Вы находитесь на странице: 1из 14

ACT NO.

3135 AN ACT TO REGULATE THE SALE OF PROPERTY


UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REALESTATE MORTGAGES
SECTION 1. When a sale is made under a special power inserted in or
attached to any real-estate mortgage hereafter made as security for the
payment of money or the fulfillment of any other obligation, the provisions
of the following election shall govern as to the manner in which the sale
and redemption shall be effected, whether or not provision for the same is
made in the power.
SECTION 2. Said sale cannot be made legally outside of the province in
which the property sold is situated; and in case the place within said
province in which the sale is to be made is subject to stipulation, such sale
shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated.
SECTION 3. Notice shall be given by posting notices of the sale for not
less than twenty days in at least three public places of the municipality or
city where the property is situated, and if such property is worth more than
four hundred pesos, such notice shall also be published once a week for at
least three consecutive weeks in a newspaper of general circulation in the
municipality or city.
SECTION 4. The sale shall be made at public auction, between the hours
or nine in the morning and four in the afternoon; and shall be under the
direction of the sheriff of the province, the justice or auxiliary justice of the
peace of the municipality in which such sale has to be made, or a notary
public of said municipality, who shall be entitled to collect a fee of five
pesos each day of actual work performed, in addition to his expenses.
SECTION 5. At any sale, the creditor, trustee, or other persons authorized
to act for the creditor, may participate in the bidding and purchase under
the same conditions as any other bidder, unless the contrary has been
expressly provided in the mortgage or trust deed under which the sale is
made.
SECTION 6. In all cases in which an extrajudicial sale is made under the
special power hereinbefore referred to, the debtor, his successors in
interest or any judicial creditor or judgment creditor of said debtor, or any
person having a lien on the property subsequent to the mortgage or deed
of trust under which the property is sold, may redeem the same at any

time within the term of one year from and after the date of the sale; and
such redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code
of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act.
SECTION 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province or place
where the property or any part thereof is situated, to give him possession
thereof during the redemption period, furnishing bond in an amount
equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this
Act. Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of
the Administrative Code, or of any other real property encumbered with a
mortgage duly registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk of the court
shall, upon the filing of such petition, collect the fees specified in
paragraph eleven of section one hundred and fourteen of Act Numbered
Four hundred and ninety-six, as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond,
order that a writ of possession issue, addressed to the sheriff of the
province in which the property is situated, who shall execute said order
immediately.
SECTION 8. The debtor may, in the proceedings in which possession was
requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession
cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the
provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure provided for in section one
hundred and twelve of Act Numbered Four hundred and ninety-six; and if it
finds the complaint of the debtor justified, it shall dispose in his favor of all
or part of the bond furnished by the person who obtained possession.
Either of the parties may appeal from the order of the judge in accordance
with section fourteen of Act Numbered Four hundred and ninety-six; but
the order of possession shall continue in effect during the pendency of the
appeal.

SECTION 9. When the property is redeemed after the purchaser has been
given possession, the redeemer shall be entitled to deduct from the price
of redemption any rentals that said purchaser may have collected in case
the property or any part thereof was rented; if the purchaser occupied the
property as his own dwelling, it being town property, or used it gainfully, it
being rural property, the redeemer may deduct from the price the interest
of one per centum per month provided for in section four hundred and
sixty-five of the Code of Civil Procedure.

from date of notice, the creditor rural bank may do so for them at their
expense: Provided, furthermore, That the applicant for homestead or free
patent has already made improvements on the land and the loan applied
for is to be used for further development of the same or for other
productive economic activities: Provided, finally, That the appraisal and
verification of the status of a land is a full responsibility of the rural bank
and any loan granted on any land which shall be found later to be within
the forest zone shall be for the sole account of the rural bank.

SECTION 10. This Act shall take effect on its approval.


The foreclosure of mortgage covering loans granted by rural banks and
Sec. 6. Loans or advances extended by rural banks organized and

executions of judgment thereon involving real properties levied upon by a

operated under this Act shall be primarily for the purpose of meeting the

sheriff shall be exempt from the publications in newspaper now required by

normal credit needs of farmers, fishermen or farm families owning or

law where the total amount of loan, excluding interest due and unpaid,

cultivating land dedicated to agricultural production as well as the normal

does not exceed One hundred thousand pesos (P100,000) or such amount

credit needs of cooperatives and merchants. In granting of loans, the rural

as the Monetary Board may prescribe as may be warranted by prevailing

bank shall give preference to the application of farmers and merchant

economic conditions. It shall be sufficient publication in such cases if the

whose cash requirements are small.

notices of foreclosure and execution of judgment are posted in the most


conspicuous area of the municipal building, the municipal public market,

Loans may be granted by rural banks on the security of lands without

the rural bank, the barangay hall, the barangay public market, if any,

Torrens Title where the owner of private property can show five (5) years

where the land mortgaged is situated during the period of sixty (60) days

on more peaceful, continuous and uninterrupted possession in concept of

immediately preceding the public auction or execution of judgment. Proof

owner; or of portions of friar land estates or other lands administered by

of publication as required herein shall be accomplished by an affidavit of

the Bureau of Lands that are covered by sales contracts and the purchase

the sheriff or officer conducting the foreclosure sale or execution of

have paid at least five (5) years installment thereon, without the necessity

judgment and shall be attached with the records of the case: Provided,

of prior approval and consent by the Director of lands; or of portions of

That when a homestead or free patent is foreclosed, the homesteader or

other estates under the administration of the Department of Agrarian

free patent holder, as well as his heirs shall have the right to redeem the

Reform or other government agency which are likewise covered by sales

same within one (1) year from the date of the registration of the

contracts and the purchasers have paid at least five (5) years installment

foreclosure in the case of land covered by a Torrens Title: Provided, finally,

thereon, without the necessity of prior approval and consent of the

That in any case, borrowers, especially those who are mere tenants, need

Department of Agrarian Reform or corresponding government agency; or of

only to secure their loans with the procedure corresponding to their share.

