ACT NO.

1508 AN ACT PROVIDING FOR THE MORTGAGING

OF PERSONAL PROPERTY AND FOR THE REGISTRATION OF
THE MORTGAGES SO EXECUTED
Section 1. The short title of this Act shall be The Chattel Mortgage Law.
Sec. 2. All personal property shall be subject to mortgage, agreeably to the
provisions of this Act, and a mortgage executed in pursuance thereof shall be
termed chattel mortgage.
Sec. 3. Chattel mortgage defined. A chattel mortgage is a conditional sale
of personal property as security for the payment of a debt, or the performance
of some other obligation specified therein, the condition being that the sale
shall be void upon the seller paying to the purchaser a sum of money or
doing some other act named. If the condition is performed according to its
terms the mortgage and sale immediately become void, and the mortgagee is
thereby divested of his title.
Sec. 4. Validity. A chattel mortgage shall not be valid against any person
except the mortgagor, his executors or administrators, unless the possession
of the property is delivered to and retained by the mortgagee or unless the
mortgage is recorded in the office of the register of deeds of the province in
which the mortgagor resides at the time of making the same, or, if he resides
without the Philippine Islands, in the province in which the property is
situated: Provided, however, That if the property is situated in a different
province from that in which the mortgagor resides, the mortgage shall be
recorded in the office of the register of deeds of both the province in which
the mortgagor resides and that in which the property is situated, and for the
purposes of this Act the city of Manila shall be deemed to be a province.
Sec. 5. Form. A chattel mortgage shall be deemed to be sufficient when
made substantially in accordance with the following form, and shall be
signed by the person or persons executing the same, in the presence of two
witnesses, who shall sign the mortgage as witnesses to the execution thereof,
and each mortgagor and mortgagee, or, in the absence of the mortgagee, his
agent or attorney, shall make and subscribe an affidavit in substance as
hereinafter set forth, which affidavit, signed by the parties to the mortgage as
above stated, and the certificate of the oath signed by the authority
administering the same, shall be appended to such mortgage and recorded
therewith.
FORM OF CHATTEL MORTGAGE AND AFFIDAVIT.
This mortgage made this ____ day of ______19____ by _______________,
a resident of the municipality of ______________, Province of
____________, Philippine Islands mortgagor, to ____________, a resident of
the municipality of ___________, Province of ______________, Philippine
Islands, mortgagee, witnesseth:
That the said mortgagor hereby conveys and mortgages to the said
mortgagee all of the following-described personal property situated in the
municipality of ______________, Province of ____________ and now in the
possession of said mortgagor, to wit:
(Here insert specific description of the property mortgaged.)
This mortgage is given as security for the payment to the said ______,
mortgagee, of promissory notes for the sum of ____________ pesos, with (or
without, as the case may be) interest thereon at the rate of ___________ per
centum per annum, according to the terms of __________, certain
promissory notes, dated _________, and in the words and figures following
(here insert copy of the note or notes secured).
(If the mortgage is given for the performance of some other obligation aside
from the payment of promissory notes, describe correctly but concisely the
obligation to be performed.)
The conditions of this obligation are such that if the mortgagor, his heirs,
executors, or administrators shall well and truly perform the full obligation
(or obligations) above stated according to the terms thereof, then this
obligation shall be null and void.
Executed at the municipality of _________, in the Province of ________,
this _____ day of 19_____
____________________
(Signature of mortgagor.)
In the presence of
_________________
_________________
(Two witnesses sign here.)
FORM OF OATH.
We severally swear that the foregoing mortgage is made for the purpose of
securing the obligation specified in the conditions thereof, and for no other
purpose, and that the same is a just and valid obligation, and one not entered
into for the purpose of fraud.
FORM OF CERTIFICATE OF OATH.
At ___________, in the Province of _________, personally appeared
____________, the parties who signed the foregoing affidavit and made oath
to the truth thereof before me.
_____________________________
(Notary public, justice of the peace, 1 or other officer, as the case may be.)
Sec. 6. Corporations. When a corporation is a party to such mortgage the
affidavit required may be made and subscribed by a director, trustee, cashier,
treasurer, or manager thereof, or by a person authorized on the part of such
corporation to make or to receive such mortgage. When a partnership is a
party to the mortgage the affidavit may be made and subscribed by one
member thereof.
Sec. 7. Descriptions of property. The description of the mortgaged
property shall be such as to enable the parties to the mortgage, or any other
person, after reasonable inquiry and investigation, to identify the same.
If the property mortgaged be large cattle, as defined by section one of Act
Numbered Eleven and forty-seven, 2 and the amendments thereof, the
description of said property in the mortgage shall contain the brands, class,
sex, age, knots of radiated hair commonly known as remolinos, or cowlicks,
and other marks of ownership as described and set forth in the certificate of
ownership of said animal or animals, together with the number and place of
issue of such certificates of ownership.
If growing crops be mortgaged the mortgage may contain an agreement
stipulating that the mortgagor binds himself properly to tend, care for and
protect the crop while growing, and faithfully and without delay to harvest
the same, and that in default of the performance of such duties the mortgage
may enter upon the premises, take all the necessary measures for the
protection of said crop, and retain possession thereof and sell the same, and
from the proceeds of such sale pay all expenses incurred in caring for,
harvesting, and selling the crop and the amount of the indebtedness or
obligation secured by the mortgage, and the surplus thereof, if any shall be
paid to the mortgagor or those entitled to the same.
A chattel mortgage shall be deemed to cover only the property described
therein and not like or substituted property thereafter acquired by the
mortgagor and placed in the same depository as the property originally
mortgaged, anything in the mortgage to the contrary notwithstanding.
Sec. 8. Failure of mortgagee to discharge the mortgage. If the
mortgagee, assign, administrator, executor, or either of them, after
performance of the condition before or after the breach thereof, or after
tender of the performance of the condition, at or after the time fixed for the
performance, does not within ten days after being requested thereto by any
person entitled to redeem, discharge the mortgage in the manner provided by
law, the person entitled to redeem may recover of the person whose duty it is
to discharge the same twenty pesos for his neglect and all damages
occasioned thereby in an action in any court having jurisdiction of the
subject-matter thereof.
Sec. 9-12. (inclusive) 3
Sec. 13. When the condition of a chattel mortgage is broken, a mortgagor or
person holding a subsequent mortgage, or a subsequent attaching creditor
may redeem the same by paying or delivering to the mortgagee the amount
due on such mortgage and the reasonable costs and expenses incurred by
such breach of condition before the sale thereof. An attaching creditor who
so redeems shall be subrogated to the rights of the mortgagee and entitled to
foreclose the mortgage in the same manner that the mortgagee could
foreclose it by the terms of this Act.
