ACT NO.
2137 THE WAREHOUSE A warehouseman shall be liable to any person
RECEIPTS LAW
I THE ISSUE OF WAREHOUSE RECEIPTS
Section 1. Persons who may issue receipts.
Warehouse receipts may be issued by any
warehouseman.
Sec. 2. Form of receipts; essential terms.
Warehouse receipts need not be in any
particular form but every such receipt must
embody within its written or printed terms:
(a) The location of the warehouse where the
goods are stored,
(b) The date of the issue of the receipt,
(c) The consecutive number of the receipt,
(d) A statement whether the goods received will
be delivered to the bearer, to a specified person
or to a specified person or his order,
(e) The rate of storage charges,
(f) A description of the goods or of the packages
containing them,
(g) The signature of the warehouseman which
may be made by his authorized agent,
(h) If the receipt is issued for goods of which the
warehouseman is owner, either solely or jointly
or in common with others, the fact of such
ownership, and
(i) A statement of the amount of advances made
and of liabilities incurred for which the
warehouseman claims a lien. If the precise
amount of such advances made or of such
liabilities incurred is, at the time of the issue of,
unknown to the warehouseman or to his agent
who issues it, a statement of the fact that
advances have been made or liabilities incurred
and the purpose thereof is sufficient.
injured thereby for all damages caused by the
omission from a negotiable receipt of any of the
terms herein required.
Sec. 3. Form of receipts. What terms may be
inserted. A warehouseman may insert in a
receipt issued by him any other terms and
conditions provided that such terms and
conditions shall not:
(a) Be contrary to the provisions of this Act.
(b) In any wise impair his obligation to exercise
that degree of care in the safe-keeping of the
goods entrusted to him which is reasonably
careful man would exercise in regard to similar
goods of his own.
Sec. 4. Definition of non-negotiable receipt. A
receipt in which it is stated that the goods
received will be delivered to the depositor or to
any other specified person, is a non-negotiable
receipt.
Sec. 5. Definition of negotiable receipt. A
receipt in which it is stated that the goods
received will be delivered to the bearer or to the
order of any person named in such receipt is a
negotiable receipt.
No provision shall be inserted in a negotiable
receipt that it is non-negotiable. Such provision,
if inserted shall be void.
Sec. 6. Duplicate receipts must be so marked.
When more than one negotiable receipt is issued
for the same goods, the word duplicate shall
be plainly placed upon the face of every such
receipt, except the first one issued. A
warehouseman shall be liable for all damages
caused by his failure so to do to any one who
purchased the subsequent receipt for value
supposing it to be an original, even though the
purchase be after the delivery of the goods by
the warehouseman to the holder of the original
receipt.
Sec. 7. Failure to mark non-negotiable. A
non-negotiable receipt shall have plainly placed
upon its face by the warehouseman issuing it
non-negotiable, or not negotiable. In case of (b) A person who is either himself entitled to
the warehousemans failure so to do, a holder of
the receipt who purchased it for value
supposing it to be negotiable, may, at his option,
treat such receipt as imposing upon the
warehouseman the same liabilities he would
have incurred had the receipt been negotiable.
This section shall not apply, however, to letters,
memoranda, or written acknowledgment of an
informal character.
II OBLIGATIONS AND RIGHTS OF
WAREHOUSEMEN UPON THEIR RECEIPTS
Sec. 8. Obligation of warehousemen to deliver.
A warehouseman, in the absence of some lawful
excuse provided by this Act, is bound to deliver
the goods upon a demand made either by the
holder of a receipt for the goods or by the
depositor; if such demand is accompanied with:
(a) An offer to satisfy the warehousemans lien;
(b) An offer to surrender the receipt, if
negotiable, with such indorsements as would be
necessary for the negotiation of the receipt; and
(c) A readiness and willingness to sign, when
the goods are delivered, an acknowledgment
that they have been delivered, if such signature
is requested by the warehouseman.
In case the warehouseman refuses or fails to
deliver the goods in compliance with a demand
by the holder or depositor so accompanied, the
burden shall be upon the warehouseman to
establish the existence of a lawful excuse for
such refusal.
Sec. 9. Justification of warehouseman in
delivering. A warehouseman is justified in
delivering the goods, subject to the provisions of
the three following sections, to one who is:
(a) The person lawfully entitled to the
possession of the goods, or his agent;
delivery by the terms of a non-negotiable receipt
issued for the goods, or who has written
authority from the person so entitled either
indorsed upon the receipt or written upon
another paper; or
(c) A person in possession of a negotiable receipt
by the terms of which the goods are deliverable
to him or order, or to bearer, or which has been
indorsed to him or in blank by the person to
whom delivery was promised by the terms of
the receipt or by his mediate or immediate
indorser.
Sec. 10. Warehousemans liability for
misdelivery. Where a warehouseman delivers
the goods to one who is not in fact lawfully
entitled to the possession of them, the
warehouseman shall be liable as for conversion
to all having a right of property or possession in
the goods if he delivered the goods otherwise
than as authorized by subdivisions (b) and (c) of
the preceding section, and though he delivered
the goods as authorized by said subdivisions, he
shall be so liable, if prior to such delivery he had
either:
(a) Been requested, by or on behalf of the person
lawfully entitled to a right of property or
possession in the goods, not to make such
deliver; or
(b) Had information that the delivery about to
be made was to one not lawfully entitled to the
possession of the goods.
Sec. 11. Negotiable receipt must be cancelled
when goods delivered. Except as provided in
section thirty-six, where a warehouseman
delivers goods for which he had issued a
negotiable receipt, the negotiation of which
would transfer the right to the possession of the
goods, and fails to take up and cancel the
receipt, he shall be liable to any one who
purchases for value in good faith such receipt,
for failure to deliver the goods to him, whether
such purchaser acquired title to the receipt
before or after the delivery of the goods by the
warehouseman.
Sec. 12. Negotiable receipts must be cancelled or
marked when part of goods delivered. Except
as provided in section thirty-six, where a
warehouseman delivers part of the goods for
which he had issued a negotiable receipt and
fails either to take up and cancel such receipt or
to place plainly upon it a statement of what
goods or packages have been delivered, he shall
be liable to any one who purchases for value in
good faith such receipt, for failure to deliver all
the goods specified in the receipt, whether such
purchaser acquired title to the receipt before or
after the delivery of any portion of the goods by
the warehouseman.
Sec. 13. Altered receipts. The alteration of a
receipt shall not excuse the warehouseman who
issued it from any liability if such alteration was:
(a) Immaterial,
(b) Authorized, or
(c) Made without fraudulent intent.
If the alteration was authorized, the
warehouseman shall be liable according to the
terms of the receipt as altered. If the alteration
was unauthorized but made without fraudulent
intent, the warehouseman shall be liable
according to the terms of the receipt as they
were before alteration.
Material and fraudulent alteration of a receipt
shall not excuse the warehouseman who issued
it from liability to deliver according to the terms
of the receipt as originally issued, the goods for
which it was issued but shall excuse him from
any other liability to the person who made the
alteration and to any person who took with
notice of the alteration. Any purchaser of the
receipt for value without notice of the alteration
shall acquire the same rights against the
warehouseman which such purchaser would
have acquired if the receipt had not been altered
at the time of purchase.
Sec. 14. Lost or destroyed receipts. Where a
negotiable receipt has been lost or destroyed, a
court of competent jurisdiction may order the
delivery of the goods upon satisfactory proof of
such loss or destruction and upon the giving of a
bond with sufficient sureties to be approved by
the court to protect the warehouseman from any
liability or expense, which he or any person
injured by such delivery may incur by reason of
the original receipt remaining outstanding. The
court may also in its discretion order the
payment of the warehousemans reasonable
costs and counsel fees.
The delivery of the goods under an order of the
court as provided in this section, shall not
relieve the warehouseman from liability to a
person to whom the negotiable receipt has been
or shall be negotiated for value without notice of
the proceedings or of the delivery of the goods.
Sec. 15. Effect of duplicate receipts. A receipt
upon the face of which the word duplicate is
plainly placed is a representation and warranty
by the warehouseman that such receipt is an
accurate copy of an original receipt properly
issued and uncanceled at the date of the issue of
the duplicate, but shall impose upon him no
other liability.
Sec. 16. Warehouseman cannot set up title in
himself . No title or right to the possession of
the goods, on the part of the warehouseman,
unless such title or right is derived directly or
indirectly from a transfer made by the depositor
at the time of or subsequent to the deposit for
storage, or from the warehousemans lien, shall
excuse the warehouseman from liability for
refusing to deliver the goods according to the
terms of the receipt.
Sec. 17. Interpleader of adverse claimants. If
more than one person claims the title or
possession of the goods, the warehouseman
may, either as a defense to an action brought
against him for non-delivery of the goods or as
an original suit, whichever is appropriate,
require all known claimants to interplead.
Sec. 18. Warehouseman has reasonable time to
determine validity of claims. If someone other
than the depositor or person claiming under him
has a claim to the title or possession of goods,
and the warehouseman has information of such
claim, the warehouseman shall be excused from
liability for refusing to deliver the goods, either
to the depositor or person claiming under him
or to the adverse claimant until the
warehouseman has had a reasonable time to
ascertain the validity of the adverse claim or to
bring legal proceedings to compel claimants to
interplead.
Sec. 19. Adverse title is no defense except as
above provided. Except as provided in the two
preceding sections and in sections nine and
thirty-six, no right or title of a third person shall
be a defense to an action brought by the
depositor or person claiming under him against
the warehouseman for failure to deliver the
goods according to the terms of the receipt.
Sec. 20. Liability for non-existence or
misdescription of goods. A warehouseman
shall be liable to the holder of a receipt for
damages caused by the non-existence of the
goods or by the failure of the goods to
correspond with the description thereof in the
receipt at the time of its issue. If, however, the
goods are described in a receipt merely by a
statement of marks or labels upon them or upon
packages containing them or by a statement that
the goods are said to be goods of a certain kind
or that the packages containing the goods are
said to contain goods of a certain kind or by
words of like purport, such statements, if true,
shall not make liable the warehouseman issuing
the receipt, although the goods are not of the
kind which the marks or labels upon them
indicate or of the kind they were said to be by
the depositor.
Sec. 21. Liability for care of goods. A
warehouseman shall be liable for any loss or
injury to the goods caused by his failure to
exercise such care in regard to them as
reasonably careful owner of similar goods
would exercise, but he shall not be liable, in the
absence of an agreement to the contrary, for any
loss or injury to the goods which could not have
been avoided by the exercise of such care.
Sec. 22. Goods must be kept separate. Except
as provided in the following section, a
warehouseman shall keep the goods so far
separate from goods of other depositors and
from other goods of the same depositor for
which a separate receipt has been issued, as to
permit at all times the identification and
redelivery of the goods deposited.
Sec. 23. Fungible goods may be commingled if
warehouseman authorized. If authorized by
agreement or by custom, a warehouseman may
mingle fungible goods with other goods of the
same kind and grade. In such case, the various
depositors of the mingled goods shall own the
entire mass in common and each depositor shall
be entitled to such portion thereof as the amount
deposited by him bears to the whole.
Sec. 24. Liability of warehouseman to depositors
of commingled goods. The warehouseman
shall be severally liable to each depositor for the
care and redelivery of his share of such mass to
the same extent and under the same
circumstances as if the goods had been kept
separate.
Sec. 25. Attachment or levy upon goods for
which a negotiable receipt has been issued. If
goods are delivered to a warehouseman by the
owner or by a person whose act in conveying
the title to them to a purchaser in good faith for
value would bind the owner, and a negotiable
receipt is issued for them, they can not
thereafter, while in the possession of the
warehouseman, be attached by garnishment or
otherwise, or be levied upon under an execution
unless the receipt be first surrendered to the
warehouseman or its negotiation enjoined. The
warehouseman shall in no case be compelled to
deliver up the actual possession of the goods
until the receipt is surrendered to him or
impounded by the court.
Sec. 26. Creditors remedies to reach negotiable
receipts. A creditor whose debtor is the owner
of a negotiable receipt shall be entitled to such
aid from courts of appropriate jurisdiction, by
injunction and otherwise, in attaching such
receipt or in satisfying the claim by means
thereof as is allowed at law or in equity in these
islands in regard to property which can not
readily be attached or levied upon by ordinary
legal process.
Sec. 27. What claims are included in the
warehousemans lien. Subject to the provisions
of section thirty, a warehouseman shall have a
lien on goods deposited or on the proceeds
thereof in his hands, for all lawful charges for
storage and preservation of the goods; also for
all lawful claims for money advanced, interest,
insurance, transportation, labor, weighing,
coopering and other charges and expenses in
relation to such goods, also for all reasonable
charges and expenses for notice, and
advertisements of sale, and for sale of the goods
where default had been made in satisfying the
warehousemans lien.
Sec. 28. Against what property the lien may be
enforced. Subject to the provisions of section
thirty, a warehousemans lien may be enforced:
(a) Against all goods, whenever deposited,
belonging to the person who is liable as debtor
for the claims in regard to which the lien is
asserted, and
(b) Against all goods belonging to others which
have been deposited at any time by the person
who is liable as debtor for the claims in regard to
which the lien is asserted if such person had
been so entrusted with the possession of goods
that a pledge of the same by him at the time of
the deposit to one who took the goods in good
faith for value would have been valid.
Sec. 29. How the lien may be lost. A
warehouseman loses his lien upon goods:
(a) By surrendering possession thereof, or
(b) By refusing to deliver the goods when a
demand is made with which he is bound to
comply under the provisions of this Act.
Sec. 30. Negotiable receipt must state charges for
which the lien is claimed. If a negotiable
receipt is issued for goods, the warehouseman
shall have no lien thereon except for charges for
storage of goods subsequent to the date of the
receipt unless the receipt expressly enumerated
other charges for which a lien is claimed. In such
case, there shall be a lien for the charges
enumerated so far as they are within the terms
of section twenty-seven although the amount of
the charges so enumerated is not stated in the
receipt.
Sec. 31. Warehouseman need not deliver until
lien is satisfied. A warehouseman having a lien
valid against the person demanding the goods
may refuse to deliver the goods to him until the
lien is satisfied.
Sec. 32. Warehousemans lien does not preclude
other remedies. Whether a warehouseman has
or has not a lien upon the goods, he is entitled to
all remedies allowed by law to a creditor against
a debtor for the collection from the depositor of
all charges and advances which the depositor
