PHILIPPINE ECONOMIC LAWS

Republic Act No. 6939 March 10, 1990

AN ACT CREATING THE COOPERATIVE DEVELOPMENT AUTHORITY TO PROMOTE THE VIABILITY AND GROWTH OF
COOPERATIVES AS INSTRUMENTS OF EQUITY, SOCIAL JUSTICE AND ECONOMIC DEVELOPMENT, DEFINING ITS POWERS,
FUNCTIONS AND RESPONSIBILITIES, RATIONALIZING GOVERNMENT POLICIES AND AGENCIES WITH COOPERATIVE
FUNCTIONS, SUPPORTING COOPERATIVE DEVELOPMENT, TRANSFERRING THE REGISTRATION AND REGULATION
FUNCTIONS OF EXISTING GOVERNMENT AGENCIES ON COOPERATIVES AS SUCH AND CONSOLIDATING THE SAME WITH
THE AUTHORITY, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

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

Section 1. Declaration of Policy. - It is hereby declared the policy of the State to promote the viability and growth of
cooperatives as instruments of equity, social justice and economic development and to create an agency, in fulfillment of
the mandate in Section 15, Article XII of the Constitution. Toward this end, the State shall recognize cooperatives as
associations organized for the economic and social betterment of their members, operating business enterprises based
on mutual aid, and founded upon internationally accepted cooperative principles and practices.

In furtherance of this policy, the appropriate national economic planning agency and include the promotion of growth and
expansion of cooperatives as a major and indispensable component of national development plans. All departments,
branches, subdivisions and instrumentalities of the Government shall promote the formation of cooperatives under their
respective programs by providing them with appropriate and suitable incentives.

The State recognizes the cooperative sector as primarily responsible for the institutional development of cooperatives.
Accordingly, the State recognizes the rights of the cooperative sector to initiate and foster within its own ranks cooperative
promotion, organization, training, information gathering, audit and support services, with government assistance where
necessary.

Government assistance to cooperatives shall be free from any restriction and conditionality that may in any manner
infringe upon the objectives and character of cooperatives as provided in this Act. The State shall, except as provided in
this Act, maintain the policy of noninterference in the management and operation of cooperatives.

Section 2. Creation of the Cooperative Development Authority. - The Cooperative Development Authority is hereby
created under the Office of the President to carry out the provision of this Act.

Section 3. Powers, Functions and Responsibilities. - The Authority shall have the following powers, functions and
responsibilities:

(a) Formulate, adopt and implement integrated and comprehensive plans and programs on cooperative development
consistent with the national policy on cooperatives and the overall socioeconomic development plans of the Government;

(b) Develop and conduct management and training programs upon request of cooperatives that will provide members of
cooperatives with the entrepreneurial capabilities, managerial expertise, and technical skills required for the efficient
operation of their cooperatives and inculcate in them the true spirit of cooperativism and provide, when necessary,
technical and professional assistance to ensure the viability and growth of cooperatives with special concern for agrarian
reform, fishery and economically depressed sectors;
(c) Support the voluntary organization and consensual development of activities that promote cooperative movements
and provide assistance towards upgrading managerial and technical expertise upon request of the cooperatives
concerned;

(d) Coordinate the efforts of the local government units and the private sector in promotion, organization, and
development of cooperatives;

(e) Register all cooperatives and their federations and unions, including their division, merger, consolidation, dissolution
or liquidation. It shall also register the transfer of all or substantially all of their assets and liabilities and such other matters
as may be required by the Authority;

(f) Require all cooperatives, their federations and unions to submit their annual financial statements, duly audited by
certified public accountants, and general information sheets;

(g) Order the cancellation after due notice and hearing of the cooperative's certificate of registration for non-compliance
with administrative requirements and in cases of voluntary dissolution;

(h) Assist cooperatives in arranging for financial and other forms of assistance under such terms and conditions as are
calculated to strengthen their viability and autonomy;

(i) Establish extension offices as may be necessary and financially viable to implement this Act. Initially, there shall be
extension offices in the Cities of Dagupan, Manila, Naga, Iloilo, Cebu, Cagayan de Oro and Davao;

(j) Impose and collect reasonable fees and charges in connection with the registration of cooperatives;

(k) Administer all grants and donations coursed through the Government for cooperative development, without prejudice
to the right of cooperatives to directly receive and administer such grants and donations upon agreement with the
grantors and donors thereof;

(l) Formulate and adopt continuing policy initiatives consultation with the cooperative sector through public hearing;

(m) Adopt rules and regulations for the conduct of its internal operations;

(n) Submit an annual report to the President and Congress on the state of the cooperative movement; and

(o) Exercise such other functions as may be necessary to implement the provisions of cooperative laws and, in the
performance thereof, the Authority may summarily punish for direct contempt any person guilty of misconduct in the
presence of the Authority which seriously interrupts any hearing or inquiry with a fine of not more than Five hundred
pesos (P500.00) or imprisonment of not more than ten (10) days, or both. Acts constituting indirect contempt as defined
under Rule 71 of the Rules of Court shall be punished in accordance with the said Rule.

Section 4. Governing Body. - The Authority shall be governed by a Board of Administrators consisting of a Chairman and
six (6) members to be appointed by the President, all of whom shall be chosen from among the nominees of the
cooperative sector with two (2) representatives each from Luzon, Visayas and Mindanao. They shall serve for a term of six
(6) years without reappointment: Provided, That among those first appointed, the Chairman shall serve for a term of (6)
years, three (3) members to serve for a term of four (4) years, and three (3) members to serve for a term of two (2) years:
Provided, further, That there shall be four (4) ex officio members, one (1) each from the: (a) Department of Agriculture,
(b) Department of Transportation and Communications, (c) National Electrification Administration, and (d) Sugar
Regulatory Administration. Said representation status for the agencies is on a nonvoting basis and terminates one (1) year
from the operation of the Authority, but said ex officio members shall not be holding any other board position in any
government entity. The Chairman and members shall serve on a full-time basis. Any vacancy in the Board shall be filled by
appointment by the President in accordance with the membership allocation set forth in this section: Provided, That a
member so appointed shall serve only for the unexpired term.
Section 5. Qualifications of Members of the Governing Board. - No person shall be appointed Chairman or member of
the Board of Administrators unless he possesses the following qualifications:

(a) A natural-born Filipino citizen of legal age;

(b) A Bachelor's Degree in Cooperatives, Economics, Finance, Agriculture, Fisheries, Veterinary Medicine, Business, Social
Science, Law, Management, or in similar fields of study and five (5) years of experience as an official or officer of a
cooperative, government agency, or nongovernment organization engaged in cooperative development or, in the absence
of a Bachelor Degree, at least ten (10) years of experience in cooperatives either as an officer of a cooperative or a
government agency or nongovernment organization engaged in cooperative development; and

(c) Must be a resident of the region he represents for at least five (5) years.

Any person appointed as Chairman or regular member of the Board of Administrators shall divest himself of any direct or
indirect pecuniary interest in or dealings with cooperatives upon his appointment.

Section 6. Board of Administrators Meeting. - The Board of Administrators shall meet at least once a month for the
transaction of its regular business. Special meetings may be called by the Chairman or majority of the members to consider
specific matters. A majority vote by the entire Board shall be required for a decision. All meetings of the Board shall be
held at the head office in Metro Manila or at any other place as may be determined by the Board.

The Board of Administrators shall appoint an Executive Director who shall be the chief operating officer of the Authority
whose compensation shall be fixed by the Board of Administrators.

Section 7. Organization of the Authority. - The Authority shall be organized within one hundred twenty (120) days from
the effectivity of this Act.

Section 8. Mediation and Conciliation. - Upon request of either or both parties, the Authority shall mediate and conciliate
disputes within a cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within
three (3) months from request thereof, a certificate of non-resolution shall be issued by the commission prior to the filing
of appropriate action before the proper courts.

Section 9. Power to Register Cooperatives. - The power to register cooperatives shall be vested solely on the Authority.
The functions of the following departments and agencies relating to the registration of cooperatives as such are hereby
transferred to the Authority:

(a) The Department of Agriculture;

(b) The Bureau of Agricultural Cooperatives Development;

(c) The Department of Transportation and Communications;

(d) The Sugar Regulatory Administration;

(e) The National Electrification Administration; and

(f) Any other pertinent government agency.

The Bureau of Agricultural Cooperatives Development created under Executive Order No. 116, Series of 1987, is hereby
abolished and its qualified employees are hereby absorbed by the Cooperative Development Authority, in accordance
with its staffing pattern, subject to Civil Service rules and regulations and rules of the Office of Compensation and Position
Classification: Provided, That the Regional Cooperative Development Assistance Offices of Regions IX and XII, created
under Executive Order No. 634, are also hereby abolished and their employees shall be given preference for employment
with the Cooperative Development Authority in accordance with its staffing pattern, subject to Civil Service rules and
regulations: Provided, finally, That those who are not absorbed shall be given separation pay computed at one and one-
fourth (1 1/4) months salary for every year of service. Service of six (6) months or more shall be considered as one (1) year
in computing the years of service for severance pay and, whenever applicable, other retirement benefits under existing
laws.

Section 10. Transfer of Funds and Programs. - The Cooperative Development Loan Fund created under Presidential
Decree No. 175, as amended, is hereby transferred from the Department of Agriculture to the Authority.

The function of the Fund for Management Training and Assistance Program granted to the Department of Agriculture by
Presidential Decree No. 175, as amended, is likewise hereby transferred to the Authority.

The fund provided for the Management Training and Assistance Program under Presidential Decree No. 175, as amended,
is hereby converted into a fund for the development of cooperatives and may be used for such purpose upon the request
of the cooperatives concerned: Provided, That duly registered cooperatives shall have the right to establish their own
private training centers or federations for purposes of cooperative development.

In addition, the Cooperative Marketing Project as created under loan agreements which are now managed by the
Department of Agriculture is likewise hereby transferred to the Authority.

Section 11. Cooperatives in the Education System. - The history, philosophy, principles and practices of cooperatives and
their role as a factor in the national economy shall be disseminated both in formal and non-formal education.

The role of nongovernment organizations, not registered as cooperatives but duly registered under Philippine laws and
engaged in cooperative promotion, organization, research and education, shall be recognized. The Authority may accredit
such nongovernment organizations as non-academic training organizations. The training courses offered by them may be
eligible as credits for the purposes of academic, professional and career advancements of their trainees. Existing training
centers for cooperatives may qualify as nongovernment organizations under this Act.

State colleges and universities shall provide technical assistance and guidance to cooperatives in the communities wherein
they operate, upon request.

Section 12. Cooperatives in the Banking System. - The promotion and development of cooperative banks as part of the
Philippine banking system shall be a major concern of the Authority which shall undertake the necessary program towards
this end in collaboration with the Central Bank of the Philippines and the cooperative sector concerned.

Section 13. Rule-Making Authority. - The Authority is hereby authorized to promulgate, after due public hearing and upon
approval of the President, such rules and regulations as may be necessary to implement the provisions of this Act. Such
implementing rules and regulations shall take effect within fifteen (15) days after publication thereof in the Official Gazette
or in two (2) newspapers of general circulation. All subsequent amendments to the implementing rules and regulations
shall undergo the same process.
Section 14. Prohibition. - No organization shall be allowed to use the title "cooperative" in its name unless it follows all
generally accepted cooperative principles, applicable cooperative laws, and is duly registered under this Act: Provided,
That organizations which have used the word "cooperative" as part of their nomenclature but which do not qualify as
cooperatives under the provisions of this Act shall have three (3) years within which to qualify and to register with the
Authority. If at the end of the three-year period provided herein, the said organizations still do not qualify, it shall be
unlawful for the organizations to continue using the word "cooperative" in their names.

Section 15. Information Campaign. - The Cooperative Development Authority is mandated to conduct a six (6) months
information campaign on the provisions of this Act, beginning three (3) months from the effectivity of this Act.

Section 16. Appropriations. - The funds needed to carry out the provisions of this Act shall be charged to the
appropriations of the Bureau of Agricultural Cooperatives Development and the Regional Cooperative Development
Assistance Offices of Regions IX and XII under the current General Appropriations Act in addition to the appropriations of
other departments/agencies/funds whose functions/programs are transferred to the Authority: Provided, That in its initial
year of operations, an additional amount of not exceeding Sixty million pesos (P60,000,000.00) may be requested and
drawn by the Authority from the Contingent Fund of the President. Thereafter, such sums as may be necessary for its
continued implementation shall be included in the annual General Appropriations Act.

Section 17. Transitory Provisions. - All cooperatives registered under Presidential Decree Nos. 175 and 775, and Executive
Order No. 898 shall be deemed registered with the Cooperative Development Authority: Provided, however, That they
shall submit to the nearest Cooperative Development Authority office their certificates of registration, copies of their
articles of incorporation and bylaws, and their latest duly audited financial statements within one (1) year from effectivity
of this Act, otherwise, their registration shall be cancelled: Provided, further, That cooperatives created under Presidential
Decree No. 269, as amended by Presidential Decree No. 1645, shall be given three (3) years within which to qualify and
register with the Authority: Provided, finally, That after these cooperatives shall have qualified and registered, the
provisions of Sections 3 and 5 of Presidential Decree No. 1645 shall no longer be applicable to the said cooperatives.

Section 18. Repeals. - All acts, general orders, executive orders, letters of implementation, letters of instruction,
regulations or circulars, or parts thereof, inconsistent with any of the provisions of this Act are hereby repealed or modified
accordingly. In case of doubt, the same shall be resolved in favor of the cooperatives.

Section 19. Separability. - If for any cause any part of this Act is declared unconstitutional, the rest of the provisions shall
remain in force and effect.

Section 20. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a
newspaper of general circulation.

Approved: March 10, 1990

 Republic Act No. 10667

AN ACT PROVIDING FOR A NATIONAL COMPETITION POLICY PROHIBITING ANTI-COMPETITIVE

AGREEMENTS, ABUSE OF DOMINANT POSITION AND ANTI-COMPETITIVE MERGERS AND ACQUISITIONS,
ESTABLISHING THE PHILIPPINE COMPETITION COMMISSION AND APPROPRIATING FUNDS THEREFOR

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

CHAPTER I
GENERAL PROVISIONS

Section 1. Short Title. – This Act shall be known as the "Philippine Competition Act".

Section 2. Declaration of Policy. – The efficiency of market competition as a mechanism for allocating goods and
services is a generally accepted precept. The State recognizes that past measures undertaken to liberalize key
sectors in the economy need to be reinforced by measures that safeguard competitive conditions. The State also
recognizes that the provision of equal opportunities to all promotes entrepreneurial spirit, encourages private
investments, facilitates technology development and transfer and enhances resource productivity. Unencumbered
market competition also serves the interest of consumers by allowing them to exercise their right of choice over
goods and services offered in the market.