Sec. 14. Sale of property at public auction; Officers return; Fees;
Disposition of proceeds. The mortgagee, his executor, administrator, or
assign, may, after thirty days from the time of condition broken, cause the
mortgaged property, or any part thereof, to be sold at public auction by a
public officer at a public place in the municipality where the mortgagor
resides, or where the property is situated, provided at least ten days notice of
the time, place, and purpose of such sale has been posted at two or more
public places in such municipality, and the mortgagee, his executor,
administrator, or assign, shall notify the mortgagor or person holding under
him and the persons holding subsequent mortgages of the time and place of
sale, either by notice in writing directed to him or left at his abode, if within
the municipality, or sent by mail if he does not reside in such municipality, at
least ten days previous to the sale.
The officer making the sale shall, within thirty days thereafter, make in
writing a return of his doings and file the same in the office of the register of
deeds where the mortgage is recorded, and the register of deeds shall record
the same. The fees of the officer for selling the property shall be the same as
in the case of sale on execution as provided in Act Numbered One hundred
and ninety, 4 and the amendments thereto, and the fees of the register of
deeds for registering the officers return shall be taxed as a part of the costs
of sale, which the officer shall pay to the register of deeds. The return shall
particularly describe the articles sold, and state the amount received for each
article, and shall operate as a discharge of the lien thereon created by the
mortgage. The proceeds of such sale shall be applied to the payment, first, of
the costs and expenses of keeping and sale, and then to the payment of the
demand or obligation secured by such mortgage, and the residue shall be paid
to persons holding subsequent mortgages in their order, and the balance, after
paying the mortgages, shall be paid to the mortgagor or person holding under
him on demand.
If the sale includes any large cattle, a certificate of transfer as required by
section sixteen of Act Numbered Eleven hundred and forty-seven 5 shall be
issued by the treasurer of the municipality where the sale was held to the
purchaser thereof.
Sec. 15. 6, 6a
Sec. 16. This Act shall take effect on August first, nineteen hundred and six.
Enacted, July 2, 1906.
Footnotes
1. Now Municipal judge.
2. Now section 511 of the Administrative Code.
3. Repealed by Act 3815, Article 367 approved December 8, 1930.
4. Now Rule 141, section 7 of the Rules of Court.
5. Now Sec. 523 of the Administrative Code.
6. Superseded by section 198 of the Administrative Code. The following is
the present text of section 198 as amended by RA 2711, approved June 18,
1960.
SECTION 198. Registration of chattel mortgages and fees collectible in
connection therewith. Every register of deeds shall keep a primary entry
book and a registration book for the chattel mortgages; shall certify on each
mortgage filed for record, as well as on its duplicate, the date, hour, and
minute when the same was by him received; and shall record in such books
any chattel mortgage, assignment, or discharge thereof, and any other
instruments relating to a recorded mortgage, and all such instruments shall be
presented to him in duplicate, the original to be filed and the duplicate to be
returned to the person concerned.
The recording of a mortgage shall be effected by making an entry, which
shall be given a correlative number, setting forth the names of the mortgagee,
and the mortgagor, the sum or obligation guaranteed, date of the instrument,
name of the notary before whom it was sworn to or acknowledged, and a
note that the property mortgaged, as well as the terms and conditions of the
mortgage, is mentioned in detail in the instrument filed, giving the proper file
number thereof. The recording of other instruments relating to a recorded
mortgage shall be effected by way of annotations on the space provided
therefor in the registration book, after the same shall have been entered in the
primary entry book.
The register of deeds shall also certify the officers return of sale upon any
mortgage, making reference upon the record of such officers return to the
volume and page of the record of the mortgage, and a reference of such
return on the record of the mortgage itself, and give a certified copy thereof,
when requested, upon payment of the lawful fees for such copy; and certify
upon each mortgage officers return of sale or discharge of mortgage; and
upon any other instrument relating to such a recorded mortgage, both on the
original and on the duplicate, the date, hour, and minute when the same is
received for record and record such certificate with the return itself and keep
an alphabetical index of mortgagors and mortgagees, which record and index
shall be open to public inspection.
Duly certified copies of such records and of filed instruments shall be
receivable as evidence in any court.
The register of deeds shall collect the following fees for services rendered
by him under this section:
(a) For entry or presentation of any document in the primary entry book,
one peso. Supporting papers presented together with the principal document
need not be charged any entry or presentation fee unless the party in interest
desires that they be likewise entered.
(b) For filing and recording each chattel mortgage, including the necessary
certificates and affidavits, the fees established in the following schedule shall
be collected:
1. When the amount of the mortgage does not exceed six thousand pesos,
three pesos and fifty centavos for the first five hundred pesos or fractional
part thereof, and one peso and fifty centavos for each additional five hundred
pesos or fractional part thereof.
2. When the amount of the mortgage is more than six thousand pesos but
does not exceed thirty thousand pesos, twenty-four pesos for the initial
amount not exceeding eight thousand pesos, and four pesos for each
additional two thousand pesos or fractional part thereof.
3. When the amount of the mortgage is more than thirty thousand pesos but
does not exceed one hundred thousand pesos, seventy-five pesos for the
initial amount not exceeding thirty-five thousand pesos, and seven pesos for
each additional five thousand pesos or fractional part thereof.
4. When the amount of the mortgage is more than one hundred thousand
pesos but does not exceed five hundred thousand pesos, one hundred and
seventy-six pesos for the initial amount not exceeding one hundred ten
thousand pesos, and ten pesos for each additional ten thousand pesos or
fractional part thereof.
5. When the amount of the mortgage is more than five hundred thousand
pesos, five hundred eighty-one pesos for the initial amount not exceeding
five hundred twenty thousand pesos, and fifteen pesos for each additional
twenty thousand pesos or fractional part thereof: Provided, however, That
registration of the mortgage in the province where the property is situated
shall be sufficient registration: And provided, further, That if the mortgage is
to be registered in more than one city or province, the register of deeds of the
city or province where the instrument is first presented for registration shall
collect the full amount of the fees due in accordance with the schedule
prescribed above, and the register of deeds of the other city or province
where the same instrument is also to be registered shall collect only a sum
equivalent to twenty per centum of the amount of fees due and paid in the
first city or province, but in no case shall the fees payable in any registry be
less than the minimum fixed in said schedule.
