilty of violating the provisions of Section 8 (c), (d)
and (e) hereof shall be subject to a fine of Fifty Thousand Pesos (Php 50,000.00) but
not exceeding Seven Hundred Fifty Thousand Pesos (Php 750,000.00) and
imprisonment of six (6) months and one (1) day to six (6) years and one (1) day.

Aside from the criminal liability provided in the aforementioned paragraphs, institutions
governed and supervised by the Bangko Sentral ng Pilipinas (BSP) found to have committed
violations of Section 8 hereof shall be subjected to the necessary fines, penalties, and sanctions as
provided under the New Central Bank Act, General Banking Law of 2000, and other pertinent
banking regulations.

In case of corporations or partnerships, the liability shall be imposed on the president,
managing director or partner, general manager, or other responsible officers of the corporation or
partnership.

SEC, 10. Mandatory Financial Education for OFWs and their Families. ~ ‘The
Department of Finance (DOF), together with the Bangko Sentral ng Pilipinas (BSP), Philippine
Overseas Employment Administration (POBA), and other agencies, shall ensure that a mandatory
financial education program shall be provided to OFWs and their families

‘The program shall include, but not be limited to, providing information on financial
management, budgeting, investment options and similar topics which shall educate the OFWs and
their families in the handling of their earnings and remittances.

SEC. 11. Liability under the Revised Penal Code and Other Laws. — Prosecution under
this Act shall be without prejudice to any liability for violation of any provision of the Revised
Penal Code or any other laws.

SEC. 12. Implementing Agency. ~ The Department of Finance (DOF), in consultation with
the BSP, POEA, Overseas Workers Welfare Administration (OWWA), Department of Foreign
Affairs (DFA), Bankers Association of the Philippines (BAP), Association of Bank Remittance
Officers, Inc. (ABROI), Philippine Association of Service Exporters, Inc. (PASEI), Philippine
Association of Foreign Exchange Dealers, Money Changers and Remittance Agents, Inc.

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(PAFERAD), shall, within ninety (90) days after the approval of this Act, issue the necessary rules
and regulations for its effective implementation.

SEC. 13, Repealing Clause. - All laws, rules or regulations that are inconsistent with the
provisions of this Act are hereby repealed or amended accordingly.

SEC.14. Separability Clause. - If any provision of this Act is held unconstitutional or
invalid, such holding shall not affect other provisions not affected thereby.

SEC. 15. Liffectivity. - This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in at least two (2) newspapers of general circulation.

Approved,