homesteads or free patent lands pending the issuance of titles but already
approved, are issued, the provisions of any law or regulations to the

A rural bank shall be allowed to foreclose lands mortgaged to it: Provided,

contrary notwithstanding: Provided, That when the corresponding titles are

That said lands shall be covered under Republic Act No. 6657.

issued, the same shall be delivered to the Register of Deeds of the


province where such lands are situated to the annotation of the
encumbrance: Provided, further, That in the case of lands pending
homestead of free patent titles, copies of notices for the presentation of
the final proof shall also be furnished the creditor rural bank and, if the
borrower applicants fail to present the final proof within thirty (30) days

Sec. 18. Exemption from Publication Requirement. The foreclosure of


mortgage covering loans granted by thrift banks and executions of
judgments thereon involving real properties and levied upon by a sheriff
shall be exempt from publication requirements where the total amount of
the loan, excluding interest due and unpaid, does not exceed One hundred
thousand pesos (P100,000) or such amount as the Monetary Board may

prescribe, as may be warranted by the prevailing economic conditions and


by the nature of service of customers served by each category of the thrift
bank. It shall be sufficient publication in such cases if the notice of
foreclosure and execution of judgment are posted in the conspicuous area
of a thrift bank's premises, municipal building, the municipal public market,
the barangay hall, and the barangay public market, if there be any, where
the land mortgaged is situated within a period of sixty (60) days
immediately preceding the public auction of the execution of judgment.
Proof of publication as required herein shall be accomplished by an
affidavit of the sheriff or officer conducting the foreclosure sale or
execution of judgment and shall be attached with the records of the case.
A thrift bank shall be allowed to foreclose lands mortgaged to it; Provided,
That said lands shall be covered under Republic Act No. 6657.
SECTION 47. Foreclosure of Real Estate Mortgage. In the event of
foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan or other credit accommodation
granted, the mortgagor or debtor whose real property has been sold for
the full or partial payment of his obligation shall have the right within one
year after the sale of the real estate, to redeem the property by paying the
amount due under the mortgage deed, with interest thereon at the rate
specified in the mortgage, and all the costs and expenses incurred by the
bank or institution from the sale and custody of said property less the
income derived therefrom. However, the purchaser at the auction sale
concerned whether in a judicial or extrajudicial foreclosure shall have the
right to enter upon and take possession of such property immediately after
the date of the confirmation of the auction sale and administer the same in
accordance with law. Any petition in court to enjoin or restrain the conduct
of foreclosure proceedings instituted pursuant to this provision shall be
given due course only upon the filing by the petitioner of a bond in an
amount fixed by the court conditioned that he will pay all the damages
which the bank may suffer by the enjoining or the restraint of the
foreclosure proceeding. Notwithstanding Act 3135, juridical persons whose
property is being sold pursuant to an extrajudicial foreclosure, shall have
the right to redeem the property in accordance with this provision until, but
not after, the registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be more than three (3)
months after foreclosure, whichever is earlier. Owners of property that has
been sold in a foreclosure sale prior to the effectivity of this Act shall retain
their redemption rights until their expiration. (78a)
ACT NO. 4118 AN ACT TO AMEND ACT NUMBERED THIRTY-ONE
HUNDRED AND THIRTY-FIVE, ENTITLED AN ACT TO REGULATE THE

SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR


ANNEXED TO REAL-ESTATE MORTGAGES.
SECTION 1. Section six of Act Numbered Thirty-one hundred and thirtyfive, entitled An Act to regulate the sale of property under special powers
inserted in or annexed to real-estate mortgages, is hereby amended to
read as follows:
Section 6. In all cases in which an extrajudicial sale is made under the
special power herein before referred to, the debtor, his successors in
interest or any judicial creditor or judgment creditor of said debtor, or any
person having a lien on the property subsequent to the mortgage or deed
of trust under which the property is sold, may redeem the same at any
time within the term of one year from and after the date of the sale; and
such redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code
of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act.
SECTION 2. The following three sections are hereby inserted after section
six of said Act Numbered Thirty-one hundred and thirty-five:
Section 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province or place
where the property or any part thereof is situated, to give him possession
thereof during the redemption period, furnishing bond in an amount
equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this
Act. Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of
the Administrative Code, or of any other real property encumbered with a
mortgage duly registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk of the court
shall, upon the filing of such petition, collect the fees specified in
paragraph eleven of section one hundred and fourteen of Act Numbered
Four hundred and ninety-six, as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond,
order that a writ of possession issue, addressed to the sheriff of the
province in which the property is situated, who shall execute said order
immediately.

Section 8. The debtor may, in the proceedings in which possession was


requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession
cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the
provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure provided for in section one
hundred and twelve of Act Numbered Four hundred and ninety-six; and if it
finds the complaint of the debtor justified, it shall dispose in his favor of all
or part of the bond furnished by the person who obtained possession.
Either of the parties may appeal from the order of the judge in accordance
with section fourteen of Act Numbered Four hundred and ninety-six; but
the order of possession shall continue in effect during the pendency of the
appeal.
Section 9. When the property is redeemed after the purchaser has been
given possession, the redeemer shall be entitled to deduct from the price
of redemption any rentals that said purchaser may have collected in case
the property or any part thereof was rented; if the purchaser occupied the
property as his own dwelling, it being town property, or used it gainfully, it
being rural property, the redeemer may deduct from the price the interest
of one per centum per month provided for in section four hundred and
sixty-five of the Code of Civil Procedure.

case of a natural person, and for a period of ten years from the date of the
approval of this Act or until the expiration of the term of the association or
partnership or of the corporate existence of the corporation, whichever
event comes first, in the case of juridical persons. Failure to renew a
license to engage in retail business shall be considered voluntary
retirement.
Nothing contained in this Act shall in any way impair or abridge whatever
rights may be granted to citizens and juridical entities of the United States
of America under Executive Agreement signed on July fourth, nineteen
undred and forty-six, between that country and the Republic of the
Philippines.
The license of any person who is not a citizen of the Philippines and of any
association, partnership or corporation not wholly owned by citizens of the
Philippines to engage in retail business, shall be forfeited for any violation
of any provision of laws on nationalization, economic control, weights and
measures, and labor and other laws relating to trade, commerce and
industry.