(c) For recording each instrument of sale, conveyance, or transfer of the
property which is subject of a recorded mortgage, or of the assignment of
mortgage credit, the fees established in the preceding schedule shall be
collected on the basis of ten per centum of the amount of the mortgage or
unpaid balance thereof: Provided, That the latter is stated in the instrument.
(d) For recording each notice of attachment, including the necessary index
and annotations, four pesos.
(e) For recording each release of mortgage, including the necessary index
and references, the fees established in the schedule under paragraph (b)
above shall be collected on the basis of five per centum of the amount of the
mortgage.
(f) For recording each release of attachment, including the proper
annotations, two pesos.
(g) For recording each sheriffs return of sale, including the index and
references, three pesos.
(h) For recording a power of attorney, appointment of judicial guardian,
administrator, or trustee, or any other instrument in which a person is given
power to act in behalf of another in connection with a mortgage, three pesos.
(i) For recording each instrument or order relating to a recorded mortgage,
including the necessary index and references, for which no specific fee is
provided above, two pesos.
(j) For certified copies of records, such fees as are allowed by law for copies
kept by the register of deeds.
(k) For issuing a certificate relative to, or showing the existence or non-
existence of, an entry in the registration book, or a document on file, for each
such certificate containing not more than two hundred words, three pesos; if
it exceeds that number, an additional fee of fifty centavos shall be collected
for every one hundred words or fractional part thereof, in excess of the first
two hundred words.









REPUBLIC ACT NO. 8556 AN ACT AMENDING REPUBLIC ACT
NO. 5980, AS AMENDED, OTHERWISE KNOWN AS THE
FINANCING COMPANY ACT

Section 1. This Act shall be known as the Financing Company Act of
1998.
Section 2. Declaration of Policy. It is hereby declared to be the policy of
the State to regulate and promote the activities of financing and leasing
companies to place their operations on a sound, competitive, stable and
efficient basis as other financial institutions, to recognize and strengthen their
critical role in providing medium and long-term credit for investments in
capital goods and equipment especially by small and medium enterprises
particularly in the countryside and to curtail and prevent acts or practices
prejudicial to the public interest so that they may be in a better position to
extend efficient service in a fair manner to the general public and to industry,
commerce and agriculture and thereby more fully contribute to the sound
development of the national economy.
Section 3. Section 3 of the same Act is hereby amended to read as follows:
Section 3. Definition of Terms. As used in this Act, the term:
(a) Financing companies hereinafter called companies, are corporations,
except banks, investments houses, savings and loan associations, insurance
companies, cooperatives, and other financial institutions organized or
operating under other special laws, which are primarily organized for the
purpose of extending credit facilities to consumers and to industrial,
commercial, or agricultural enterprises, by direct lending or by discounting
or factoring commercial papers or accounts receivable, or by buying and
selling contracts, leases, chattel mortgages, or other evidences of
indebtedness, or by financial leasing of movable as well as immovable
property;
(b) Securities and Exchange Commission shall mean the office of the
Securities and Exchange Commission of the Philippines;
(c) Credit shall mean any loan, mortgage, financial lease, deed of trust,
advance or discount, any conditional sales contract, contract to sell, or sale or
contract of sale of property or service, either for present or future delivery,
under which, part of all or the price is payable subsequent to the making of
such sale or contract; any contract, any option, demand, lien or pledge, or to
the other claims against, or for the delivery of, property or money, any
purchase, or other acquisition of or any credit upon the security of, any
obligation or claim arising out of the foregoing, and any transaction or series
of transactions having similar purpose or effect; and
(d) Financial leasing is a mode of extending credit through a non-
cancelable lease contract under which the lessor purchases or acquires, at the
instance of the lessee, machinery, equipment, motor vehicles, appliances,
business and office machines, and other movable or immovable property in
consideration of the periodic payment by the lessee of a fixed amount of
money sufficient to amortize at least seventy (70%) of the purchase price or
acquisition cost, including any incidental expenses and a margin of profit
over an obligatory period of not less than two (2) years during which the
lessee has the right to hold and use the leased property with the right to
expense the lease rentals paid to the lessor and bears the cost of repairs,
maintenance, insurance and preservation thereof, but with no obligation or
option on his part to purchase the leased property from the owner-lessor at
the end of the lease contract.
(e) Purchase discount is the difference between the value of the
receivable purchased or credit assigned, and the net amount paid by the
finance company for such purchases or assignment, exclusive of fees,
services, charges, interest and other charges incident to the extension of
credit.
(f) Lease rentals shall refer to the periodic payments made by the lessee
to the lessor under Section 3(d), above.
Section 4. Section 4 of the same Act is hereby amended to read as follows:
Section 4. Grant of Authority to Securities and Exchange Commission.
The Securities and Exchange Commission is hereby empowered to enforce
the provisions implementing regulations except insofar as the Bangko Sentral
may have supervisory authority under the provisions of Republic Act No.
7653 with respect to financing companies licensed to perform quasi-banking
functions, and insofar as the Monetary Board has authority to prescribe
financing company rates and charges under section 5 hereof.
Section 5. Section 5 of the same Act is hereby amended to read as follows:
Section 5. Limitation on Purchase Discounts, Lease Rentals, Fees, Service
and Other Charges. The Monetary Board of the Bangko Sentral ng
Pilipinas is hereby empowered to prescribe, in consultation with financing
companies and the Securities and Exchange Commission, the maximum rate
or rates of purchase discounts, lease rentals, fees, service and other charges
of financing companies, and to change, eliminate or grant exemptions from
or suspend the effectivity of such rules whenever warranted by prevailing
economic and social conditions.
Section 6. Section 6 of the same Act is hereby amended to read as follows:
Section 6. Form of Organization and Capital Requirements. Financing
companies shall be organized in the form of stock corporations at least forty
percent (40%) of the voting stock of which is owned by citizens of the
Philippines and shall have a paid-up capital of not less than Ten million
pesos (P10,000,000) in case the financing company is located in Metro
Manila and other first class cities, Five million pesos (P5,000,000) in other
classes of cities and Two million five hundred thousand pesos (P2,500,000)
in municipalities: provided, however, that no foreign national may be
allowed to own stock in any financing company unless the country of which
he is a national accords the same reciprocal rights to Filipinos in the
ownership of financing companies or their counterpart entities in such
country: and Provided, further, that financing companies duly existing and in
operation before the effectivity of this Act shall comply with the minimum
capital requirement within one (1) year from the date of the said effectivity.