Pursuant to the constitutional goals for the national economy to attain a more equitable distribution of opportunities,
income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the
benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the
underprivileged and the constitutional mandate that the State shall regulate or prohibit monopolies when the public
interest so requires and that no combinations in restraint of trade or unfair competition shall be allowed, the State
shall:

(a) Enhance economic efficiency and promote free and fair competition in trade, industry and all commercial
economic activities, as well as establish a National Competition Policy to be implemented by the
Government of the Republic of the Philippines and all of its political agencies as a whole;

(b) Prevent economic concentration which will control the production, distribution, trade, or industry that will
unduly stifle competition, lessen, manipulate or constrict the discipline of free markets; and

(c) Penalize all forms of anti-competitive agreements, abuse of dominant position and anti-competitive
mergers and acquisitions, with the objective of protecting consumer welfare and advancing domestic and
international trade and economic development.

Section 3. Scope and Application. — This Act shall be enforceable against any person or entity engaged in any
trade, industry and commerce in the Republic of the Philippines. It shall likewise be applicable to international trade
having direct, substantial, and reasonably foreseeable effects in trade, industry, or commerce in the Republic of the
Philippines, including those that result from acts done outside the Republic of the Philippines.

This Act shall not apply to the combinations or activities of workers or employees nor to agreements or
arrangements with their employers when such combinations, activities, agreements, or arrangements are designed
solely to facilitate collective bargaining in respect of conditions of employment.

Section 4. Definition of Terms. – As used in this Act:

(a) Acquisition refers to the purchase of securities or assets, through contract or other means, for the
purpose of obtaining control by:

(1) One (1) entity of the whole or part of another;

(2) Two (2) or more entities over another; or

 (3) One (1) or more entities over one (1) or more entities;

(b) Agreement refers to any type or form of contract, arrangement, understanding, collective
recommendation, or concerted action, whether formal or informal, explicit or tacit, written or oral;

(c) Conduct refers to any type or form of undertaking, collective recommendation, independent or concerted
action or practice, whether formal or informal;

(d) Commission refers to the Philippine Competition Commission created under this Act;

(e) Confidential business information refers to information which concerns or relates to the operations,
production, sales, shipments, purchases, transfers, identification of customers, inventories, or amount or
source of any income, profits, losses, expenditures;

(f) Control refers to the ability to substantially influence or direct the actions or decisions of an entity, whether
by contract, agency or otherwise;

(g) Dominant position refers to a position of economic strength that an entity or entities hold which makes it
capable of controlling the relevant market independently from any or a combination of the following:
competitors, customers, suppliers, or consumers;

(h) Entity refers to any person, natural or juridical, sole proprietorship, partnership, combination or
association in any form, whether incorporated or not, domestic or foreign, including those owned or
controlled by the government, engaged directly or indirectly in any economic activity;

(i) Market refers to the group of goods or services that are sufficiently interchangeable or substitutable and
the object of competition, and the geographic area where said goods or services are offered;

(j) Merger refers to the joining of two (2) or more entities into an existing entity or to form a new entity;

(k) Relevant market refers to the market in which a particular good or service is sold and which is a
combination of the relevant product market and the relevant geographic market, defined as follows:

(1) A relevant product market comprises all those goods and/or services which are regarded as
interchangeable or substitutable by the consumer or the customer, by reason of the goods and/or
services’ characteristics, their prices and their intended use; and

(2) The relevant geographic market comprises the area in which the entity concerned is involved in
the supply and demand of goods and services, in which the conditions of competition are sufficiently
homogenous and which can be distinguished from neighboring areas because the conditions of
competition are different in those areas.

CHAPTER II
PHILIPPINE COMPETITION COMMISSION

Section 5. Philippine Competition Commission. – To implement the national competition policy and attain the
objectives and purposes of this Act, an independent quasi-judicial body is hereby created, which shall be known as
the Philippine Competition Commission (PCC), hereinafter referred to as the Commission, and which shall be
organized within sixty (60) days after the effectivity of this Act. Upon establishment of the Commission, Executive
Order No. 45 designating the Department of Justice as the Competition Authority is hereby amended. The Office for
Competition (OFC) under the Office of the Secretary of Justice shall however be retained, with its powers and
functions modified pursuant to Section 13 of this Chapter.

The Commission shall be an attached agency to the Office of the President.

Section 6. Composition of the Commission. – The Commission shall be composed of a Chairperson and four (4)
Commissioners. The Chairperson and the Commissioners shall be citizens and residents of the Philippines, of good
moral character, of recognized probity and independence and must have distinguished themselves professionally in
public, civic or academic service in any of the following fields: economics, law, finance, commerce or engineering.
They must have been in the active practice of their professions for at least ten (10) years, and must not have been
candidates for any elective national or local office in the immediately preceding elections, whether regular or
special: Provided, That at least one (1) shall be a member of the Philippine Bar with at least ten (10) years of
experience in the active practice of law, and at least one (1) shall be an economist. The Chairperson and the
Commissioners who shall have the rank equivalent of cabinet secretary and undersecretary, respectively, shall be
appointed by the President.

Section 7. Term of Office. – The term of office of the Chairperson and the Commissioners shall be seven (7) years
without reappointment. Of the first set of appointees, the Chairperson shall hold office for seven (7) years and of the
first four (4) Commissioners, two (2) shall hold office for a term of seven (7) years and two (2) for a term of five (5)
years. In case a vacancy occurs before the expiration of the term of office, the appointment to such vacancy shall
only be for the unexpired term of the predecessor.

The Chairperson and the Commissioners shall enjoy security of tenure and shall not be suspended or removed from
office except for just cause as provided by law.

Section 8. Prohibitions and Disqualifications. – The Commissioners shall not, during their tenure, hold any other
office or employment. They shall not, during their tenure, directly or indirectly practice any profession, except in a
teaching capacity, participate in any business, or be financially interested in any contract with, or any franchise, or
special privileges granted by the government or any subdivision, agency, or instrumentality thereof, including
government-owned and -controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in
the conduct of their office. They shall not be qualified to run for any office in the election immediately succeeding
their cessation from office: Provided, That the election mentioned hereof is not a Barangay election or a
Sangguniang Kabataan election. Provided, they shall not be allowed to personally appear or practice as counsel or
agent on any matter pending before the Commission for two (2) years following their cessation from office.

No spouse or relative by consanguinity or affinity within the fourth civil degree of any of the Commissioners, the
Chairperson and the Executive Director of the Commission may appear as counsel nor agent on any matter pending
before the Commission or transact business directly or indirectly therein during incumbency and within two (2) years
from cessation of office.

Section 9. Compensation and Other Emoluments for Members and Personnel of the Commission.—
Thecompensation and other emoluments for the members and personnel of the Commission shall be exempted
from the coverage of Republic Act No. 6758, otherwise known as the "Salary Standardization Act". For this purpose,
the salaries and other emoluments of the Chairperson, the Commissioners, and personnel of the Commission shall
be set based on an objective classification system, taking into consideration the importance and responsibilities
attached to the respective positions, and shall be submitted to the President of the Philippines for his approval.

Section 10. Quorum. – Three (3) members of the Commission shall constitute a quorum and the affirmative vote of
three (3) members shall be necessary for the adoption of any rule, ruling, order, resolution, decision or other acts of
the Commission.

Section 11. Staff. – The Commission shall appoint, fix the compensation, and determine the status, qualifications,
and duties of an adequate staff, which shall include an Executive Director of the Commission. The Executive
Director shall be appointed by the Commission and shall have relevant experience in any of the fields of law,
economics, commerce, management, finance or engineering for at least ten (10) years. The members of the
technical staff, except those performing purely clerical functions, shall possess at least a Bachelor’s Degree in any
of the following lines of specialization: economics, law, finance, commerce, engineering, accounting, or
management.

Section 12. Powers and Functions. — The Commission shall have original and primary jurisdiction over the
enforcement and implementation of the provisions of this Act, and its implementing rules and regulations. The
Commission shall exercise the following powers and functions:
(a) Conduct inquiry, investigate, and hear and decide on cases involving any violation of this Act and other
existing competition laws motu proprio or upon receipt of a verified complaint from an interested party or
upon referral by the concerned regulatory agency, and institute the appropriate civil or criminal proceedings;

(b) Review proposed mergers and acquisitions, determine thresholds for notification, determine the
requirements and procedures for notification, and upon exercise of its powers to review, prohibit mergers
and acquisitions that will substantially prevent, restrict, or lessen competition in the relevant market;

(c) Monitor and undertake consultation with stakeholders and affected agencies for the purpose of
understanding market behavior;

(d) Upon finding, based on substantial evidence, that an entity has entered into an anti-competitive
agreement or has abused its dominant position after due notice and hearing, stop or redress the same, by
applying remedies, such as, but not limited to, issuance of injunctions, requirement of divestment, and
disgorgement of excess profits under such reasonable parameters that shall be prescribed by the rules and
regulations implementing this Act;

(e) Conduct administrative proceedings, impose sanctions, fines or penalties for any noncompliance with or
breach of this Act and its implementing rules and regulations (IRR) and punish for contempt;

(f) Issue subpoena duces tecum and subpoena ad testificandum to require the production of books, records,
or other documents or data which relate to any matter relevant to the investigation and personal appearance
before the Commission, summon witnesses, administer oaths, and issue interim orders such as show cause
orders and cease and desist orders after due notice and hearing in accordance with the rules and
regulations implementing this Act;

(g) Upon order of the court, undertake inspections of business premises and other offices, land and vehicles,
as used by the entity, where it reasonably suspects that relevant books, tax records, or other documents
which relate to any matter relevant to the investigation are kept, in order to prevent the removal,
concealment, tampering with, or destruction of the books, records, or other documents;

(h) Issue adjustment or divestiture orders including orders for corporate reorganization or divestment in the
manner and under such terms and conditions as may be prescribed in the rules and regulations
implementing this Act. Adjustment or divestiture orders, which are structural remedies, should only be
imposed:

(1) Where there is no equally effective behavioral remedy; or

(2) Where any equally effective behavioral remedy would be more burdensome for the enterprise
concerned than the structural remedy. Changes to the structure of an enterprise as it existed before
the infringement was committed would only be proportionate to the substantial risk of a lasting or
repeated infringement that derives from the very structure of the enterprise;

(i) Deputize any and all enforcement agencies of the government or enlist the aid and support of any private
institution, corporation, entity or association, in the implementation of its powers and functions;

(j) Monitor compliance by the person or entities concerned with the cease and desist order or consent
judgment;

(k) Issue advisory opinions and guidelines on competition matters for the effective enforcement of this Act
and submit annual and special reports to Congress, including proposed legislation for the regulation of
commerce, trade, or industry;

(l) Monitor and analyze the practice of competition in markets that affect the Philippine economy; implement
and oversee measures to promote transparency and accountability; and ensure that prohibitions and
requirements of competition laws are adhered to;
 (m) Conduct, publish, and disseminate studies and reports on anti-competitive conduct and agreements to
inform and guide the industry and consumers;

(n) Intervene or participate in administrative and regulatory proceedings requiring consideration of the
provisions of this Act that are initiated by government agencies such as the Securities and Exchange
Commission, the Energy Regulatory Commission and the National Telecommunications Commission;

(o) Assist the National Economic and Development Authority, in consultation with relevant agencies and
sectors, in the preparation and formulation of a national competition policy;

(p) Act as the official representative of the Philippine government in international competition matters;

(q) Promote capacity building and the sharing of best practices with other competition-related bodies;

(r) Advocate pro-competitive policies of the government by:

(1) Reviewing economic and administrative regulations, motu proprio or upon request, as to whether
or not they adversely affect relevant market competition, and advising the concerned agencies
against such regulations; and

(2) Advising the Executive Branch on the competitive implications of government actions, policies
and programs; and

(s) Charging reasonable fees to defray the administrative cost of the services rendered.

Section 13. Office for Competition (OFC), Powers and Functions. — The OFC under the Department of Justice
(DOJ-OFC) shall only conduct preliminary investigation and undertake prosecution of all criminal offenses arising
under this Act and other competition-related laws in accordance with Section 31 of Chapter VI of this Act. The OFC
shall be reorganized and allocated resources as may be required therefor to effectively pursue such mandate.

CHAPTER III
PROHIBITED ACTS

Section 14. Anti-Competitive Agreements. –

(a) The following agreements, between or among competitors, are per se prohibited:

(1) Restricting competition as to price, or components thereof, or other terms of trade;

(2) Fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid
rotation and market allocation and other analogous practices of bid manipulation;

(b) The following agreements, between or among competitors which have the object or effect of substantially
preventing, restricting or lessening competition shall be prohibited:

(1) Setting, Kmiting, or controlling production, markets, technical development, or investment;

(2) Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods
or services, buyers or sellers or any other means;

(c) Agreements other than those specified in (a) and (b) of this section which have the object or effect of
substantially preventing, restricting or lessening competition shall also be prohibited: Provided, Those which
contribute to improving the production or distribution of goods and services or to promoting technical or
economic progress, while allowing consumers a fair share of the resulting benefits, may not necessarily be
deemed a violation of this Act.
An entity that controls, is controlled by, or is under common control with another entity or entities, have common
economic interests, and are not otherwise able to decide or act independently of each other, shall not be considered
competitors for purposes of this section.

Section 15. Abuse of Dominant Position. – It shall be prohibited for one or more entities to abuse their dominant
position by engaging in conduct that would substantially prevent, restrict or lessen competition:

(a) Selling goods or services below cost with the object of driving competition out of the relevant
market: Provided, That in the Commission’s evaluation of this fact, it shall consider whether the entity or
entities have no such object and the price established was in good faith to meet or compete with the lower
price of a competitor in the same market selling the same or comparable product or service of like quality;

(b) Imposing barriers to entry or committing acts that prevent competitors from growing within the market in
an anti-competitive manner except those that develop in the market as a result of or arising from a superior
product or process, business acumen, or legal rights or laws;

(c) Making a transaction subject to acceptance by the other parties of other obligations which, by their nature
or according to commercial usage, have no connection with the transaction;

(d) Setting prices or other terms or conditions that discriminate unreasonably between customers or sellers
of the same goods or services, where such customers or sellers are contemporaneously trading on similar
terms and conditions, where the effect may be to lessen competition substantially: Provided, That the
following shall be considered permissible price differentials:

(1) Socialized pricing for the less fortunate sector of the economy;

(2) Price differential which reasonably or approximately reflect differences in the cost of
manufacture, sale, or delivery resulting from differing methods, technical conditions, or quantities in
which the goods or services are sold or delivered to the buyers or sellers;

(3) Price differential or terms of sale offered in response to the competitive price of payments,
services or changes in the facilities furnished by a competitor; and

(4) Price changes in response to changing market conditions, marketability of goods or services, or
volume;

(e) Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where, to
whom, or in what forms goods or services may be sold or traded, such as fixing prices, giving preferential
discounts or rebate upon such price, or imposing conditions not to deal with competing entities, where the
object or effect of the restrictions is to prevent, restrict or lessen competition substantially: Provided, That
nothing contained in this Act shall prohibit or render unlawful:

(1) Permissible franchising, licensing, exclusive merchandising or exclusive distributorship

agreements such as those which give each party the right to unilaterally terminate the agreement; or

(2) Agreements protecting intellectual property rights, confidential information, or trade secrets;

(f) Making supply of particular goods or services dependent upon the purchase of other goods or services
from the supplier which have no direct connection with the main goods or services to be supplied;

(g) Directly or indirectly imposing unfairly low purchase prices for the goods or services of, among others,
marginalized agricultural producers, fisherfolk, micro-, small-, medium-scale enterprises, and other
marginalized service providers and producers;

(h) Directly or indirectly imposing unfair purchase or selling price on their competitors, customers, suppliers
or consumers, provided that prices that develop in the market as a result of or due to a superior product or
process, business acumen or legal rights or laws shall not be considered unfair prices; and
 (i) Limiting production, markets or technical development to the prejudice of consumers, provided that
limitations that develop in the market as a result of or due to a superior product or process, business
acumen or legal rights or laws shall not be a violation of this Act:

Provided, That nothing in this Act shall be construed or interpreted as a prohibition on having a dominant position in
a relevant market or on acquiring, maintaining and increasing market share through legitimate means that do not
substantially prevent, restrict or lessen competition:

Provided, further, That any conduct which contributes to improving production or distribution of goods or services
within the relevant market, or promoting technical and economic progress while allowing consumers a fair share of
the resulting benefit may not necessarily be considered an abuse of dominant position:

Provided, finally, That the foregoing shall not constrain the Commission or the relevant regulator from pursuing
measures that would promote fair competition or more competition as provided in this Act.

