Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Second Regular Session

5470
HOUSE BILL NO.

INTRODUCED BY: REP. KARLO ALEXEI B. NOGRALES, REP, EMMELINE Y,
AGLIPAY VILLAR, REP. FLORENCIO T. FLORES, JR
AND REP. DEOGRACIAS B, RAMOS, JR.

EXPLANATORY NOTE

The Labor Code of the Philippines, as amended, was enacted in 1974. Through the
years, the trend towards integration and interconnectedness of countries into a
single global community has increased in the form of various political and economic
agreements. In 1991, the Philippines became a member of the World Trade
Organization (WTO). As a member, the country is also a signatory to the General
Agreement on Trade in Services (GATS), a treaty of the WTO, which entered into
force in 1995. The GATS is a framework for a multilateral trading system in the
service sector which includes an annex on the movement of natural persons.

One of the Philippine commitments to the WTO-GATS is to review the restrictions in
Title Il, Article 40 of the Labor Code of the Philippines, as amended. The main
restriction in the hiring of a foreign national is the Labor Market Test (LMT) which is
used to determine the non-availability of a qualified, able and willing person in the
Philippines to do the services for which the foreign national is being hired. It is
comparable to an Economics Needs Test implemented by other countries,

In relation to this, the Philippines is also a member-state of the Association of
Southeast Asian Nations (ASEAN), and is likewise obliged to review the said
provision in preparation for the envisioned regional integration in 2015 as envisioned
in the ASEAN Economic Community (AEC) Blueprint. ASEAN member countries
committed to the AEC in 2007.

The proposed amendment of the provision in the Labor Code is to facilitate
uniformity by properly stating the term used by the Philippines in its commitments
entered into bilateral, regional and multilateral agreements. It is a way for the country
to determine if there is a short supply of workers in specific industries, occupations
and professions which probably inhibits the country from increased productivity and
industry development. It includes a provision for training of Filipino understudies to


transfer skills and technology from the foreign national.

Increased fines and penalties for violations by foreign nationals are also updated to
address inflation since the law was enacted almost four decades ago.

In conclusion, as the Philippines strives to meet its commitments in the WTO-GATS,
AEC, and other bilateral, regional and multilateral agreements, it is expected to at
least review the affected national laws and policies. This proposed agreement is a
timely initiative to update the said law as the country modernizes as part of a global
community. It is also a show of good faith to countries, regions, and international
bodies the Philippines has agreements with that the country is willing to
accommodate changes in order to meet its commitments. The proposed amendment
is beneficial to the country as it paves the way to an improved but still protective
policy on employment of foreign nationals

Lanta A Willie
KARLO/ALEXE! B. NOGRALES EMMELINE Y. AGLIPAY VILLAR
Representative Representative
1" District, Davao City Party List - DIWA

FLOREN iN RES, JR DE
Reprdsentativ Representative
2 District, Buki 2 District, Sorsogon

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Second Regular Session

5470

HOUSE BILL NO.

INTRODUCED BY: REP. KARLO ALEXEI B. NOGRALES, REP. EMMELINE Y.
AGLIPAY VILLAR, REP. FLORENCIO T. FLORES, JR.
AND REP. DEOGRACIAS B. RAMOS, JR.

“AN ACT TO ENHANCE THE REGULATION ON EMPLOYMENT OF FOREIGN
NATIONALS AND TRANSFER OF TECHNOLOGY, AMENDING FOR THE
PURPOSE ARTICLES 40, 41, AND 42, TITLE II, BOOK 1 OF PRESIDENTIAL.
DECREE NO. 442, AS AMENDED OR 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. Article 40 of the Labor Code is hereby amended to read as follows:

Title Il - Employment of Non-Resident [Aliens] FOREIGN NATIONALS

ART. 40. Employment permit of non-resident [aliens] FOREIGN NATIONALS
— [Any—ahen] ALL NON- EECOENE RORERGNS HAHONAES seeking
[admission ip m 6

i employment: in ‘the
Philippines shall obtain an employment permit from the Department of Labor
AND EMPLOYMENT.