has expressly or impliedly contracted with the
warehouseman to pay.
Sec. 33. Satisfaction of lien by sale. A
warehousemans lien for a claim which has
become due may be satisfied as follows:
(a) An itemized statement of the
warehousemans claim, showing the sum due at
the time of the notice and the date or dates when
it becomes due,
(b) A brief description of the goods against
which the lien exists,
(c) A demand that the amount of the claim as
stated in the notice of such further claim as shall
accrue, shall be paid on or before a day
mentioned, not less than ten days from the
delivery of the notice if it is personally
delivered, or from the time when the notice shall
reach its destination, according to the due
course of post, if the notice is sent by mail,
(d) A statement that unless the claim is paid
within the time specified, the goods will be
advertised for sale and sold by auction at a
specified time and place.
In accordance with the terms of a notice so
given, a sale of the goods by auction may be had
to satisfy any valid claim of the warehouseman
for which he has a lien on the goods. The sale
shall be had in the place where the lien was
acquired, or, if such place is manifestly
unsuitable for the purpose of the claim specified
in the notice to the depositor has elapsed, and
advertisement of the sale, describing the goods
to be sold, and stating the name of the owner or
person on whose account the goods are held,
and the time and place of the sale, shall be
published once a week for two consecutive
weeks in a newspaper published in the place
where such sale is to be held. The sale shall not
be held less than fifteen days from the time of
the first publication. If there is no newspaper
published in such place, the advertisement shall
be posted at least ten days before such sale in
not less than six conspicuous places therein.
From the proceeds of such sale, the
warehouseman shall satisfy his lien including
the reasonable charges of notice, advertisement
and sale. The balance, if any, of such proceeds
shall be held by the warehouseman and
delivered on demand to the person to whom he
would have been bound to deliver or justified in
delivering goods.
At any time before the goods are so sold, any
person claiming a right of property or
possession therein may pay the warehouseman
the amount necessary to satisfy his lien and to
pay the reasonable expenses and liabilities
incurred in serving notices and advertising and
preparing for the sale up to the time of such
payment. The warehouseman shall deliver the
goods to the person making payment if he is a
person entitled, under the provision of this Act,
to the possession of the goods on payment of
charges thereon. Otherwise, the warehouseman
shall retain the possession of the goods
according to the terms of the original contract of
deposit.
Sec. 34. Perishable and hazardous goods. If
goods are of a perishable nature, or by keeping
will deteriorate greatly in value, or, by their
order, leakage, inflammability, or explosive
nature, will be liable to injure other property ,
the warehouseman may give such notice to the
owner or to the person in whose names the
goods are stored, as is reasonable and possible
under the circumstances, to satisfy the lien upon
such goods and to remove them from the
warehouse and in the event of the failure of such
person to satisfy the lien and to receive the
goods within the time so specified, the
warehouseman may sell the goods at public or
private sale without advertising. If the
warehouseman, after a reasonable effort, is
unable to sell such goods, he may dispose of
them in any lawful manner and shall incur no
liability by reason thereof.
The proceeds of any sale made under the terms
of this section shall be disposed of in the same
way as the proceeds of sales made under the
terms of the preceding section.
Sec. 35. Other methods of enforcing lien. The
remedy for enforcing a lien herein provided
does not preclude any other remedies allowed
by law for the enforcement of a lien against
personal property nor bar the right to recover so
much of the warehousemans claim as shall not
be paid by the proceeds of the sale of the
property.
Sec. 36. Effect of sale. After goods have been
lawfully sold to satisfy a warehousemans lien,
or have been lawfully sold or disposed of
because of their perishable or hazardous nature,
the warehouseman shall not thereafter be liable
for failure to deliver the goods to the depositor
or owner of the goods or to a holder of the
receipt given for the goods when they were
deposited, even if such receipt be negotiable.
III NEGOTIATION AND TRANSFER OF
RECEIPTS
Sec. 37. Negotiation of negotiable receipt of
delivery. A negotiable receipt may be
negotiated by delivery:
(a) Where, by terms of the receipt, the
warehouseman undertakes to deliver the goods
to the bearer, or
(b) Where, by the terms of the receipt, the
warehouseman undertakes to deliver the goods
to the order of a specified person, and such
person or a subsequent indorsee of the receipt
has indorsed it in blank or to bearer.
Where, by the terms of a negotiable receipt, the
goods are deliverable to bearer or where a
negotiable receipt has been indorsed in blank or
to bearer, any holder may indorse the same to
himself or to any other specified person, and, in
such case, the receipt shall thereafter be
negotiated only by the indorsement of such
indorsee.
Sec. 38. Negotiation of negotiable receipt by
indorsement. A negotiable receipt may be
negotiated by the indorsement of the person to
whose order the goods are, by the terms of the
receipt, deliverable. Such indorsement may be in
blank, to bearer or to a specified person. If
indorsed to a specified person, it may be again
negotiated by the indorsement of such person in
blank, to bearer or to another specified person.
Subsequent negotiation may be made in like
manner.
Sec. 39. Transfer of receipt. A receipt which is
not in such form that it can be negotiated by
delivery may be transferred by the holder by
delivery to a purchaser or donee.
A non-negotiable receipt can not be negotiated,
and the indorsement of such a receipt gives the
transferee no additional right.
Sec. 40. Who may negotiate a receipt. A
negotiable receipt may be negotiated:
(a) By the owner thereof, or
(b) By any person to whom the possession or
custody of the receipt has been entrusted by the
owner, if, by the terms of the receipt, the
warehouseman undertakes to deliver the goods
to the order of the person to whom the
possession or custody of the receipt has been
entrusted, or if, at the time of such entrusting,
the receipt is in such form that it may be
negotiated by delivery.
Sec. 41. Rights of person to whom a receipt has
been negotiated. A person to whom a
negotiable receipt has been duly negotiated
acquires thereby:
(a) Such title to the goods as the person
negotiating the receipt to him had or had ability
to convey to a purchaser in good faith for value,
and also such title to the goods as the depositor
or person to whose order the goods were to be
delivered by the terms of the receipt had or had
ability to convey to a purchaser in good faith for
value, and
(b) The direct obligation of the warehouseman
to hold possession of the goods for him
according to the terms of the receipt as fully as if
the warehouseman and contracted directly with
him.
Sec. 42. Rights of person to whom receipt has
been transferred. A person to whom a receipt
has been transferred but not negotiated acquires
thereby, as against the transferor, the title of the
goods subject to the terms of any agreement
with the transferor.
If the receipt is non-negotiable, such person also
acquires the right to notify the warehouseman of
the transfer to him of such receipt and thereby to
acquire the direct obligation of the
warehouseman to hold possession of the goods
for him according to the terms of the receipt.
Prior to the notification of the warehouseman by
the transferor or transferee of a non-negotiable
receipt, the title of the transferee to the goods
and the right to acquire the obligation of the
warehouseman may be defeated by the levy of
an attachment or execution upon the goods by a
creditor of the transferor or by a notification to
the warehouseman by the transferor or a
subsequent purchaser from the transferor of a
subsequent sale of the goods by the transferor.
Sec. 43. Transfer of negotiable receipt without
indorsement. Where a negotiable receipt is
transferred for value by delivery and the
indorsement of the transferor is essential for
negotiation, the transferee acquires a right
against the transferor to compel him to indorse
the receipt unless a contrary intention appears.
The negotiation shall take effect as of the time
when the indorsement is actually made.
Sec. 44. Warranties of a sale of receipt. A
person who, for value, negotiates or transfers a
receipt by indorsement or delivery, including
one who assigns for value a claim secured by a
receipt, unless a contrary intention appears,
warrants:
(a) That the receipt is genuine,
(b) That he has a legal right to negotiate or
transfer it,
(c) That he has knowledge of no fact which
would impair the validity or worth of the
receipt, and
(d) That he has a right to transfer the title to the
goods and that the goods are merchantable or fit
for a particular purpose whenever such
warranties would have been implied, if the
contract of the parties had been to transfer
without a receipt of the goods represented
thereby.
Sec. 45. Indorser not a guarantor. The
indorsement of a receipt shall not make the
indorser liable for any failure on the part of the
warehouseman or previous indorsers of the
receipt to fulfill their respective obligations.
Sec. 46. No warranty implied from accepting
payment of a debt. A mortgagee, pledgee, or
holder for security of a receipt who, in good
faith, demands or receives payment of the debt
for which such receipt is security, whether from
a party to a draft drawn for such debt or from
any other person, shall not, by so doing, be
deemed to represent or to warrant the
genuineness of such receipt or the quantity or
quality of the goods therein described.
Sec. 47. When negotiation not impaired by
fraud, mistake or duress. The validity of the
negotiation of a receipt is not impaired by the
fact that such negotiation was a breach of duty
on the part of the person making the negotiation
or by the fact that the owner of the receipt was
induced by fraud, mistake or duress or to
entrust the possession or custody of the receipt
to such person, if the person to whom the
receipt was negotiated or a person to whom the
receipt was subsequently negotiated paid value
therefor, without notice of the breach of duty, or
fraud, mistake or duress.
Sec. 48. Subsequent negotiation. Where a
person having sold, mortgaged, or pledged
goods which are in warehouse and for which a
negotiable receipt has been issued, or having
sold, mortgaged, or pledged the negotiable
receipt representing such goods, continues in
possession of the negotiable receipt, the
subsequent negotiation thereof by the person
under any sale or other disposition thereof to
any person receiving the same in good faith, for
value and without notice of the previous sale,
mortgage or pledge, shall have the same effect
as if the first purchaser of the goods or receipt
had expressly authorized the subsequent
negotiation.
Sec. 49. Negotiation defeats vendors lien.
Where a negotiable receipt has been issued for
goods, no sellers lien or right of stoppage in
transitu shall defeat the rights of any purchaser
for value in good faith to whom such receipt has
been negotiated, whether such negotiation be
prior or subsequent to the notification to the
warehouseman who issued such receipt of the
sellers claim to a lien or right of stoppage in
transitu. Nor shall the warehouseman be
obliged to deliver or justified in delivering the
goods to an unpaid seller unless the receipt is
first surrendered for cancellation.
IV CRIMINAL OFFENSES
Sec. 50. Issue of receipt for goods not received.
A warehouseman, or an officer, agent, or servant
of a warehouseman who issues or aids in
issuing a receipt knowing that the goods for
which such receipt is issued have not been
actually received by such warehouseman, or are
not under his actual control at the time of
issuing such receipt, shall be guilty of a crime,
and, upon conviction, shall be punished for each
offense by imprisonment not exceeding five
years, or by a fine not exceeding ten thousand
pesos, or both.
Sec. 51. Issue of receipt containing false
statement. A warehouseman, or any officer,
agent or servant of a warehouseman who
fraudulently issues or aids in fraudulently
issuing a receipt for goods knowing that it
contains any false statement, shall be guilty of a
crime, and upon conviction, shall be punished
for each offense by imprisonment not exceeding
one year, or by a fine not exceeding two
thousand pesos, or by both.
Sec. 52. Issue of duplicate receipt not so marked.
A warehouse, or any officer, agent, or servant
of a warehouseman who issues or aids in
issuing a duplicate or additional negotiable
receipt for goods knowing that a former
negotiable receipt for the same goods or any
part of them is outstanding and uncanceled,
without plainly placing upon the face thereof
the word duplicate except in the case of a lost
or destroyed receipt after proceedings are
provided for in section fourteen, shall be guilty
of a crime, and, upon conviction, shall be
punished for each offense by imprisonment not
exceeding five years, or by a fine not exceeding
ten thousand pesos, or by both.
Sec. 53. Issue for warehousemans goods or
receipts which do not state that fact. Where
they are deposited with or held by a
warehouseman goods of which he is owner,
either solely or jointly or in common with
others, such warehouseman, or any of his
officers, agents, or servants who, knowing this
ownership, issues or aids in issuing a negotiable
receipt for such goods which does not state such
ownership, shall be guilty of a crime, and, upon
conviction, shall be punished for each offense by
imprisonment not exceeding one year, or by a
fine not exceeding two thousand pesos, or by
both.
Sec. 54. Delivery of goods without obtaining
negotiable receipt. A warehouseman, or any
officer, agent, or servant of a warehouseman,
who delivers goods out of the possession of such
warehouseman, knowing that a negotiable
receipt the negotiation of which would transfer
the right to the possession of such goods is
outstanding and uncanceled, without obtaining
the possession of such receipt at or before the
time of such delivery, shall, except in the cases
provided for in sections fourteen and thirty-six,
be found guilty of a crime, and, upon conviction,
shall be punished for each offense by
imprisonment not exceeding one year, or by a
fine not exceeding two thousand pesos, or by
both.
Sec. 55. Negotiation of receipt for mortgaged
goods. Any person who deposits goods to
which he has no title, or upon which there is a
lien or mortgage, and who takes for such goods
a negotiable receipt which he afterwards
negotiates for value with intent to deceive and
without disclosing his want of title or the
existence of the lien or mortgage, shall be guilty
of a crime, and, upon conviction, shall be
punished for each offense by imprisonment not
exceeding one year, or by a fine not exceeding
two thousand pesos, or by both.
V INTERPRETATION
Sec. 56. Case not provided for in Act. Any case
not provided for in this Act shall be governed by
the provisions of existing legislation, or in
default thereof, by the rule of the law merchant.
Sec. 57. Name of Act. This Act may be cited as
the Warehouse Receipts Act.
Sec. 58. Definitions. (a) In this Act, unless the
content or subject matter otherwise requires:
Action includes counterclaim, set-off, and
suits in equity as provided by law in these
islands.
Delivery means voluntary transfer of
possession from one person to another.
Fungible goods means goods of which any
unit is, from its nature by mercantile custom,
treated as the equivalent of any other unit.
Goods means chattels or merchandise in
storage or which has been or is about to be
stored.
Holder of a receipt means a person who has
both actual possession of such receipt and a
right of property therein.
Order means an order by indorsement on the
receipt.
Owner does not include mortgagee.
Person includes a corporation or partnership
or two or more persons having a joint or
common interest.
To purchase includes to take as mortgagee or
as pledgee.
Receipt means a warehouse receipt.
Value is any consideration sufficient to
support a simple contract. An antecedent or pre-
existing obligation, whether for money or not,
constitutes value where a receipt is taken either
in satisfaction thereof or as security therefor.
Warehouseman means a person lawfully
engaged in the business of storing goods for
profit.
(b) A thing is done in good faith within the
meaning of this Act when it is in fact done
honestly, whether it be done negligently or not.
Sec. 59. Application of Act. The provisions of
this Act do not apply to receipts made and
delivered prior to the taking effect hereof.