SECTION 3. The number of the present section seven of said Act


Numbered Thirty-one hundred and thirty-five is hereby changed, making it
section ten.

No license shall be issued to any person who is not a citizen of the

SECTION 4. This Act shall take effect on its approval

owned by citizens of the Philippines, actually engaged in the retail business

Philippines and to any association, partnership or corporation not wholly


to establish or open additional stores or branches for retail business.

Ra 1180 ACT TO REGULATE THE RETAIL BUSINESS


SEC. 2. Every person who is not a citizen of the Philippines and every
SECTlON 1. No person who is not a citizen of the Philippines and no

asosciaton, partnership or corporation not wholly owned by citizens of the

association, partnership, or corporation the capital of which is not wholly

Philippines, engaged in the retail business, shall, within ninety days after

owned by citizens of the Philippines, shall engage directly or indirectly in

the approval of this Act arid within the first fifteen days of January every

the retail business: Provided, That a person who is not a citizen of the

year thereafter, present for registration with the municipal or city treasurer

Philippines, or an association, partnership, or corporation not wholly owned

a verified statement containing the names, addresses, and nationality of

by citizens of the Philippines, which is actually engaged in the said

the owners, partners or stockholders, the nature of the retail business it is

business on May fifteen, nineteen hundred and fifty-four, shall be entitled

engaged in, the amount of its assets and liabilities, the names o.f its

to continue to engage therein, unless its license is forfeited in accordance

principal officials, and such other related data as may be required by the

herewith, until his death or voluntary retirement from said business, in the

Secretary of Commerce and Industry.

SEC. 3. In case of death of a person who is not a citizen of the Philippines


and who is entitled to engage in retail business under the provisions of this
Act, his or her heir, administrator or executor is entitled to continue with
such retail business only for the purpose of liquidation for a period of not
more than six months after such death.
SEC. 4. As used in this Act, the term retail business shall mean any act,
occupation or calling of habitually selling direct to the general public
merchandise, commodities or goods for consumption, but shall not include:
a manufacturer, processor, laborer or worker selling to the general public
the products manufactured, processed or produced by him if his capital
does not exceed five thousand pesos, or
a farmer or agriculturist selling the product of his farm.
SEC. 5. Every license to engage in retail business issued in favor of any
citizen of the Philippines or of any association, partnership or corporation
wholly owned by citizens of the Philippines shall be conclusive evidence of
ownership by such citizen, association, partnership or corporation of the
business for which the license was issued, except as against the
Government or the State.
SEC. 6. Any violation of this Act shall be punished imprisonment for not
less than three years and not re than five years and by a fine of not less
than three housand pesos and not more than five thousand pesos the case
of associations, partnerships or corporations, the penalty shall be imposed
upon its partners, president, directors, manager, and other officers
responsible for the violation. If the offender is not a citizen of the
Philippines, he shall be deported immediately after service of sentence. If
the offender is a public officer or employee, he shall, In addition to the
penalty prescribed herein, be dismissed from the public service,

REPUBLIC ACT NO. 8762


AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING
FOR THE PURPOSE REALING FOR THE PURPOSE REPUBLIC ACT NO.
1180, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines of Representatives of the Philippines in Congress assembled:
Section 1. Title This Act shall be known as the "Retail Trade
Liberalization Act of 2000."
Section 2. Declaration of Policy. It is the policy of the State to promote
consumer welfare in attracting promoting and welcoming productive
investment that will bring down price for the Filipino consumer, create
more jobs, promote tourism, assist small manufacturers, stimulate
economic growth and enable Philippine goods and services to become
globally competitive through the liberalization of the retail trade sector.
Pursuant to this policy, the Philippine retail industry is hereby liberalized to
encourage Filipino and competitive retail trade sector in the interest of
empower the Filipino consumer through lower prices, higher quality goods,
better services and wider choices.
Section 3. Definition. - As used in this Act.
(1) "Retail trade" shall mean any act, occupation or calling of
habitually selling direct to the general public merchandise,
commodities or good for consumption, but the restriction of this
law shall not apply to the following:
(a) Sales by manufacturer, processor, laborer, or worker, to
the general public the products manufactured, processed
or products by him if his capital dose not exceed One
hundred thousand pesos(100,000.00);
(b) Sales by a farmer or agriculturist selling the products of
his farm;

perpetually disenfranchised, and perpetually disqualified from holding any


public office.
SEC. 7. This Act shall take effect upon its approval.

(c) Sales in restaurant operations by a hotel owner or innkeeper irrespective of the amount capital: provided, that
the restaurant is incidental to the hotel business; and

(d) Sales which are limited only to products manufactured,


processed or assembled by a manufactured, processed or
assembled by a manufacturer though a single outlet,
irrespective of capitalization.
(2) "High-end or luxury goods" shall refer to goods which are not
necessary for life maintenance and whose demand is generated in
large part by the higher income groups. Luxury goods shall include,
but are not limited to products such as; jewelry, branded or
designer clothing and footwear, wearing apparel, leisure and
sporting goods, electronics and other personal effects.

case shall the investments for establishing a store in


vestments for establishing a store in Categories B and C be
less than the equivalent in Philippine pesos of Eight
hundred thirty thousand US dollars (US$830,000.00).
Category D Enterprises specializing in high-end or
luxury products with a paid-up capital of the equivalent in
Philippine Pesos of Two hundred fifty thousand US dollars
(US$250,000.00) per store may be wholly owned by
foreigners.

Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine
Citizenship. - A natural-born citizen of the Philippines who resides in the
Philippines shall be granted the same rights as Filipino citizens for
purposes of this Act.

The foreign investor shall be required to maintain in the Philippines the full
amount of the prescribed minimum capital unless the foreign investor has
notified the SEC and the DTI of its intention to repatriate its capital and
cease operations in the Philippines. The actual use in Philippine operations
of the inwardly remitted minimum capital requirement shall be monitored
by the SEC.

Section 5. Foreign Equity Participation. - Foreign-owned partnerships,


associations and corporation formed and organized under the laws of the
Philippines may, upon registration with the Securities and Exchange
Commission (SEC) and the Department of Trade and Industry (DTI), or in
case of foreign owned single proprietorships, with the DTI, Engage or
invest in the retail trade business, subject to the following categories.

Failure to maintain the full amount of the prescribed minimum capital prior
to notification of the SEC and the DTI, shall subject the foreign investor to
penalties or restrictions on any future trading activities/business in the
Philippines.

Category A Enterprises with paid-up capital of the


equivalent in Philippine Peso of the than Two million five
hundred thousand US dollars (US$2,500,000.00) shall be
reserved exclusively for Filipino citizens and corporations
wholly owned by Filipino citizens.
Category B Enterprises with a minimum paid-up capital
of the equivalent in Philippine Pesos of two million five
hundred thousand US dollar (US$2,500,000.00) but less
than Seven million five hundred thousand US dollars
(US$7,500,000.00) may be wholly owned by foreigners
except for the first two (2) years after the effectivity of this
Act wherein foreign participation shall be limited to not
more than sixty percent (60%) of total equity.
Category C Enterprises with a paid-up capital of the
equivalent in Philippine Pesos of Seven million five hundred
thousand US dollars (US$7,500,000.00), or more may be
wholly owned by foreigners: Provided, however, That in no

Foreign retail stores shall secure a certification from the Bangko Sentral ng
Pilipinas (BSP) and the DTI, which will verify or confirm inward remittance
of the minimum required capital investments.
Section 6. Foreign Investors Acquiring Shares of Stock of Local Retailers.
- Foreign investors acquiring shares from existing retail stores whether or
not publicly listed whose net worth is in the excess of the peso equivalent
of Two million five hundred thousand US dollars (US$2,500,000.00) may
purchase only up to a maximum of sixty percent (60%) of the equity
thereof within the first two (2) years from the effectivity of this Act and
thereafter, they may acquire the remaining percentage consistent with the
allowable foreign participation as herein provided.
Section 7. Public Offering of Shares of Stock. All retail trade enterprises
under Categories B and C in which foreign ownership exceeds eighty
percent (80%) of equity shall offer a minimum of thirty percent (30%) of
their equity to the public through any stock exchange in the Philippine
within eight (8) years from their start of operations.

Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be


allowed to engage in retail trade in the Philippine unless all the following
qualifications are met:
(a) A minimum of Two hundred million US dollar
(US$200,000,000.00) net worth in its parent corporation for
Categories B and C, and Fifty million US dollar (US$50,000,000.00)
net worth in its parent corporation for category D;
(b) (5) retailing branches or franchises in operation anywhere
around the word unless such retailer has at least one (1) store
capitalized at a minimum of Twenty-five million US dollars
(US$25,000,000.00);
(c) Five (5)-year track record in retailing; and
(d) Only nationals from, or juridical entities formed or incorporated
in Countries which allow the entry of Filipino retailers shall be
allowed to engage in retail trade in the Philippines.
The DTI is hereby authorized to pre-qualify all foreign retailers, subject to
the provisions of this Act, before they are allowed to conduct business in
the Philippine.
The DTI shall keep a record of Qualified foreign retailers who may, upon
compliance with law, establish retail stores in the Philippine. It shall ensure
that parent retail trading company of the foreign investor complies with the
qualifications on capitalization and track record prescribed in this section
The Inter- Agency Committee on Tariff and Related Matters Authority
(NEDA) Board shall formulate and regularly update a list of foreign retailers
of high-end or luxury goods and render an annual report on the same to
Congress.
Section 9. Promotion of Locally Manufactured Products. - For ten (10) year
after the effectivity of this Act, at least thirty percent (30%) of the
aggregate cost of the stock inventory of foreign retailers falling under
Categories B and C and ten percent (10%) for category D shall be made in
the Philippines.
Section 10. Prohibited Activities of Qualified Foreign Retailers. Qualified
foreign retailers shall not be allowed to engage in certain retailing activities
outside their accredited stores through the use of mobile or rolling stores