CHAPTER IV
MERGERS AND ACQUISITIONS

Section 16. Review of Mergers and Acquisitions. — The Commission shall have the power to review mergers and
acquisitions based on factors deemed relevant by the Commission.

Section 17. Compulsory Notification. – Parties to the merger or acquisition agreement referred to in the preceding
section wherein the value of the transaction exceeds one billion pesos (P1,000,000,000.00) are prohibited from
consummating their agreement until thirty (30) days after providing notification to the Commission in the form and
containing the information specified in the regulations issued by the Commission: Provided, That the Commission
shall promulgate other criteria, such as increased market share in the relevant market in excess of minimum
thresholds, that may be applied specifically to a sector, or across some or all sectors, in determining whether parties
to a merger or acquisition shall notify the Commission under this Chapter.

An agreement consummated in violation of this requirement to notify the Commission shall be considered void and
subject the parties to an administrative fine of one percent (1%) to five percent (5%) of the value of the transaction.

Should the Commission deem it necessary, it may request further information that are reasonably necessary and
directly relevant to the prohibition under Section 20 hereof from the parties to the agreement before the expiration of
the thirty (30)-day period referred. The issuance of such a request has the effect of extending the period within
which the agreement may not be consummated for an additional sixty (60) days, beginning on the day after the
request for information is received by the parties: Provided, That, in no case shall the total period for review by the
Commission of the subject agreement exceed ninety (90) days from initial notification by the parties.

When the above periods have expired and no decision has been promulgated for whatever reason, the merger or
acquisition shall be deemed approved and the parties may proceed to implement or consummate it. All notices,
documents and information provided to or emanating from the Commission under this section shall be subject to
confidentiality rule under Section 34 of this Act except when the release of information contained therein is with the
consent of the notifying entity or is mandatorily required to be disclosed by law or by a valid order of a court of
competent jurisdiction, or of a government or regulatory agency, including an exchange.

In the case of the merger or acquisition of banks, banking institutions, building and loan associations, trust
companies, insurance companies, public utilities, educational institutions and other special corporations governed
by special laws, a favorable or no-objection ruling by the Commission shall not be construed as dispensing of the
requirement for a favorable recommendation by the appropriate government agency under Section 79 of the
Corporation Code of the Philippines.

A favorable recommendation by a governmental agency with a competition mandate shall give rise to a disputable
presumption that the proposed merger or acquisition is not violative of this Act.
Section 18. Effect of Notification. — If within the relevant periods stipulated in the preceding section, the
Commission determines that such agreement is prohibited under Section 20 and does not qualify for exemption
under Section 21 of this Chapter, the Commission may:

(a) Prohibit the implementation of the agreement;

(b) Prohibit the implementation of the agreement unless and until it is modified by changes specified by the
Commission.

(c) Prohibit the implementation of the agreement unless and until the pertinent party or parties enter into
legally enforceable agreements specified by the Commission.

Section 19. Notification Threshold. – The Commission shall, from time to time, adopt and publish regulations
stipulating:

(a) The transaction value threshold and such other criteria subject to the notification requirement of Section
17 of this Act;

(b) The information that must be supplied for notified merger or acquisition;

(c) Exceptions or exemptions from the notification requirement; and

(d) Other rules relating to the notification procedures.

Section 20. Prohibited. Mergers and Acquisitions. – Merger or acquisition agreements that substantially prevent,
restrict or lessen competition in the relevant market or in the market for goods or services as may be determined by
the Commission shall be prohibited.

Section 21. Exemptions from Prohibited. Mergers and Acquisitions. – Merger or acquisition agreement prohibited
under Section 20 of this Chapter may, nonetheless, be exempt from prohibition by the Commission when the parties
establish either of the following:

(a) The concentration has brought about or is likely to bring about gains in efficiencies that are greater than
the effects of any limitation on competition that result or likely to result from the merger or acquisition
agreement; or

(b) A party to the merger or acquisition agreement is faced with actual or imminent financial failure, and the
agreement represents the least anti-competitive arrangement among the known alternative uses for the
failing entity’s assets:

Provided, That an entity shall not be prohibited from continuing to own and hold the stock or other share capital or
assets of another corporation which it acquired prior to the approval of this Act or acquiring or maintaining its market
share in a relevant market through such means without violating the provisions of this Act:

Provided, further, That the acquisition of the stock or other share capital of one or more corporations solely for
investment and not used for voting or exercising control and not to otherwise bring about, or attempt to bring about
the prevention, restriction, or lessening of competition in the relevant market shall not be prohibited.

Section 22. Burden of Proof. – The burden of proof under Section 21 lies with the parties seeking the exemption. A
party seeking to rely on the exemption specified in Section 21(a) must demonstrate that if the agreement were not
implemented, significant efficiency gains would not be realized.

Section 23. Finality of Ridings on Mergers and Acquisitions. – Merger or acquisition agreements that have received
a favorable ruling from the Commission, except when such ruling was obtained on the basis of fraud or false
material information, may not be challenged under this Act.
 CHAPTER V
DISPOSITION OF CASES

Section 24. Relevant Market. – For purposes of determining the relevant market, the following factors, among
others, affecting the substitutability among goods or services constituting such market and the geographic area
delineating the boundaries of the market shall be considered:

(a) The possibilities of substituting the goods or services in question, with others of domestic or foreign
origin, considering the technological possibilities, extent to which substitutes are available to consumers and
time required for such substitution;

(b) The cost of distribution of the good or service, its raw materials, its supplements and substitutes from
other areas and abroad, considering freight, insurance, import duties and non-tariff restrictions; the
restrictions imposed by economic agents or by their associations; and the time required to supply the market
from those areas;

(c) The cost and probability of users or consumers seeking other markets; and

(d) National, local or international restrictions which limit access by users or consumers to alternate sources
of supply or the access of suppliers to alternate consumers.

Section 25. Control of an Entity. – In determining the control of an entity, the Commission may consider the
following:

Control is presumed to exist when the parent owns directly or indirectly, through subsidiaries, more than one half
(1/2) of the voting power of an entity, unless in exceptional circumstances, it can clearly be demonstrated that such
ownership does not constitute control. Control also exists even when an entity owns one half (1/2) or less of the
voting power of another entity when:

(a) There is power over more than one half (1/2) of the voting rights by virtue of an agreement with investors;

(b) There is power to direct or govern the financial and operating policies of the entity under a statute or
agreement;

(c) There is power to appoint or remove the majority of the members of the board of directors or equivalent
governing body;

(d) There is power to cast the majority votes at meetings of the board of directors or equivalent governing
body;

(e) There exists ownership over or the right to use all or a significant part of the assets of the entity;

(f) There exist rights or contracts which confer decisive influence on the decisions of the entity.

Section 26. Determination of Anti-Competitive Agreement or Conduct. – In determining whether anti-competitive

agreement or conduct has been committed, the Commission shall:

(a) Define the relevant market allegedly affected by the anti-competitive agreement or conduct, following the
principles laid out in Section 24 of this Chapter;

(b) Determine if there is actual or potential adverse impact on competition in the relevant market caused by
the alleged agreement or conduct, and if such impact is substantial and outweighs the actual or potential
efficiency gains that result from the agreement or conduct;

(c) Adopt a broad and forward-looking perspective, recognizing future market developments, any overriding
need to make the goods or services available to consumers, the requirements of large investments in
 infrastructure, the requirements of law, and the need of our economy to respond to international competition,
but also taking account of past behavior of the parties involved and prevailing market conditions;

(d) Balance the need to ensure that competition is not prevented or substantially restricted and the risk that
competition efficiency, productivity, innovation, or development of priority areas or industries in the general
interest of the country may be deterred by overzealous or undue intervention; and

(e) Assess the totality of evidence on whether it is more likely than not that the entity has engaged in anti-
competitive agreement or conduct including whether the entity’s conduct was done with a reasonable
commercial purpose such as but not limited to phasing out of a product or closure of a business, or as a
reasonable commercial response to the market entry or conduct of a competitor.

Section 27. Market Dominant Position. – In determining whether an entity has market dominant position for
purposes of this Act, the Commission shall consider the following:

(a) The share of the entity in the relevant market and whether it is able to fix prices unilaterally or to restrict
supply in the relevant market;

(b) The existence of barriers to entry and the elements which could foreseeably alter both said barriers and
the supply from competitors;

(c) The existence and power of its competitors;

(d) The possibility of access by its competitors or other entities to its sources of inputs;

(e) The power of its customers to switch to other goods or services;

(f) Its recent conducts; and

(g) Other criteria established by the regulations of this Act.

There shall be a rebuttable presumption of market dominant position if the market share of an entity in the relevant
market is at least fifty percent (50%), unless a new market share threshold is determined by the Commission for that
particular sector.

The Commission shall from time to time determine and publish the threshold for dominant position or minimum level
of share in the relevant market that could give rise to a presumption of dominant position. In such determination, the
Commission would consider the structure of the relevant market, degree of integration, access to end-users,
technology and financial resources, and other factors affecting the control of a market, as provided in subsections
(a) to (g) of this section.

The Commission shall not consider the acquiring, maintaining and increasing of market share through legitimate
means not substantially preventing, restricting, or lessening competition in the market such as but not limited to
having superior skills, rendering superior service, producing or distributing quality products, having business
acumen, and the enjoyment and use of protected intellectual property rights as violative of this Act.

Section 28. Forbearance. – The Commission may forbear from applying the provisions of this Act, for a limited time,
in whole or in part, in all or specific cases, on an entity or group of entities, if in its determination:

(a) Enforcement is not necessary to the attainment of the policy objectives of this Act;

(b) Forbearance will neither impede competition in the market where the entity or group of entities seeking
exemption operates nor in related markets; and

(c) Forbearance is consistent with public interest and the benefit and welfare of the consumers.
A public hearing shall be held to assist the Commission in making this determination.

The Commission’s order exempting the relevant entity or group of entities under this section shall be made public.
Conditions may be attached to the forbearance if the Commission deems it appropriate to ensure the long-term
interest of consumers.

In the event that the basis for the issuance of the exemption order ceases to be valid, the order may be withdrawn
by the Commission.

CHAPTER VI
FINES AND PENALTIES

Section 29. Administrative Penalties. –

(a) Administrative Fines. – In any investigation under Chapter III, Sections 14 and 15, and Chapter IV,
Sections 17 and 20 of this Act, after due notice and hearing, the Commission may impose the following
schedule of administrative fines on any entity found to have violated the said sections:

First offense: Fine of up to one hundred million pesos (P100,000,000.00);

Second offense: Fine of not less than one hundred million pesos (P100,000,000.00) but not more
than two hundred fifty million pesos (P250,000,000.00).

In fixing the amount of the fine, the Commission shall have regard to both the gravity and the duration of the
violation.

(b) Failure to Comply With an Order of the Commission. – An entity which fails or refuses to comply with a
ruling, order or decision issued by the Commission shall pay a penalty of not less than fifty thousand pesos
(P50,000.00) up to two million pesos (P2,000,000.00) for each violation and a similar amount of penalty for
each day thereafter until the said entity fully complies. Provided that these fines shall only accrue daily
beginning forty-five (45) days from the time that the said decision, order or ruling was received.

(c) Supply of Incorrect or Misleading Information. – The Commission may likewise impose upon any entity
fines of up to one million pesos (PI,000,000.00) where, intentionally or negligently, they supply incorrect or
misleading information in any document, application or other paper filed with or submitted to the
Commission or supply incorrect or misleading information in an application for a binding ruling, a proposal
for a consent judgment, proceedings relating to a show cause order, or application for modification of the
Commission’s ruling, order or approval, as the case may be.

(d) Any other violations not specifically penalized under the relevant provisions of this Act shall be penalized
by a fine of not less than fifty thousand pesos (P50,000.00) up to two million pesos (P2,000,000.00).

Provided that the schedule of fines indicated in this section shall be increased by the Commission every five (5)
years to maintain their real value from the time it was set.

Section 30. Criminal Penalties. – An entity that enters into any anti-competitive agreement as covered by Chapter
III, Section 14(a) and 14(b) under this Act shall, for each and every violation, be penalized by imprisonment from two
(2) to seven (7) years, and a fine of not less than fifty million pesos (P50,000,000.00) but not more than two hundred
fifty million pesos (P250,000,000.00). The penalty of imprisonment shall be imposed upon the responsible officers,
and directors of the entity.

When the entities involved are juridical persons, the penalty of. imprisonment shall be imposed on its officers,
directors, or employees holding managerial positions, who are knowingly and willfully responsible for such violation.
 CHAPTER VII
ENFORCEMENT

Section 31. Fact Finding; Preliminary Inquiry. – The Commission, motu proprio, or upon the filing of a verified
complaint by an interested party or upon referral by a regulatory agency, shall have the sole and exclusive authority
to initiate and conduct a fact-finding or preliminary inquiry for the enforcement of this Act based on reasonable
grounds.

The Commission, after considering the statements made, or documents or articles produced in the course of the
fact-finding or preliminary inquiry, shall terminate the same by:

(a) Issuing a resolution ordering its closure if no violation or infringement of this Act is found; or

(b) Issuing a resolution to proceed, on the basis of reasonable grounds, to the conduct of a full
administrative investigation.