[Fhe] AN employment permit may be issued to a non-resident faien]
FOREIGN NATIONAL [

the] SUBJECT TO THE LABOR MARKET TEST BASED ON THE non -
availability of [a-person—ia_the—Philippines—who—is-competent_able—and]
QUALIFIED AND willing [at-the-time-of application te perform the services for
which the-alien-is-desired] FILIPINO NATIONAL.


THE SECRETARY OF LABOR AND EMPLOYMENT IS AUTHORIZED TO
GRANT EXEMPTIONS FROM THE LABOR MARKET TEST TO FOREIGN
NATIONALS AS PROVIDED FOR UNDER EXISTING LAWS AND
AGREEMENTS, AS WELL AS IN INDUSTRIES OR OCCUPATIONS OR
PRACTICE OF PROFESSIONS WHERE THERE IS SHORT SUPPLY,
AFTER TRIPARTITE CONSULTATION.

FOREIGN NATIONALS ISSUED EMPLOYMENT PERMITS SHALL
TRANSFER TECHNOLOGY TO FILIPINO UNDERSTUDIES WITHIN A
PRESCRIBED PERIOD.

For an enterprise registered in preferred areas of investments, said
employment permit may be issued upon recommendation of the government
agency charged with the supervision of said registered enterprise.

Section 2. Article 41 of the Labor Code is hereby amended to read as follows
ART. 41. Prohibition against transfer of employment.

(a) After the issuance of an employment permit, the [alien] FOREIGN
NATIONAL shall not transfer to another job or change his employer without
prior approval of the Secretary of Labor AND EMPLOYMENT.

(b) Any non-resident [alien] FOREIGN NATIONAL who shall take up
employment in violation of the provision of this Title and its implementing
tules and regulations, AS WELL AS THE EMPLOYER OR THE
RESPONSIBLE PERSON, REPRESE TING Jue EMPLOYERS: shall be
punished [in-ac: n h 0) WITH A
FINE of [the-Labor-Code ] NOT LESS THAN. FIFTY THOUSAND PESOS
(P50,000.00) NOR MORE THAN ONE HUNDRED THOUSAND PESOS
(P100,000.00), OR IMPRISONMENT OF NOT LESS THAN SIX MONTHS
NOR MORE THAN SIX YEARS OR BOTH SUCH FINE AND
IMPRISONMENT AT THE DISCRETION OF THE COURT.

In addition, the [alien—worker] FOREIGN NATIONAL shall be subject to
deportation after service of his OR HER sentence.

THE SECRETARY OF LABOR AND EMPLOYMENT IS AUTHORIZED TO
IMPOSE A FINE OF FIFTY THOUSAND PESOS (P50,000.00) FOR EVERY
YEAR OR FRACTION THEREOF TO BOTH THE FOREIGN NATIONAL
FOUND WORKING WITHOUT VALID EMPLOYMENT PERMIT AND TO
THE EMPLOYER.

Section 3. Article 42 of the Labor Code is hereby amended to read as follows:

ART. 42. Submission of List. — Any employer employing non-resident foreign
nationals [on the effective date of this Code] shall submit a list of such
nationals to the REGIONAL DIRECTOR OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT WHICH HAS JURISDICTION ON THE EMPLOYER


[Secretary-of Labor-and-Empleyment] within 30 days after HIRING, [such

date] indicating their names, citizenship, foreign and local addresses, nature
of employment and status of stay in the country. [The-Seeretary-ef Labor and
Employment-shall-then—determine—fthey_are—entitled_to—an—employment
permit]
Section 4. Implementing Rules and Regulations. Within ninety (90) days from the
effectivity of this Act, the Secretary of Labor and Employment, in coordination with

concerned agencies, shall formulate the necessary rules and regulations to
implement the provisions of this Act.

Section 5. Repealing Clause. All statutory laws, orders and issuances, rules and
regulations and/or parts thereof which are inconsistent with the provisions of this Act
are hereby repealed or modified accordingly.

Section 6. Effectivity. This Act shall take effect after fifteen (15) days from the date
of its publication in Official Gazette or in a newspaper of general circulation

Approved,