Section 7. Section 7 of the same Act is hereby amended to read as follows:
Section 7. Requirement for Registration. Aside from requiring
compliance with the provisions of the Corporation Code, the Securities and
Exchange Commission shall not register the articles of incorporation of any
financing company unless its office is satisfied on the evidence submitted to
it, that:
(a) All the requirements of existing laws to engage in the business for
which the applicant is proposed to be incorporated or organized have been
complied with;
(b) The organization, direction and administration, as well as the integrity
and responsibility of the organizers and administrators reasonably assure the
protection of the interest of the general public;
(c) All the requirements of this Act have been complied with: provided,
that financing companies duly incorporated or registered prior to the
approval of this Act, and which are actually existing and operating as such,
shall file an information sheet with the Securities and Exchange Commission
in the form to be prescribed by the Securities and Exchange Commission
within sixty (60) days after notice from the said Commission. No person,
association, partnership, or corporation shall hold itself out as doing business
as a financing company or finance and investment company or any other
title or name tending to give the public the impression that it is engaged in
the operations and activities of a financing company, unless so authorized
under this Act.
Section 8. Section 8 of the same Act is hereby repealed.
Section 9. Section 9 of the same Act is hereby renumbered as Section 8.
Section 10. There is hereby inserted after Section 8 as renumbered, new
Sections 9, 10, 11, 12 and 13 to read as follows:
Section 9. Rights and Powers. Financing companies shall have the
following powers, in addition to those granted by this Act and by other laws:
(a) Engage in quasi-banking and money market operations with the prior
approval of the Bangko Sentral ng Pilipinas;
(b) Engage in trust operations subject to the provisions of the General
Banking Act upon prior approval by the Bangko Sentral ng Pilipinas;
(c) Issue bonds and other capital instruments subject to pertinent rules and
regulations of the Bangko Sentral ng Pilipinas;
(d) Rediscount their paper with government financial institutions subject
to relevant laws, rules and regulation;
(e) Participate in special loan or credit programs sponsored by or made
available through government financial institutions; and
(f) Provide foreign currency loans and leases to enterprises who earn
foreign currency by exports or other means, subject to existing laws and rules
and regulations promulgated by the Bangko Sentral ng Pilipinas.
Nothing in this section shall be construed as precluding a financing
company from performing such services or exercising such powers as may be
granted by the Bangko Sentral ng Pilipinas or the Securities and Exchange
Commission or as may be incidental to its activities as a corporation.
Section 10. Applicability of Incentives and Exemptions to Financial
Leases. Any incentive, exemption or benefit, including tax credits and
investment incentives granted by law or regulation to any purchaser,
importer, borrower or other eligible person in connection with any purchase,
importation, acquisition, or other transaction shall not be lost, diminished or
impaired when the associated financing is through a financial lease rather
than through borrowing or other conventional method of financing.
Financing companies providing the financial lease in such cases shall be
entitled to any incentive, exemption, benefit or privilege available to lenders,
importers, purchasers or other eligible person in such transactions under the
applicable law or regulation.
Section 11. Parity Clause. When providing medium and long-term
credit to small and medium enterprises, financing companies shall enjoy such
other rights, powers, benefits and privileges as may be granted by the law or
regulation to other non-bank financial institutions when they provide similar
credit to such enterprises.
Section 12. Liability of Lessors. Financing companies shall not be
liable for loss, damage or injury caused by a motor vehicle, aircraft, vessel,
equipment, machinery or other property leased to a third person or entity
except when the motor vehicle, aircraft, vessel, equipment or other property
is operated by the financing company, its employees or agents at the time of
the loss, damage or injury.
Section 13. Registry of Financial Lease. The Register of Deeds shall
open and maintain a register of financial leases, as an adjunct to the chattel
mortgage registry.
Said lease register shall contain the following particulars:
(1) Name or description of property, including:
(a) Brand name or name of manufacturer;
(b) Name of model, if any;
(c) Year of model, or manufacture, if available; and
(d) Serial number, if any.
(2) Acquisition cost;
(3) Name of owner or finance company lessor;
(4) Name of lessee;
(5) Date of lease agreement or schedule;
(6) Date of expiry of lease; and
(7) Date of entry in lease registry.

Section 11. Section 10 of the same Act is hereby renumbered as Section
14. As renumbered, Section 14 is hereby amended to read as follows:
Section 14. Penalty. A fine of not less than Ten thousand pesos
(P10,000.00) and not more than One hundred thousand pesos (P100,000.00)
or imprisonment for not more than six (6) months or both, at the discretion of
the court, shall be imposed upon:
(1) Persons, associations, partnerships or corporations, including the
managing officer thereof, that shall:
(a) Engage in the business of a financing company without authority from
the Securities and Exchange Commission;
(b) Hold themselves out to be financing companies, either through
advertisement in whatever form, whether in its stationery, commercial paper
or other document, or through other representations without authority;
(c) Make use of trade or firm name containing the words Financing
Company or Leasing Company or Finance and Leasing Company or
Finance and Investment Company or any other designation that would give
the public the impression that it is engaged in the business of a financing
company or leasing company as defined in this Act without authority; and
(d) Violate the provisions of this Act.
(2) Any officer, employee, or agent of a financing company who shall:
(a) Knowingly and willingly make any statement in any application,
report or document required to be filed under this Act, which statement is
false or misleading with respect to any material fact; or
(b) Overvalue or aid in overvaluing any securities for the purpose of
influencing in any way the action of the company on any loan, or discounting
line.
(3) Any officer, employee or examiner of the Securities and Exchange
Commission directly charged with the implementation of this Act who shall
AN ACT DEFINING THE CRIME OF MONEY LAUNDERING,
PROVIDING PENALTIES THEREFOR AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:
SECTION 1. Short Title. This Act shall be known as the "Anti-Money
Laundering Act of 2001."
SEC. 2. Declaration of Policy. It is hereby declared the policy of the State
to protect and preserve the integrity and confidentiality of bank accounts and
to ensure that the Philippines shall not be used as a money laundering site for
the proceeds of any unlawful activity. Consistent with its foreign policy, the
State shall extend cooperation in transnational investigations and
prosecutions of persons involved in money laundering activities wherever
committed.
