Rules and Regulations Implementing Executive Order No. 857

December 29, 1982

RULES AND REGULATIONS IMPLEMENTING EXECUTIVE ORDER NO. 857

RULE I

Definition of Terms

SECTION 1.  Definition —

a) Filipino contract worker abroad — any member of the Philippine labor force employed abroad.

b) Mandatory remittance the amount or portion of the basic salary of the Filipino contract workers abroad required under existing laws and regulations to be remitted by the workers to their beneficiaries in the Philippines and sold for pesos to the Philippine banking system.

c) Licensed agencies or other entities — any agency or entity licensed or authorized by the Ministry of Labor and Employment to hire or recruit Filipino workers for employment abroad.

d) Philippine banking system — includes local commercial banks, branches of foreign banks, offshore banking units and thrift banks and rural banks authorized by the Central Bank to purchase for pesos foreign exchange.

RULE II

Statement of Policy

SECTION 1.  Objective — It is the policy of the State to protect the welfare of families, dependents and beneficiaries of Filipino workers abroad and to ensure that the foreign exchange earnings of these workers are remitted and sold for pesos to authorized banks in the Philippines, in line with the country's economic development program.

RULE III

Foreign Exchange Remittance

SECTION 1.  Coverage — This Rule shall apply to any worker defined in Section 1(a), Rule 1 of these Rules and Regulations. It shall also apply to licensed agencies or other entities authorized by the Ministry of Labor and Employment to hire and recruit Filipino workers to overseas employment and their foreign principals or employers.

SECTION 2.  Obligation to remit — It shall be mandatory for a worker to remit and sell for pesos regularly, on a monthly basis, a portion of his basic salary abroad to his beneficiary in the Philippines through the Philippine banking system in accordance with Section 4 of this Rule. This obligation shall be stipulated in the contract of employment and/or service agreement submitted to the Ministry of Labor and Employment for approval.

All agencies and other entities authorized by the Ministry of Labor and Employment to recruit Filipino workers for overseas employment shall cause the inward remittance and sell for pesos the foreign exchange payments due from foreign employers, representing mobilization expenses of Filipino overseas workers, including their air fares and other incidentals.

SECTION 3.  Obligation to report — All agencies and other entities authorized by the Ministry of Labor and Employment to recruit Filipino workers for overseas employment shall submit monthly reports to the Central Bank of the Philippines through its Foreign Exchange Department, which shall, among other things, contain the following information: (a) name of worker; (b) name and address of foreign employer; (c) basic salary of worker in foreign exchange; (d) name and address of designated beneficiary or dependent; and (e) name of local bank of worker and bank account number, if any. The form for this purpose shall prescribed by the Central Bank of the Philippines.

SECTION 4.  Mandatory remittance requirements — The percentage of foreign exchange remittance referred to in Section 2 of this Rule, shall be as follows:

a) Seamen or mariners: Seventy (70) percent of basic salary;

b) Workers of Filipino contractors and construction companies: Seventy (70) percent of basic salary;

c) Doctors, engineers, teachers, nurses and other professional workers whose employment contracts provide for free board and lodging: Seventy (70) percent of basic salary

d) All other professional workers whose employment contracts do not provide for free board and lodging facilities: Fifty (50) percent of basic salary;

e) Domestic and other services workers: Fifty (50) percent of basic salary;

f) All other workers not falling under the aforementioned categories: Fifty (50) percent of basic salary.

SECTION 5.  Proof of compliance — For purpose of Executive Order No. 857, proof of compliance with the mandatory remittance requirement as mentioned in Section 2 hereof, may consist of any of the following documents or such alternatives as may be approved by the Central Bank of the Philippines showing that the contract worker had in fact effected aforesaid remittance and caused the surrender of the same for pesos through the Philippine banking system:

a) Confirmed bank remittance form; or

b) Certification from employer, duly authenticated, that remittance has been effected; or

c) Bank certification of credit/payment advice evidencing sale for pesos to the Philippine banking system; or

d) Central Bank official receipt covering foreign exchange sold in the Philippines to authorized agent banks or authorized foreign exchange dealers; or

e) Receipt of International Postal Money Order.

SECTION 6.  Procedure for remittance — Remittance of foreign exchange shall in accordance with the "Guidelines and Mechanism to Facilitate the Remittance of Salaries of Filipino Overseas Workers" adopted pursuant to LOI 1219 dated March 26, 1982.

SECTION 7.  Remittance arrangements — The Central bank of the Philippines shall cause necessary arrangements to be made with the appropriate financing institutions to handle the remittances called for in this Order, Pending the establishments of appropriate arrangements and in the absence of banking facilities, the Embassy or Consulate nearest to the job site may act, in the interim, as a channel for remittance of foreign exchange earning. In the performance of these functions, the Embassy or Consulate shall abide by customary local laws and regulations on the matter. The Ministry of Foreign Affairs shall report to the Central Bank of the Philippines these arrangements and shall remit all the funds to the Philippine National Bank, which shall take charge of the prompt payment in pesos to the beneficiaries. The Philippine National bank shall submit to the Central Bank of the Philippines a monthly report covering these transactions in a form to be provided for the purpose within ten (10) banking days following the end of reference month..