Sec. 60. Repeals. All acts and laws and parts

thereof inconsistent with this Act are hereby
repealed.

Sec. 61. Time when Act takes effect. This Act

shall take effect ninety days after its publication
in the Official Gazette of the Philippines shall
have been completed.
PRESIDENTIAL DECREE No. 115
PROVIDING FOR THE REGULATION OF
TRUST RECEIPTS TRANSACTIONS
WHEREAS, the utilization of trust receipts, as a
convenient business device to assist importers
and merchants solve their financing problems,
had gained popular acceptance in international
and domestic business practices, particularly in
commercial banking transactions;
WHEREAS, there is no specific law in the
Philippines that governs trust receipt
transactions, especially the rights and
obligations of the parties involved therein and
the enforcement of the said rights in case of
default or violation of the terms of the trust
receipt agreement;
WHEREAS, the recommendations contained in
the report on the financial system which have
been accepted, with certain modifications by the
monetary authorities included, among others,
the enactment of a law regulating the trust
receipt transactions;
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by
virtue of the powers vested in me by the
Constitution, as Commander-in-Chief of all the
Armed Forces of the Philippines, and pursuant
to Proclamation No. 1081, dated September 21,
1972, and General Order No. 1, dated September
22, 1972, as amended, and in order to effect the
desired changes and reforms in the social,
economic, and political structure of our society,
do hereby order and decree and make as part of
the law of the land the following:
Section 1. Short Title. This Decree shall be
known as the Trust Receipts Law.
Section 2. Declaration of Policy. It is hereby
declared to be the policy of the state (a) to
encourage and promote the use of trust receipts
as an additional and convenient aid to
commerce and trade; (b) to provide for the
regulation of trust receipts transactions in order
to assure the protection of the rights and
enforcement of obligations of the parties
involved therein; and (c) to declare the misuse
and/or misappropriation of goods or proceeds
realized from the sale of goods, documents or
instruments released under trust receipts as a
criminal offense punishable under Article Three
hundred and fifteen of the Revised Penal Code.
Section 3. Definition of terms. As used in this
Decree, unless the context otherwise requires,
the term
(a) "Document" shall mean written or printed
evidence of title to goods.
(b) "Entrustee" shall refer to the person having
or taking possession of goods, documents or
instruments under a trust receipt transaction,
and any successor in interest of such person for
the purpose or purposes specified in the trust
receipt agreement.
(c) "Entruster" shall refer to the person holding
title over the goods, documents, or instruments
subject of a trust receipt transaction, and any
successor in interest of such person.
(d) "Goods" shall include chattels and personal
property other than: money, things in action, or
things so affixed to land as to become a part
thereof.
(e) "Instrument" means any negotiable
instrument as defined in the Negotiable
Instrument Law; any certificate of stock, or bond
or debenture for the payment of money issued
by a public or private corporation, or any
certificate of deposit, participation certificate or
receipt, any credit or investment instrument of a
sort marketed in the ordinary course of business
or finance, whereby the entrustee, after the
issuance of the trust receipt, appears by virtue of
possession and the face of the instrument to be
the owner. "Instrument" shall not include a
document as defined in this Decree.
(f) "Purchase" means taking by sale, conditional
sale, lease, mortgage, or pledge, legal or
equitable.
(g) "Purchaser" means any person taking by
purchase.
(h) "Security Interest" means a property interest
in goods, documents or instruments to secure
performance of some obligations of the
entrustee or of some third persons to the
entruster and includes title, whether or not
expressed to be absolute, whenever such title is
in substance taken or retained for security only.
(i) "Person" means, as the case may be, an
individual, trustee, receiver, or other fiduciary,
partnership, corporation, business trust or other
association, and two more persons having a joint
or common interest.
(j) "Trust Receipt" shall refer to the written or
printed document signed by the entrustee in
favor of the entruster containing terms and
conditions substantially complying with the
provisions of this Decree. No further formality
of execution or authentication shall be necessary
to the validity of a trust receipt.
(k) "Value" means any consideration sufficient to
support a simple contract.
Section 4. What constitutes a trust receipt
transaction. A trust receipt transaction, within
the meaning of this Decree, is any transaction by
and between a person referred to in this Decree
as the entruster, and another person referred to
in this Decree as entrustee, whereby the
entruster, who owns or holds absolute title or
security interests over certain specified goods,
documents or instruments, releases the same to
the possession of the entrustee upon the latter's
execution and delivery to the entruster of a
signed document called a "trust receipt" wherein
the entrustee binds himself to hold the
designated goods, documents or instruments in
trust for the entruster and to sell or otherwise
dispose of the goods, documents or instruments
with the obligation to turn over to the entruster
the proceeds thereof to the extent of the amount
owing to the entruster or as appears in the trust
receipt or the goods, documents or instruments
themselves if they are unsold or not otherwise
disposed of, in accordance with the terms and
conditions specified in the trust receipt, or for
other purposes substantially equivalent to any
of the following:
1. In the case of goods or documents, (a) to sell
the goods or procure their sale; or (b) to
manufacture or process the goods with the
purpose of ultimate sale: Provided, That, in the
case of goods delivered under trust receipt for
the purpose of manufacturing or processing
before its ultimate sale, the entruster shall retain
its title over the goods whether in its original or
processed form until the entrustee has complied
fully with his obligation under the trust receipt;
or (c) to load, unload, ship or tranship or
otherwise deal with them in a manner
preliminary or necessary to their sale; or
2. In the case of instruments,
a) to sell or procure their sale or exchange; or
b) to deliver them to a principal; or
c) to effect the consummation of some
transactions involving delivery to a depository
or register; or
d) to effect their presentation, collection or
renewal
The sale of goods, documents or instruments by
a person in the business of selling goods,
documents or instruments for profit who, at the
outset of the transaction, has, as against the
buyer, general property rights in such goods,
documents or instruments, or who sells the
same to the buyer on credit, retaining title or
other interest as security for the payment of the
purchase price, does not constitute a trust
receipt transaction and is outside the purview
and coverage of this Decree.
Section 5. Form of trust receipts; contents. A
trust receipt need not be in any particular form,
but every such receipt must substantially
contain (a) a description of the goods,
documents or instruments subject of the trust
receipt; (2) the total invoice value of the goods
and the amount of the draft to be paid by the
entrustee; (3) an undertaking or a commitment
of the entrustee (a) to hold in trust for the
entruster the goods, documents or instruments
therein described; (b) to dispose of them in the
manner provided for in the trust receipt; and (c)
to turn over the proceeds of the sale of the
goods, documents or instruments to the
entruster to the extent of the amount owing to
the entruster or as appears in the trust receipt or
to return the goods, documents or instruments
in the event of their non-sale within the period
specified therein.
The trust receipt may contain other terms and
conditions agreed upon by the parties in
addition to those hereinabove enumerated
provided that such terms and conditions shall
not be contrary to the provisions of this Decree,
any existing laws, public policy or morals,
public order or good customs.
Section 6. Currency in which a trust receipt may
be denominated. A trust receipt may be
denominated in the Philippine currency or any
foreign currency acceptable and eligible as part
of international reserves of the Philippines, the
provisions of existing law, executive orders,
rules and regulations to the contrary
notwithstanding: Provided, however, That in
the case of trust receipts denominated in foreign
currency, payment shall be made in its
equivalent in Philippine currency computed at
the prevailing exchange rate on the date the
proceeds of sale of the goods, documents or
instruments held in trust by the entrustee are
turned over to the entruster or on such other
date as may be stipulated in the trust receipt or
other agreements executed between the
entruster and the entrustee.
Section 7. Rights of the entruster. The entruster
shall be entitled to the proceeds from the sale of
the goods, documents or instruments released
under a trust receipt to the entrustee to the
extent of the amount owing to the entruster or
as appears in the trust receipt, or to the return of
the goods, documents or instruments in case of
non-sale, and to the enforcement of all other
rights conferred on him in the trust receipt
provided such are not contrary to the provisions
of this Decree.
The entruster may cancel the trust and take
possession of the goods, documents or
instruments subject of the trust or of the
proceeds realized therefrom at any time upon
default or failure of the entrustee to comply with
any of the terms and conditions of the trust
receipt or any other agreement between the
entruster and the entrustee, and the entruster in
possession of the goods, documents or
instruments may, on or after default, give notice
to the entrustee of the intention to sell, and may,
not less than five days after serving or sending
of such notice, sell the goods, documents or
instruments at public or private sale, and the
entruster may, at a public sale, become a
purchaser. The proceeds of any such sale,
whether public or private, shall be applied (a) to
the payment of the expenses thereof; (b) to the
payment of the expenses of re-taking, keeping
and storing the goods, documents or
instruments; (c) to the satisfaction of the
entrustee's indebtedness to the entruster. The
entrustee shall receive any surplus but shall be
liable to the entruster for any deficiency. Notice
of sale shall be deemed sufficiently given if in
writing, and either personally served on the
entrustee or sent by post-paid ordinary mail to
the entrustee's last known business address.
Section 8. Entruster not responsible on sale by
entrustee. The entruster holding a security
interest shall not, merely by virtue of such
interest or having given the entrustee liberty of
sale or other disposition of the goods,
documents or instruments under the terms of
the trust receipt transaction be responsible as
principal or as vendor under any sale or contract
to sell made by the entrustee.
Section 9. Obligations of the entrustee. The
entrustee shall (1) hold the goods, documents or
instruments in trust for the entruster and shall
dispose of them strictly in accordance with the
terms and conditions of the trust receipt; (2)
receive the proceeds in trust for the entruster
and turn over the same to the entruster to the
extent of the amount owing to the entruster or
as appears on the trust receipt; (3) insure the
goods for their total value against loss from fire,
theft, pilferage or other casualties; (4) keep said
goods or proceeds thereof whether in money or
whatever form, separate and capable of
identification as property of the entruster; (5)
return the goods, documents or instruments in
the event of non-sale or upon demand of the
entruster; and (6) observe all other terms and
conditions of the trust receipt not contrary to the
provisions of this Decree.
Section 10. Liability of entrustee for loss. The
risk of loss shall be borne by the entrustee. Loss
of goods, documents or instruments which are
the subject of a trust receipt, pending their
disposition, irrespective of whether or not it was
due to the fault or negligence of the entrustee,
shall not extinguish his obligation to the
entruster for the value thereof.
Section 11. Rights of purchaser for value and in
good faith. Any purchaser of goods from an
entrustee with right to sell, or of documents or
instruments through their customary form of
transfer, who buys the goods, documents, or
instruments for value and in good faith from the
entrustee, acquires said goods, documents or
instruments free from the entruster's security
interest.
Section 12. Validity of entruster's security
interest as against creditors. The entruster's
security interest in goods, documents, or
instruments pursuant to the written terms of a
trust receipt shall be valid as against all creditors
of the entrustee for the duration of the trust
receipt agreement.
Section 13. Penalty clause. The failure of an
entrustee to turn over the proceeds of the sale of
the goods, documents or instruments covered
by a trust receipt to the extent of the amount
owing to the entruster or as appears in the trust
receipt or to return said goods, documents or
instruments if they were not sold or disposed of
in accordance with the terms of the trust receipt
shall constitute the crime of estafa, punishable
under the provisions of Article Three hundred
and fifteen, paragraph one (b) of Act Numbered
Three thousand eight hundred and fifteen, as
amended, otherwise known as the Revised
Penal Code. If the violation or offense is
committed by a corporation, partnership,
association or other juridical entities, the penalty
provided for in this Decree shall be imposed
upon the directors, officers, employees or other
officials or persons therein responsible for the
offense, without prejudice to the civil liabilities
arising from the criminal offense.
Section 14. Cases not covered by this
Decree. Cases not provided for in this Decree
shall be governed by the applicable provisions
of existing laws.
Section 15. Separability clause. If any provision
or section of this Decree or the application
thereof to any person or circumstance is held
invalid, the other provisions or sections hereof
and the application of such provisions or
sections to other persons or circumstances shall
not be affected thereby.
ACT NO. 1508 - AN ACT PROVIDING FOR
THE MORTGAGING OF PERSONAL
PROPERTY AND FOR THE REGISTRATION
OF THE MORTGAGES SO EXECUTED
Section 1. The short title of this Act shall be "The
Chattel Mortgage Law."
Sec. 2. All personal property shall be subject to
mortgage, agreeably to the provisions of this
Act, and a mortgage executed in pursuance
thereof shall be termed chattel mortgage.
Sec. 3. Chattel mortgage defined. A chattel
mortgage is a conditional sale of personal
property as security for the payment of a debt,
or the performance of some other obligation
specified therein, the condition being that the
sale shall be void upon the seller paying to the
purchaser a sum of money or doing some other
act named. If the condition is performed
according to its terms the mortgage and sale
immediately become void, and the mortgagee is
thereby divested of his title.
Sec. 4. Validity. A chattel mortgage shall not
be valid against any person except the
mortgagor, his executors or administrators,
unless the possession of the property is
delivered to and retained by the mortgagee or
unless the mortgage is recorded in the office of
the register of deeds of the province in which
the mortgagor resides at the time of making the
same, or, if he resides without the Philippine
Islands, in the province in which the property is
situated: Provided, however, That if the
property is situated in a different province from
that in which the mortgagor resides, the
mortgage shall be recorded in the office of the
register of deeds of both the province in which
the mortgagor resides and that in which the
property is situated, and for the purposes of this
Act the city of Manila shall be deemed to be a
province.
Sec. 5. Form. A chattel mortgage shall be
deemed to be sufficient when made
substantially in accordance with the following
form, and shall be signed by the person or
persons executing the same, in the presence of
two witnesses, who shall sign the mortgage as
witnesses to the execution thereof, and each
mortgagor and mortgagee, or, in the absence of
the mortgagee, his agent or attorney, shall make
and subscribe an affidavit in substance as
hereinafter set forth, which affidavit, signed by
the parties to the mortgage as above stated, and
the certificate of the oath signed by the authority
administering the same, shall be appended to
such mortgage and recorded therewith.
Sec. 6. Corporations. When a corporation is a
party to such mortgage the affidavit required
may be made and subscribed by a director,
trustee, cashier, treasurer, or manager thereof, or
by a person authorized on the part of such
corporation to make or to receive such
mortgage. When a partnership is a party to the
mortgage the affidavit may be made and
subscribed by one member thereof.
Sec. 7. Descriptions of property. The
description of the mortgaged property shall be
such as to enable the parties to the mortgage, or
any other person, after reasonable inquiry and
investigation, to identify the same.
If the property mortgaged be large cattle," as
defined by section one of Act Numbered Eleven
and forty-seven, 2 and the amendments thereof,
the description of said property in the mortgage
shall contain the brands, class, sex, age, knots of
radiated hair commonly known as remolinos, or
cowlicks, and other marks of ownership as
described and set forth in the certificate of
ownership of said animal or animals, together
with the number and place of issue of such
certificates of ownership.
If growing crops be mortgaged the mortgage
may contain an agreement stipulating that the
mortgagor binds himself properly to tend, care
for and protect the crop while growing, and
faithfully and without delay to harvest the same,
and that in default of the performance of such
duties the mortgage may enter upon the
premises, take all the necessary measures for the
protection of said crop, and retain possession
thereof and sell the same, and from the proceeds
of such sale pay all expenses incurred in caring
for, harvesting, and selling the crop and the
amount of the indebtedness or obligation
secured by the mortgage, and the surplus
thereof, if any shall be paid to the mortgagor or
those entitled to the same.
A chattel mortgage shall be deemed to cover
only the property described therein and not like
or substituted property thereafter acquired by
the mortgagor and placed in the same
depository as the property originally
mortgaged, anything in the mortgage to the
contrary notwithstanding.
Sec. 8. Failure of mortgagee to discharge the
mortgage. If the mortgagee, assign,
administrator, executor, or either of them, after
performance of the condition before or after the
breach thereof, or after tender of the
performance of the condition, at or after the time
fixed for the performance, does not within ten
days after being requested thereto by any person
entitled to redeem, discharge the mortgage in
the manner provided by law, the person entitled
to redeem may recover of the person whose
duty it is to discharge the same twenty pesos for
his neglect and all damages occasioned thereby
in an action in any court having jurisdiction of
the subject-matter thereof.
Sec. 9-12. (inclusive) 3
Sec. 13. When the condition of a chattel
mortgage is broken, a mortgagor or person
holding a subsequent mortgage, or a subsequent
attaching creditor may redeem the same by
paying or delivering to the mortgagee the
amount due on such mortgage and the
reasonable costs and expenses incurred by such
breach of condition before the sale thereof. An
attaching creditor who so redeems shall be
subrogated to the rights of the mortgagee and
entitled to foreclose the mortgage in the same
manner that the mortgagee could foreclose it by
the terms of this Act.
Sec. 14. Sale of property at public auction;
Officer's return; Fees; Disposition of proceeds.
The mortgagee, his executor, administrator,
or assign, may, after thirty days from the time of
condition broken, cause the mortgaged
property, or any part thereof, to be sold at public
auction by a public officer at a public place in
the municipality where the mortgagor resides,
or where the property is situated, provided at
least ten days' notice of the time, place, and
purpose of such sale has been posted at two or
more public places in such municipality, and the
mortgagee, his executor, administrator, or
assign, shall notify the mortgagor or person
holding under him and the persons holding
subsequent mortgages of the time and place of
sale, either by notice in writing directed to him
or left at his abode, if within the municipality, or
sent by mail if he does not reside in such
municipality, at least ten days previous to the
sale.
The officer making the sale shall, within thirty
days thereafter, make in writing a return of his
doings and file the same in the office of the
register of deeds where the mortgage is
recorded, and the register of deeds shall record
the same. The fees of the officer for selling the
property shall be the same as in the case of sale
on execution as provided in Act Numbered One
hundred and ninety, 4 and the amendments
thereto, and the fees of the register of deeds for
registering the officer's return shall be taxed as a
part of the costs of sale, which the officer shall
pay to the register of deeds. The return shall
particularly describe the articles sold, and state
the amount received for each article, and shall
operate as a discharge of the lien thereon created
by the mortgage. The proceeds of such sale shall
be applied to the payment, first, of the costs and
expenses of keeping and sale, and then to the
payment of the demand or obligation secured by
such mortgage, and the residue shall be paid to
persons holding subsequent mortgages in their
order, and the balance, after paying the
mortgages, shall be paid to the mortgagor or
person holding under him on demand.
If the sale includes any "large cattle," a certificate
of transfer as required by section sixteen of Act
Numbered Eleven hundred and forty-seven 5
shall be issued by the treasurer of the
municipality where the sale was held to the
purchaser thereof.
deprived the lessee of the possession or
enjoyment of the thing. (1454-A-a)
Art. 2140. By a chattel mortgage, personal
property is recorded in the Chattel Mortgage
Register as a security for the performance of an
obligation. If the movable, instead of being
recorded, is delivered to the creditor or a third
person, the contract is a pledge and not a chattel
mortgage. (n)
Art. 2141. The provisions of this Code on pledge,
insofar as they are not in conflict with the
Chattel Mortgage Law shall be applicable to
chattel mortgages.