SEC. 3. Definitions. For purposes of this Act, the following terms are
hereby defined as follows:
(a) "Covered institution" refers to:
(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and
their subsidiaries and affiliates supervised or regulated by the Bangko Sentral
ng Pilipinas (BSP);
(2) insurance companies and all other institutions supervised or regulated by
the Insurance Commission; and
(3) (i) securities dealers, brokers, salesmen, investment houses and other
similar entities managing securities or rendering services as investment
agent, advisor, or consultant, (ii) mutual funds, close-end investment
companies, common trust funds, pre-need companies and other similar
entities, (iii) foreign exchange corporations, money changers, money
payment, remittance, and transfer companies and other similar entities, and
(iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by Securities and Exchange Commission and Exchange
Commission
(b) "Covered transaction" is a single, series, or combination of transactions
involving a total amount in excess of Four million Philippine pesos
(Php4,000,000.00) or an equivalent amount in foreign currency based on the
prevailing exchange rate within five (5) consecutive banking days except
those between a covered institution and a person who, at the time of the
transaction was a properly identified client and the amount is commensurate
with the business or financial capacity of the client; or those with an
underlying legal or trade obligation, purpose, origin or economic
justification.
It likewise refers to a single, series or combination or pattern of unusually
large and complex transactions in excess of Four million Philippine pesos
(Php4,000,000.00) especially cash deposits and investments having no
credible purpose or origin, underlying trade obligation or contract.
(c) "Monetary instrument" refers to:
(1) coins or currency of legal tender of the Philippines, or of any other
country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers, deposit
certificates, trust certificates, custodial receipts or deposit substitute
instruments, trading orders, transaction tickets and confirmations of sale or
investments and money market instruments; and
(4) other similar instruments where title thereto passes to another by
endorsement, assignment or delivery.
(d) "Offender" refers to any person who commits a money laundering
offense.
(e) "Person" refers to any natural or juridical person.
(f) "Proceeds" refers to an amount derived or realized from an unlawful
activity.
(g) "Supervising Authority" refers to the appropriate supervisory or
regulatory agency, department or office supervising or regulating the covered
institutions enumerated in Section 3(a).
(h) "Transaction" refers to any act establishing any right or obligation or
giving rise to any contractual or legal relationship between the parties
thereto. It also includes any movement of funds by any means with a covered
institution.
(i) "Unlawful activity" refers to any act or omission or series or combination
thereof involving or having relation to the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise
known as the Revised Penal Code, as amended;
(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as
amended, otherwise known as the Dangerous Drugs Act of 1972;
(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as
amended; otherwise known as the Anti-Graft and Corrupt Practices Act;
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and
302 of the Revised Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal gambling under Presidential
Decree No. 1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;
(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;
(9) Swindling under Article 315 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations under Republic Act No. 8792, otherwise known as the
Electronic Commerce Act of 2000;
(12) Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended,
including those perpetrated by terrorists against non-combatant persons and
similar targets;
(13) Fraudulent practices and other violations under Republic Act No. 8799,
otherwise known as the Securities Regulation Code of 2000;
(14) Felonies or offenses of a similar nature that are punishable under the
penal laws of other countries.
SEC. 4. Money Laundering Offense. Money laundering is a crime
whereby the proceeds of an unlawful activity are transacted, thereby making
them appear to have originated from legitimate sources. It is committed by
the following:
(a) Any person knowing that any monetary instrument or property represents,
involves, or relates to, the proceeds of any unlawful activity, transacts or
attempts to transact said monetary instrument or property.
(b) Any person knowing that any monetary instrument or property involves
the proceeds of any unlawful activity, performs or fails to perform any act as
a result of which he facilitates the offense of money laundering referred to in
paragraph (a) above.
(c) Any person knowing that any monetary instrument or property is required
under this Act to be disclosed and filed with the Anti-Money Laundering
Council (AMLC), fails to do so.
SEC. 5. Jurisdiction of Money Laundering Cases. The regional trial
courts shall have jurisdiction to try all cases on money laundering. Those
committed by public officers and private persons who are in conspiracy with
such public officers shall be under the jurisdiction of the Sandiganbayan.
SEC. 6. Prosecution of Money Laundering.
(a) Any person may be charged with and convicted of both the offense of
money laundering and the unlawful activity as herein defined.
(b) Any proceeding relating to the unlawful activity shall be given
precedence over the prosecution of any offense or violation under this Act
without prejudice to the freezing and other remedies provided.
SEC. 7. Creation of Anti-Money Laundering Council (AMLC). The
Anti-Money Laundering Council is hereby created and shall be composed of
the Governor of the Bangko Sentral ng Pilipinas as chairman, the
Commissioner of the Insurance Commission and the Chairman of the
Securities and Exchange Commission as members. The AMLC shall act
unanimously in the discharge of its functions as defined hereunder:
(1) to require and receive covered transaction reports from covered
institutions;
(2) to issue orders addressed to the appropriate Supervising Authority or the
covered institution to determine the true identity of the owner of any
monetary instrument or property subject of a covered transaction report or
request for assistance from a foreign State, or believed by the Council, on the
basis of substantial evidence, to be, in whole or in part, wherever located,
representing, involving, or related to, directly or indirectly, in any manner or
by any means, the proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and all other remedial proceedings
through the Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering
activities and other violations of this Act;
(6) to freeze any monetary instrument or property alleged to be proceeds of
any unlawful activity;
(7) to implement such measures as may be necessary and justified under this
Act to counteract money laundering;
(8) to receive and take action in respect of, any request from foreign states
for assistance in their own anti-money laundering operations provided in this
Act;
(9) to develop educational programs on the pernicious effects of money
laundering, the methods and techniques used in money laundering, the viable
means of preventing money laundering and the effective ways of prosecuting
and punishing offenders; and
(10) to enlist the assistance of any branch, department, bureau, office, agency
or instrumentality of the government, including government-owned and -
controlled corporations, in undertaking any and all anti-money laundering
operations, which may include the use of its personnel, facilities and
resources for the more resolute prevention, detection and investigation of
money laundering offenses and prosecution of offenders.
SEC. 8. Creation of a Secretariat. The AMLC is hereby authorized to
establish a secretariat to be headed by an Executive Director who shall be
appointed by the Council for a term of five (5) years. He must be a member
of the Philippine Bar, at least thirty-five (35) years of age and of good moral
character, unquestionable integrity and known probity. All members of the
Secretariat must have served for at least five (5) years either in the Insurance
Commission, the Securities and Exchange Commission or the Bangko
Sentral ng Pilipinas (BSP) and shall hold full-time permanent positions
within the BSP.