or carts, the use of sales representatives, door-to-door selling, restaurants


and sari-sari stores and such other similar retailing activities: Provided,
That a detailed list of prohibited activities shall hereafter be formulated by
the DTI
Section 11. Implementing Agency: Rule and Regulations. The
monitoring and regulation of foreign sole proprietorships, partnerships,
associations or corporations allowed to engage in retail trade shall be the
responsibility of the DTI. This shall include resolution of conflicts.
The DTI, in coordination with the SEC, the NEDA and the BSP, shall
formulate and issue the implementing rules and regulation necessary to
implement this Act within ninety (90) days after its approval.
Section 12. Penalty Clause. - Any person who shall be Found guilty of
Violation of any provision of this Act shall be punished by imprisonment of
not less that six (2) years and one (1) day but not more than eight (8)
years, and a fine of not less than One million pesos
(P1,000,000.00) but not more that Twenty million pesos (P20,000,000.00)
In the case of associations, partnerships or corporations, the penalty shall
be imposed upon its partners, president, directors, manager and other
officers responsible for the violation. If the offender is not a citizen of the
Philippines he shall be deported immediately after service of sentence. If
the Filipino of fender is a public officer or employee, he shall, in addition to
the penalty prescribed herein, suffer dismissal and permanent
disqualification from public office
Section 13. Repealing Clause. Republic Act No. 1180, as amended, is
hereby repealed. Republic Act No. 3018, as amended, and all other laws,
executive orders, rules and regulations or parts thereof inconsistent with
this Act are repealed or modified accordingly.
Section 14. Separability Clause. If any provisions of this Act shall be held
unconstitutional, the other provisions not otherwise affected thereby shall
remain in force and effect.
Section 15. Effectivity. This act shall take effect fifteen (150 days after
its approval and publication in at least two (2) newspapers of general
circulation in the Philippines.
Approved: March 07, 2000

(SGD.) JOSEPH E. ESTRADA


President of the Philippines
COMMONWEALTH ACT No. 108
AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE
NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR
PRIVILEGES
Be it enacted by the National Assembly of the Philippines
Section 1. Penalty In all cases in which any constitutional or legal
provisions requires Philippine or any other specific citizenship as a requisite
for the exercise or enjoyment of a right, franchise or privilege, any citizen
of the Philippines or of any other specific country who allows his name or
citizenship to be used for the purpose of evading such provision, and any
alien or foreigner profiting thereby, shall be punished by imprisonment for
not less than five nor more than fifteen years, and by a fine of not less than
the value of the right franchise or privilege, which is enjoyed or acquired in
violation of the provisions hereof but in no case less than five thousand
pesos.
The fact that the citizen of the Philippines or of any specific country
charged with a violation of this Act had, at the time of the acquisition of his
holdings in the corporations or associations referred to in section two of
this Act, no real or personal property, credit or other assets the value of
which shall at least be equivalent to said holdings, shall be evidence of a
violation of this Act.1
Section 2. Simulation of minimum capital stock In all cases in which a
constitutional or legal provision requires that, in order that a corporation or
association may exercise or enjoy a right, franchise or privilege, not less
than a certain per centum of its capital must be owned by citizens of the
Philippines or of any other specific country, it shall be unlawful to falsely
simulate the existence of such minimum stock or capital as owned by such
citizens, for the purpose of evading said provision. The president or
managers and directors or trustees of corporations or associations
convicted of a violation of this section shall be punished by imprisonment
of not less than five nor more than fifteen years, and by a fine not less than
the value of the right, franchise or privilege, enjoyed or acquired in
violation of the provisions hereof but in no case less than five thousand
pesos.2
Section 2-A. Unlawful use, Exploitation or enjoyment Any person,
corporation, or association which, having in its name or under its control, a
right, franchise, privilege, property or business, the exercise or enjoyment
of which is expressly reserved by the Constitution or the laws to citizens of
the Philippines or of any other specific country, or to corporations or

associations at least sixty per centum of the capital of which is owned by


such citizens, permits or allows the use, exploitation or enjoyment thereof
by a person, corporation or association not possessing the requisites
prescribed by a the Constitution or the laws of the Philippines; or leases, or
in any other way, transfers or conveys said right, franchise, privilege,
property or business to a person, corporation or association not otherwise
qualified under the Constitution, or the provisions of the existing laws; or in
any manner permits or allows any person, not possessing the qualifications
required by the Constitution, or existing laws to acquire, use, exploit or
enjoy a right, franchise, privilege, property or business, the exercise and
enjoyment of which are expressly reserved by the Constitution or existing
laws to citizens of the Philippines or of any other specific country, to
intervene in the management, operation, administration or control thereof,
whether as an officer, employee or laborer therein with or without
remuneration except technical personnel whose employment may be
specifically authorized by the Secretary of Justice, and any person who
knowingly aids, assists or abets in the planning consummation or
perpetration of any of the acts herein above enumerated shall be punished
by imprisonment for not less than five nor more than fifteen years and by a
fine of not less than the value of the right, franchise or privilege enjoyed or
acquired in violation of the provisions hereof but in no case less than five
thousand pesos: Provided, however, That the president, managers or
persons in charge of corporations, associations or partnerships violating
the provisions of this section shall be criminally liable in lieu thereof:
Provided, further, That any person, corporation or association shall, in
addition to the penalty imposed herein, forfeit such right, franchise,
privilege, and the property or business enjoyed or acquired in violation of
the provisions of this Act: And provided, finally, That the election of aliens
as members of the board of directors or governing body of corporations or
associations engaging in partially nationalized activities shall be allowed in
proportion to their allowable participation or share in the capital of such
entities.3
Section 2-B. Any violation of the provisions of this Act by the spouse of
any public official, if both live together, shall be cause for the dismissal of
such public official. 4itc@lawphil
Section 2-C. The exercise, possession or control by a Filipino citizen
having a common-law relationship with an alien of a right, privilege,
property or business, the exercise or enjoyment of which is expressly
reserved by the Constitution or the laws to citizens of the Philippines, shall
constitute a prima facie evidence of violation of the provisions of Section 2A hereof.5
Section 3. Any corporation or association violating any of the provisions of
this Act shall, upon proper court proceedings, be dissolved.
Section 3-A. Reward to informer. In case of conviction under the
provisions of this Act, twenty-five per centum of any fine imposed shall
accrue to the benefit of the informer who furnishes to the Government

original information leading to said conviction and who shall be ascertained


and named in the judgment of the court. If the informer is a dummy, who
shall voluntarily take the initiative of reporting to the proper authorities
any violation of the provisions of this Act and assist in the prosecution,
resulting in the conviction of any person or corporation profiting thereby or
involved therein, he shall be entitled to the reward hereof in the sum
equivalent to twenty-five per centum of the fine actually paid to or
received by the Government, and shall be exempted from the penal
liabilities provided for in this Act. 6
Section 4. This Act shall take effect upon its approval.
Republic Act No. 7042