RULE IV

Effect of Non-compliance with the Mandatory Remittance Requirement

SECTION 1. No passport shall be issued, renewed or extended by the Ministry of Foreign Affairs unless proof of applicant's substantial compliance with the mandatory remittance requirement in the percentages provided for under these Rules is submitted.

SECTION 2. Passports issued to Filipino contract workers shall have an initial period of validity of one year. The Ministry of Foreign Affairs may however adjust, as circumstances may require, the initial passport validity period.

SECTION 3. The passport shall be renewable every year upon submission of usual requirements and presentation of documentary proof of compliance to the remittance requirement defined in Section 5 of Rule III hereof.

RULE V

Effect of Non-compliance with the Mandatory Remittance Requirements

SECTION 1. No accreditation shall be issued to an employer and no license or authority shall be granted to an agency or entity by the Ministry of Labor and Employment unless they submit proof that they have provided facilities to effect the remittances of foreign exchange earnings of Filipino workers under their employ.

SECTION 2. No contracts of employment and/or service agreement shall be approved or renewed by the Ministry of Labor and Employment unless proof of compliance with the mandatory remittance requirement is submitted.

SECTION 3. A contract worker who fails to comply with the mandatory remittance requirement shall be suspended or excluded from the list of eligible workers for overseas employment and in cases of subsequent violations, he shall be repatriated at his own expense or at the expense of his employer as the case may be.

SECTION 4. Filipino or foreign employers and/or their representatives who fail to comply with these Rules shall be excluded from the overseas employment program.

SECTION 5. In case of local private employment agencies and other similar entities, their failure to comply with the mandatory remittance requirement shall be a ground for cancellation of their authority to recruit workers for overseas employment without prejudice to their liabilities under existing laws and regulations.

RULE VI

Agency Guidelines for the Implementation of these Rules

SECTION 1. The Ministry of Foreign Affairs, the Ministry of Labor and Employment and the Central bank of the Philippines shall draw up appropriate procedural guidelines for the proper implementation of these rules by their respective agencies.

RULE VII

Inter-Agency Coordination

SECTION 1. For purposes of coordination and effective implementation of Executive Order No. 857 and its implementing rules and regulations, the Ministry of Foreign Affairs, the Ministry of Labor and employment and the Central bank of the Philippines shall designate their respective representatives to constitute an Inter-Agency Committee pursuant to LOI 1219 dated March 26, 1982.

SECTION 2. The Ministry of Labor and Employment in collaboration with the Central bank of the Philippines shall undertake continuing seminars to familiarize and educate contract workers, recruiters and/or their representative on the procedures for remittance of foreign exchange earnings.

SECTION 3. The Ministry of Foreign Affairs, through its diplomatic and consular establishments, and the Ministry of Labor and Employment shall circularize and disseminate widely the Executive Order and such other implementing rules and guidelines as may be issued hereafter.

RULE VIII

Date of Effectivity

SECTION 1. The provisions of these rules and regulations shall be effective beginning 1 February 1983.

DONE in the City of Manila, this 29th day of December, 1982.

(SGD.) JAIME C. LAYAGovernorCentral Bank of the Philippines

(SGD.) BLAS F. OPLE MinisterMinistry of Labor and Employment

(SGD.) CARLOS P. ROMULOMinisterMinistry of Foreign Affairs

ANNEX

RESOLUTION NO. 1-83

INTER-AGENCY COMMITTEE OF THE CENTRAL BANK, MINISTRY OF LABOR AND MINISTRY OF FOREIGN AFFAIRS FOR THE IMPLEMENTATION OF E.O. 857

In its meeting held on 9 February 1983 at the Blue Room of the Central Bank and presided over by Central Bank Deputy Governor Juan Quintos, Jr., the Inter-Agency Committee on Implementation of Executive Order No. 857 decided on the following:

I.  Guidelines

1.1  Validity of Passports of Contract Workers — In accordance with the normal duration of contracts of employment and taking into account the provisions of both Executive Order Nos. 855 and 857 mandating the Ministry of Foreign Affairs to adjust, as circumstances may require, the initial validity period, passports issued to contract workers shall be valid for two years, renewable for another years subject to compliance with the mandatory remittance requirement.

1.2  Definition of "substantial compliance" — As a general rule, compliance with the percentages of mandatory remittance defined in Section 2 of Executive Order No. 857 shall be required. However, during the initial period of the implementation of the Executive Order, which is from February 1, 1983, consular officers may renew old passports or issue new passports and officials of the Ministry of Labor may renew employment contracts if the contact workers concerned are able to submit proof of "substantial compliance" with the mandatory remittance requirements.

A contract worker shall be deemed to have substantially complied with mandatory requirement if, at the time he applies for renewal of passport or renewal of his employment contract during the period cited above, he can show proof that he has remitted and sold for pesos at least one half of the amount of foreign exchange corresponding to the mandatory remittance required to him.