SEC. 9. Prevention of Money Laundering; Customer Identification
Requirements and Record Keeping.
(a) Customer Identification. - Covered institutions shall establish and record
the true identity of its clients based on official documents. They shall
maintain a system of verifying the true identity of their clients and, in case of
corporate clients, require a system of verifying their legal existence and
organizational structure, as well as the authority and identification of all
persons purporting to act on their behalf.The provisions of existing laws to
the contrary notwithstanding, anonymous accounts, accounts under fictitious
names, and all other similar accounts shall be absolutely prohibited. Peso and
foreign currency non-checking numbered accounts shall be allowed. The
BSP may conduct annual testing solely limited to the determination of the
existence and true identity of the owners of such accounts.
(b) Record Keeping. - All records of all transactions of covered institutions
shall be maintained and safely stored for five (5) years from the dates of
transactions. With respect to closed accounts, the records on customer
identification, account files and business correspondence, shall be preserved
and safely stored for at least five (5) years from the dates when they were
closed.
(c) Reporting of Covered Transactions. - Covered institutions shall report to
the AMLC all covered transactions within five (5) working days from
occurrence thereof, unless the Supervising Authority concerned prescribes a
longer period not exceeding ten (10) working days.
When reporting covered transactions to the AMLC, covered institutions and
their officers, employees, representatives, agents, advisors, consultants or
associates shall not be deemed to have violated Republic Act No. 1405, as
amended; Republic Act No. 6426, as amended; Republic Act No. 8791 and
other similar laws, but are prohibited from communicating, directly or
indirectly, in any manner or by any means, to any person the fact that a
covered transaction report was made, the contents thereof, or any other
information in relation thereto. In case of violation thereof, the concerned
officer, employee, representative, agent, advisor, consultant or associate of
the covered institution, shall be criminally liable. However, no
administrative, criminal or civil proceedings, shall lie against any person for
having made a covered transaction report in the regular performance of his
duties and in good faith, whether or not such reporting results in any criminal
prosecution under this Act or any other Philippine law.
When reporting covered transactions to the AMLC, covered institutions and
their officers, employees, representatives, agents, advisors, consultants or
associates are prohibited from communicating, directly or indirectly, in any
manner or by any means, to any person, entity, the media, the fact that a
covered transaction report was made, the contents thereof, or any other
information in relation thereto. Neither may such reporting be published or
aired in any manner or form by the mass media, electronic mail, or other
similar devices. In case of violation thereof, the concerned officer, employee,
representative, agent, advisor, consultant or associate of the covered
institution, or media shall be held criminally liable.
SEC. 10. Authority to Freeze. Upon determination that probable cause
exists that any deposit or similar account is in any way related to an unlawful
activity, the AMLC may issue a freeze order, which shall be effective
immediately, on the account for a period not exceeding fifteen (15) days.
Notice to the depositor that his account has been frozen shall be issued
simultaneously with the issuance of the freeze order. The depositor shall
have seventy-two (72) hours upon receipt of the notice to explain why the
freeze order should be lifted. The AMLC has seventy-two (72) hours to
dispose of the depositors explanation. If it fails to act within seventy-two
(72) hours from receipt of the depositors explanation, the freeze order shall
automatically be dissolved. The fifteen (15)-day freeze order of the AMLC
may be extended upon order of the court, provided that the fifteen (15)-day
period shall be tolled pending the courts decision to extend the period.
No court shall issue a temporary restraining order or writ of injunction
against any freeze order issued by the AMLC except the Court of Appeals or
the Supreme Court.
SEC. 11. Authority to Inquire into Bank Deposits. Notwithstanding the
provisions of Republic Act No. 1405, as amended; Republic Act No. 6426,
as amended; Republic Act No. 8791, and other laws, the AMLC may inquire
into or examine any particular deposit or investment with any banking
institution or non-bank financial institution upon order of any competent
court in cases of violation of this Act when it has been established that there
is probable cause that the deposits or investments involved are in any way
related to a money laundering offense: Provided, That this provision shall not
apply to deposits and investments made prior to the effectivity of this Act.
SEC. 12. Forfeiture Provisions.
(a) Civil Forfeiture. - When there is a covered transaction report made, and
the court has, in a petition filed for the purpose ordered seizure of any
monetary instrument or property, in whole or in part, directly or indirectly,
related to said report, the Revised Rules of Court on civil forfeiture shall
apply.
(b) Claim on Forfeited Assets. - Where the court has issued an order of
forfeiture of the monetary instrument or property in a criminal prosecution
for any money laundering offense defined under Section 4 of this Act, the
offender or any other person claiming an interest therein may apply, by
verified petition, for a declaration that the same legitimately belongs to him
and for segregation or exclusion of the monetary instrument or property
corresponding thereto. The verified petition shall be filed with the court
which rendered the judgment of conviction and order of forfeiture, within
fifteen (15) days from the date of the order of forfeiture, in default of which
the said order shall become final and executory. This provision shall apply in
both civil and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. - Where the court has issued an order of
forfeiture of the monetary instrument or property subject of a money
laundering offense defined under Section 4, and said order cannot be
enforced because any particular monetary instrument or property cannot,
with due diligence, be located, or it has been substantially altered, destroyed,
diminished in value or otherwise rendered worthless by any act or omission,
directly or indirectly, attributable to the offender, or it has been concealed,
removed, converted or otherwise transferred to prevent the same from being
found or to avoid forfeiture thereof, or it is located outside the Philippines or
has been placed or brought outside the jurisdiction of the court, or it has been
commingled with other monetary instruments or property belonging to either
the offender himself or a third person or entity, thereby rendering the same
difficult to identify or be segregated for purposes of forfeiture, the court may,
instead of enforcing the order of forfeiture of the monetary instrument or
property or part thereof or interest therein, accordingly order the convicted
offender to pay an amount equal to the value of said monetary instrument or
property. This provision shall apply in both civil and criminal forfeiture.
SEC. 13. Mutual Assistance among States.
(a) Request for Assistance from a Foreign State. - Where a foreign State
makes a request for assistance in the investigation or prosecution of a money
laundering offense, the AMLC may execute the request or refuse to execute
the same and inform the foreign State of any valid reason for not executing
the request or for delaying the execution thereof. The principles of mutuality
and reciprocity shall, for this purpose, be at all times recognized.