Sec. 15. 6, 6a

IN RELATION TO:

Art. 1484. In a contract of sale of personal

property the price of which is payable in
installments, the vendor may exercise any of the
following remedies:

(1) Exact fulfillment of the obligation, should the

vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to

pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing

sold, if one has been constituted, should the
vendee's failure to pay cover two or more
installments. In this case, he shall have no
further action against the purchaser to recover
any unpaid balance of the price. Any agreement
to the contrary shall be void. (1454-A-a)

Art. 1485. The preceding article shall be applied

to contracts purporting to be leases of personal
property with option to buy, when the lessor has
ACT NO. 3135 - AN ACT TO REGULATE
THE SALE OF PROPERTY UNDER SPECIAL
POWERS INSERTED IN OR ANNEXED TO
REAL-ESTATE 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
RA: 4118 AN ACT CONVERTING CERTAIN
PARCELS OF LAND IN THE CITY OF
MANILA, WHICH IS RESERVED AS
COMMUNAL PROPERTY, INTO
DISPOSABLE OR ALIENABLE LAND OF
THE STATE AND PROVIDING FOR ITS
SUBDIVISION AND SALE.
Section 1. Lot 1-B-2B of Block 557 of the
cadastral survey of the City of Manila, situated
in the District of Malate, City of Manila, which is
reserved as communal property, is hereby
converted into disposable or alienable land of
the State, to be placed under the disposal of the
Land Tenure Administration. The Land Tenure
Administration shall subdivide the property
into small lots, none of which shall exceed one
hundred and twenty square meters in area and
sell the same on installment basis to the tenants
or bona fide occupants thereof and to
individuals, in the order mentioned: Provided,
That no down payment shall be required of
tenants or bona fide occupants who cannot
afford to pay such down payment: Provided,
further, That no person can purchase more than
one lot: Provided, furthermore, That if the
tenant or bona fide occupant of any given lot is
not able to purchase the same, he shall be given
a lease from month to month until such time
that he is able to purchase the lot: Provided, still
further, That in the event of lease, the rentals
which may be charged shall exceed eight per
cent per annum of the assessed value of the
property leased: And provided, finally, That in
fixing the price of each lot, which shall not
exceed twenty pesos per square meter, the cost
of subdivision and survey shall not be included.
Section 2. Upon approval of this Act, no
ejectment proceedings against any tenant or
bona fide occupant of the above lots shall be
instituted and any ejectment proceedings
pending in court against any such tenant or
bona fide occupant shall be dismissed upon
motion of the defendant: Provided, That any
demolition order directed against any tenant or
bona fide occupant thereof shall be lifted.

Section 3. Upon approval of this Act, if the

tenant or bona fide occupant is in arrears in the
payment of any rentals, the amount legally due
shall be liquidated and shall be payable in
twenty-four equal monthly installments from
the date of liquidation.

Section 4. No property acquired by virtue of this

Act shall be transferred, sold, mortgaged, or
otherwise disposed of within a period of five
years from the date full ownership thereof has
been vested in the purchaser without the
consent of the Land Tenure Administration.

Section 5. In the event of the death of the

purchaser prior to the complete payment of the
price of the lot purchased by him, his widow
and children shall succeed in all his rights and
obligations with respect to his lot.

Section 6. The Chairman of the Land Tenure

Administration, shall implement and issue such
rules and regulations as may be necessary to
carry out the provisions of this Act.

Section 7. The sum of one hundred fifty

thousand pesos is appropriated out of any funds
in the National Treasury not otherwise
appropriated, to carry out the purposes of this
Act.

Section 8. All laws or parts of laws inconsistent

with this Act are repealed or modified
accordingly.
 RA: 3765 AN ACT TO REQUIRE THE
DISCLOSURE OF FINANCE CHARGES IN
CONNECTION WITH EXTENSIONS OF
CREDIT.
Section 1. This Act shall be known as the "Truth
in Lending Act."
Section 2. Declaration of Policy. It is hereby
declared to be the policy of the State to protect
its citizens from a lack of awareness of the true
cost of credit to the user by assuring a full
disclosure of such cost with a view of
preventing the uninformed use of credit to the
detriment of the national economy.
Section 3. As used in this Act, the term
(1) "Board" means the Monetary Board of the
Central Bank of the Philippines.
(2) "Credit" means any loan, mortgage, deed of
trust, advance, or discount; any conditional sales
contract; any contract to sell, or sale or contract
of sale of property or services, either for present
or future delivery, under which part or all of the
price is payable subsequent to the making of
such sale or contract; any rental-purchase
contract; any contract or arrangement for the
hire, bailment, or leasing of property; any
option, demand, lien, pledge, or other claim
against, or for the delivery of, property or
money; any purchase, or other acquisition of, or
any credit upon the security of, any obligation of
claim arising out of any of the foregoing; and
any transaction or series of transactions having a
similar purpose or effect.
(3) "Finance charge" includes interest, fees,
service charges, discounts, and such other
charges incident to the extension of credit as the
Board may be regulation prescribe.
(4) "Creditor" means any person engaged in the
business of extending credit (including any
person who as a regular business practice make
loans or sells or rents property or services on a
time, credit, or installment basis, either as
principal or as agent) who requires as an
incident to the extension of credit, the payment
of a finance charge.
(5) "Person" means any individual, corporation,
partnership, association, or other organized
group of persons, or the legal successor or
representative of the foregoing, and includes the
Philippine Government or any agency thereof,
or any other government, or of any of its
political subdivisions, or any agency of the
foregoing.
Section 4. Any creditor shall furnish to each
person to whom credit is extended, prior to the
consummation of the transaction, a clear
statement in writing setting forth, to the extent
applicable and in accordance with rules and
regulations prescribed by the Board, the
following information:
(1) the cash price or delivered price of the
property or service to be acquired;
(2) the amounts, if any, to be credited as down
payment and/or trade-in;
(3) the difference between the amounts set forth
under clauses (1) and (2);
(4) the charges, individually itemized, which are
paid or to be paid by such person in connection
with the transaction but which are not incident
to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of
pesos and centavos; and
(7) the percentage that the finance bears to the
total amount to be financed expressed as a
simple annual rate on the outstanding unpaid
balance of the obligation.
Section 5. The Board shall prescribe such rules
and regulations as may be necessary or proper
in carrying out the provisions of this Act. Any that a defendant has willfully violated this Act
rule or regulation prescribed hereunder may shall be prima facie evidence against such
contain such classifications and differentiations defendant in an action or proceeding brought by
as in the judgment of the Board are necessary or any other party against such defendant under
proper to effectuate the purposes of this Act or this Act as to all matters respecting which said
to prevent circumvention or evasion, or to judgment would be an estoppel as between the
facilitate the enforcement of this Act, or any rule parties thereto.
or regulation issued thereunder.
Section 7. This Act shall become effective upon
Section 6. (a) Any creditor who in connection approval.
with any credit transaction fails to disclose to
any person any information in violation of this
Act or any regulation issued thereunder shall be
liable to such person in the amount of P100 or in
an amount equal to twice the finance charged
required by such creditor in connection with
such transaction, whichever is the greater,
except that such liability shall not exceed P2,000
on any credit transaction. Action to recover such
penalty may be brought by such person within
one year from the date of the occurrence of the
violation, in any court of competent jurisdiction.
In any action under this subsection in which any
person is entitled to a recovery, the creditor shall
be liable for reasonable attorney's fees and court
costs as determined by the court.

