SEVENTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S. B. NO. 1425
Senate
c( tl)c 5 ii
*17 MAY-2 P2 51
RECEIVLU BY:
Introduced by Senator JOEL VILLANUEVA
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 I OF PRESIDENTIAL DECREE NO. 442, AS 
AMENDED OR THE LABOR CODE OF THE PHILIPPINES
EXPLANATORY NOTE
The proposed amendments to Articles 40, 41, and 42, Title II, Book I of 
the Philippine Labor Code is triggered by the lingering problem of coordination 
and accountability for the increasing number of foreign nationals working 
illegally in the country. Additionally, it is a show of good faith to countries, 
regions, and international bodies that the country honors its commitments in 
the WTO-GATS, ASEAN Economic Community (AEC), and other bilateral, 
regional and multilateral agreements, to at least review the restriction in the 
hiring of foreign nationals, or 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.
The amendments aim to: (1) update the provisions and reflect the 
terms used by the country in trade negotiations and in its bilateral, regional 
and multilateral agreements’ commitments; (2) provide flexibility in the Labor 
Market Test in cases where there is a short supply of skilled workers in 
specific industries, occupations and professions; (3) provide for training of 
Filipino understudies to transfer skills and technology from the foreign national 
through an understudy program; (4) emphasize that the Department of Labor 
and Employment is the sole issuing authority of employment permits all over 
the country including those working or employed in enterprises in preferred 
areas of investments or in economic zones; and (5) update the fines and 
penalties for violations which was set several decades ago.


In conclusion, as the Philippines strives to meet its commitments in the 
WTO-GATS, AEG, and other bilateral, regional and multilateral agreements, 
proposed amendments will improve but reiterate the restrictive policy on 
employment of foreign nationals.
SENATOR JOEL VILLANUEVA


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SEVENTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE 
S. B. N O .i'52^
•17 HAY-2 P2 51
RECtlVLD LV:
Introduced by Senator JOEL VILLANUEVA
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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 I 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:
SEC. 1. Title II, Book I of the Labor Code is hereby amended to read as 
follows:
Title II - Employment of Non-Resident [Aliens] FOREIGN NATIONALS
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SEC. 2. Article 40 of the Labor Code is hereby amended to read as follows:
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ARTICLE 
40. 
Employment permit of non-resident 
[aliens]
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FOREIGN NATIONALS -  [Afty—alien] ALL NON-RESIDENT
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FOREIGN NATIONALS seeking [admission to the Philippines- for
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desires-to-enga§e-an-alien-fof] employment in the Philippines shall
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obtain an employment permit from the Department of Labor AND
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EMPLOYMENT.
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[The] AN employment permit may be issued to a non-resident
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[alien] FOREIGN NATIONAL [onto- the applicant employer after a
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determination—ef-the] SUBJECT TO THE LABOR MARKET TEST
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BASED ON THE 
non- availability of [a person in the
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Philippines who is competent^able and] QUALIFIED AND willing


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is desiped] 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 REGULATIONS, AS WELL AS IN 
INDUSTRIES 
OR 
OCCUPATIONS 
OR 
PRACTICE 
OF 
PROFESSIONS WHERE THERE IS SHORT SUPPLY, AS 
DETERMINED THROUGH TRIPARTITE CONSULTATION.
For an enterprise registered in preferred areas of investments OR 
IN DESIGNATED ECONOMIC ZONES, THE employment permit 
SHALL ONLY BE ISSUED BY THE DEPARTMENT OF LABOR 
AND EMPLOYMENT, may be issued upon recommendation of BY 
the government agency charged with the supervision of said 
registered OR LOCATOR enterprise.
SEC. 3. A new Article 40-A of the Labor Code is hereby provided to read as 
follows:
ARTICLE 
40-A. 
UNDERSTUDY 
PROGRAM 
-  
FOREIGN 
NATIONALS 
ISSUED 
EMPLOYMENT 
PERMITS 
SHALL 
TRANSFER TECHNOLOGY TO AT LEAST TWO (2) FILIPINO 
UNDERSTUDIES WITHIN A PRESCRIBED PERIOD OF THE 
DEPARTMENT OF LABOR AND EMPLOYMENT-APPROVED 
UNDERSTUDY PROGRAM OF THE ENTERPRISE.
SEC. 4. Article 41 of the Labor Code is hereby amended to read as follows: 
ARTICLE 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/HER 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 rules and regulations, AS WELL AS 
THE EMPLOYER OR THE RESPONSIBLE PERSON 
REPRESENTING THE EMPLOYER, shall be punished [in
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),


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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/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.
SEC. 5. Article 42 of the Labor Code is hereby amended to read as follows:
ARTICLE 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-oTTabof^^nd 
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.
SEC. 6. 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.
SEC. 7. Separability Clause. -  If any provision of this Act is declared 
unconstitutional or otherwise invalid, the validity of the other provisions shall 
not be affected thereby.
SEC. 8. Repealing Clause. - All statutory laws, orders and issuances, rules 
and regulations and/or parts thereof inconsistent with the provisions of this Act 
are hereby repealed or modified accordingly.


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SEC. 9. 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 
5 : circulation.
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Approved,