SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
"15 
MAY I! P3:44 
SENATE 
Senate Bill No. 
2760 
(. i, , i'l' T" I' v)..,' 
"", " •• "U '''----U'' 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
ENHANCiNG 
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, OTHERWISE KNOWN AS "THE LABOR 
CODE OF THE PHILIPPINES" 
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 II, 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 light of the envisioned regional integration 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. 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
SENATE 
Senate Bill No. 
2760 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
ENHANCING 
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, OTHERWISE KNOWN AS "THE LABOR 
CODE OF THE PHILIPPINES" 
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled: 
1 
Section i.Article 40 of the Labor Code is hereby amended to read as follows: 
2 
3 
"Title II - Employment of Non-Resident [Aliens] FOREIGN 
4 
NATIONALS. 
5 
"ART. 40. Employment permit of non-resident [aliens]-
6 
FOREIGN NATIONALS -
[Any alien] 
ALL NON-RESIDENT 
7 
FOREIGN NATIONALS seeking [admission to the Philippines for 
8 
employment purposes and any domestic or foreign employer who 
9 
desires to engage an alien for] employment in the Philippines shall 
10 
obtain an employment permit from the Department of Labor AND 
11 
EMPLOYMENT. 
12 
13 
"[The} AN employment permit may be issued to a non-
14 
resident [alien] FOREIGN NATIONAL [or to the applicant employer 
15 
after a determination of the] SUBJECT TO THE LABOR MARKET 
16 
TEST BASED ON THE non - availability of [a person in the 
17 
Philippines who is competent, able and] QUALIFIED AND willing 
18 
[at the time of application to perform the services for which the alien 
19 
is desired] FILIPINO NATIONAL. 
20 
21 
"THE SECRETARY OF LABOR AND EMPLOYMENT IS 
22 
AUTHORIZED TO GRANT EXEMPTIONS FROM THE LABOR 
23 
MARKET TEST TO FOREIGN NATIONALS AS PROVIDED FOR 
24 
UNDEREXISTING LAWS AND AGREEMENTS, AS WELL AS IN 
25 
INDUSTRIES 
OR 
OCCUPATIONS 
OR 
PRACTICE 
OF 
26 
PROFESSIONS WHERE THERE IS SHORT SUPPLY, AFTER 
27 
TRIPARTITE CONSULTATION. 
28 
29 
"FOREIGN NATIONALS ISSUED EMPLOYMENT PERMITS 
30 
SHALL 
TRANSFER 
TECHNOLOGY 
TO 
FILIPINO 
31 
UNDERSTUDIES WITHIN A PRESCRIBED PERIOD. 
1 


1 
"For an enterprise registered 
in 
preferred areas of 
2 
investments, said employment permit may be issued upon 
3 
recommendation of the government agency charged with the 
4 
supervision of said registered enterprise." 
5 
6 
7 
SEC 2. Article 41 of the Labor Code is hereby amended to read as follows: 
8 
9 
"ART. 41. Prohibition against transfer of employment. 
10 
"(a) After the issuance of an employment permit, the [alien) 
11 
FOREIGN NATIONAL shall not transfer to another job or change 
12 
his employer without prior approval of the Secretary of Labor AND 
13 
EMPLOYMENT. 
14 
15 
"(b) Any non-resident [alien) FOREIGN NATIONAL 
who 
16 
shall take up employment in violation of the provision of this Title 
17 
and its implementing rules and regulations, AS WELL AS THE 
18 
EMPLOYER OR THE RESPONSIBLE PERSON REPRESENTING 
19 
THE EMPLOYER, 
shall be punished [in accordance with the 
20 
provisions of Articles 289 and 290J WITH A FINE of [the Labor 
21 
Code.) 
NOT 
LESS 
THAN 
FIFTY THOUSAND 
PESOS 
22 
(P50,000.00) NOR MORE THAN ONE HUNDRED THOUSAND 
23 
PESOS (P100,000.00), 
OR IMPRISONMENT OF NOT LESS 
24 
THAN SIX MONTHS NOR MORE THAN SIX YEARS OR BOTH 
25 
SUCH FINE AND IMPRISONMENT AT THE DISCRETION OF 
26 
THE COURT. 
27 
28 
"In addition, the [alien worker) FOREIGN NATIONAL shall be 
29 
subject to deportation after service of his OR HER sentence. 
30 
31 
"THE SECRETARY OF LABOR AND EMPLOYMENT IS 
32 
AUTHORIZED TO IMPOSE A FINE OF FIFTY THOUSAND 
33 
PESOS (P50,000.00) FOR EVERY YEAR OR FRACTION 
34 
THEREOF TO BOTH THE FOREIGN NATIONAL FOUND 
35 
WORKING WITHOUT VALID EMPLOYMENT PERMIT AND TO 
36 
THE EMPLOYER." 
37 
38 
39 
SEC 3. Article 42 of the Labor Code is hereby amended to read as follows: 
40 
41 
ART. 42. Submission of List. - Any employer employing non-
42 
resident foreign nationals [on the effective date of this Code) shall 
43 
submit a list of such nationals to the REGIONAL DIRECTOR OF 
44 
THE DEPARTMENT OF LABOR AND EMPLOYMENT WHICH 
45 
HAS JURISDICTION ON THE EMPLOYER [Secretary of Labor and 
46 
Employment] within 30 days after HIRING, [such date) indicating 
47 
their names, citizenship, foreign and local addresses, nature of 
48 
employment and status of stay in the country. [The Secretary of 
49 
Labor and Employment shall then determine if they are entitled to 
50 
an employment permit.) 
51 
52 
53 
SEC 4. Implementing Rules and Regulations. Within ninety (90) days from the 
54 
effectivity of this Act, the Secretary of Labor and Employment, in coordination 
55 
with concerned agencies, shall formulate the necessary rules and regulations to 
56 
implement the provisions of this Act. 
57 
2 


1 
SEC 5. 
Separability Clause. -
If any provIsion of this Act is declared 
2 
unconstitutional, the same shall not affect the validity and effectivity of the other 
3 
provisions thereof. 
4 
5 
SEC 6. Repealing Clause. All statutory laws, orders and issuances, rules and 
6 
regulations and/or parts thereof which are inconsistent with the provisions of this 
7 
Act are hereby repealed or modified accordingly. 
8 
9 
10 
SEC 7. Effectivity. This Act shall take effect after fifteen (15) days from the date 
11 
of its publication in Official Gazette or in a newspaper of general circulation. 
12 
13 
14 
15 
16 
17 
Approved, 
3