(b) Except as specified in subsection (a) of this

section, nothing contained in this Act or any
regulation contained in this Act or any
regulation thereunder shall affect the validity or
enforceability of any contract or transactions.

(c) Any person who willfully violates any

provision of this Act or any regulation issued
thereunder shall be fined by not less than P1,00
or more than P5,000 or imprisonment for not
less than 6 months, nor more than one year or
both.

(d) No punishment or penalty provided by this

Act shall apply to the Philippine Government or
any agency or any political subdivision thereof.

(e) A final judgment hereafter rendered in any

criminal proceeding under this Act to the effect
Anti-Money Laundering Act of 2001 (RA 9160)
SECTION 1. Short Title. This Act shall be
known as the "Anti-Money Laundering Act of
2001."
SEC. 2. Declaration of Policy. It is hereby
declared the policy of the State to protect and
preserve the integrity and confidentiality of
bank accounts and to ensure that the Philippines
shall not be used as a money laundering site for
the proceeds of any unlawful activity.
Consistent with its foreign policy, the State shall
extend cooperation in transnational
investigations and prosecutions of persons
involved in money laundering activities
wherever committed.
SEC. 3. Definitions. For purposes of this Act,
the following terms are hereby defined as
follows:
(a) "Covered institution" refers to:
(1) banks, non-banks, quasi-banks, trust entities,
and all other institutions and their subsidiaries
and affiliates supervised or regulated by the
Bangko Sentral ng Pilipinas (BSP);
(2) insurance companies and all other
institutions supervised or regulated by the
Insurance Commission; and
(3) (i) securities dealers, brokers, salesmen,
investment houses and other similar entities
managing securities or rendering services as
investment agent, advisor, or consultant, (ii)
mutual funds, close-end investment companies,
common trust funds, pre-need companies and
other similar entities, (iii) foreign exchange
corporations, money changers, money payment,
remittance, and transfer companies and other
similar entities, and (iv) other entities
administering or otherwise dealing in currency,
commodities or financial derivatives based
thereon, valuable objects, cash substitutes and
other similar monetary instruments or property
supervised or regulated by Securities and
Exchange Commission and Exchange
Commission
(b) "Covered transaction" is a single, series, or
combination of transactions involving a total
amount in excess of Four million Philippine
pesos (Php4,000,000.00) or an equivalent amount
in foreign currency based on the prevailing
exchange rate within five (5) consecutive
banking days except those between a covered
institution and a person who, at the time of the
transaction was a properly identified client and
the amount is commensurate with the business
or financial capacity of the client; or those with
an underlying legal or trade obligation, purpose,
origin or economic justification.
It likewise refers to a single, series or
combination or pattern of unusually large and
complex transactions in excess of Four million
Philippine pesos (Php4,000,000.00) especially
cash deposits and investments having no
credible purpose or origin, underlying trade
obligation or contract.
(c) "Monetary instrument" refers to:
(1) coins or currency of legal tender of the
Philippines, or of any other country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds,
commercial papers, deposit certificates, trust
certificates, custodial receipts or deposit
substitute instruments, trading orders,
transaction tickets and confirmations of sale or
investments and money market instruments;
and
(4) other similar instruments where title thereto
passes to another by endorsement, assignment
or delivery.
(d) "Offender" refers to any person who commits
a money laundering offense.
(e) "Person" refers to any natural or juridical
person.
(f) "Proceeds" refers to an amount derived or
realized from an unlawful activity.
(g) "Supervising Authority" refers to the
appropriate supervisory or regulatory agency,
department or office supervising or regulating
the covered institutions enumerated in Section
3(a).
(h) "Transaction" refers to any act establishing
any right or obligation or giving rise to any
contractual or legal relationship between the
parties thereto. It also includes any movement of
funds by any means with a covered institution.
(i) "Unlawful activity" refers to any act or
omission or series or combination thereof
involving or having relation to the following:
(1) Kidnapping for ransom under Article 267 of
Act No. 3815, otherwise known as the Revised
Penal Code, as amended;
(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of
Republic Act No. 6425, as amended, otherwise
known as the Dangerous Drugs Act of 1972;
(3) Section 3 paragraphs B, C, E, G, H and I of
Republic Act No. 3019, as amended; otherwise
known as the Anti-Graft and Corrupt Practices
Act;
(4) Plunder under Republic Act No. 7080, as
amended;
(5) Robbery and extortion under Articles 294,
295, 296, 299, 300, 301 and 302 of the Revised
Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal
gambling under Presidential Decree No. 1602;
(7) Piracy on the high seas under the Revised
Penal Code, as amended and Presidential
Decree No. 532;
(8) Qualified theft under Article 310 of the
Revised Penal Code, as amended;
(9) Swindling under Article 315 of the Revised
Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455
and 1937;
(11) Violations under Republic Act No. 8792,
otherwise known as the Electronic Commerce
Act of 2000;
(12) Hijacking and other violations under
Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal
Code, as amended, including those perpetrated
by terrorists against non-combatant persons and
similar targets;
(13) Fraudulent practices and other violations
under Republic Act No. 8799, otherwise known
as the Securities Regulation Code of 2000;
(14) Felonies or offenses of a similar nature that
are punishable under the penal laws of other
countries.
SEC. 4. Money Laundering Offense. Money
laundering is a crime whereby the proceeds of
an unlawful activity are transacted, thereby
making them appear to have originated from
legitimate sources. It is committed by the
following:
(a) Any person knowing that any monetary
instrument or property represents, involves, or
relates to, the proceeds of any unlawful activity,
transacts or attempts to transact said monetary
instrument or property.
(b) Any person knowing that any monetary
instrument or property involves the proceeds of
any unlawful activity, performs or fails to
perform any act as a result of which he
facilitates the offense of money laundering
referred to in paragraph (a) above.
(c) Any person knowing that any monetary
instrument or property is required under this
Act to be disclosed and filed with the Anti-
Money Laundering Council (AMLC), fails to do
so.
SEC. 5. Jurisdiction of Money Laundering Cases.
The regional trial courts shall have jurisdiction
to try all cases on money laundering. Those
committed by public officers and private
persons who are in conspiracy with such public
officers shall be under the jurisdiction of the
Sandiganbayan.
SEC. 6. Prosecution of Money Laundering.
(a) Any person may be charged with and
convicted of both the offense of money
laundering and the unlawful activity as herein
defined.
(b) Any proceeding relating to the unlawful
activity shall be given precedence over the
prosecution of any offense or violation under
this Act without prejudice to the freezing and
other remedies provided.
SEC. 7. Creation of Anti-Money Laundering
Council (AMLC). The Anti-Money Laundering
Council is hereby created and shall be composed
of the Governor of the Bangko Sentral ng
Pilipinas as chairman, the Commissioner of the
Insurance Commission and the Chairman of the
Securities and Exchange Commission as
members. The AMLC shall act unanimously in
the discharge of its functions as defined
hereunder:
(1) to require and receive covered transaction
reports from covered institutions;
(2) to issue orders addressed to the appropriate
Supervising Authority or the covered institution
to determine the true identity of the owner of
any monetary instrument or property subject of
a covered transaction report or request for
assistance from a foreign State, or believed by
the Council, on the basis of substantial evidence,
to be, in whole or in part, wherever located,
representing, involving, or related to, directly or
indirectly, in any manner or by any means, the
proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and
all other remedial proceedings through the
Office of the Solicitor General;
(4) to cause the filing of complaints with the
Department of Justice or the Ombudsman for
the prosecution of money laundering offenses;
(5) to initiate investigations of covered
transactions, money laundering activities and
other violations of this Act;
(6) to freeze any monetary instrument or
property alleged to be proceeds of any unlawful
activity;
(7) to implement such measures as may be
necessary and justified under this Act to
counteract money laundering;
(8) to receive and take action in respect of, any
request from foreign states for assistance in their
own anti-money laundering operations
provided in this Act;
(9) to develop educational programs on the
pernicious effects of money laundering, the
methods and techniques used in money
laundering, the viable means of preventing
money laundering and the effective ways of
prosecuting and punishing offenders; and
(10) to enlist the assistance of any branch,
department, bureau, office, agency or
instrumentality of the government, including
government-owned and -controlled
corporations, in undertaking any and all anti-
money laundering operations, which may
include the use of its personnel, facilities and
resources for the more resolute prevention,
detection and investigation of money
laundering offenses and prosecution of
offenders.
SEC. 8. Creation of a Secretariat. The AMLC is
hereby authorized to establish a secretariat to be
headed by an Executive Director who shall be
appointed by the Council for a term of five (5)
years. He must be a member of the Philippine
Bar, at least thirty-five (35) years of age and of
good moral character, unquestionable integrity
and known probity. All members of the
Secretariat must have served for at least five (5)
years either in the Insurance Commission, the
Securities and Exchange Commission or the
Bangko Sentral ng Pilipinas (BSP) and shall hold
full-time permanent positions within the BSP.
SEC. 9. Prevention of Money Laundering;
Customer Identification Requirements and
Record Keeping.
(a) Customer Identification. - Covered
institutions shall establish and record the true
identity of its clients based on official
documents. They shall maintain a system of
verifying the true identity of their clients and, in
case of corporate clients, require a system of
verifying their legal existence and
organizational structure, as well as the authority
and identification of all persons purporting to
act on their behalf.The provisions of existing
laws to the contrary notwithstanding,
anonymous accounts, accounts under fictitious
names, and all other similar accounts shall be
absolutely prohibited. Peso and foreign currency
non-checking numbered accounts shall be
allowed. The BSP may conduct annual testing
solely limited to the determination of the
existence and true identity of the owners of such
accounts.
(b) Record Keeping. - All records of all
transactions of covered institutions shall be
maintained and safely stored for five (5) years
from the dates of transactions. With respect to
closed accounts, the records on customer
identification, account files and business
correspondence, shall be preserved and safely
stored for at least five (5) years from the dates
when they were closed.
(c) Reporting of Covered Transactions. -
Covered institutions shall report to the AMLC
all covered transactions within five (5) working
days from occurrence thereof, unless the
Supervising Authority concerned prescribes a
longer period not exceeding ten (10) working
days.
When reporting covered transactions to the
AMLC, covered institutions and their officers,
employees, representatives, agents, advisors,
consultants or associates shall not be deemed to
have violated Republic Act No. 1405, as
amended; Republic Act No. 6426, as amended;
Republic Act No. 8791 and other similar laws,
but are prohibited from communicating, directly
or indirectly, in any manner or by any means, to
any person the fact that a covered transaction
report was made, the contents thereof, or any
other information in relation thereto. In case of
violation thereof, the concerned officer,
employee, representative, agent, advisor,
consultant or associate of the covered
institution, shall be criminally liable. However,
no administrative, criminal or civil proceedings,
shall lie against any person for having made a
covered transaction report in the regular
performance of his duties and in good faith,
whether or not such reporting results in any
criminal prosecution under this Act or any other
Philippine law.
When reporting covered transactions to the
AMLC, covered institutions and their officers,
employees, representatives, agents, advisors,
consultants or associates are prohibited from
communicating, directly or indirectly, in any
manner or by any means, to any person, entity,
the media, the fact that a covered transaction
report was made, the contents thereof, or any
other information in relation thereto. Neither
may such reporting be published or aired in any
manner or form by the mass media, electronic
mail, or other similar devices. In case of
violation thereof, the concerned officer,
employee, representative, agent, advisor,
consultant or associate of the covered
institution, or media shall be held criminally
liable.
SEC. 10. Authority to Freeze. Upon
determination that probable cause exists that
any deposit or similar account is in any way
related to an unlawful activity, the AMLC may
issue a freeze order, which shall be effective
immediately, on the account for a period not
exceeding fifteen (15) days. Notice to the
depositor that his account has been frozen shall
be issued simultaneously with the issuance of
the freeze order. The depositor shall have
seventy-two (72) hours upon receipt of the
notice to explain why the freeze order should be
lifted. The AMLC has seventy-two (72) hours to
dispose of the depositors explanation. If it fails
to act within seventy-two (72) hours from
receipt of the depositors explanation, the freeze
order shall automatically be dissolved. The
fifteen (15)-day freeze order of the AMLC may
be extended upon order of the court, provided
that the fifteen (15)-day period shall be tolled
pending the courts decision to extend the
period.