The Commission, after due notice and hearing, and on the basis of facts and evidence presented, may issue an
order for the temporary cessation or desistance from the performance of certain acts by the respondent entity, the
continued performance of which would result in a material and adverse effect on consumers or competition in the
relevant market.

If the evidence so warrants, the Commission may file before the DOJ criminal complaints for violations of this Act or
relevant laws for preliminary investigation and prosecution before the proper court. The DOJ shall conduct such
preliminary investigation in accordance with the Revised Rules of Criminal Procedure.

The preliminary inquiry shall, in all cases, be completed by the Commission within ninety (90) days from submission
of the verified complaint, referral, or date of initiation by the Commission, motu proprio, of the same.

Except as provided in Section 12(i) of Chapter II of this Act, no law enforcement agency shall conduct any kind of
fact-finding, inquiry or investigation into any competition-related matters.

Section 32. Relationship With Sector Regulators. – The Commission shall have original and primary jurisdiction in
the enforcement and regulation of all competition-related issues.

The Commission shall still have jurisdiction if the issue involves both competition and noncompetition issues, but the
concerned sector regulator shall be consulted and afforded reasonable opportunity to submit its own opinion and
recommendation on the matter before the Commission makes a decision on any case.

Where appropriate, the Commission and the sector regulators shall work together to issue rules and regulations to
promote competition, protect consumers, and prevent abuse of market power by dominant players within their
respective sectors.

Section 33. Power to Investigate and Enforce Orders and Resolutions. – The Commission shall conduct inquiries by
administering oaths, issuing subpoena duces tecum and summoning witnesses, and commissioning consultants or
experts. It shall determine if any provision of this Act has been violated, enforce its orders and carry out its
resolutions by making use of any available means, provisional or otherwise, under existing laws and procedures
including the power to punish for contempt and to impose fines.

Section 34. Confidentiality of Information. – Confidential business information submitted by entities, relevant to any
inquiry or investigation being conducted pursuant to this Act as well as any deliberation in relation thereto, shall not,
in any manner, be directly or indirectly disclosed, published, transferred, copied, or disseminated. Likewise, the
Commission shall, to the extent possible, subject such information to the confidentiality rule provided under this
section when it issues notices, bulletins, rulings and other documents: Pi’ovided., That the confidentiality rule shall
not apply if the notifying entity consents to the disclosure, or the document or information is mandatorily required to
be disclosed by law or by a valid order of a court of competent jurisdiction or of a government or regulatory agency,
including an exchange. The identity of the persons who provide information to the Commission under condition of
anonymity, shall remain confidential, unless such confidentiality is expressly waived by these persons.
Any violation of this provision shall be imposed a fine of not less than one million pesos (PI,000,000.00) but not
more than five million pesos (P5,000,000.00).

Section 35. Leniency Program. – The Commission shall develop a Leniency Program to be granted to any entity in
the form of immunity from suit or reduction of any fine which would otherwise be imposed on a participant in an anti-
competitive agreement as provided in Section 14(a) and 14(b) of this Act in exchange for the voluntary disclosure of
information regarding such an agreement which satisfies specific criteria prior to or during the fact-finding or
preliminary inquiry stage of the case.

Immunity from suit will be granted to an entity reporting illegal anti-competitive activity before a fact-finding or
preliminary inquiry has begun if the following conditions are met:

(a) At the time the entity comes forward, the Commission has not received information about the activity
from any other source;

(b) Upon the entity’s discovery of illegal activity, it took prompt and effective action to terminate its
participation therein;

(c) The entity reports the wrongdoing with candor and completeness and provides full, continuing, and
complete cooperation throughout the investigation; and

(d) The entity did not coerce another party to participate in the activity and clearly was not the leader in, or
the originator of, the activity.

Even after the Commission has received information about the illegal activity after a fact-finding or preliminary
inquiry has commenced, the reporting entity will be granted leniency, provided preceding conditions (b) and (c) and
the following additional requirements are complied with:

(1) The entity is the first to come forward and qualify for leniency;

(2) At the time the entity comes forward, the Commission does not have evidence against the entity that is
likely to result in a sustainable conviction; and

(3) The Commission determines that granting leniency would not be unfair to others.

Such program shall include the immunity from any suit or charge of affected parties and third parties, exemption,
waiver, or gradation of fines and/or penalties giving precedence to the entity submitting such evidence. An entity
cooperating or furnishing information, document or data to the Commission in connection to an investigation being
conducted shall not be subjected to any form of reprisal or discrimination. Such reprisal or discrimination shall be
considered a violation of this Act subject to the sanctions provided in this Act.

Nothing in this section shall preclude prosecution for entities that report to the Commission false, misleading, or
malicious information, data or documents damaging to the business or integrity of the entities under inquiry as a
violation of said section. An entity found to have reported false, misleading or malicious information, data, or
document may be penalized by a fine not less than the penalty imposed in the section reported to have been
violated by the entity complained of.

The DOJ-OFC may likewise grant leniency or immunity as provided in this section in the event that there is already
a preliminary investigation pending before it.

Section 36. Nolo Contendere. – An entity charged in a criminal proceeding pursuant to Section 14(a) and 14(b) of
this Act may enter a plea of Nolo Contendere, in which he does not accept nor deny responsibility for the charges
but agrees to accept punishment as if he had pleaded guilty. The plea cannot be used against the defendant entity
to prove liability in a civil suit arising from the criminal action nor in another cause of action: Provided, That a plea
of Nolo Contendere may be entered only up to arraignment and subsequently, only with the permission of the court
which shall accept it only after weighing its effect on the parties, the public and the administration of justice.
Section 37. Non-Adversarial Remedies. — As an implementing and enforcement policy, the Commission shall,
under such rules and regulations it may prescribe, encourage voluntary compliance with this Act and other
competition laws by making available to the parties concerned the following and other analogous non-adversarial
administrative remedies, before the institution of administrative, civil or criminal action:

(a) Binding Ruling. — Where no prior complaint or investigation has been initiated, any entity that is in doubt
as to whether a contemplated act, course of conduct, agreement, or decision, is in compliance with, is
exempt from, or is in violation of any of the provisions of this Act, other competition laws, or implementing
rules and regulations thereof, may request the Commission, in writing, to render a binding ruling
thereon: Provided,That the ruling is for a specified period, subject to extension as may be determined by the
Commission, and based on substantial evidence.

In the event of an adverse binding ruling on an act, course or conduct, agreement, or decision, the applicant
shall be provided with a reasonable period, which in no case shall be more than ninety (90) days, to abide
by the ruling of the Commission and shall not be subject to administrative, civil, or criminal action unless the
applicant fails to comply with the provisions of this Act;

(b) Show Cause Order. — Upon preliminary findings motu proprio or on written complaint under oath by an
interested party that any entity is conducting its business, in whole or in part in a manner that may not be in
accord with the provisions of this Act or other competition laws, and it finds that the issuance of a show
cause order would be in the interest of the public, the Commission shall issue and serve upon such entity or
entities a written description of its business conduct complained of, a statement of the facts, data, and
information together with a summary of the evidence thereof, with an order requiring the said entity or
entities to show cause, within the period therein fixed, why no order shall issue requiring such person or
persons to cease and desist from continuing with its identified business conduct, or pay the administrative
fine therein specified, or readjust its business conduct or practices;

(c) Consent Order. – At any time prior to the conclusion by the Commission of its inquiry, any entity under
inquiry may, without in any manner admitting a violation of this Act or any other competition laws, submit to
the Commission a written proposal for the entry of a consent order, specifying therein the terms and
conditions of the proposed consent order which shall include among others the following:

(1) The payment of an amount within the range of fines provided for under this Act;

(2) The required compliance report as well as an entity to submit regular compliance reports;

(3) Payment of damages to any private party/parties who may have suffered injury; and

(4) Other terms and conditions that the Commission deems appropriate and necessary for the
effective enforcement of this Act or other Competition Laws:

Provided, That a consent order shall not bar any inquiry for the same or similar acts if continued or repeated;

(d) Monitoring of Compliance. – The Commission shall monitor the compliance by the entity or entities
concerned, their officers, and employees, with the final and executory binding ruling, cease and desist order,
or approval of a consent judgment. Upon motion of an interested party/parties, the Commission shall issue a
certification or resolution to the effect that the entity or entities concerned have, or have not, as the case
may be, complied with a final and executory ruling, order, or approval.

(e) Inadmissibility of Evidence in Criminal Proceedings. – The request for a binding ruling, the show cause
order, or the proposal for consent order; the facts, data, and information therein contained or subsequently
supplied by the entity or entities concerned; admissions, oral or written, made by them against their interest;
all other documents filed by them, including their evidence presented in the proceedings before the
Commission; and the judgment or order rendered thereon; shall not be admissible as evidence in any
criminal proceedings arising from the same act subject of the binding ruling, show cause order or consent
order against such entity or entities, their officers, employees, and agents.
Section 38. Contempt. — The Commission may summarily punish for contempt by imprisonment not exceeding
thirty (30) days or by a fine not exceeding one hundred thousand pesos (P 100,000.00), or both, any entity guilty of
such misconduct in the presence of the Commission in its vicinity as to seriously interrupt any hearing, session or
any proceeding before it, including cases in which an entity willfully fails or refuses, without just cause, to comply
with a summons, subpoena or subpoena duces tecum legally issued by the Commission being present at a hearing,
proceeding, session or investigation, refused to be sworn as a witness or to answer questions or to furnish
information when lawfully required to do so.

Section 39. Appeals of the Decisions of the Commission. – Decisions of the Commission shall be appealable to the
Court of Appeals in accordance with the Rules of Court. The appeal shall not stay the order, ruling or decision
sought to be reviewed, unless the Court of Appeals shall direct otherwise upon such terms and conditions it may
deem just. In the appeal, the Commission shall be included as a party respondent to the case.

Section 40. ‘Writ of Execution. – Upon the finality of its binding ruling, order, resolution, decision, judgment, or rule
or regulation, collectively, the Commission may issue a writ of execution to enforce its decision and the payment of
the administrative fines provided in the preceding sections.

Section 41. Basic Necessities and Prime Commodities. – If the violation involves the trade or movement of basic
necessities and prime commodities as defined by Republic Act No. 7581, as amended, the fine imposed by the
Commission or the courts, as the case may be, shall be tripled.

Section 42. Immunity from Suit. – The Chairperson,the Commissioners, officers, employees and agents of the
Commission shall not be subject to any action, claim or demand in connection with any act done or omitted by them
in the performance of their duties and exercise of their powers except for those actions and omissions done in
evident bad faith or gross negligence.

Section 43. Indemnity. – Unless the actions of the Commission or its Chairperson, any of its Commissioners,
officers, employees and agents are found to be in willful violation of this Act, performed with evident bad faith or
gross negligence, the Commission, its Chairperson, Commissioners, officers, employees and agents are held free
and harmless to the fullest extent permitted by law from any liability, and they shall be indemnified for any and all
liabilities, losses, claims, demands, damages, deficiencies, costs and expenses of whatsoever kind and nature that
may arise in connection with the exercise of their powers and performance of their duties and functions.

The Commission shall underwrite or advance litigation costs and expenses, including legal fees and other expenses
of external counsel, or provide legal assistance to its Chairperson, Commissioners, officers, employees, or agents in
connection with any civil, criminal, administrative or any other action or proceeding, to which they are made a party
by reason of, or in connection with, the exercise of authority or performance of duties and functions under this
Act: Provided, That such legal protection shall not apply to any civil, criminal, administrative, or any action or
proceeding that may be initiated by the Commission, against such Chairperson, Commissioners, officers,
employees, or agents: Provided, further, That the Chairperson, Commissioners, officers, employees, or agents, who
shall resign, retire, transfer to another agency or be separated from the service, shall continue to be provided with
such legal protection in connection with any act done or omitted to be done by them in good faith during their tenure
or employment with the Commission: Provided, finally, That in the event of a settlement or compromise,
indemnification shall be provided only in connection with such matters covered by the settlement as to which the
Commission is advised by counsel that the persons to be indemnified did not commit any negligence or misconduct.

The costs and expenses incurred in defending the aforementioned action, suit or proceeding may be paid by the
Commission in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the Chairperson, Commissioner, officer, employee, or agent to repay the amount advanced should it
ultimately be determined by the Commission that one is not entitled to be indemnified as provided in this section.

Section 44. Jurisdiction of the Regional Trial Court. – The Regional Trial Court of the city or province where the
entity or any of the entities whose business act or conduct Constitutes the subject matter of a case, conducts its
principal place of business, shall have original and exclusive jurisdiction, regardless of the penalties and fines herein
imposed, of all criminal and civil cases involving violations of this Act and other competition-related laws. If the
defendant or anyone is charged in the capacity of a director, officer, shareholder, employee, or agent of a
corporation or other juridical entity who knowingly and willfully authorized the commission of the offense charged,
the Regional Trial Court of the city or province where such corporation or juridical entity conducts its principal place
of business, shall have jurisdiction.

Section 45. Private Action. – Any person who suffers direct injury by reason of any violation of this Act may institute
a separate and independent civil action after the Commission has completed the preliminary inquiry provided under
Section 31.

CHAPTER VIII
OTHER PROVISIONS

Section 46. Statute of Limitations. — Any action arising from a violation of any provision of this Act shall be forever
barred unless commenced within five (5) years from:

 For criminal actions, the time the violation is discovered by the offended party, the authorities, or their
agents; and
 For administrative and civil actions, the time the cause of action accrues.

Section 47. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary
Mandatory Injunctions. — Except for the Court of Appeals and the Supreme Court, no other court shall issue any
temporary restraining order, preliminary injunction or preliminary mandatory injunction against the Commission in
the exercise of its duties or functions: Provided, That, this prohibition shall apply in all cases, disputes or
controversies instituted by a private party, including, but not limited to, cases filed by entities or those claiming to
have rights through such entities: Provided, however, That, this prohibition shall not apply when the matter is of
extreme urgency involving a constitutional issue, such that the non-issuance of a temporary restraining order will
result in grave injustice and irreparable injury to the public: Provided, further, That, the applicant shall file a bond, in
an amount to be fixed by the Court, but in no case shall it exceed twenty percent (20%) of the imposable fines
provided for under Chapter VI, Section 29 of this Act: Provided, finally, That in the event that the court finally decides
that the applicant was not entitled to the relief applied for, the bond shall accrue in favor of the Commission.

Any temporary restraining order, preliminary injunction or preliminary mandatory injunction issued in violation of this
section is void and of no force and effect. Any judge who violates this section shall be penalized by suspension of at
least one (1) year without pay in addition to other criminal, civil or administrative penalties.

Section 48. Trade Associations. – Nothing contained in this Act shall be construed to prohibit the existence and
operation of trade associations organized to promote quality standards and safety issues: Pi’ovided, That, these
associations shall not in any way be used to justify any violation of this Act: Provided, however, That it shall not be
illegal to use the association as a forum to discuss or promote quality standards, efficiency, safety, security,
productivity, competitiveness and other matters of common interest involving the industry: Provided, further, That
such is done without any anti-competitive intent or effect.