(b) Powers of the AMLC to Act on a Request for Assistance from a Foreign
State. - The AMLC may execute a request for assistance from a foreign State
by: (1) tracking down, freezing, restraining and seizing assets alleged to be
proceeds of any unlawful activity under the procedures laid down in this Act;
(2) giving information needed by the foreign State within the procedures laid
down in this Act; and (3) applying for an order of forfeiture of any monetary
instrument or property in the court: Provided, That the court shall not issue
such an order unless the application is accompanied by an authenticated copy
of the order of a court in the requesting State ordering the forfeiture of said
monetary instrument or property of a person who has been convicted of a
money laundering offense in the requesting State, and a certification or an
affidavit of a competent officer of the requesting State stating that the
conviction and the order of forfeiture are final and that no further appeal lies
in respect of either.
(c) Obtaining Assistance from Foreign States. - The AMLC may make a
request to any foreign State for assistance in (1) tracking down, freezing,
restraining and seizing assets alleged to be proceeds of any unlawful activity;
(2) obtaining information that it needs relating to any covered transaction,
money laundering offense or any other matter directly or indirectly related
thereto; (3) to the extent allowed by the law of the foreign State, applying
with the proper court therein for an order to enter any premises belonging to
or in the possession or control of, any or all of the persons named in said
request, and/or search any or all such persons named therein and/or remove
any document, material or object named in said request: Provided, That the
documents accompanying the request in support of the application have been
duly authenticated in accordance with the applicable law or regulation of the
foreign State; and (4) applying for an order of forfeiture of any monetary
instrument or property in the proper court in the foreign State: Provided, That
the request is accompanied by an authenticated copy of the order of the
regional trial court ordering the forfeiture of said monetary instrument or
property of a convicted offender and an affidavit of the clerk of court stating
that the conviction and the order of forfeiture are final and that no further
appeal lies in respect of either.
(d) Limitations on Requests for Mutual Assistance. - The AMLC may refuse
to comply with any request for assistance where the action sought by the
request contravenes any provision of the Constitution or the execution of a
request is likely to prejudice the national interest of the Philippines unless
there is a treaty between the Philippines and the requesting State relating to
the provision of assistance in relation to money laundering offenses.
(e) Requirements for Requests for Mutual Assistance from Foreign States. -
A request for mutual assistance from a foreign State must (1) confirm that an
investigation or prosecution is being conducted in respect of a money
launderer named therein or that he has been convicted of any money
laundering offense; (2) state the grounds on which any person is being
investigated or prosecuted for money laundering or the details of his
conviction; (3) give sufficient particulars as to the identity of said person; (4)
give particulars sufficient to identify any covered institution believed to have
any information, document, material or object which may be of assistance to
the investigation or prosecution; (5) ask from the covered institution
concerned any information, document, material or object which may be of
assistance to the investigation or prosecution; (6) specify the manner in
which and to whom said information, document, material or object obtained
pursuant to said request, is to be produced; (7) give all the particulars
necessary for the issuance by the court in the requested State of the writs,
orders or processes needed by the requesting State; and (8) contain such
other information as may assist in the execution of the request.
(f) Authentication of Documents. - For purposes of this Section, a document
is authenticated if the same is signed or certified by a judge, magistrate or
equivalent officer in or of, the requesting State, and authenticated by the oath
or affirmation of a witness or sealed with an official or public seal of a
minister, secretary of State, or officer in or of, the government of the
requesting State, or of the person administering the government or a
department of the requesting territory, protectorate or colony. The certificate
of authentication may also be made by a secretary of the embassy or legation,
consul general, consul, vice consul, consular agent or any officer in the
foreign service of the Philippines stationed in the foreign State in which the
record is kept, and authenticated by the seal of his office.
(g) Extradition. - The Philippines shall negotiate for the inclusion of money
laundering offenses as herein defined among extraditable offenses in all
future treaties.
SEC. 14. Penal Provisions.
(a) Penalties for the Crime of Money Laundering. The penalty of
imprisonment ranging from seven (7) to fourteen (14) years and a fine of not
less than Three million Philippine pesos (Php 3,000,000.00) but not more
than twice the value of the monetary instrument or property involved in the
offense, shall be imposed upon a person convicted under Section 4(a) of this
Act.
The penalty of imprisonment from four (4) to seven (7) years and a fine of
not less than One million five hundred thousand Philippine pesos
(Php1,500,000.00) but not more than Three million Philippine pesos
(Php3,000,000.00), shall be imposed upon a person convicted under Section
4(b) of this Act.
The penalty of imprisonment from six (6) months to four (4) years or a fine
of not less than One hundred thousand Philippine pesos (Php100,000.00) but
not more than Five hundred thousand Philippine pesos (Php500,000.00), or
both, shall be imposed on a person convicted under Section 4(c) of this Act.
(b) Penalties for Failure to Keep Records. The penalty of imprisonment from
six (6) months to one (1) year or a fine of not less than One hundred
thousand Philippine pesos (Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a
person convicted under Section 9(b) of this Act.
(c) Malicious Reporting. Any person who, with malice, or in bad faith,
reports or files a completely unwarranted or false information relative to
money laundering transaction against any person shall be subject to a penalty
of six (6) months to four (4) years imprisonment and a fine of not less than
One hundred thousand Philippine pesos (Php100, 000.00) but not more than
Five hundred thousand Philippine pesos (Php500, 000.00), at the discretion
of the court: Provided, That the offender is not entitled to avail the benefits of
the Probation Law.
If the offender is a corporation, association, partnership or any juridical
person, the penalty shall be imposed upon the responsible officers, as the
case may be, who participated in the commission of the crime or who shall
have knowingly permitted or failed to prevent its commission. If the offender
is a juridical person, the court may suspend or revoke its license. If the
offender is an alien, he shall, in addition to the penalties herein prescribed, be
deported without further proceedings after serving the penalties herein
prescribed. If the offender is a public official or employee, he shall, in
addition to the penalties prescribed herein, suffer perpetual or temporary
absolute disqualification from office, as the case may be.
Any public official or employee who is called upon to testify and refuses to
do the same or purposely fails to testify shall suffer the same penalties
prescribed herein.
(d) Breach of Confidentiality. The punishment of imprisonment ranging from
three (3) to eight (8) years and a fine of not less than Five hundred thousand
Philippine pesos (Php500,000.00) but not more than One million Philippine
pesos (Php1,000,000.00), shall be imposed on a person convicted for a
violation under Section 9(c).
SEC. 15. System of Incentives and Rewards. A system of special
incentives and rewards is hereby established to be given to the appropriate
government agency and its personnel that led and initiated an investigation,
prosecution and conviction of persons involved in the offense penalized in
Section 4 of this Act.