June 13, 1991

AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE


PROCEDURES FOR REGISTERING ENTERPRISES DOING BUSINESS IN
THE PHILIPPINES, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::
Section 1. Title. - This Act shall be known as the, "Foreign Investments
Act of 1991".
Section 2. Declaration of Policy. - It is the policy of the State to attract,
promote and welcome productive investments from foreign individuals,
partnerships, corporations, and governments, including their political
subdivisions, in activities which significantly contribute to national
industrialization and socioeconomic development to the extent that foreign
investment is allowed in such activity by the Constitution and relevant
laws. Foreign investments shall be encouraged in enterprises that
significantly expand livelihood and employment opportunities for Filipinos;
enhance economic value of farm products; promote the welfare of Filipino
consumers; expand the scope, quality and volume of exports and their
access to foreign markets; and/or transfer relevant technologies in
agriculture, industry and support services. Foreign investments shall be
welcome as a supplement to Filipino capital and technology in those
enterprises serving mainly the domestic market.
As a general rule, there are no restrictions on extent of foreign ownership
of export enterprises. In domestic market enterprises, foreigners can invest
as much as one hundred percent (100%) equity except in areas included in
the negative list. Foreign owned firms catering mainly to the domestic
market shall be encouraged to undertake measures that will gradually
increase Filipino participation in their businesses by taking in Filipino

partners, electing Filipinos to the board of directors, implementing transfer


of technology to Filipinos, generating more employment for the economy
and enhancing skills of Filipino workers.
Section 3. Definitions. - As used in this Act:
a) The term "Philippine national" shall mean a citizen of the
Philippines or a domestic partnership or association wholly owned
by citizens of the Philippines; or a corporation organized under the
laws of the Philippines of which at least sixty percent (60%) of the
capital stock outstanding and entitled to vote is owned and held by
citizens of the Philippines; or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a
Philippine national and at least sixty (60%) of the fund will accrue
to the benefit of the Philippine nationals: Provided, That where a
corporation and its non-Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise,
at least sixty percent (60%) of the capital stocks outstanding and
entitled to vote of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the
members of the Board of Directors of both corporations must be
citizens of the Philippines, in order that the corporations shall be
considered a Philippine national;
b) The term "investment" shall mean equity participation in any
enterprise organized or existing under the laws of the Philippines;
c) The term "foreign investment" shall mean as equity investment
made by a non-Philippine national in the form of foreign exchange
and/or other assets actually transferred to the Philippines and duly
registered with the Central Bank which shall assess and appraise
the value of such assets other than foreign exchange;
d) The praise "doing business" shall include soliciting orders,
service contracts, opening offices, whether called "liaison" offices
or branches; appointing representatives or distributors domiciled in
the Philippines or who in any calendar year stay in the country for
a period or periods totalling one hundred eighty (180) days or
more; participating in the management, supervision or control of
any domestic business, firm, entity or corporation in the
Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate to that
extent the performance of acts or works, or the exercise of some of
the functions normally incident to, and in progressive prosecution

of, commercial gain or of the purpose and object of the business


organization: Provided, however, That the phrase "doing business:
shall not be deemed to include mere investment as a shareholder
by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; nor having
a nominee director or officer to represent its interests in such
corporation; nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own
name and for its own account;
e) The term "export enterprise" shall mean an enterprise which
produces goods for sale, or renders services to the domestic
market entirely or if exporting a portion of its output fails to
consistently export at least sixty percent (60%) thereof; and
g) The term "Foreign Investments Negative List" or "Negative List"
shall mean a list of areas of economic activity whose foreign
ownership is limited to a maximum of forty ownership is limited to
a maximum of forty percent (40%) of the equity capital of the
enterprise engaged therein.
Section 4. Scope. - This Act shall not apply to banking and other financial
institutions which are governed and regulated by the General Banking Act
and other laws under the supervision of the Central Bank.
Section 5. Registration of Investments of Non-Philippine
Nationals. - Without need of prior approval, a non-Philippine national, as
that term is defined in Section 3 a), and not otherwise disqualified by law
may upon registration with the Securities and Exchange Commission (SEC),
or with the Bureau of Trade Regulation and Consumer Protection (BTRCP) of
the Department of Trade and Industry in the case of single proprietorships,
do business as defined in Section 3 (d) of this Act or invest in a domestic
enterprise up to one hundred percent (100%) of its capital, unless
participation of non-Philippine nationals in the enterprise is prohibited or
limited to a smaller percentage by existing law and/or limited to a smaller
percentage by existing law and/or under the provisions of this Act. The SEC
or BTRCP, as the case may be, shall not impose any limitations on the
extent of foreign ownership in an enterprise additional to those provided in
this Act: Provided, however, That any enterprise seeking to avail of
incentives under the Omnibus Investment Code of 1987 must apply for
registration with the Board of Investments (BOI), which shall process such
application for registration in accordance with the criteria for evaluation
prescribed in said Code: Provided, finally, That a non-Philippine national
intending to engage in the same line of business as an existing joint