The requirement to remit a monthly basis need not be strictly applied during the initial period of implementation provided that the amount remitted and sold for pesos through authorized financing institutions shall at least be equal to one half of the amount corresponding to the mandatory percentage requirement defined under the Executive Order.

For example, if the salary of a contract worker is US$200 a month of US$2,400 a year, such worker is required to remit 50% thereof or US$1,200 annually under Executive Order No. 857. Pursuant to the substantial compliance formula, a contract worker needs only to show proof that he has at least remitted and sold for pesos 50% of US$1,200 thereof or US$600.00 a year.

The "substantial compliance" defined herein shall apply to contract workers remitting on an individual basis. It shall not be applicable to those contract workers already remitting or who will be remitting under the payroll system, or on a monthly basis.

1.3 Proof of Compliance — Proof of compliance could be any one of those enumerated in Sec. 5 of the Executive Order provided the name of the applicant is clearly shown as the sender of seller of the foreign exchange. It shall be the responsibility of the contract worker or his beneficiaries to keep copies of proof of remittance or sale for pesos as evidence of his compliance for purposes of supporting his application for renewal of passport and/or employment contract.

In cases where no remittances of foreign exchange are made abroad, evidence of sale of foreign currencies for pesos to authorized banks of the Central Bank or Foreign Exchange Dealers, shall be accepted as proof of compliance with the mandatory remittance requirement.

1.4  Definition of Beneficiaries — Beneficiaries are immediate members, relatives, dependents and other persons to whom a contract worker regularly remits a portion of his foreign exchange earnings to the Philippines. A contract workers may also designate himself as how own beneficiary.

1.5  Conflict in Mandatory Remittance Requirement and Host Country's Regulations on the Matter — Should there be conflict in complying with the mandatory remittance requirement in view of the host country's regulations on the matter, the percentages of remittance shall be within allowable limits set down by local laws.

1.6  Beneficiaries Living with Contract Workers Abroad — A contract worker whose immediate family members, dependents or beneficiaries are residing with him abroad is not compelled to comply with the mandatory remittance requirement except if the dependents themselves are contract workers, subject to verification of his family status by the Ministries of Foreign Affairs and/or Labor and Employment. He should be encouraged, nevertheless, to remit a portion of his foreign earnings to the Philippines.

1.7  Role of Embassy as Channel for Remittance — The role of the embassy as defined in Sec. 7 of Rule III of the implementing rules is only temporary, in the absence of banking facilities in the jobsite and pending the establishment of appropriate arrangements by the Central Bank. In exercising this function, the Embassy shall abide by customary local laws and regulations of the host country.

1.8  Remittances of Contract Workers Are Not Deemed Personal Deductions for Income Taxation Purposes — Obligations of contract workers to remit portions of his foreign exchange earnings under Executive Order No. 857 are separate and distinct from the personal deductions defined under the gross income taxation law.

1.9  Filipino Servicemen in U.S. Defense Installations — Filipino servicemen working in U.S. military installations are not compelled to comply with the mandatory compliance requirement but they should be encouraged nevertheless to remit a portion of their foreign exchange earnings to the Philippines through authorized financing institutions.

1.10  Immigrants and Filipino Employees of the U.N. — Immigrants and Filipino professionals and employees working with United Nations agencies or specialized bodies are not compelled to comply with the mandatory requirement of Executive Order No. 857 but they shall, nevertheless, be encouraged to remit portions of their foreign exchange earnings to the Philippines through authorized financing institutions.

II.  Administrative Measures

1.11  Holding of Training Seminars for Licensed Recruitment Agencies — The Committee requested the Central Bank and the Ministry of Labor and Employment to make arrangements for the holding of training seminars for licensed recruitment agencies and entities to apprise them of the spirit and intent of E.O. 857, its rules and regulations, and the procedures governing mandatory remittances of Filipino contract workers and to ensure that all concerned (recruiters and workers) are familiar with their obligations under E.O. 857.

1.12  Clearing House for Inquiries. — All inquiries arising out of the implementation of Executive Order No. 857 shall be addressed to the Inter-Agency Committee, created under Office Order No. 31, dated February 7, 1983, c/o Atty/ Gregorio Suarez, Associate Director, Foreign Exchange Department, Central Bank of the Philippines.

1.13  Feedback Mechanism — Consular officers and labor attaches abroad shall be advised to bring to the Committee's attention, through the Ministry of Foreign Affairs, all questions or matters which could not be resolved in the post and which may required clarification or interpretation of the Executive Order and its implementation rules and regulations. They are also encouraged to make appropriate suggestions or recommendations to effectively implement the Executive Order.

1.14  The Committees shall transmit immediately to the Minister of Foreign Affairs and Labor and Employment and the Central Bank of the Philippines, these guidelines for dissemination and information of all concerned.

1.15  The Committee may, from time to time, issue resolutions to clarify further these guidelines.