Section 49. Congressional Oversight Committee. – To oversee the implementation of this Act, there shall be
created a Congressional Oversight Committee on Competition (COCC) to be composed of the Chairpersons of the
Senate Committees on Trade and Commerce, Economic Affairs, and Finance, the Chairpersons of the House of
Representatives Committees on Economic Affairs, Trade and Industry, and Appropriations and two (2) members
each from the Senate and the House of Representatives who shall be designated by the Senate President and the
Speaker of the House of Representatives: Provided, That one (1) of the two (2) Senators and one (1) of the two (2)
House Members shall be nominated by the respective Minority Leaders of the Senate and the House of
Representatives. The Congressional Oversight Committee shall be jointly chaired by the Chairpersons of the Senate
Committee on Trade and Commerce and the House of Representatives Committee on Economic Affairs. The Vice
Chairperson of the Congressional Oversight Committee shall be jointly held by the Chairpersons of the Senate
Committee on Economic Affairs and the House of Representatives Committee on Trade and Industry.

The Secretariat of the COCC shall be drawn from the existing personnel of the Senate and House of
Representatives committees comprising the Congressional Oversight Committee.
 CHAPTER IX
FINAL PROVISIONS

Section 50. Implementing Rules and Regulations. — Within one hundred eighty (180) days from the effectivity of
this Act, the Commission, in consultation with the DOJ-OFC and concerned sector regulators shall promulgate the
necessary implementing rules and regulations for the implementation of this Act: Provided, That, the Commission
may revise such implementing rules and regulations as it deems necessary: Provided, however, That such revised
implementing rules and regulations shall only take effect fifteen (15) days following its publication in two (2)
newspapers of general circulation.

Section 51. Appropriations and Use of Fees, Charges and Penalties. – The initial budgetary requirements of the
Commission of three hundred million pesos (P300,000,000.00) is hereby appropriated.

 All fees, fines, penalties collected by the Commission shall not be retained by the Commission, but will be
remitted to the National Treasury and shall accrue to the general funds.

Such funds necessary for the continuous and effective operation of the Commission shall be included in the annual
General Appropriations Act.

Section 52. Transparency Clause. — Final decisions, orders and rulings of the Commission shall be published on
the official website subject to Section 34 of this Act.

Records of public proceedings shall be made available to the public subject to Section 34 of this Act. 1âwphi1

Section 53. Transitional Clause. — In order to allow affected parties time to renegotiate agreements or restructure
their business to comply with the provisions of this Act, an existing business structure, conduct, practice or any act
that may be in violation of this Act shall be subject to the administrative, civil and criminal penalties prescribed
herein only if it is not cured or is continuing upon the expiration of two (2) years after the effectivity of this
Act: Provided, That this section shall not apply to administrative, civil and criminal proceedings against anti-
competitive agreement or conduct, abuse of dominant position, and anti-competitive mergers and acquisitions,
initiated prior to the entry into force of this Act: Provided, further, That during the said two (2)-year period, the
government shall undertake an advocac program to inform the general public of the provisions of this Act.

Section 54. Separability Clause. – If any clause, sentence, section or part of this Act shall be adjudged by a court of
competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder of this Act, but
shall be confined in its operation to the clause, sentence, paragraph, section, or part thereof directly involved in the
controversy.

Section 55. Repealing Clause. – The following laws, and all other laws, decrees, executive orders and regulations,
or part or parts thereof inconsistent with any provision of this Act, are hereby repealed, amended or otherwise
modified accordingly:

(a) Article 186 of Act No. 3815, otherwise known as the Revised Penal Code: Provided, That violations of
Article 186 of the Revised Penal Code committed before the effectivity of this Act may continue to be
prosecuted unless the same have been barred by prescription, and subject to the procedure under Section
31 of this Act;

(b) Section 4 of Commonwealth Act No. 138;

(c) Section 43(u) on Functions of the ERC of Republic Act No. 9136, entitled "An Act Ordaining Reforms in
the Electric Power Industry, Amending for the Purpose Certain Laws and for Other Purposes", otherwise
known as the "Electric Power Industry Reform Act of2001", insofar as the provision thereof is inconsistent
with this Act;

(d) Section 24 on Illegal Acts of Price Manipulation and Section 25 on Penalty for Illegal Acts of Price
Manipulation of Republic Act No. 9502, entitled "An Act Providing for Cheaper and Quality Medicines,
Amending for the Purpose Republic Act No. 8293 or the Intellectual Property Code, Republic Act No. 6675
 or the Generics Act of 1988, and Republic Act No. 5921 or the Pharmacy Law, and for Other Purposes",
otherwise known as the "Universally Accessible Cheaper and Quabrty Medicines Act of 2008". insofar as the
provisions thereof are inconsistent with this Act; and

(e) Executive Order No. 45, Series of 2011, Designating the Department of Justice as the Competition
Authority, Department of Justice Circular 005 Series of 2015, and other related issuances, insofar as they
are inconsistent with the provisions of this Act.

Section 56.Effectivity Clause. – This Act shall take effect fifteen (15) days following its publication in the Official
Gazette or at least two (2) national newspapers of general circulation. Notwithstanding any provision herein, this Act
shall have no retroactive effect.

Approved,

(Sgd.) FELICIANO BELMONTE JR. (Sgd.) FRANKLIN M. DRILON

Speaker of the House President of the Senate
of Representatives

This Act which is a consolidation of Senate Bill No. 2282 and House Bill No. 5286 was finally passed by the Senate
and the House of Representatives on June 10, 2015.

(Sgd.) MARILYN B. BARUA-YAP (Sgd.) FRANKLIN M. DRILON

Secretary General President of the Senate
House of Representatives

Approved: JULY 21, 2015

(Sgd) BENIGNO S. AQUINO III

President of the Philippines
 Republic Act No. 7470
"National Economic Research and Business Assistance Center of the Philippines Act of 1992"
AN ACT ESTABLISHING THE NATIONAL ECONOMIC RESEARCH AND BUSINESS ASSISTANCE CENTER
OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

REPUBLIC ACT NO. 7470

AN ACT ESTABLISHING THE NATIONAL ECONOMIC RESEARCH AND BUSINESS ASSISTANCE CENTER
OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

Section 1. Title. — This Act shall be known as the "National Economic Research and Business Assistance
Center of the Philippines Act of 1992."chan robles virtual law library

Sec. 2. Declaration of Policy. — It is the policy of the State to enhance economic growth by providing
necessary and strategic economic and business information and research assistance thereby expediting
the process of business formation and encouraging the growth of entrepreneurship in the country.
chan robles virtual law library

Sec. 3. Creation. — There is hereby created the National Economic Research and Business Assistance
Center (NERBAC) of the Philippines, hereinafter referred to as the Center, which shall be placed under the
Department of Trade and Industry.chanrobles virtual law library

Sec. 4. Purpose. — The Center shall provide prospective entrepreneurs/investors with the basic information
on various business options that are open to them in accordance with the investment priorities of the
Government. The Center shall likewise provide a one-stop action center which shall facilitate the
processing and documentation of all paper requirements necessary for the establishment of a business
enterprise in the country, including credit services. chan robles virtual law library

Sec. 5. Functions. — The Center shall perform the following functions:

(a) To provide information to prospective investors, both local and foreign, on the different kinds of
business opportunities that are in accord with set investment priorities of the Government;

chan robles virtual law library

(b) To establish an updated data bank of all industries and business enterprise in the country; chan robles
virtual law library

(c) To prepare pre-feasibility studies of existing as well as possible industries in the Philippines that can
help entrepreneurs decide on what business to venture into;

(d) To organize and maintain a centralized one-stop shop services or assistance center that shall expedite
the processing of all government requirements necessary in establishing a business;

(e) To monitor technological advances relevant to business and economy, and disseminate such
information to Filipino entrepreneurs and the public in general;

(f) To formulate and coordinate the conduct of relevant research projects to help attain the Center's goals;
(g) To monitor and collate economic, technical, and industry research output of all government agencies
that has reference to business enterprises, as well as to investors in the country; chan robles virtual law
library

(h) To collect and facilitate the gathering of information on the kind of technology/machinery needed, their
prices, specifications, and where they can be purchased or leased, as well as to help rehabilitate and
modernize existing machinery and equipment of essential industries; and

(i) To facilitate the gathering of information on how to harness indigenous resources and technology
required for our development efforts.

Sec. 6. Structural Organization. — The Center shall have a Board of Governors under which shall be the
Office of the Director General and the Office of the Deputy Director General. Under the Office of the Director
General shall be two (2) departments which shall be headed by their respective directors, namely on:
Agriculture, Fishery and Forestry, to handle all agricultural, agri-based, agribusiness, marine and
aquaculture, and forestry matters; and Industry, Utilities and Services, to handle all industrial, utilities and
service-related matters. Under each department shall be three (3) divisions which shall be headed by their
division chiefs, namely on: Technical Research Assistance, to handle production and related matters; Pre-
feasibility Studies Assistance, to handle all pre-feasibility studies and related matters; and Trade and
Marketing Assistance, to handle market research and related matters, both for domestic and international:
Provided, That a central documentation and information service headed by a director, to handle all
documentation, information and related mattes, including public relations, shall be constituted to provide
staff support to the Director General.
chan robles virtual law library

Sec. 7. Board of Governors. — The Board of Governors shall have the following powers and functions: chan
robles virtual law library

(a) To formulate policies, guidelines and programs to effectively implement the purposes of the Center;

(b) To approve the annual and supplemental budgets of the Center;

(c) To fix any services or similar fees the Center may charge the end-users of its services;

(d) To promulgate rules as may be necessary for the effective exercise of the powers and functions of the
Center;

(e) To authorize any contract or agreement as may be necessary for the proper, efficient and stable
administration of the Center;

(f) To prepare and submit periodic and/or special reports to the President; chan robles virtual law library

(g) To determine and approve the appointment of other officers of the Center, with their corresponding
qualifications, duties and emoluments; and

(h) To appoint consultants and acknowledged experts in their respective fields as may be necessary for the
realization of this Act. chan robles virtual law library
Sec. 8. Board of Governors: Composition, Term and Compensation. — The Center shall be governed and its
activities and properties shall be managed by a Board of Governors which shall be chaired by the Secretary
of Trade and Industry and ten (10) other Filipino citizens, five (5) of whom shall come from the government
sector, namely: the secretaries of the National Economic and Development Authority, the Department of
Foreign Affairs, the Department of Finance, the Department of Agriculture, and the Department of
Environment and Natural Resources; and five (5) of whom shall come from the private sector whose
functions shall be related to the purposes of the Center, all of whom shall be appointed by the President:
Provided, That a representative from the private sector shall be appointed as Vice-Chairman: Provided,
further, That the ex officio Vice-Chairman shall be the Director General: Provided, finally, That all Board
members shall have a broad experience in business, management or finance.chanrobles virtual law library

The term of office of the Board members from the government sector shall be for the duration of their public
office while the term of office of the private sector Board members shall be three (3) years each until their
successors shall have been appointed: Provided, That they shall be eligible for reappointment after the
expiration of their respective terms.chanrobles virtual law library

The Board members shall meet regularly at least once a month and as often as the exigencies of the service
demand. The presence of at least six (6) members shall constitute a quorum, and the vote of majority of the
members present shall be necessary for the adoption of any resolution, rule or decision. chan robles virtual
law library

The Board members shall receive for every meeting attended a per diem to be fixed by the President of the
Philippines.cralaw

Sec. 9. Office of the Director General. — The chief operating officer and principal representative of the
Center shall be the Director General assisted by a Deputy Director General, working full time, both to be
appointed by the President: Provided, That such appointment shall be subject to confirmation by the
Commission on Appointments.cralaw

Sec. 10. Coordination with Government Agencies. — Government agencies concerned shall coordinate with
the Center and are hereby obliged to give economic information and such other assistance for taxation
purposes, as well as to act on the applications submitted by investors on any problem concerning the
setting up of business in the Philippines. For this purpose, all government agencies concerned with
business documentation and processing shall henceforth detail their appropriate representatives to the
Center: Provided, That such government agencies shall provide for such detailed personnel's salaries
and/or other emoluments.cralaw

Moreover, the Department of Foreign Affairs, through its commercial attaches worldwide, shall extend
assistance to the Center by disseminating economic data properly released by the Center to the different
countries concerned. The commercial attaches shall also furnish the Center with current and relevant
economic data from other countries for circulation in the Philippines. chan robles virtual law library

Sec. 11. Vacancy Before Expiration of Term. — Any private sector Board member appointed by the
President to fill a vacancy in the Board of Governors occurring prior to the expiration of the term for which
his predecessor was appointed shall serve only for the unexpired portion of his predecessor.cralaw

Sec. 12. Removal or Suspension for Cause. — An officer of the Center may be suspended or removed by
the President for mismanagement, grave abuse of discretion, infidelity in the conduct of fiduciary relations,
gross negligence in the performance of duties, dishonesty, corruption, or any act involving moral
turpitude.cralaw

Sec. 13. Appointment, Promotion, Terms and Conditions of Employment. — The officers and employees of
the Center shall be covered by the Civil Service Law, as well as the rules of the Office of Compensation and
Position Classification.cralaw
Sec. 14. Location. — The Center's head office shall be located in a convenient and accessible site in the
National Capital Region: Provided, That the regional offices of the Center may be integrated with the
regional offices of the Department of Trade and Industry whenever feasible and shall obtain all its service
functions under one roof, including the head office. chan robles virtual law library

Sec. 15. Appropriations. — An amount not exceeding Fifteen million pesos (P15,000,000) to provide for the
initial implementation of this Act shall be charged against the Contingent Fund. Thereafter, the amount
necessary for the continued operation of the Center shall be included in the General Appropriations Act as
part of the budget of the Department of Trade and Industry.cralaw

Sec. 16. Implementing Guidelines. — The Department of Trade and Industry shall make all other necessary
guidelines for the proper and effective implementation of this Act.cralaw

Sec. 17. Repealing Clause. — All other provisions of law contrary to or inconsistent with this Act are hereby
repealed or modified accordingly.

Sec. 18. Effectivity Clause. — This Act shall take effect fifteen (15) days after its complete publication in two
(2) newspapers of general circulation.
 SPECIAL ECONOMIC ZONE ACT OF 1995

[Republic Act No. 7916]

CHAPTER 1

PURPOSES AND OBJECTIVES; ESTABLISHMENT AND NATURE OF SPECIAL ECONOMIC ZONES;

COORDINATION WITH OTHER SIMILAR SCHEMES

SECTION 1. Title. - This act shall be known and cited as "The Special Economic Zone Act of 1995."