venture in his application for registration with SEC. During the transitory
period as provided in Section 15 hereof, SEC shall disallow registration of
the applying non-Philippine national if the existing joint venture enterprise,
particularly the Filipino partners therein, can reasonably prove they are
capable to make the investment needed for they are competing applicant.
Upon effectivity of this Act, SEC shall effect registration of any enterprise
applying under this Act within fifteen (15) days upon submission of
completed requirements.
Section 6. Foreign Investments in Export Enterprises. - Foreign
investment in export enterprises whose products and services do not fall
within Lists A and B of the Foreign Investment Negative List provided under
Section 8 hereof is allowed up to one hundred percent (100%) ownership.
Export enterprises which are non-Philippine nationals shall register with
BOI and submit the reports that may be required to ensure continuing
compliance of the export enterprise with its export requirement. BOI shall
advise SEC or BTRCP, as the case may be, of any export enterprise that
fails to meet the export ratio requirement. The SEC or BTRCP shall
thereupon order the non-complying export enterprise to reduce its sales to
the domestic market to not more than forty percent (40%) of its total
production; failure to comply with such SEC or BTRCP order, without
justifiable reason, shall subject the enterprise to cancellation of SEC or
BTRCP registration, and/or the penalties provided in Section 14 hereof.
Section 7. Foreign Investments in Domestic Market Enterprises. Non-Philippine nationals may own up to one hundred percent (100%) of
domestic market enterprises unless foreign ownership therein is prohibited
or limited by existing law or the Foreign Investment Negative List under
Section 8 hereof.
A domestic market enterprise may change its status to export enterprise if
over a three (3) year period it consistently exports in each year thereof
sixty per cent (60%) or more of its output.
Section 8. List of Investment Areas Reserved to Philippine
Nationals (Foreign Investment Negative List).- The Foreign
Investment Negative List shall have three (3) component lists: A, B, and C:
a) List A shall enumerate the areas of activities reserved to
Philippine nationals by mandate of the Constitution and specific
laws.

b) List B shall contain the areas of activities and enterprises


pursuant to law:
1) Which are defense-related activities, requiring prior
clearance and authorization from Department of National
Defense (DND) to engage in such activity, such as the
manufacture, repair, storage and/or distribution of
firearms, ammunition, lethal weapons, military ordnance,
explosives, pyrotechnics and similar materials; unless such
manufacturing or repair activity is specifically authorized,
with a substantial export component, to a non-Philippine
national by the Secretary of National Defense; or
2) Which have implications on public health and morals,
such as the manufacture and distribution of dangerous
drugs; all forms of gambling; nightclubs, bars, beerhouses,
dance halls; sauna and steambath houses and massage
clinics.
Small and medium-sized domestic market enterprises with
paid-in equity capital less than the equivalent of five
hundred thousand US dollars (US$500,000) are reserved to
Philippine nationals, unless they involve advanced
technology as determined by the Department of Science
and Technology. Export enterprises which utilize raw
materials from depleting natural resources, with paid-in
equity capital of less than the equivalent of five hundred
thousand US dollars (US$500,000) are likewise reserved to
Philippine nationals.
Amendments to List B may be made upon recommendation of the
Secretary of National Defense, or the Secretary of Health, or the
Secretary of Education, Culture and Sports, indorsed by the NEDA,
or upon recommendation motu propio of NEDA, approved by the
President, and promulgated by Presidential Proclamation.
c) List C shall contain the areas of investment in which existing
enterprises already serve adequately the needs of the economy
and the consumer and do not require further foreign investments,
as determined by NEDA applying the criteria provided in Section 9
of this Act, approved by the President and promulgated in a
Presidential Proclamation.

The Transitory Foreign Investment Negative List established in Sec.


15 hereof shall be replaced at the end of the transitory period by
the first Regular Negative List to the formulated and recommended
by the NEDA, following the process and criteria provided in Section
8 and 9 of this Act. The first Regular Negative List shall be
published not later than sixty (60) days before the end of the
transitory period provided in said section, and shall become
immediately effective at the end of the transitory period.
Subsequent Foreign Investment Negative Lists shall become
effective fifteen (15) days after publication in two (2) newspapers
of general circulation in the Philippines: Provided, however, That
each Foreign Investment Negative List shall be prospective in
operation and shall in no way affect foreign investments existing
on the date of its publication.
Amendments to List B and C after promulgation and publication of
the first Regular Foreign Investment Negative List at the end of the
transitory period shall not be made more often than once every
two (2) years.
Section 9. Determination of Areas of Investment for Inclusion in
List C of the Foreign Investment Negative List. - Upon petition by a
Philippine national engage therein, an area of investment may be
recommended by NEDA for inclusion in List C of the Foreign Investment
Negative List upon determining that it complies with all the following
criteria:
a) The industry is controlled by firms owned at least sixty percent
(60%) by Filipinos;
b) Industry capacity is ample to meet domestic demand;
c) Sufficient competition exists within the industry;
d) Industry products comply with Philippine standards of health and
safety or, in the absence of such, with international standards, and
are reasonably competitive in quality with similar products in the
same price range imported into the country;
e) Quantitative restrictions are not applied on imports of directly
competing products;

f) The leading firms of the industry substantially comply with


environmental standards; and

d) Characterized by strong backward and forward linkages with


most industries existing in the country, and

g) The prices of industry products are reasonable.

e) Generate substantial foreign exchange savings through import


substitution and collateral foreign exchange earnings through
export of part of the output that will result with the establishment,
expansion or development of the industry.