No court shall issue a temporary restraining
order or writ of injunction against any freeze
order issued by the AMLC except the Court of
Appeals or the Supreme Court.
SEC. 11. Authority to Inquire into Bank
Deposits. Notwithstanding the provisions of
Republic Act No. 1405, as amended; Republic
Act No. 6426, as amended; Republic Act No.
8791, and other laws, the AMLC may inquire
into or examine any particular deposit or
investment with any banking institution or non-
bank financial institution upon order of any
competent court in cases of violation of this Act
when it has been established that there is
probable cause that the deposits or investments
involved are in any way related to a money
laundering offense: Provided, That this
provision shall not apply to deposits and
investments made prior to the effectivity of this
Act.
SEC. 12. Forfeiture Provisions.
(a) Civil Forfeiture. - When there is a covered
transaction report made, and the court has, in a
petition filed for the purpose ordered seizure of
any monetary instrument or property, in whole
or in part, directly or indirectly, related to said
report, the Revised Rules of Court on civil
forfeiture shall apply.
(b) Claim on Forfeited Assets. - Where the court
has issued an order of forfeiture of the monetary
instrument or property in a criminal prosecution
for any money laundering offense defined under
Section 4 of this Act, the offender or any other
person claiming an interest therein may apply,
by verified petition, for a declaration that the
same legitimately belongs to him and for
segregation or exclusion of the monetary
instrument or property corresponding thereto.
The verified petition shall be filed with the court
which rendered the judgment of conviction and
order of forfeiture, within fifteen (15) days from
the date of the order of forfeiture, in default of
which the said order shall become final and
executory. This provision shall apply in both
civil and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. - Where the
court has issued an order of forfeiture of the
monetary instrument or property subject of a
money laundering offense defined under
Section 4, and said order cannot be enforced
because any particular monetary instrument or
property cannot, with due diligence, be located,
or it has been substantially altered, destroyed,
diminished in value or otherwise rendered
worthless by any act or omission, directly or
indirectly, attributable to the offender, or it has
been concealed, removed, converted or
otherwise transferred to prevent the same from
being found or to avoid forfeiture thereof, or it is
located outside the Philippines or has been
placed or brought outside the jurisdiction of the
court, or it has been commingled with other
monetary instruments or property belonging to
either the offender himself or a third person or
entity, thereby rendering the same difficult to
identify or be segregated for purposes of
forfeiture, the court may, instead of enforcing
the order of forfeiture of the monetary
instrument or property or part thereof or
interest therein, accordingly order the convicted
offender to pay an amount equal to the value of
said monetary instrument or property. This
provision shall apply in both civil and criminal
forfeiture.
SEC. 13. Mutual Assistance among States.
(a) Request for Assistance from a Foreign State. -
Where a foreign State makes a request for
assistance in the investigation or prosecution of
a money laundering offense, the AMLC may
execute the request or refuse to execute the same
and inform the foreign State of any valid reason
for not executing the request or for delaying the
execution thereof. The principles of mutuality
and reciprocity shall, for this purpose, be at all
times recognized.
(b) Powers of the AMLC to Act on a Request for
Assistance from a Foreign State. - The AMLC
may execute a request for assistance from a
foreign State by: (1) tracking down, freezing,
restraining and seizing assets alleged to be
proceeds of any unlawful activity under the
procedures laid down in this Act; (2) giving
information needed by the foreign State within
the procedures laid down in this Act; and (3)
applying for an order of forfeiture of any
monetary instrument or property in the court:
Provided, That the court shall not issue such an
order unless the application is accompanied by
an authenticated copy of the order of a court in
the requesting State ordering the forfeiture of
said monetary instrument or property of a
person who has been convicted of a money
laundering offense in the requesting State, and a
certification or an affidavit of a competent
officer of the requesting State stating that the
conviction and the order of forfeiture are final
and that no further appeal lies in respect of
either.
(c) Obtaining Assistance from Foreign States. -
The AMLC may make a request to any foreign
State for assistance in (1) tracking down,
freezing, restraining and seizing assets alleged
to be proceeds of any unlawful activity; (2)
obtaining information that it needs relating to
any covered transaction, money laundering
offense or any other matter directly or indirectly
related thereto; (3) to the extent allowed by the
law of the foreign State, applying with the
proper court therein for an order to enter any
premises belonging to or in the possession or
control of, any or all of the persons named in
said request, and/or search any or all such
persons named therein and/or remove any
document, material or object named in said
request: Provided, That the documents
accompanying the request in support of the
application have been duly authenticated in
accordance with the applicable law or regulation
of the foreign State; and (4) applying for an
order of forfeiture of any monetary instrument
or property in the proper court in the foreign
State: Provided, That the request is accompanied
by an authenticated copy of the order of the
regional trial court ordering the forfeiture of
said monetary instrument or property of a
convicted offender and an affidavit of the clerk
of court stating that the conviction and the order
of forfeiture are final and that no further appeal
lies in respect of either.
(d) Limitations on Requests for Mutual
Assistance. - The AMLC may refuse to comply
with any request for assistance where the action
sought by the request contravenes any provision
of the Constitution or the execution of a request
is likely to prejudice the national interest of the
Philippines unless there is a treaty between the
Philippines and the requesting State relating to
the provision of assistance in relation to money
laundering offenses.
(e) Requirements for Requests for Mutual
Assistance from Foreign States. - A request for
mutual assistance from a foreign State must (1)
confirm that an investigation or prosecution is
being conducted in respect of a money
launderer named therein or that he has been
convicted of any money laundering offense; (2)
state the grounds on which any person is being
investigated or prosecuted for money
laundering or the details of his conviction; (3)
give sufficient particulars as to the identity of
said person; (4) give particulars sufficient to
identify any covered institution believed to have
any information, document, material or object
which may be of assistance to the investigation
or prosecution; (5) ask from the covered
institution concerned any information,
document, material or object which may be of
assistance to the investigation or prosecution; (6)
specify the manner in which and to whom said
information, document, material or object
obtained pursuant to said request, is to be
produced; (7) give all the particulars necessary
for the issuance by the court in the requested
State of the writs, orders or processes needed by
the requesting State; and (8) contain such other
information as may assist in the execution of the
request.
(f) Authentication of Documents. - For purposes
of this Section, a document is authenticated if
the same is signed or certified by a judge,
magistrate or equivalent officer in or of, the
requesting State, and authenticated by the oath
or affirmation of a witness or sealed with an
official or public seal of a minister, secretary of
State, or officer in or of, the government of the
requesting State, or of the person administering
the government or a department of the
requesting territory, protectorate or colony. The
certificate of authentication may also be made
by a secretary of the embassy or legation, consul
general, consul, vice consul, consular agent or
any officer in the foreign service of the
Philippines stationed in the foreign State in
which the record is kept, and authenticated by
the seal of his office.
(g) Extradition. - The Philippines shall negotiate
for the inclusion of money laundering offenses
as herein defined among extraditable offenses in
all future treaties.
SEC. 14. Penal Provisions.
(a) Penalties for the Crime of Money
Laundering. The penalty of imprisonment
ranging from seven (7) to fourteen (14) years
and a fine of not less than Three million
Philippine pesos (Php 3,000,000.00) but not more
than twice the value of the monetary instrument
or property involved in the offense, shall be
imposed upon a person convicted under Section
4(a) of this Act.
The penalty of imprisonment from four (4) to
seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos
(Php1,500,000.00) but not more than Three
million Philippine pesos (Php3,000,000.00), shall
be imposed upon a person convicted under
Section 4(b) of this Act.
The penalty of imprisonment from six (6)
months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or
both, shall be imposed on a person convicted
under Section 4(c) of this Act.
(b) Penalties for Failure to Keep Records. The
penalty of imprisonment from six (6) months to
one (1) year or a fine of not less than One
hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or
both, shall be imposed on a person convicted
under Section 9(b) of this Act.
(c) Malicious Reporting. Any person who, with
malice, or in bad faith, reports or files a
completely unwarranted or false information
relative to money laundering transaction against
any person shall be subject to a penalty of six (6)
months to four (4) years imprisonment and a
fine of not less than One hundred thousand
Philippine pesos (Php100, 000.00) but not more
than Five hundred thousand Philippine pesos
(Php500, 000.00), at the discretion of the court:
Provided, That the offender is not entitled to
avail the benefits of the Probation Law.
If the offender is a corporation, association,
partnership or any juridical person, the penalty
shall be imposed upon the responsible officers,
as the case may be, who participated in the
commission of the crime or who shall have
knowingly permitted or failed to prevent its
commission. If the offender is a juridical person,
the court may suspend or revoke its license. If
the offender is an alien, he shall, in addition to
the penalties herein prescribed, be deported
without further proceedings after serving the
penalties herein prescribed. If the offender is a
public official or employee, he shall, in addition
to the penalties prescribed herein, suffer
perpetual or temporary absolute disqualification
from office, as the case may be.
Any public official or employee who is called
upon to testify and refuses to do the same or
purposely fails to testify shall suffer the same
penalties prescribed herein.
(d) Breach of Confidentiality. The punishment of
imprisonment ranging from three (3) to eight (8)
years and a fine of not less than Five hundred
thousand Philippine pesos (Php500,000.00) but
not more than One million Philippine pesos
(Php1,000,000.00), shall be imposed on a person
convicted for a violation under Section 9(c).
SEC. 15. System of Incentives and Rewards. A
system of special incentives and rewards is
hereby established to be given to the
appropriate government agency and its
personnel that led and initiated an investigation,
prosecution and conviction of persons involved
in the offense penalized in Section 4 of this Act.
SEC. 16. Prohibitions Against Political
Harassment. This Act shall not be used for
political persecution or harassment or as an
instrument to hamper competition in trade and
commerce.
No case for money laundering may be filed
against and no assets shall be frozen, attached or
forfeited to the prejudice of a candidate for an
electoral office during an election period.
SEC. 17. Restitution. Restitution for any
aggrieved party shall be governed by the
provisions of the New Civil Code.
SEC. 18. Implementing Rules and Regulations.
Within thirty (30) days from the effectivity of
this Act, the Bangko Sentral ng Pilipinas, the
Insurance Commission and the Securities and
Exchange Commission shall promulgate the
rules and regulations to implement effectively
the provisions of this Act. Said rules and
regulations shall be submitted to the
Congressional Oversight Committee for
approval.
Covered institutions shall formulate their
respective money laundering prevention
programs in accordance with this Act including,
but not limited to, information dissemination on
money laundering activities and its prevention,
detection and reporting, and the training of
responsible officers and personnel of covered
institutions.
SEC. 19. Congressional Oversight Committee.
There is hereby created a Congressional
Oversight Committee composed of seven (7)
members from the Senate and seven (7)
members from the House of Representatives.
The members from the Senate shall be
appointed by the Senate President based on the
proportional representation of the parties or
coalitions therein with at least two (2) Senators
representing the minority. The members from
the House of Representatives shall be appointed
by the Speaker also based on proportional
representation of the parties or coalitions therein
with at least two (2) members representing the
minority.
succeeding years shall be included in the
General Appropriations Act.
SEC. 21. Separability Clause. If any provision
or section of this Act or the application thereof
to any person or circumstance is held to be
invalid, the other provisions or sections of this
Act, and the application of such provision or
section to other persons or circumstances, shall
not be affected thereby.
SEC. 22. Repealing Clause. All laws, decrees,
executive orders, rules and regulations or parts
thereof, including the relevant provisions of
Republic Act No. 1405, as amended; Republic
Act No. 6426, as amended; Republic Act No.
8791, as amended and other similar laws, as are
inconsistent with this Act, are hereby repealed,
amended or modified accordingly.
SEC. 23. Effectivity. This Act shall take effect
fifteen (15) days after its complete publication in
the Official Gazette or in at least two (2) national
newspapers of general circulation.
The provisions of this Act shall not apply to
deposits and investments made prior to its
effectivity.