SECTION 2. Declaration of Policy. - It is the declared policy of the government to translate into practical
realities the following State policies and mandates in the 1987 Constitution,
namely:chanroblesvirtuallawlibrary

a)"The State recognizes the indispensible role of the private sector, encourages private enterprise, and
provides incentives to needed investments." (Sec. 20, Atr. II)

b)"The State shall promote the preferential use of Filipino labor, domestic materials and locally produced
goods, and adopt measures that help make them competitive." (Sec. 12, Art. XII)

In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a
sound and balanced industrial, economic and social development of the country in order to provide jobs to
the people especially those in the rural areas, increase their productivity and their individual and family
income, and thereby improve the level and quality of their living condition through the establishment, among
others, of special economic zones in suitable and strategic locations in the country and through measures
that shall effectively attract legitimate and productive foreign investments.

SECTION 3. Purposes, Intents and Objectives. - It is the purpose, intent and objective of this
Act:chanroblesvirtuallawlibrary

a)To establish the legal framework and mechanisms for the integration, coordination, planning and
monitoring of special economic zones, industrial estates/parks, export processing zones and other
economic zones;

b)To transform selected areas in the country into highly developed agro-industrial, commercial, tourist,
banking investment, and financial centers, where highly trained workers and efficient services will be
available to commercial enterprises;

c)To promote the flow of investors, both foreign and local, into special economic zones which would
generate employment opportunities and establish backward and forward linkages among industries in and
around the economic zones;

d)To stimulate the repatriation of Filipino capital by providing attractive climate and incentives for business
activity;

e)To promote financial and industrial cooperation between the Philippines and industrialized countries
through technology-intensive industries that will modernize the country's industrial sector and improve
productivity levels by utilizing new technological and managerial know-how; and

f)To vest the special economic zones on certain areas thereof with the status of a separate customs
territory within the framework of the Constitution and the national sovereignty and territorial integrity of the
Philippines.
SECTION 4. Definition of Terms. - For purposes of this Act, the following definitions shall apply to the
following terms:chanroblesvirtuallawlibrary

a)"Special economic zones (SEZ)" - hereinafter referred to as the ECOZONES, are selected areas with
highly developed or which have the potential to be developed into agro-industrial, industrial
tourist/recreational, commercial, banking, investment and financial centers. An ECOZONE may contain any
or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones, and
tourist/recreational centers.

b)"Industrial estate (IE)" - refers to a tract of land subdivided and developed according to a comprehensive
plan under a unified continuos management and with provisions for basic infrastructure and utilities, with or
without pre-built standard factory buildings and community facilities for the use of the community of
industries.cralaw

c)"Export processing zone (EPZ)" - a specialized industrial estate located physically and/or administratively
outside customs territory, predominantly oriented to export production. Enterprises located in export
processing zones are allowed to import capital equipment and raw materials free from duties, taxes and
other import restrictions.cralaw

d)"Free trade zone" - an isolated policed area adjacent to a port of entry (as a seaport) and/or airport where
imported goods may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, or
otherwise manipulated without being subject to import duties. However, movement of these imported goods
from the free-trade area to a non-free-trade area in the country shall be subject to import duties.cralaw

Enterprises within the zone are granted preferential tax treatment and immigration laws are more lenient.

SECTION 5. Establishment of ECOZONES. - To ensure the viability and geographic dispersal of

ECOZONES through a system of prioritization, the following areas are initially identified as ECOZONES,
subject to the criteria specified in Section 6:chanroblesvirtuallawlibrary

a)So much as may be necessary of that portion of Morong, Hermosa, Dinalupihan, Orani, Samal, and
Abucay in the Province of Bataan;

b)So much as may be necessary of that portion of the municipalities of Ibaan, Rosario, Taysan, San Jose,
San Juan, and cities of Lipa and Batangas;

c)So much as may be necessary of that portion of the City of Cagayan de Oro in the Province of Misamis
Oriental;

d)So much as may be necessary of that portion of the City of Iligan in the Province of Lanao del Norte;

e)So much as may be necessary of that portion of the Province of Saranggani;

f)So much as may be necessary of that portion of the City of Laoag in the Province of Ilocos Norte;

g)So much as may be necessary of that portion of Davao City and Samal Island in the Province of Ilocos
Norte;

h)So much as may be necessary of that portion of Oroquieta City in the Province of Misamis Occidental;

i)So much as may be necessary of that portion of Tubalan Cove, Malita in the Province of Davao del Sur;

j)So much as may be necessary of that portion of Baler, Dinalungan and Casiguran including its territorial
waters and islets and its immediate environs in the Province of Aurora;

k)So much as may be necessary of that portion of cities of Naga and Iriga in the Province of Camarines
Sur, Legaspi and Tabaco in the Province of Albay, and Sorsogon in the Province of Sorsogon;
l)So much as may be necessary of that portion of Bataan Island in the province of Batanes;

m)So much as may be necessary of that portion of Lapu-lapu in the Island of Mactan, and the municipalities
of Balamban and Pinamungahan and the cities of Cebu and Toledo and the Province of Cebu, including its
territorial waters and islets and its immediate environs;

n)So much as may be necessary of that portion of Tacloban City;

o)So much as may be necessary of that portion of the Municipality of Barugo in the Province of Leyte;

p)So much as may be necessary of that portion of the Municipality of Buenavista in the Province of
Guimaras;

q)So much as may be necessary of that portion of the municipalities of San Jose de Buenavista, Hamtic,
Sibalom, and Culasi in the Province of Antique;

r)So much as may be necessary of that portion of the municipalities of Catarman, Bobon and San Jose in
the Province of Northern Samar, the Island of Samar;

s)So much as may be necessary of that portion of the Municipality of Ternate and its immediate environs in
the Province of Cavite;

t)So much as may be necessary of that portion of Polloc, Parang in the Province of Maguindanao;

u)So much as may be necessary of that portion of the Municipality of Boac in the Province of Marinduque;

v)So much as may be necessary of that portion of the Municipality of Pitogo in the Province of Zamboanga
del Sur;

w)So much as may be necessary of that portion of Dipolog City-Manukan Corridor in the Province of
Zamboanga del Norte;

x)So much as may be necessary of that portion of Mambajao, Camiguin Province;

y)So much as may be necessary of that portion of Infanta, Real, Polillo, Alabat, Atimonan, Mauban, Tiaong,
Pagbilao, Mulanay, Tagkawayan, and Dingalan Bay in the Province of Quezon;

z)So much as may be necessary of that portion of Butuan City and the Province of Agusan del Norte,
including its territorial waters and islets and its immediate environs;

aa)So much as may be necessary of that portion of Roxas City including its territorial waters and islets and
its immediate environs in the Province of Capiz;

bb)So much as may be necessary of that portion of San Jacinto, San Fabian, Mangaldan, Lingayen, Sual,
Dagupan, Alaminos, Manaoag, Binmaley in the Province of Pangasinan;

cc)So much as may be necessary of that portion of the autonomous region;

dd)So much as may be necessary of that portion of Masinloc, Candelaria and Sta. Cruz in the Province of
Zambales;

ee)So much as may be necessary of that portion of the Palawan Island;

ff)So much as may be necessary of that portion of General Santos City in South Cotabato and its
immediate environs;

gg)So much as may be necessary of that portion of Dumaguete City and Negros Oriental, including its
territorial waters and islets and its immediate environs.
i)So much as may be necessary of that portion of the Province of Ilocos Sur;

ii)So much as may be necessary of that portion of the Province of La Union;

jj)So much as may be necessary of that portion of the Province of Laguna, including its territorial waters
and its immediate environs;

kk)So much as may be necessary of that portion of the Province of Rizal;

ll)All existing export processing zones and government-owned industrial estates; and

mm) Any private industrial estate which shall voluntarily apply for conversion into an ECOZONE.

This areas shall be developed through any of the following schemes:chanroblesvirtuallawlibrary

(i)Private initiative;

(ii)Local government initiative with the assistance of the national government; and

(iii)National government initiative.

These metes and bounds of each ECOZONE are to be delineated and more particularly described in a
proclamation to be issued by the President of the Philippines, upon the recommendation of Philippine
Economic Zone Authority (PEZA), which shall be established under this Act, in coordination with the
municipal and/or city council, National Land Use Coordinating Committee and/or the Regional Land Use
Committee.

SECTION 6. Criteria for the Establishment of Other ECOZONES. - In addition to the ECOZONES identified
in Section 5 of this Act, other areas may be established as ECOZONES in a proclamation to be issued by
the President of the Philippines subject to the evaluation and recommendation of the PEZA, based on a
detailed feasibility and engineering study which must conform to the following
criteria:chanroblesvirtuallawlibrary

a)The proposed area must be identified as a regional growth center in the Medium-Term Philippine
Development Plan or by the Regional Development Council;

b)The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones,
ports, airports, etc., and the suitability and capacity of the proposed site to absorb such improvements;

c)The availability of water source and electric power supply for use of the ECOZONE;

d)The extent of vacant lands available for industrial and commercial development and future expansion of
the ECOZONE as well as lands adjacent to the ECOZONE available for development of residential areas
for the ECOZONE workers;

e)The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE;

f)The area must have a significant incremental advantage over the existing economic zones and its
potential profitability can be established;

g)The area must be strategically located; and

h)The area must be situated where controls can easily be established to curtail smuggling activities.

The areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the
said area shall be developed only through local government and/or private sector initiative under any of the
schemes allowed in Republic Act. No. 6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national government: Provided, further, That the area can be easily secured to
curtail smuggling activities: Provided, finally, That after five (5) years the area must have attained a
substantial degree of development, the indicators of which shall be formulated by the PEZA.

SECTION 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial/Trading, Tourist,

Investment and Financial Community.- Within the framework of the Constitution, the interest of national
sovereignty and territorial integrity of the Republic, ECOZONE shall be developed, as much as possible,
into a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist,
banking, financial and investment center with minimum government intervention. Each ECOZONE shall be
provided with transportation, telecommunications, and other facilities needed to generate linkage with
industries and employment opportunities for its own inhabitants and those of nearby towns and cities.

The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such
other matters within the exclusive competence of the national government. The ECOZONE may establish
mutually beneficial economic relations with other entities within the country, or, subject to the administrative
guidance of the Department of Foreign Affairs and/or the Department of Trade and Industry, with foreign
entities or enterprises. Foreign citizens and companies owned by non-Filipinos in whatever proportion may
set up enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any sector of
industry, international trade and commerce within the ECOZONE. Their assets, profits and other legitimate
interests shall be protected: Provided, That the ECOZONE through the PEZA may require a minimum
investment for any ECOZONE enterprise in freely convertible currencies: Provided, further, That the new
investments shall fall under the priorities, thrusts and limits provided for in this Act.

SECTION 8. ECOZONE to be Operated and Managed as Separate Customs Territory.- The ECOZONES
shall be managed and operated by the PEZA as separate customs territory.cralaw

The PEZA is hereby vested with the authority to issue certificates of origin products manufactured or
processed in each ECOZONE in accordance with the prevailing rules of origin, and the pertinent
regulations of the Department of Trade and Industry and/or the Department of Finance.

SECTION 9. Defense and Security. - The defense of the ECOZONE and the security of its perimeter fence
shall be the responsibility of the national government in coordination with the PEZA. Military forces sent by
the national government for the purpose of defense shall not interfere in the internal affairs of any of the
ECOZONE and expenditure for these military forces shall be borne by the national government. The PEZA
may provide and establish the ECOZONES' internal security and firefighting forces.

SECTION 10. Immigration. - Any investor within the ECOZONE whose initial investment shall not be less
than One hundred fifty thousand dollars ($150,000), his/her spouse and dependent children under twenty-
one (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have
freedom of ingress and egress to and from the ECOZONE without any need of special authorization from
the Bureau of Immigration.cralaw

The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens,
possessing highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the
Department of Labor and Employment. The names of aliens granted permanent residents status and
working visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after
issuance thereof.cralaw
CHAPTER II

GOVERNING STRUCTURES

SECTION 11. The Philippine Economic Zone Authority (PEZA) Board. - There is hereby created a body
corporate to be known as the Philippine Economic Zone Authority (PEZA) attached to the Department of
Trade and Industry. The Board shall have a director general with the rank of a department undersecretary
who shall be appointed by the President. The director general shall be at least forty (40) years of age, of
proven probity and integrity, and with a degree in economics, business, public administration, law,
management or its equivalent.cralaw

The director general shall be assisted by three (3) deputy directors general each for policy and planning,
administration and operations, who shall be appointed by the PEZA Board, upon the recommendation of
the director general. The deputy directors general shall be at least thirty-five (35) years, old, with proven
probity and integrity and with a degree in economics, business, public administration, law, management or
its equivalent. They must have career executive service eligibility.cralaw

The Board shall be composed of the director general as ex officio chairman with eight(8) members as
follows: the Secretaries or their representatives of the Department of Trade and Industry, the Department of
Finance, the Department of Labor and Employment, the Department of the Interior and Local Government,
the National Economic and Development Authority, and the Bangko Sentral ng Pilipinas, one (1)
representative from the investors/business sector in the ECOZONE.cralaw

The existing Export Processing Zone Authority (EPZA) created under Presidential Decree No. 66 shall
evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order
issued for this purpose.cralaw

Members of the Board shall receive a per diem of not less than the amount equivalent to the representation
and transportation allowances of the members of the Board and/or as may be determined by the
Department of Budget and Management: Provided, however, That the per diem collected per month does
not exceed the equivalent of four (4) meetings.cralaw

SECTION 12. Functions and Powers of PEZA Board.- The Philippine Economic Zone Authority (PEZA)
Board shall have the following functions and powers:chanroblesvirtuallawlibrary

a)Set the general policies on the establishments and operations of the ECOZONES, industrial estates,
export processing zones, free trade zones, and the like;

b)Review proposals for the establishment of ECOZONES based on the criteria under Section 6 and
endorse the President the establishment of the ECOZONES , industrial estates, export processing zones,
free trade zones and the like. Thereafter, it shall facilitate and assist in the organization of said entities;

c)Regulate and undertake the establishment, operation and maintenance of utilities, other services and
infrastructure in the ECOZONE, such as heat, light and power, water supply, telecommunications,
transport, toll roads and bridges, port services, etc., and to fix just reasonable and competitive rates, fares,
charges and fees therefor;

d)Approve the annual budget of the PEZA and the ECOZONE development plans;

e)Issue rules and regulations to implement the provisions of this Act in so far as its powers and functions
are concerned;

f)Exercise its powers and functions as provided for in this Act; and

g)Render annual reports to the President and the Congress

SECTION 13. General Powers and Functions of the Authority.- The PEZA shall have the following powers
and functions:chanroblesvirtuallawlibrary

a)To operate, administer, manage and develop the ECOZONE according to the principles and provisions
set forth in this Act;

b)To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized
manner;

c)To coordinate with local government units and exercise general supervision over the development, plans,
activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones,
and the like;

d)In coordination with local government units concerned and appropriate agencies, to construct, acquire,
own, lease operate and maintain on its own or through contract, franchise, license, bulk purchase from the
private sector and build-operate-transfer scheme or joint venture, adequate facilities and infrastructure,
such as light and power sytems, water supply and distribution systems, telecommunications and
transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities for the operation
and development of the ECOZONE;

e)To create, operate and/or contract to operate such agencies and functional units or offices of the authority
as it may deem necessary;

f)To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or
real property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act;

g)To coordinate the formulation and preparation of the development plans of the different entities
mentioned above;

h)To coordinate with the National Economic and Development Authority (NEDA), the Department of Trade
and Industry (DTI), the Department of Science and Technology (DOST), and the local government units
and appropriate government agencies for policy and program formulation and implementation; and

i)To monitor and evaluate the development and requirements of entities in subsection (a) and recommend
to the local government units or other appropriate authorities the location, incentives, basic services, utilities
and infrastructure required or to be made available for said entities.

