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SEVENTEENTH CONGRESS °
First Regular Session REGISTRATION UNT
BILLS AND INDEX

H.B.No. 710

Introduced by HONORABLE BELLAFLOR J. ANGARA-CASTILLO.

EXPLANATORY NOTE

The Labor Code of the Philippines, as amended, was enacted in 1974. Through the
years, the trend towards integration and inter-connectedness 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.

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 in
its 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. Also, this bill 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.

As the Philippines strives to meet its commitments in the WTO-GATS, AEC, and
other agreements, it is expected to at least review the affected national laws and policies.
This bill is a timely initiative to update our 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.

In view of the foregoing, the passage of this bill is “ bies sought.

ox lt shu <EASTILLO
epresentative

Lone District, Province of Aurora



SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

710

H. B. No.

Introduced by HONORABLE BELLAFLOR J. ANGARA-CASTILLO

AN ACT TO ENHANCE THE REGULATION ON EMPLOYMENT OF FOREIGN
NATIONALS AND TRANSFER OF TECHNOLOGY, AMENDING FOR THE PURPOSE
ARTICLE NUMBERS 40, 41, AND 42, TITLE Il, BOOK 1 OF PRESIDENTIAL DECREE

NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE
PHILIPPINES, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Article 40 of Presidential Decree No. 442, otherwise known as the Labor Code

1

2 of the Philippines, as amended, is hereby amended to read as follows:

3

4 “Title It

5 Employment of Non-Resident Foreign Nationals

6

7 ART. 40. Employment permit of non-resident foreign nationals. Any non-
8 resident foreign nationals seeking employment in the Philippines shall obtain an
9 employment permit from the Department of Labor and Employment.

10

u An employment permit may be issued to a non-resident foreign national subject to
2 the labor market test based on the non-availability of qualified and willing Filipino
13 national.

14

1s The Secretary of Labor and Employment is authorized to grant exemptions from the
16 labor market test to foreign nationals as provided for under existing laws and
7 agreements, as well as in industries or occupations or practice of professions
18 where there is short supply, after tripartite consultation

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20 Foreign nationals issued employment permits shall transfer technology to Filipino
21 understudies within a prescribed period.

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23 For an enterprise registered in preferred areas of investments, said employment
24 permit may be issued upon recommendation of the government agency charged with
2s the supervision of said registered enterprise.”

27 SEC. 2. Article 41 of the same Code is hereby amended to read as follows:
“Art. 41. Prohibition against transfer of employment.
1. After the issuance of an employment permit, the foreign national shall not
transfer to another job or change his employer without prior approval of the
Secretary of Labor and Employment

2. Any non-resident foreign national who shall take up employment in violation of
the provision of this Title and its implementing rules and regulations, as well as.

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the employer or the responsible person representing the employer, shall be
punished with a fine not less than Fifty thousand pesos (P50,000.00) nor more
than One hundred thousand pesos (100,000.00), 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 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.”

SEC. 3. Article 41 of the same Code is hereby amended to read as follows:

“Art. 42, Submission of List. Any employer employing non-resident foreign
nationals shall submit a list of such nationals to the Regional Director of the
Department of Labor and Employment which has jurisdiction on the employer within
thirty (80) days after hiring, indicating their names, citizenship, foreign and local
addresses, nature of employment and status of stay in the country.”

SEC. 4. Implementing Rules and Regulations. - The Secretary of Labor and
Employment, in coordination with concerned agencies, shall promulgate the necessary
tules and regulations to implement the provisions of this Act within ninety (90) days from its
effectivity.

SEC. 5. Repealing Clause. — Presidential Decree No. 442, as amended, otherwise known
as the "Labor Code of the Philippines’, and all other acts, laws, presidential issuances, rules
and regulations inconsistent herewith are hereby repealed, amended or modified
accordingly

SEC. 6. Separability Clause. — If any provision of this Act is declared unconstitutional or
invalid, the other provisions not affected thereby shall remain in full force and effect.

Sec. 7. Effectivity Clause. — This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,

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