The Oversight Committee shall have the power

to promulgate its own rules, to oversee the
implementation of this Act, and to review or
revise the implementing rules issued by the
Anti-Money Laundering Council within thirty
(30) days from the promulgation of the said
rules.

SEC. 20. Appropriations Clause. The AMLC

shall be provided with an initial appropriation
of Twenty-five million Philippine pesos
(Php25,000,000.00) to be drawn from the
national government. Appropriations for the
 [ REPUBLIC ACT NO. 9194 ] "6. the transaction is in any way related to an
unlawful activity or offense under this Act that
AN ACT AMENDING REPUBLIC ACT NO. is about to be, is being or has been committed; or
9160, OTHERWISE KNOWN AS THE
"7. any transaction that is similar or analogous to
"ANTI-MONEY LAUNDERING ACT OF 2001"
any of the foregoing."
SECTION 1. Section 3, paragraph (b), of
SEC. 3. Section 3(i) of the same Act is further
Republic Act No. 9160 is hereby amended as
amended to read as follows:
follows:
"(i) 'Unlawful activity' refers to any act or
"(b) 'Covered transaction' is a transaction in cash omission or series or combination thereof
or other equivalent monetary instrument involving or having direct relation to the
involving a total amount in excess of Five following:
hundred thousand pesos (P500,000.00) within
"(1) Kidnapping for ransom under Article 267 of
one (1) banking day."
Act No. 3815, otherwise known as the Revised
SEC. 2. Section 3 of the same Act is further Penal Code, as amended;
amended by inserting betweenparagraphs (b)
"(2) Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16
and (c) a new paragraph designated as (b-1) to
of Republic Act No. 9165,
read as follows:
otherwise known as the Comprehensive
"(b-1) 'Suspicious transaction' are transactions
Dangerous Drugs Act of 2002;
with covered institutions, regardless of the
amounts involved, where any of the following "(3) Section 3 paragraphs B, C, E, G, H and I of
circumstances exist: Republic Act No. 3019, as amended, otherwise
known as the Anti-Graft and Corrupt Practices
"1. there is no underlying legal or trade
Act;
obligation, purpose or economic justification;
"(4) Plunder under Republic Act No. 7080, as
"2. the client is not properly identified;
amended;
"3. the amount involved is not commensurate
"(5) Robbery and extortion under Articles 294,
with the business or financial capacity of the
295, 296, 299, 300, 301 and 302 of the Revised
client;
Penal Code, as amended;
"4. taking into account all known circumstances,
"(6) Jueteng and Masiao punished as illegal
it may be perceived that the
gambling under Presidential Decree No. 1602;
clients transaction is structured in order to
"(7) Piracy on the high seas under the Revised
avoid being the subject of reporting
Penal Code, as amended and Presidential
requirements under the Act;
Decree No. 532;
"5. any circumstance relating to the transaction
"(8) Qualified theft under Article 310 of the
which is observed to deviate from the profile of
Revised Penal Code, as amended;
the client and/or the clients past transactions
with the covered institution; "(9) Swindling under Article 315 of the Revised
Penal Code, as amended;
"(10) Smuggling under Republic Act Nos. 455
and 1937;
"(11) Violations under Republic Act No. 8792,
otherwise known as the Electronic Commerce
Act of 2000;
"(12) Hijacking and other violations under
Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal
Code, as amended, including those perpetrated
by terrorists against non-combatant persons and
similar targets;
"(13) Fraudulent practices and other violations
under Republic Act No. 8799, otherwise known
as the Securities Regulation Code of 2000;
"(14) Felonies or offenses of a similar nature that
are punishable under the penal laws of other
countries."
SEC. 4. Section 4 of the same Act is hereby
amended to read as follows:
"SEC. 4. Money Laundering Offense. Money
laundering is a crime whereby the proceeds of
an unlawful activity as herein defined are
transacted, thereby making them appear to have
originated from legitimate sources. It is
committed by the following:
"(a) Any person knowing that any monetary
instrument or property represents, involves, or
relates to, the proceeds of any unlawful activity,
transacts or attempts to transact said monetary
instrument or property.
"(b) Any person knowing that any monetary
instrument or property involves the proceeds of
any unlawful activity, performs or fails to
perform any act as a result of which he
facilitates the offense of money laundering
referred to in paragraph (a) above.
"(c) Any person knowing that any monetary
instrument or property is required under this
Act to be disclosed and filed with the Anti-
Money Laundering Council (AMLC), fails to do
so."
SEC. 5. Section 7 of the same Act is hereby
amended as follows:
"SEC. 7. Creation of Anti-Money Laundering
Council (AMLC). The Anti-Money Laundering
Council is hereby created and shall be composed
of the Governor of the Bangko Sentral ng
Pilipinas as chairman, the Commissioner of the
Insurance Commission and the Chairman of the
Securities and Exchange Commission as
members. The AMLC shall act unanimously in
the discharge of its functions as defined
hereunder:
"(1) to require and receive covered or suspicious
transaction reports from covered institutions;
"(2) to issue orders addressed to the appropriate
Supervising Authority or the covered institution
to determine the true identity of the owner of
any monetary instrument or property subject of
a covered transaction or suspicious transaction
report or request for assistance from a foreign
State, or believed by the Council, on the basis of
substantial evidence, to be, in whole or in part,
wherever located, representing, involving, or
related to, directly or indirectly, in any manner
or by any means, the proceeds of an unlawful
activity.
"(3) to institute civil forfeiture proceedings and
all other remedial proceedings through the
Office of the Solicitor General;
"(4) to cause the filing of complaints with the
Department of Justice or the Ombudsman for
the prosecution of money laundering offenses;
"(5) to investigate suspicious transactions and
covered transactions deemed suspicious after an
investigation by AMLC, money laundering
activities, and other violations of this Act;
"(6) to apply before the Court of Appeals, ex
parte, for the freezing of any monetary
instrument or property alleged to be the
proceeds of any unlawful activity as defined in
Section 3(i) hereof;
"(7) to implement such measures as may be
necessary and justified under this Act to
counteract money laundering;
"(8) to receive and take action in respect of, any
request from foreign states for assistance in their
own anti-money laundering operations
provided in this Act;
"(9) to develop educational programs on the
pernicious effects of money laundering, the
methods and techniques used in money
laundering, the viable means of preventing
money laundering and the effective ways of
prosecuting and punishing offenders;
"(10) to enlist the assistance of any branch,
department, bureau, office, agency or
instrumentality of the government, including
government-owned and controlle corporations,
in undertaking any and all anti-money
laundering operations, which may include the
use of its personnel, facilities and resources for
the more resolute prevention, detection and
investigation of money laundering offenses and
prosecution of offenders; and
"(11) to impose administrative sanctions for the
violation of laws, rules, regulations and orders
and resolutions issued pursuant thereto."
SEC. 6. Section 9(c) of the same Act is hereby
amended to read as follows:
"(c) Reporting of Covered and Suspicious
Transactions. Covered institutions shall report
to the AMLC all covered transactions and
suspicious transactions within five (5) working
days from occurrence thereof, unless the
Supervising Authority prescribes a longer
period not exceeding ten (10) working days.
"Should a transaction be determined to be both a
covered transaction and a suspicious
transaction, the covered institution shall be
required to report the same as a suspicious
transaction.
"When reporting covered or suspicious
transactions to the AMLC, covered institutions
and their officers and employees shall not be
deemed to have violated Republic Act No. 1405,
as amended, Republic Act No. 6426, as
amended, Republic Act No. 8791 and other
similar laws, but are prohibited from
communicating, directly or indirectly, in any
manner or by any means, to any person, the fact
that a covered or suspicious transaction report
was made, the contents thereof, or any other
information in relation thereto. In case of
violation thereof, the concerned officer and
employee of the covered institution shall be
criminally liable. However, no administrative,
criminal or civil proceedings, shall lie against
any person for having made a covered or
suspicious transaction report in the regular
performance of his duties in good faith, whether
or not such reporting results in any criminal
prosecution under this Act or any other law.
"When reporting covered or suspicious
transactions to the AMLC, covered institutions
and their officers and employees are prohibited
from communicating directly or indirectly, in
any manner or by any means, to any person or
entity, the media, the fact that a covered or
suspicious transaction report was made, the
contents thereof, or any other information in
relation thereto. Neither may such reporting be
published or aired in any manner or form by the
mass media, electronic mail, or other similar
devices. In case of violation thereof, the
concerned officer and employee of the covered
institution and media shall be held criminally
liable."
SEC. 7. Section 10 of the same Act is hereby
amended to read as follows: "SEC. 10. Freezing
of Monetary Instrument or Property. The
Court of Appeals, upon application ex parte by
the AMLC and after determination that
probable cause exists that any monetary
instrument or property is in any way related to
an unlawful activity as defined in Section 3(i)
hereof, may issue a freeze order which shall be
effective immediately. The freeze order shall be
for a period of twenty (20) days unless extended
by the court."
SEC. 8. Section 11 of the same Act is hereby
amended to read as follows:
"SEC. 11. Authority to Inquire into Bank
Deposits. Notwithstanding the provisions of
Republic Act No. 1405, as amended, Republic
Act No. 6426, as amended, Republic Act No.
8791, and other laws, the AMLC may inquire
into or examine any particular deposit or
investment with any banking institution or non-
bank financial institution upon order of any
competent court in cases of violation of this Act,
when it has been established that there is
probable cause that the deposits or investments
are related to an unlawful activity as defined in
Section 3(i) hereof or a money laundering
offense under Section 4 hereof; except that no
court order shall be required in cases involving
unlawful activities defined in Sections 3(i)(1), (2)
and (12). "To ensure compliance with this Act,
the Bangko Sentral ng Pilipinas (BSP) may
inquire into or examine any deposit or
investment with any banking institution or
nonbank financial institution when the
examination is made in the course of a periodic
or special examination, in accordance with the
rules of examination of the BSP."
SEC. 9. Section 14, paragraphs (c) and (d) of the
same Act is hereby amended to read as follows:
"(c) Malicious Reporting. Any person who, with
malice, or in bad faith, reports or files a
completely unwarranted or false information
relative to money laundering transaction against
any person shall be subject to a penalty of six (6)
months to four (4) years imprisonment and a
fine of not less than One hundred thousand
Philippine pesos (Php 100,000.00) but not more
than Five hundred thousand Philippine pesos
(Php 500,000.00), at the discretion of the court:
Provided, That the offender is not entitled to
avail the benefits of the Probation Law. "If the
offender is a corporation, association,
partnership or any juridical person, the penalty
shall be imposed upon the responsible officers,
as the case may be, who participated in, or
allowed by their gross negligence, the
commission of the crime. If the offender is a
juridical person, the court may suspend or
revoke its license. If the offender is an alien, he
shall, in addition to the penalties herein
prescribed, be deported without further
proceedings after serving the penalties herein
prescribed. If the offender is a public official or
employee, he shall, in addition to the penalties
prescribed herein, suffer perpetual or temporary
absolute disqualification from office, as the case
may be. "Any public official or employee who is
called upon to testify and refuses to do the same
or purposely fails to testify shall suffer the same
penalties prescribed herein.
"(d) Breach of Confidentiality. The punishment
of imprisonment ranging from three (3) to eight
(8) years and a fine of not less than Five hundred
thousand Philippine pesos (Php 500,000.00) but
not more than One million Philippine pesos
(Php 1,000,000.00) shall be imposed on a person
convicted for a violation under Section 9(c). In
the case of a breach of confidentiality that is
published or reported by media, the responsible
reporter, writer, president, publisher, manager
and editor-in-chief shall be liable under this
Act."
SEC. 10. Section 15 of Republic Act No. 9160 is
hereby deleted
 [REPUBLIC ACT NO. 10365]
AN ACT FURTHER STRENGTHENING THE
ANTI-MONEY LAUNDERING LAW,
AMENDING FOR THE PURPOSE REPUBLIC
ACT NO. 9160, OTHERWISE KNOWN AS
THE ANTI-MONEY LAUNDERING ACT OF
2001, AS AMENDED
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress
assembled:
SECTION 1. Section 3(a) of Republic Act No.
9160, as amended, is hereby amended to read as
follows:
(a) Covered persons, natural or juridical, refer
to:
(1) banks, non-banks, quasi-banks, trust
entities, foreign exchange dealers, pawnshops,
money changers, remittance and transfer
companies and other similar entities and all
other persons and their subsidiaries and
affiliates supervised or regulated by the Bangko
Sentral ng Pilipinas (BSP);
(2) insurance companies, pre-need companies
and all other persons supervised or regulated by
the Insurance Commission (IC);
(3) (i) securities dealers, brokers, salesmen,
investment houses and other similar persons
managing securities or rendering services as
investment agent, advisor, or consultant, (ii)
mutual funds, close-end investment companies,
common trust funds, and other similar persons,
and (iii) other entities administering or
otherwise dealing in currency, commodities or
financial derivatives based thereon, valuable
objects, cash substitutes and other similar
monetary instruments or property supervised or
regulated by the Securities and Exchange
Commission (SEC);
(4) jewelry dealers in precious metals, who, as a
business, trade in precious metals, for
transactions in excess of One million pesos
(P1,000,000.00);
(5) jewelry dealers in precious stones, who, as a
business, trade in precious stones, for
transactions in excess of One million pesos
(P1,000,000.00);
(6) company service providers which, as a
business, provide any of the following services
to third parties: (i) acting as a formation agent of
juridical persons; (ii) acting as (or arranging for
another person to act as) a director or corporate
secretary of a company, a partner of a
partnership, or a similar position in relation to
other juridical persons; (iii) providing a
registered office, business address or
accommodation, correspondence or
administrative address for a company, a
partnership or any other legal person or
arrangement; and (iv) acting as (or arranging for
another person to act as) a nominee shareholder
for another person; and
(7) persons who provide any of the following
services:
(i) managing of client money, securities or other
assets;
(ii) management of bank, savings or securities
accounts;
(iii) organization of contributions for the
creation, operation or management of
companies; and
(iv) creation, operation or management of
juridical persons or arrangements, and buying
and selling business entities.
Notwithstanding the foregoing, the term
covered persons shall exclude lawyers and
accountants acting as independent legal
professionals in relation to information
concerning their clients or where disclosure of
information would compromise client
confidences or the attorney-client
relationship: Provided, That these lawyers and
accountants are authorized to practice in the
Philippines and shall continue to be subject to
the provisions of their respective codes of
conduct and/or professional responsibility or
any of its amendments.
SEC. 2. Section 3(i) of the same Act is hereby
amended to read as follows:
(i) Unlawful activity refers to any act or
omission or series or combination thereof
involving or having direct relation to the
following:
(1) Kidnapping for ransom under Article 267 of
Act No. 3815, otherwise known as the Revised
Penal Code, as amended;
(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and
16 of Republic Act No. 9165, otherwise known
as the Comprehensive Dangerous Drugs Act of
2002;
(3) Section 3 paragraphs B, C, E, G, H and I of
Republic Act No. 3019, as amended, otherwise
known as the Anti-Graft and Corrupt Practices
Act;
(4) Plunder under Republic Act No. 7080, as
amended;
(5) Robbery and extortion under Articles 294,
295, 296, 299, 300, 301 and 302 of the Revised
Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal
gambling under Presidential Decree No. 1602;
(7) Piracy on the high seas under the Revised
Penal Code, as amended and Presidential
Decree No. 532;
(8) Qualified theft under Article 310 of the
Revised Penal Code, as amended;
(9) Swindling under Article 315 and Other
Forms of Swindling under Article 316 of the
Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455
and 1937;
(11) Violations of Republic Act No. 8792,
otherwise known as the Electronic Commerce
Act of 2000;
(12) Hijacking and other violations under
Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal
Code, as amended;
(13) Terrorism and conspiracy to commit
terrorism as defined and penalized under
Sections 3 and 4 of Republic Act No. 9372;
(14) Financing of terrorism under Section 4 and
offenses punishable under Sections 5, 6, 7 and 8
of Republic Act No. 10168, otherwise known as
the Terrorism Financing Prevention and
Suppression Act of 2012:
(15) Bribery under Articles 210, 211 and 211-A
of the Revised Penal Code, as amended, and
Corruption of Public Officers under Article 212
of the Revised Penal Code, as amended;
(16) Frauds and Illegal Exactions and
Transactions under Articles 213, 214, 215 and
216 of the Revised Penal Code, as amended;
(17) Malversation of Public Funds and Property
under Articles 217 and 222 of the Revised Penal
Code, as amended;
(18) Forgeries and Counterfeiting under
Articles 163, 166, 167, 168, 169 and 176 of the
Revised Penal Code, as amended;
(19) Violations of Sections 4 to 6 of Republic
Act No. 9208, otherwise known as the Anti-
Trafficking in Persons Act of 2003;
(20) Violations of Sections 78 to 79 of Chapter
IV, of Presidential Decree No. 705, otherwise
known as the Revised Forestry Code of the
Philippines, as amended;
(21) Violations of Sections 86 to 106 of Chapter
VI, of Republic Act No. 8550, otherwise known
as the Philippine Fisheries Code of 1998;
(22) Violations of Sections 101 to 107, and 110
of Republic Act No. 7942, otherwise known as
the Philippine Mining Act of 1995;
(23) Violations of Section 27(c), (e), (f), (g) and
(i), of Republic Act No. 9147, otherwise known
as the Wildlife Resources Conservation and
Protection Act;
(24) Violation of Section 7(b) of Republic Act
No. 9072, otherwise known as the National
Caves and Cave Resources Management
Protection Act;
(25) Violation of Republic Act No. 6539,
otherwise known as the Anti-Carnapping Act of
2002, as amended;
(26) Violations of Sections 1, 3 and 5 of
Presidential Decree No. 1866, as amended,
otherwise known as the decree Codifying the
Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or
Disposition of Firearms, Ammunition or
Explosives;
(27) Violation of Presidential Decree No. 1612,
otherwise known as the Anti-Fencing Law;
(28) Violation of Section 6 of Republic Act No.
8042, otherwise known as the Migrant Workers
and Overseas Filipinos Act of 1995, as amended
by Republic Act No. 10022;
(29) Violation of Republic Act No. 8293,
otherwise known as the Intellectual Property
Code of the Philippines;
(30) Violation of Section 4 of Republic Act No.
9995, otherwise known as the Anti-Photo and
Video Voyeurism Act of 2009;
(31) Violation of Section 4 of Republic Act No.
9775, otherwise known as the Anti-Child
Pornography Act of 2009;
(32) Violations of Sections 5, 7, 8, 9, 10(c), (d)
and (e), 11, 12 and 14 of Republic Act No. 7610,
otherwise known as the Special Protection of
Children Against Abuse, Exploitation and
Discrimination;
(33) Fraudulent practices and other violations
under Republic Act No. 8799, otherwise known
as the Securities Regulation Code of 2000; and
(34) Felonies or offenses of a similar nature that
are punishable under the penal laws of other
countries.
SEC. 3. Section 3 of the same Act shall have new
paragraphs (j) and (k).
(j) Precious metals shall mean gold, silver,
platinum, palladium, rhodium, ruthenium,
iridium and osmium. These include alloys of
precious metals, solders and plating chemicals
such as rhodium and palladium plating
solutions and potassium gold cyanide and
potassium silver cyanide and silver cyanide in
salt solution.
(k) Precious stones shall mean diamond, ruby,
emerald, sapphire, opal, amethyst, beryl, topaz,
and garnet that are used in jewelry making,
including those formerly classified as semi-
precious stones.
SEC. 4. Section 4 of the same Act is hereby
amended to read as follows:
SEC. 4. Money Laundering Offense. Money
laundering is committed by any person who,
knowing that any monetary instrument or
property represents, involves, or relates to the
proceeds of any unlawful activity:
(a) transacts said monetary instrument or
property;
(b) converts, transfers, disposes of, moves,
acquires, possesses or uses said monetary
instrument or property;
(c) conceals or disguises the true nature, source,
location, disposition, movement or ownership of
or rights with respect to said monetary
instrument or property;
(d) attempts or conspires to commit money
laundering offenses referred to in paragraphs
(a), (b) or (c);
(e) aids, abets, assists in or counsels the
commission of the money laundering offenses
referred to in paragraphs (a), (b) or (c) above;
and
(f) performs or fails to perform any act as a
result of which he facilitates the offense of
money laundering referred to in paragraphs (a),
(b) or (c) above.
Money laundering is also committed by any
covered person who, knowing that a covered or
suspicious transaction is required under this Act
to be reported to the Anti-Money Laundering
Council (AMLC), fails to do so.
SEC. 5. Section 6(a) of the same Act is hereby
amended to read as follows:
SEC. 6. Prosecution of Money Laundering.
(a) Any person may be charged with and
convicted of both the offense of money
laundering and the unlawful activity as herein
defined.
(b) The prosecution of any offense or violation
under this Act shall proceed independently of
any proceeding relating to the unlawful
activity.
SEC. 6. Section 7 of the same Act is hereby
amended to read as follows:
SEC. 7. Creation of Anti-Money Laundering
Council (AMLC). The Anti-Money Laundering
Council is hereby created and shall be composed
of the Governor of the Bangko Sentral ng
Pilipinas as Chairman, the Commissioner of the
Insurance Commission and the Chairman of the
Securities and Exchange Commission, as
members. The AMLC shall act unanimously in
the discharge of its functions as defined
hereunder:
x x x
(6) to apply before the Court of Appeals, ex
parte, for the freezing of any monetary
instrument or property alleged to be laundered,
proceeds from, or instrumentalities used in or
intended for use in any unlawful activity as
defined in Section 3(i) hereof;
x x x
(12) to require the Land Registration Authority
and all its Registries of Deeds to submit to the
AMLC, reports on all real estate transactions
involving an amount in excess of Five hundred
thousand pesos (P500,000.00) within fifteen (15)
days from the date of registration of the
transaction, in a form to be prescribed by the
AMLC. The AMLC may also require the Land
Registration Authority and all its Registries of
Deeds to submit copies of relevant documents of
all real estate transactions.
SEC. 7. Section 9(c), paragraphs 1 and 4 of the
same Act are hereby amended to read as
follows:
SEC. 9. Prevention of Money Laundering;
Customer Identification Requirements and
Record Keeping.
(a) x x x
(b) x x x
(c) Reporting of Covered and Suspicious
Transactions. Covered persons shall report to
the AMLC all covered transactions and
suspicious transactions within five (5) working
days from occurrence thereof, unless the AMLC
prescribes a different period not exceeding
fifteen (15) working days.
Lawyers and accountants acting as
independent legal professionals are not required
to report covered and suspicious transactions if
the relevant information was obtained in
circumstances where they are subject to
professional secrecy or legal professional
privilege.
x x x
x x x
When reporting covered or suspicious
transactions to the AMLC, covered persons and
their officers and employees are prohibited from
communicating, directly or indirectly, in any
manner or by any means, to any person or
entity, the media, the fact that a covered or
suspicious transaction has been reported or is
about to be reported, the contents of the report,
or any other information in relation thereto.
Neither may such reporting be published or
aired in any manner or form by the mass
media, electronic mail, or other similar devices.
In case of violation thereof, the concerned officer
and employee of the covered person and media
shall be held criminally liable.
SEC. 8. Section 10 of the same Act, as amended
by Republic Act No. 10167, is hereby amended
to read as follows:
SEC. 10. Freezing of Monetary Instrument or
Property. Upon a verified ex parte petition by
the AMLC and after determination that
probable cause exists that any monetary
instrument or property is in any way related to
an unlawful activity as defined in Section 3(i)
hereof, the Court of Appeals may issue a freeze
order which shall be effective immediately, and
which shall not exceed six (6) months depending
upon the circumstances of the
case: Provided, That if there is no case filed
against a person whose account has been frozen
within the period determined by the court, the
freeze order shall be deemed ipso
facto lifted: Provided, further, That this new rule
shall not apply to pending cases in the courts. In
any case, the court should act on the petition to
freeze within twenty-four (24) hours from filing
of the petition. If the application is filed a day
before a nonworking day, the computation of
the twenty-four (24)-hour period shall exclude
the nonworking days.
A person whose account has been frozen may
file a motion to lift the freeze order and the court
must resolve this motion before the expiration of
the freeze order.
No court shall issue a temporary restraining
order or a writ of injunction against any freeze
order, except the Supreme Court.
SEC. 9. Section 12 of the same Act is hereby
amended to read as follows:
(a) Civil Forfeiture. Upon determination by
the AMLC that probable cause exists that any
monetary instrument or property is in any way
related to an unlawful activity as defined in
Section 3(i) or a money laundering offense
under Section 4 hereof, the AMLC shall file with
the appropriate court through the Office of the
Solicitor General, a verified ex parte petition for
forfeiture, and the Rules of Court on Civil
Forfeiture shall apply.
The forfeiture shall include those other
monetary instrument or property having an
equivalent value to that of the monetary
instrument or property found to be related in
any way to an unlawful activity or a money
laundering offense, when with due diligence,
the former cannot be located, or it has been
substantially altered, destroyed, diminished in
value or otherwise rendered worthless by any
act or omission, or it has been concealed,
removed, converted, or otherwise transferred, or
it is located outside the Philippines or has been
placed or brought outside the jurisdiction of the
court, or it has been commingled with other
monetary instrument or property belonging to
either the offender himself or a third person or
entity, thereby rendering the same difficult to
identify or be segregated for purposes of
forfeiture.
(b) Claim on Forfeited Assets. Where the
court has issued an order of forfeiture of the
monetary instrument or property in a criminal
prosecution for any money laundering offense
defined under Section 4 of this Act, the offender
or any other person claiming an interest therein
may apply, by verified petition, for a declaration
that the same legitimately belongs to him and
for segregation or exclusion of the monetary
instrument or property corresponding thereto.
The verified petition shall be filed with the court
which rendered the judgment of forfeiture,
within fifteen (15) days from the date of the
finality of the order of forfeiture, in default of
which the said order shall become final and
executor. This provision shall apply in both civil
and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. Where the
court has issued an order of forfeiture of the
monetary instrument or property subject of a
money laundering offense defined under
Section 4, and said order cannot be enforced
because any particular monetary instrument or
property cannot, with due diligence, be located,
or it has been substantially altered, destroyed,
diminished in value or otherwise rendered
worthless by any act or omission, directly or
indirectly, attributable to the offender, or it has
been concealed, removed, converted, or
otherwise transferred to prevent the same from
being found or to avoid forfeiture thereof, or it is
located outside the Philippines or has been
placed or brought outside the jurisdiction of the
court, or it has been commingled with other
monetary instruments or property belonging to
either the offender himself or a third person or
entity, thereby rendering the same difficult to
identify or be segregated for purposes of
forfeiture, the court may, instead of enforcing
the order of forfeiture of the monetary
instrument or property or part thereof or
interest therein, accordingly order the convicted
offender to pay an amount equal to the value of
said monetary instrument or property. This
provision shall apply in both civil and criminal
forfeiture.
SEC. 10. Section 14 of the same Act, as amended,
is hereby further amended to read as follows:
SEC. 14. Penal Provisions. (a) Penalties for the
Crime of Money Laundering. The penalty of
imprisonment ranging from seven (7) to
fourteen (14) years and a fine of not less than
Three million Philippine pesos (Php3,000,000.00)
but not more than twice the value of the
monetary instrument or property involved in
the offense, shall be imposed upon a person
convicted under Section 4(a), (b), (c) and (d) of
this Act.
The penalty of imprisonment from four (4) to
seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos
(Php1,500,000.00) but not more than Three
million Philippine pesos (Php3,000,000.00), shall
be imposed upon a person convicted under
Section 4(e) and (f) of this Act.
The penalty of imprisonment from six (6)
months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or
both, shall be imposed on a person convicted
under the last paragraph of Section 4 of this Act.
(b) x x x
(c) x x x
(d) x x x
(e) The penalty of imprisonment ranging from
four (4) to seven (7) years and a fine
corresponding to not more than two hundred
percent (200%) of the value of the monetary
instrument or property laundered shall be
imposed upon the covered person, its directors,
officers or pesonnel who knowingly participated
in the commission of the crime of money
laundering.
(f) Imposition of Administrative Sanctions. The
imposition of the administrative sanctions shall
be without prejudice to the filing of criminal
charges against the persons responsible for the
violation.
After due notice and hearing, the AMLC shall,
at its discretion, impose sanctions, including
monetary penalties, warning or reprimand,
upon any covered person, its directors, officers,
employees or any other person for the violation
of this Act, its implementing rules and
regulations, or for failure or refusal to comply
with AMLC orders, resolutions and other
issuances. Such monetary penalties shall be in
amounts as may be determined by the AMLC to
be appropriate, which shall not be more than
Five hundred thousand Philippine pesos
(P500,000.00) per violation.
the covered persons. Whenever a bank, or quasi-
bank, financial institution or whenever any
person or entity commits said discriminatory
act, the person or persons responsible for such
violation shall be subject to sanctions as may be
deemed appropriate by their respective
regulators.
SEC. 11. New sections are hereby inserted after
Section 19 of the same Act, as amended, to read
as follows:
SEC. 20. Non-intervention in the Bureau of
Internal Revenue (BIR) Operations. Nothing
contained in this Act nor in related antecedent
laws or existing agreements shall be construed
to allow the AMLC to participate in any manner
in the operations of the BIR.
SEC. 21. The authority to inquire into or
examine the main account and the related
accounts shall comply with the requirements of
Article III, Sections 2 and 3 of the 1987
Constitution, which are hereby incorporated by
reference. Likewise, the constitutional injunction
against ex post facto laws and bills of attainder
shall be respected in the implementation of this
Act.

The AMLC may promulgate rules on fines and

penalties taking into consideration the attendant
circumstances, such as the nature and gravity of
the violation or irregularity.

(g) The provision of this law shall not be

construed or implemented in a manner that will
discriminate against certain customer types,
such as politically-exposed persons, as well as
their relatives, or against a certain religion, race
or ethnic origin, or such other attributes or
profiles when used as the only basis to deny
these persons access to the services provided by
 Republic Act No. 7042
AN ACT TO PROMOTE FOREIGN
INVESTMENTS, PRESCRIBE THE
PROCEDURES FOR REGISTERING
ENTERPRISES DOING BUSINESS IN THE
PHILIPPINES, AND FOR OTHER PURPOSES
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
g) The prices of industry products are
reasonable.
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;
d) Characterized by strong backward and
forward linkages with most industries existing
in the country, and
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.
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.