SECTION 14. Powers and Functions of the Director General. -The director general shall be the overall
coordinator of the policies, plans and programs of the ECOZONES. As such, he shall provide overall
supervision over and general direction to the development and operations of these ECOZONES. He shall
determine the structure and the staffing pattern and personnel complement of the PEZA and establish
regional offices, when necessary, subject to the approval of the PEZA Board.

In addition, he shall have the following specific powers and responsibilities:chanroblesvirtuallawlibrary

a)To safeguard all the lands, buildings, records, monies, credits and other properties and rights of the
ECOZONES;

b)To ensure that all revenues of the ECOZONE are collected and applied in accordance with its budget;

c)To ensure that the investors/firms and employees of the ECOZONES are properly discharging their
respective duties;

d)To give such information and recommend such measures to the Board, as he shall deem advantageous
to the ECOZONE;

e)To submit to the Board, the ongoing and proposed projects, work and financial program, annual budget of
receipts, and expenditures of the ECOZONE;
f)To represent the ECOZONE in all its business matters and sign on its behalf after approval of the Board,
all its bonds, borrowings, contracts, agreements and obligations made in accordance with this Act;

g)To acquire jurisdiction, as he may deem proper, over the protests, complaints, and claims of the residents
and enterprises in the ECOZONE concerning administrative matters;

h)To recommend to the Board the grant, approval, refusal, amendment or termination of the ECOZONE
franchises, licenses, permits, contracts, and agreements in accordance with the policies set by the Board;

i)To require owners of houses, buildings or other structures constructed without the necessary permit
whether constructed on public or private lands, to remove or demolish such houses, buildings, structures
within sixty (60) days after notice and upon failure of such owner to remove or demolish such house,
building or structure within said period, the director general or his authorized representative may summarily
cause its removal or demolition at the expense of the owner, any existing law, decree, executive order and
other issuances or part thereof to the contrary notwithstanding;

j)To take such emergency measures as may be necessary to avoid fires, floods and mitigate the effects of
storms and other natural or public calamities;

k)To prepare and make out plans for the physical and economic development of the ECOZONE, including
zoning and land subdivision, and issue such rules and regulations which shall be submitted to the Board for
its approval; and

l)To perform such other duties and exercise such powers as may be prescribed by the Board, and to
implement the policies, rules and regulations set by the PEZA.

SECTION 15. Administration of Each ECOZONE.- Each ECOZONE shall be organized, administered,
managed and operated by the ECOZONE executive committee composed of the
following:chanroblesvirtuallawlibrary

a)The administrator who shall be appointed by the PEZA Board upon recommendation of the director
general;and

b)One (1) deputy administrator to be appointed by the Board upon recommendation of the director general.

An ECOZONE advisory body shall be created with the following members:chanroblesvirtuallawlibrary

1.The president of the association of investors in the ECOZONE;

2.The governor of the province where the ECOZONE is located;

3.The mayor/s of the municipality/ies or city/ies where the ECOZONE is located;

4.The president of an accredited labor union in the ECOZONE;

5.The representative of the business sector in the periphery of the ECOZONE; and

6.The representative of the PEZA.

The ECOZONE advisory body shall have the following functions:chanroblesvirtuallawlibrary

(i)Advise the ECOZONE management on matters pertaining to policy initiatives; and

(ii)Assist the ECOZONE management in settling problems arising between labor and any enterprise in the
ECOZONE.cralaw
SECTION 16. Salary and Other Emoluments. - The salary of the director general shall be in accordance
with the revised compensation and position classification system.

SECTION 17. Investigation and Inquiries. - Upon a written formal complaint made under oath, which on its
face provides reasonable basis to believe that some anomaly or irregularity might have been committed,
the PEZA or the administrator of the ECOZONE concerned, shall have the power to inquire into the conduct
of firms or employees of the ECOZONE and to conduct investigations, and for that purpose may subpoena
witnesses, administer oaths, and compel the production of books, papers, and other evidences: Provided,
That to arrive at the truth, the investigator (s) may grant immunity from prosecution to any person whose
testimony or whose possessions of documents or other evidence is necessary or convenient to determine
the truth in any investigation conducted by him or under the authority of the PEZA or the administrator of
the ECOZONE concerned.cralaw

SECTION 18. Prohibition Against Holding Any Other Office. - The director general, deputy directors
general, administrators, officials and staff or assistants of the PEZA shall not hold any other office or
employment within or outside the PEZA during their tenure, directly or indirectly, practice any profession,
participate in any business, or be financially interested in any contract with, or in any franchise, or special
privilege granted by the PEZA or national government, or any subdivision, agency, or instrumentality
thereof, including any government-owned or controlled corporation, or its subsidiary.cralaw

SECTION 19. Disbursement of Funds. - No money shall be paid out of the funds of any ECOZONE except
in pursuance of the budget as formulated and approved by the PEZA.cralaw

SECTION 20. Full Disclosure of Financial and Business Interests. - Every member of the Board of the
PEZA, the director general, the deputy directors general, and their staff shall, upon assumption of office,
make full disclosure of their financial and business interests.

CHAPTER III

OPERATIONS WITHIN THE ECOZONE

SECTION 21. Development Strategy of the ECOZONE. - - The strategy and priority of development of each
ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the
Department of Trade and Industry and the National Economic and Development Authority: Provided, That
such development strategy is consistent with the priorities of the national government as outlined in the
medium-term Philippine development plan.cralaw

It shall be the policy of the government and the PEZA to encourage and provide incentives and facilitate
private sector participation in the construction and operation of public utilities and infrastructure in the
ECOZONE, using any of the schemes allowed in Republic Act. No. 6957 (the build-operate-transfer
law).cralaw

SECTION 22. Survey or Resources. - The PEZA shall, in coordination with appropriate authorities and
neighboring cities and municipalities, immediately conduct a survey of the physical, natural assets and
potentialities of the ECOZONE areas under it jurisdiction.cralaw

SECTION 23. Fiscal Incentives. - Business establishments operating within the ECOZONES shall be
entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the
Export Processing Zone Authority, or those provided under Book VI of Executive Order No. 226, otherwise
known as the Omnibus Investment Code of 1987.cralaw
Furthermore, tax credits for exporters using local materials as inputs shall enjoy the same benefits provided
for in the Export Development Act of 1994.cralaw

SECTION 24. Exemption from Taxes Under the National Internal Revenue Code. - Any provision of
existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be
imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent
(5%) of the gross income earned by all businesses and enterprises within the ECOZONE shall be remitted
to the national government. This five percent (5%) shall be shared and distributed as
follows:chanroblesvirtuallawlibrary

a)Three percent (3%) to the national government;

b)One percent (1%) to the local government units affected by the declaration of the ECOZONE in
proportion to their population, land area, and equal sharing factors; and

c)One percent (1%) for the establishment of a development fund to be utilized for the development of
municipalities outside and contiguous to each ECOZONE: Provided, however, That the respective share of
the affected local government units shall be determined on the basis of the following
formula:chanroblesvirtuallawlibrary

1)Population - fifty percent (50%)

2)Land area - twenty-five percent (25%); and
3)Equal sharing - twenty-five percent (25%).

SECTION 25. Applicable National Taxes. - All income derived by persons and all service establishments in
the ECOZONE shall be subject to taxes under the National Internal Revenue Code.

SECTION 26. Domestic Sales. - Goods manufactured by an ECOZONE enterprise shall be made available
for immediate retail sales in the domestic market, subject to payment of corresponding taxes on the raw
materials and other regulations that may be adopted by the Board of the PEZA.cralaw

However, in order to protect the domestic industry, there shall be a negative list of industries that will be
drawn up by the PEZA. Enterprises engaged in the industries included in the negative list shall not be
allowed to sell their products locally. Said negative list shall be regularly updated by the PEZA. The PEZA,
in coordination with the Department of Trade and Industry and the Bureau of Customs, shall jointly issue
the necessary implementing rules and guidelines for the effective implementation of this section.

SECTION 27. Applicability of Banking Laws and Regulations. - Existing banking laws and Bangko Sentral
ng Pilipinas (BSP) rules and regulations shall apply to banks and financial institutions to be established in
the ECOZONE and to other ECOZONE-registered enterprises. Among other pertinent regulations, these
include those governing foreign exchange and other current account, transactions (trade and non-trade)
local and foreign borrowings, foreign investments, establishment and operation of local and foreign banks,
foreign currency deposit units, offshore banking units and other financial institutions under the supervision
of the BSP.cralaw

SECTION 28. After Tax Profits. - Without prior Bangko Sentral approval, after tax profits and other earnings
of foreign investments in enterprises in the ECOZONE may be remitted outward in the equivalent foreign
exchange through any of the banks licensed by the Bangko Sentral ng Pilipinas in the ECOZONE:
Provided, however, That such foreign investments in said enterprises have been previously registered with
the Bangko Sentral.cralaw

SECTION 29. Eminent Domain. - The areas comprising an ECOZONE may be expanded or reduced when
necessary. For this purpose, the government shall have the power to acquire, either by purchase,
negotiation or condemnation proceedings, any private lands within or adjacent to the ECOZONE
for:chanroblesvirtuallawlibrary

a)Consolidation of lands for zero development purposes;

b)Acquisition of right way to the ECOZONE; and

c)The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.

SECTION 30. Leases of Lands and Buildings. - Lands and buildings in each ECOZONE may be leased to
foreign investors for a period not exceeding fifty (50) years renewable once for a period of not more than
twenty-five (25) years, as provided for under Republic Act No. 7652, otherwise known as the Investors'
Lease Act. The leasehold right acquired under long-term contracts may be sold, transferred or assigned,
subject to the conditions set forth under Republic Act. No. 7652.

SECTION 31. Land Conversion. - Agricultural lands may be converted for residential, commercial, industrial
and other non-agricultural purposes, subject to the conditions set forth under Republic Act. No.. 6657 and
other existing laws.cralaw

SECTION 32. Shipping and Shipping Register. - Private shipping and related business including private
container terminals may operate freely in the ECOZONE, subject only to such minimum reasonable
regulations of local application which the PEZA may prescribe.cralaw

The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a
shipping register for each ECOZONE as a business register of convenience for ocean-going vessels and
issue related certification. Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of
the ECOZONE, subject only to such reasonable requirement as may be prescribed by the PEZA in
coordination with the appropriate agencies of the national government.

SECTION 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall
take concrete and appropriate steps and enact the proper measures for the protection of the local
environment.cralaw

SECTION 34. Termination of Business. - Investors in the ECOZONE who desire to terminate business or
operations shall comply with such requirements and procedures which the PEZA shall set, particularly
those relating to the clearing of debts. The assets of the closed enterprises can be transferred and the
funds can be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed
jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.cralaw

SECTION 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE
shall register with the PEZA to avail of all incentives and benefits provided for in this Act.cralaw

SECTION 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of
facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies
that are involved in registering, licensing or issuing permits to investors shall assign their representatives to
the ECOZONE to attend to investor's requirements.
CHAPTER IV

INDUSTRIAL HARMONY IN THE ECOZONES

SECTION 37. Labor and Management Relations. - Except as otherwise provided in this Act, labor and
management relations in the ECOZONE shall be governed by the existing Labor Code of the Philippines.
Employees and personnel in the ECOZONE enterprises shall receive salaries and benefits and shall enjoy
working conditions not less than those provided under the Philippine Labor Code and other relevant laws,
issuances, rules and regulations of the Philippine government and the Department of Labor and
Employment.cralaw

SECTION 38. Promotion of Industrial Peace. - In the pursuit of industrial harmony in the ECOZONE, a
tripartite body composed of one (1) representative each from the Department of Labor and Employment,
labor sector and business and industry sectors shall be created in order to formulate a mechanism under a
social pact for the enhancement and preservation of industrial peace in the ECOZONE within thirty (30)
days after the effectivity of this Act.cralaw

SECTION 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Labor
and Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff members
and workers, the terms of which provide salaries and benefits not less than those provided under this Act,
the Philippine Labor Code, as amended, and other relevant issuances of the national government.cralaw

SECTION 40. Percentage of Foreign Nationals. - Employment of foreign nationals hired by ECOZONE
enterprises in a supervisory, technical or advisory capacity shall not exceed five percent (5%) of its
workforce without the express authorization of the Secretary of Labor and Employment.cralaw

SECTION 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment,
shall promulgate appropriate measures and programs leading to the expansion of the services of the
ECOZONE to help the local governments of nearby areas meet the needs of the migrant workers.cralaw

SECTION 42. Incentive Scheme. - Ad additional deduction equivalent to one-half (1/2) of the value of
training expenses incurred in developing skilled or unskilled labor or for managerial or other management
development programs incurred by enterprises in the ECOZONE can be deducted from the national
government's share of three percent (3%) as provided in Section 24.cralaw

The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a
review of the incentive scheme provided in this section every two (2) years or when circumstances so
warrant.cralaw
CHAPTER V

NATIONAL GOVERNMENT AND OTHER ENTITIES

SECTION 43. Relationship with the Regional Development Council. - The PEZA shall determine the
development goals for the ECOZONE within the framework of national development plans, policies and
goals, and the administrator shall, upon approval by the PEZA Board, submit the ECOZONE plans,
programs and projects to the regional development council for inclusion in and as inputs to the overall
regional development plan. SECTION 44. Relationship with Local Government Units. - Except as herein
provided, the local government units comprising the ECOZONE shall retain their basic autonomy and
identity. The cities shall be governed by their respective charters and the municipalities shall operate and
function in accordance with Republic Act No. 7160, otherwise known as the Local Government Code of
1991.cralaw

SECTION 45. Relationship of PEZA to Privately -Owned Industrial Estates. - Privately-owned industrial
estates shall retain their autonomy and independence and shall be monitored by the PEZA for
implementation of incentives.cralaw

SECTION 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial
estates and agri-export processing estates shall be transferred to the PEZA. The resources of government-
owned industrial estates and similar bodies except the Bases Conversion Development Authority and those
areas identified under Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency.
They are hereby detached from their mother agencies and attached to the PEZA for policy, program and
operational supervision.cralaw

The Boards of the affected government-owned industrial estates shall be phased out and only the
management level and an appropriate number of personnel shall be retained. Government personnel
whose services are not retained by the PEZA or any government office within the ECOZONE shall be
entitled to separation pay and such retirement and other benefits they are entitled to under the laws then in
force at the time of their separation: Provided, That in no case shall the separation pay less than one and
one-fourth (1 1/4) month of every year of service.cralaw

CHAPTER VI

MISCELLANEOUS PROVISIONS

SECTION 47. Appropriation. - Upon the effectivity of this Act, all funds of the former Export Processing
Zone Authority (PEZA) shall be transferred to the newly-created Philippine Economic Zone Authority.
Thereafter, any sum as may be necessary to augment its capital outlay, shall be included in the General
Appropriations Act to be treated as an equity of the national government.cralaw

Additional funding shall come from the following:chanroblesvirtuallawlibrary

a)The annual subsidies, appropriations and/or other assets of the exports processing zone, and the
industrial estates and other economic areas that have been absorbed/transferred to the PEZA as mandated
in this Act;

b)The proceeds from the rent of lands, buildings, and other properties of the ECOZONES concerned;

c)The proceeds from fees, charges and other revenue-generating instruments which the PEZA is
authorized to impose and collect under this Act;

d)The proceeds from bonds which the PEZA authorized to float both domestic and abroad; and
e)The advance rentals, license fees, and other charges which the PEZA is authorized to impose under this
Act and which an investor is willing to advance payment for.