The petition shall be subjected to a public hearing at which affected parties


will have the opportunity to show whether the petitioner industry
adequately serves the economy and the consumer, in general, and meets
the above stated criteria in particular. NEDA may delegate evaluation of
the petition and conduct of the public hearing to any government agency
having cognizance of the petitioner industry. The delegated agency shall
make its evaluation report and recommendations to NEDA which retains
the right and sole responsibility to determine whether to recommend to the
President to promulgate the area of investment in List C of the Negative
List. An industry or area of investment included in List C of the Negative
List by Presidential Proclamation shall remain in the said List C for two (2)
years, without prejudice to re-inclusion upon new petition, and due
process.
Section 10. Strategic Industries. - Within eighteen (18) months after
the effectivity of this Act, the NEDA Board shall formulate and publish a list
of industries strategic to the development of the economy. The list shall
specify, as a matter of policy and not as a legal requirement, the desired
equity participation by Government and/or private Filipino investors in each
strategic industry. Said list of strategic industries, as well as the
corresponding desired equity participation of government and/or private
Filipino investors, may be amended by NEDA to reflect changes in
economic needs and policy directions of Government. The amended list of
strategic industries shall be published concurrently with publication of the
Foreign Investment Negative List.
The term "strategic industries" shall mean industries that are characterized
by all of the following:
a) Crucial to the accelerated industrialization of the country,
b) Require massive capital investments to achieve economies of
scale for efficient operations;
c) Require highly specialized or advanced technology which
necessitates technology transfer and proven production techniques
in operations;

Section 11. Compliance with Environmental Standards. - All


industrial enterprises regardless of nationality of ownership shall comply
with existing rules and regulations to protect and conserve the
environment and meet applicable environmental standards.
Section 12. Consistent Government Action. - No agency,
instrumentality or political subdivision of the Government shall take any
action on conflict with or which will nullify the provisions of this Act, or any
certificate or authority granted hereunder.
Section 13. Implementing Rules and Regulations. - NEDA, in
consultation with BOI, SEC and other government agencies concerned,
shall issue the rules and regulations to implement this Act within one
hundred and twenty (120) days after its effectivity. A copy of such rules
and regulations shall be furnished the Congress of the Republic of the
Philippines.
Section 14. Administrative Sanctions. - A person who violates any
provision of this Act or of the terms and conditions of registration or of the
rules and regulations issued pursuant thereto, or aids or abets in any
manner any violation shall be subject to a fine not exceeding One hundred
thousand pesos (P100,000).
If the offense is committed by a juridical entity, it shall be subject to a fine
in an amount not exceeding of 1% of total paid-in capital but not more
than Five million pesos (P5,000,000). The president and/or officials
responsible therefor shall also be subject to a fine not exceeding Two
hundred thousand pesos (P200,000).
In addition to the foregoing, any person, firm or juridical entity involved
shall be subject to forfeiture of all benefits granted under this Act.
SEC shall have the power to impose administrative sanctions as provided
herein for any violation of this Act or its implementing rules and
regulations.

Section 15. Transitory Provisions. - Prior to effectivity of the


implementing rules and regulations of this Act, the provisions of Book II of
Executive Order 226 and its implementing rules and regulations shall
remain in force.
During the initial transitory period of thirty-six (36) months after issuance
of the Rules and Regulations to implement this Act, the Transitory Foreign
Investment Negative List shall consist of the following:
A. List A:
1. All areas of investment in which foreign ownership is
limited by mandate of Constitution and specific laws.
B. List B:
1. Manufacture, repair, storage and/or distribution of
firearms, ammunitions, lethal weapons, military ordinance,
explosives, pyrotechnics and similar materials required by
law to be licensed by and under the continuing regulation
of the Department of National Defense; unless such
manufacturing or repair activity is specifically authorized
with a substantial export component, to a non-Philippine
national by the Secretary of National Defense;
2. Manufacture and distribution of dangerous drugs; all
forms of gambling; nightclubs, bars, beerhouses, dance
halls; sauna and steam bathhouses, massage clinic and
other like activities regulated by law because of risks they
may pose to public health and morals;
3. Small and medium-size domestic market enterprises
with paid-in equity capital or less than the equivalent of
US$500,000, unless they involve advanced technology as
determined by the Department of Science and Technology,
and
4. Export enterprises which utilize raw materials from
depleting natural resources, and with paid-in equity capital
of less than the equivalent US$500,000.
C. List C:

1. Import and wholesale activities not integrated with


production or manufacture of goods;
2. Services requiring a license or specific authorization, and
subject to continuing regulations by national government
agencies other than BOI and SEC which at the time of
effectivity of this Act are restricted to Philippine nationals
by existing administrative regulations and practice of the
regulatory agencies concerned: Provided, That after
effectivity of this Act, no other services shall be additionally
subjected to such restrictions on nationality of ownership
by the corresponding regulatory agencies, and such
restrictions once removed shall not be reimposed; and
3. Enterprises owned in the majority by a foreign licensor
and/or its affiliates for the assembly, processing or
manufacture of goods for the domestic market which are
being produced by a Philippine national as of the date of
effectivity of this Act under a technology, know-how and/or
brand name license from such licensor during the term of
the license agreement: Provided, That, the license is duly
registered with the Central Bank and/or the Technology
Transfer Board and is operatively in force as of the date of
effectivity of this Act.
NEDA shall make the enumeration as appropriate of the areas of the
investment covered in this Transitory Foreign Investment Negative List and
publish the Negative List in full at the same time as, or prior to, the
publication of the rules and regulations to implement this Act.
The areas of investment contained in List C above shall be reserved to
Philippine nationals only during the transitory period. The inclusion of any
of them in the regular Negative List will require determination by NEDA
after due public hearings that such inclusion is warranted under the criteria
set forth in Section 8 and 9 hereof.
Section 16. Repealing Clause. - Articles forty-four (44) to fifty-six (56) of
Book II of Executive Order No. 226 are hereby repealed.
All other laws or parts of laws inconsistent with the provisions of this Act
are hereby repealed or modified accordingly.

Section 17. Separability. - If any part or section of this Act is declared


unconstitutional for any reason whatsoever, such declaration shall not in
any way affect the other parts or sections of this Act.
Section 18. Effectivity. - This Act shall take effect fifteen (15) days after
approval and publication in two (2) newspaper of general circulation in the
Philippines.

itc-alf