SECTION 48. Applicability of National Laws. - National laws shall prevail vis-a-vis ECOZONE rules,
regulations and standards, unless there is a clear intent in this Act or other Acts of Congress to vest the
ECOZONE specific powers and privileges not otherwise allowed under existing laws.

SECTION 49. Authority of the President to Advance Initial Funding. - Subject to existing laws, the President
of the Philippines is hereby authorized to advance out of the savings of the Office of the President such
funds as may be necessary to effect the organization of an ECOZONE which shall be reimbursed by the
PEZA at reasonable term and condition.cralaw

SECTION 50. Non-applicability on Areas Covered by Republic Act No. 7227. - This Act shall not be
applicable to economic zones and areas already created or to be created under Republic Act No. 7227 or
other special laws, and governed by authorities constituted pursuant thereto.cralaw

Any provision of this Act which provides benefits or privileges less than those granted or imposes
obligations or burdens more onerous to special economic zones created or to be created under special
laws shall not apply to them.

SECTION 51. Ipso Facto Clause. - All privileges, benefits, advantages or exemptions granted to special
economic zones under Republic Act No. 7227, shall ipso facto be accorded to special economic zones
already created or to be created under this Act. The free port status shall not be vested upon the new
special economic zones.cralaw

SECTION 52. Separability Clause. - The provisions of this Act are hereby declared separable, and in the
event one or more of such provisions or part thereof are declared unconstitutional, such declaration of
unconstitutionality shall not affect the validity of the other provisions thereof.cralaw

SECTION 53. Interpretation/Construction. - The powers, authorities and functions that are vested in the
Philippine Economic Zone Authority (PEZA) and the ECOZONES concerned are intended to establish
decentralization of governmental functions and authority as well as an efficient and effective working
relationship between the ECOZONE, the central government and the local government units.cralaw

SECTION 54. Repealing Clause. - All laws, acts, presidential decrees, executive orders, proclamations
and/or administrative regulations which are inconsistent with the provisions of this Act, are hereby
amended, modified, superseded or repealed accordingly.cralaw

SECTION 55. Implementing Rules and Regulations. - The Department of Trade and Industry, the National
Economic and Development Authority, the Department of Finance, the Bureau of Customs, the Department
of Agrarian Reform, the Department of the Interior and Local Government, the Philippine Economic Zone
Authority, and the representatives from the technical staff of the Committee on Economic Affairs of both
Houses of Congress shall formulate the implementing rules and regulations of this Act within ninety (90)
days after its approval. Such rules and regulations shall take effect fifteen (15) days after their publication in
a newspaper of general circulation in the Philippines.cralaw

SECTION 56. Transitory Provisions. - Prior to the effectivity of the implementing rules and regulations of
this Act, the provisions of Presidential Decree No. 66, as amended, and its implementing rules and
regulations shall remain in force.cralaw

SECTION 57. Effectivity. - This Act shall take effect upon its approval.cralaw

This Act which is a consolidation of House Bill No. 14295 and Senate bill No. 1061 was finally passed by
the House of Representatives and the Senate on February 21, 1995.
 REPUBLIC ACT No. 5455

AN ACT TO REQUIRE THAT THE MAKING OF INVESTMENTS AND THE DOING OF BUSINESS WITHIN THE PHILIPPINES BY
FOREIGNERS OR BUSINESS ORGANIZATIONS OWNED IN WHOLE OR IN PART BY FOREIGNERS SHOULD CONTRIBUTE TO
THE SOUND AND BALANCED DEVELOPMENT OF THE NATIONAL ECONOMY ON A SELF-SUSTAINING BASIS, AND FOR
OTHER PURPOSES.

Section 1. Definitions and scope of this Act. (1) As used in this Act, the term "investment" shall mean equity participation
in any enterprise formed, organized or existing under the laws of the Philippines; and the phrase "doing business" shall
include soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the
Philippines for a period or periods totaling one hundred eighty 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.

(2) This Act shall not apply to banking institutions which are governed and regulated by the General Banking Act and other
laws.

Section 2. Permitted Investments. (1) Without need of prior authority anyone not a Philippine national as that term is
defined in Section three of the Investment Incentives Act, and not otherwise disqualified by law, may invest:

(a) In any enterprise registered under the Investment Incentives Act, to the extent that the total investment of non-
Philippine nationals therein would not affect its status as a registered enterprise under that law;

(b) In any enterprise not registered under the Investment Incentives Act, to the extent that the total investment of non-
Philippine nationals therein shall not exceed thirty percent of the outstanding capital of that enterprise, unless existing
law forbids any non-Philippine ownership in the enterprise or limits ownership by non-Philippine nationals to a percentage
smaller than thirty per cent.

(2) Within thirty days after notice of the investment received by it, the enterprise in which any investment is made by a
non-Philippine national shall register the same with the Board of Investments for purposes of record. Investments made
in the form of foreign exchange or other assets actually transferred to the Philippines shall also be registered with the
Central Bank. The Board shall assess and appraise the value of such assets other than foreign exchange.

Section 3. Permissible Investments. If an investment by a non-Philippine national in an enterprise not registered under the
Investment Incentives Act is such that the total participation by non-Philippine nationals in the outstanding capital thereof
shall exceed thirty per cent, the enterprise must obtain prior authority from the Board of Investments, which authority
shall be granted unless the proposed investment

(a) Would conflict with existing constitutional provisions and laws regulating the degree of required ownership by
Philippine nationals in the enterprise; or

(b) Would pose a clear and present danger of promoting monopolies or combinations in restraint of trade; or

(c) Would be made in an enterprise engaged in an area adequately being exploited by Philippine nationals; or

(d) Would conflict or be inconsistent with the Investments Priorities Plan in force at the time the investment is sought to
be made; or

(e) Would not contribute to the sound and balanced development of the national economy on a self-sustaining basis.

Investments made in the form of foreign exchange or other assets actually transferred to the Philippines shall also be
registered with the Central Bank. The Board shall assess and appraise the value of such assets other than foreign exchange.
Section 4. Licenses to do business. No alien, and no firm, association, partnership, corporation or any other form of
business organization formed, organized, chartered or existing under any laws other than those of the Philippines, or
which is not a Philippine national, or more than thirty per cent of the outstanding capital of which is owned or controlled
by aliens shall do business or engage in any economic activity in the Philippines, or be registered, licensed, or permitted
by the Securities and Exchange Commission or by any other bureaus, office, agency, political subdivision or instrumentality
of the government, to do business, or engage in any economic activity in the Philippines, without first securing a written
certificate from the Board of Investments to the effect;

(1) That the operation or activity of such alien, firm, association, partnership, corporation or other form of business
organization is not inconsistent with the Investments Priorities Plan;

(2) That such business or economic activity will contribute to the sound and balanced development of the national
economy on a self-sustaining basis;

(3) That such business or economic activity by the applicant would not conflict with the Constitution or laws of the
Philippines;

(4) That the field of business or economic activity is not one that is being adequately exploited by Philippine nationals; and

(5) That the entry of applicant therein will not pose a clear and present danger of promoting monopolies or combinations
in restraint of trade.

Upon granting said certificate, the Board shall impose the following requirements on the alien or the firm, association,
partnership, corporation or other form of business organization that is not organized or existing under the laws of the
Philippines

(1) To appoint a citizen of the Philippines, of legal age, good moral character and reputation, and sound financial standing,
as resident agent, who shall be authorized to accept summons and other legal process in behalf of the applicant;

(2) To establish an office in the Philippines and to notify the Securities and Exchange Commission in writing of the
applicant's exact address and of every contemplated transfer thereof or of the opening of new offices, at least fifteen days
before the same are to be effected; and once effected, not later than ten days afterwards;

(3) To bring assets into the Philippines to constitute the capital of the office or offices, of such kind and value as the Board
may deem necessary to protect those who may deal with the applicant, and to maintain that capital unimpaired during
the period it does business in the Philippines;

(4) To present prior proof that citizens of the Philippines and corporations or other business organizations organized or
existing under the laws of the Philippines are allowed to do business in the contrary or individual state within a federal
country of which applicant is a citizen or in which it is domiciled: Provided, however, That if the state or country of domicile
of the applicant imposes on, or requires of, Philippine nationals other conditions, requirements or restrictions besides
those set forth in this Act, the Board of Investments shall impose the said other conditions, requirements or restrictions
on the applicant if, in its judgment, the imposition thereof shall foster the sound and balanced development of the national
economy on a self-sustaining basis;

(5) To submit to the Securities and Exchange Commission certified copies of applicant's charter and by-laws and all
amendments thereto, if any, with their translation into an official language within twenty days after their adoption or
after the grant of the prescribed certificate by the Board of Investments; and annually, of applicant's financial statements
showing all assets, liabilities, and networth and results of operations, setting out separately those pertaining to the branch
office;

(6) To keep a complete set of accounting records with the resident agent, which shall fully and faithfully reflect all
transactions within the Philippines, and to permit inspection thereof by the Securities and Exchange Commission, the
Bureau of Internal Revenue, the Board of Investments and, if a corporation, by the officers mentioned in Section fifty-four
of the Corporation Law;
(7) To give priority to resident creditors as against non-resident creditors and owners or stockholders in the distribution
of assets within the Philippines upon insolvency, dissolution or revocation of the license;

(8) To give the Securities and Exchange Commission at least six months advance notice in writing of applicants' intention
to stop doing business within the Philippines; and to give such public notice thereof as the Securities and Exchange
Commission may require for the protection of resident creditors and others dealing with the applicant; and

(9) Not to terminate any franchise, licensing or other agreement that applicant may have with a resident of the Philippines,
authorizing the latter to assemble, manufacture or sell within the Philippines the products of the applicant, except for
violation thereof or other just cause and upon payment of compensation and reimbursement of investment and other
expenses incurred by the licensee in developing a market for the said products: Provided, however, That in case of
disagreement, the amount of compensation or reimbursement shall be determined by the court where the licensee is
domiciled or has its principal office who shall require the applicant to file a bond in such amount as, in its opinion, is
sufficient for this purpose.

The above requirement shall be in addition to those set forth in the Corporation Law, as amended, for licensing foreign
corporations and a violation of any of these requirements shall be sufficient cause to cancel a license or permit issued
pursuant to this Act: Provided, however, That this section shall not apply to aliens or foreign firms, associations
partnerships, corporations or other forms of business organization not organized or existing under the laws of the
Philippines who may lawfully have been licensed to do business in the Philippines prior to the effectivity of this Act;
Provided, further, That where the issuance of said license has been irregular or contrary to law, any person adversely
affected thereby may file an action with the Court of First Instance where said alien or foreign business organizations
resides or has its principal office to cancel the said license. In such cases, no injunction shall issue without notice and
hearing; and appeals and other proceedings for review shall be filed directly with the Supreme Court.

Section 5. Mergers and Consolidations. The provisions of this Act shall apply to any merger, consolidation, syndicate or
any other combination of firms, associations, partnerships or other forms of business organization that will result in
ownership or control by persons or entities that are not Philippine nationals of more than thirty per cent of the capital of
whatever organization results from the merger, consolidation, syndicate or other combination.

Section 6. Local Government Action. No agency, instrumentality or political subdivision of the Government shall take any
action in conflict with or which will nullify the provisions of this Act, or any certificate or authority granted thereunder.

Section 7. Publication and Posting of Notices. Immediately after the filing of any application under this Act, the Secretary
of the Board of Investments shall publish the same at the expense of the applicant once a week for three consecutive
weeks in the Official Gazette and in one of the newspapers of general circulation in the province or city where the applicant
has its principal office and post copies of said application in conspicuous places, in the office of the Board of Investments
or in the building where said office is located, setting forth in such copies the name of the applicant, the business in which
it is engaged or proposes to engage or invest, and such other data and information as may be required by the Board of
Investments. No approval or certificate shall be valid without the publication and posting of notices as herein provided.

Section 8. Judicial Relief. From any decision of the Board of Investments under this Act, or from the failure of the Board of
Investments to act on any application within sixty days from the date of final publication of the application, the applicant
or any person adversely affected thereby may seek judicial relief in the Court of First Instance of Manila.

Section 9. Rules and Regulations. The Board of Investments shall promulgate such rules and regulations as may be
necessary to enforce the intent and provisions of this Act. The rules and regulations shall take effect thirty days after their
publication in the Official Gazette and in two (2) newspapers of general circulation in the Philippines.

Section 10. Penal Clause. Any violation of this Act or of the requirements for a license to do business within the Philippines
shall be punished with a fine of not less than ten thousand pesos and not more than twenty-five thousand pesos and
imprisonment of not less than five years and not more than ten years. If the violation is committed by a corporation or
association, the penalty shall be imposed upon the president, director or directors, manager, managing partner, or other
official thereof responsible for such violation. Any alien violating or responsible for the violation of this Act shall, upon
completion of the service of sentence, be deported without any further proceedings on the part of the Deportation Board.
Any government official or employee who aids, abets or connives with any person in violating this Act shall, in addition to
the penalty which may be imposed upon him as a principal, be perpetually disqualified from holding any public office.

Section 11. Separability Clause. If any part or section of this Act is declared unconstitutional for any reason, whatsoever,
such declaration shall not in any way affect the other parts or sections of this Act.

Section 12. Repealing Clause. All laws or parts of laws inconsistent herewith are hereby repealed or modified accordingly.

Section 13. Appropriation. The sum of one million pesos or so much thereof as may be necessary, out of any funds in the
National Treasury not otherwise appropriated, is hereby authorized to be appropriated to carry out the provisions of this
Act.

Section 14. Effectivity. This Act shall take effect upon approval.

Enacted without Executive approval, September 30, 1968.