SEC. 16. Prohibitions Against Political Harassment. This Act shall not
be used for political persecution or harassment or as an instrument to hamper
competition in trade and commerce.
No case for money laundering may be filed against and no assets shall be
frozen, attached or forfeited to the prejudice of a candidate for an electoral
office during an election period.
SEC. 17. Restitution. Restitution for any aggrieved party shall be
governed by the provisions of the New Civil Code.
SEC. 18. Implementing Rules and Regulations. Within thirty (30) days
from the effectivity of this Act, the Bangko Sentral ng Pilipinas, the
Insurance Commission and the Securities and Exchange Commission shall
promulgate the rules and regulations to implement effectively the provisions
of this Act. Said rules and regulations shall be submitted to the Congressional
Oversight Committee for approval.
Covered institutions shall formulate their respective money laundering
prevention programs in accordance with this Act including, but not limited
to, information dissemination on money laundering activities and its
prevention, detection and reporting, and the training of responsible officers
and personnel of covered institutions.
SEC. 19. Congressional Oversight Committee. There is hereby created a
Congressional Oversight Committee composed of seven (7) members from
the Senate and seven (7) members from the House of Representatives. The
members from the Senate shall be appointed by the Senate President based
on the proportional representation of the parties or coalitions therein with at
least two (2) Senators representing the minority. The members from the
House of Representatives shall be appointed by the Speaker also based on
proportional representation of the parties or coalitions therein with at least
two (2) members representing the minority.
The Oversight Committee shall have the power to promulgate its own rules,
to oversee the implementation of this Act, and to review or revise the
implementing rules issued by the Anti-Money Laundering Council within
thirty (30) days from the promulgation of the said rules.
SEC. 20. Appropriations Clause. The AMLC shall be provided with an
initial appropriation of Twenty-five million Philippine pesos
(Php25,000,000.00) to be drawn from the national government.
Appropriations for the succeeding years shall be included in the General
Appropriations Act.
SEC. 21. Separability Clause. If any provision or section of this Act or
the application thereof to any person or circumstance is held to be invalid,
the other provisions or sections of this Act, and the application of such
provision or section to other persons or circumstances, shall not be affected
thereby.
SEC. 22. Repealing Clause. All laws, decrees, executive orders, rules and
regulations or parts thereof, including the relevant provisions of Republic Act
No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act
No. 8791, as amended and other similar laws, as are inconsistent with this
Act, are hereby repealed, amended or modified accordingly.
SEC. 23. Effectivity. This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) national
newspapers of general circulation.















AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS,
REPEALING FOR THE PURPOSE REALING FOR THE PURPOSE
REPUBLIC ACT NO. 1180, AS AMENDED, AND FOR OTHER
PURPOSES
Section 1. Title This Act shall be known as the "Retail Trade Liberalization
Act of 2000."
Section 2. Declaration of Policy. It is the policy of the State to promote
consumer welfare in attracting promoting and welcoming productive
investment that will bring down price for the Filipino consumer, create more
jobs, promote tourism, assist small manufacturers, stimulate economic
growth and enable Philippine goods and services to become globally
competitive through the liberalization of the retail trade sector.
Pursuant to this policy, the Philippine retail industry is hereby liberalized to
encourage Filipino and competitive retail trade sector in the interest of
empower the Filipino consumer through lower prices, higher quality goods,
better services and wider choices.
Section 3. Definition. - As used in this Act.
(1) "Retail trade" shall mean any act, occupation or calling of habitually
selling direct to the general public merchandise, commodities or good for
consumption, but the restriction of this law shall not apply to the following:
(a) Sales by manufacturer, processor, laborer, or worker, to the general public
the products manufactured, processed or products by him if his capital dose
not exceed One hundred thousand pesos(100,000.00);
(b) Sales by a farmer or agriculturist selling the products of his farm;
(c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective
of the amount capital: provided, that the restaurant is incidental to the hotel
business; and
(d) Sales which are limited only to products manufactured, processed or
assembled by a manufactured, processed or assembled by a manufacturer
though a single outlet, irrespective of capitalization.
(2) "High-end or luxury goods" shall refer to goods which are not necessary
for life maintenance and whose demand is generated in large part by the
higher income groups. Luxury goods shall include, but are not limited to
products such as; jewelry, branded or designer clothing and footwear,
wearing apparel, leisure and sporting goods, electronics and other personal
effects.
Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine
Citizenship. - A natural-born citizen of the Philippines who resides in the
Philippines shall be granted the same rights as Filipino citizens for purposes
of this Act.
Section 5. Foreign Equity Participation. - Foreign-owned partnerships,
associations and corporation formed and organized under the laws of the
Philippines may, upon registration with the Securities and Exchange
Commission (SEC) and the Department of Trade and Industry (DTI), or in
case of foreign owned single proprietorships, with the DTI, Engage or invest
in the retail trade business, subject to the following categories.
Category A Enterprises with paid-up capital of the equivalent in Philippine
Peso of the than Two million five hundred thousand US dollars
(US$2,500,000.00) shall be reserved exclusively for Filipino citizens and
corporations wholly owned by Filipino citizens.
Category B Enterprises with a minimum paid-up capital of the equivalent
in Philippine Pesos of two million five hundred thousand US dollar
(US$2,500,000.00) but less than Seven million five hundred thousand US
dollars (US$7,500,000.00) may be wholly owned by foreigners except for the
first two (2) years after the effectivity of this Act wherein foreign
participation shall be limited to not more than sixty percent (60%) of total
equity.
Category C Enterprises with a paid-up capital of the equivalent in
Philippine Pesos of Seven million five hundred thousand US dollars
(US$7,500,000.00), or more may be wholly owned by foreigners: Provided,
however, That in no case shall the investments for establishing a store in
vestments for establishing a store in Categories B and C be less than the
equivalent in Philippine pesos of Eight hundred thirty thousand US dollars
(US$830,000.00).
Category D Enterprises specializing in high-end or luxury products with a
paid-up capital of the equivalent in Philippine Pesos of Two hundred fifty
thousand US dollars (US$250,000.00) per store may be wholly owned by
foreigners.
The foreign investor shall be required to maintain in the Philippines the full
amount of the prescribed minimum capital unless the foreign investor has
notified the SEC and the DTI of its intention to repatriate its capital and
cease operations in the Philippines. The actual use in Philippine operations of
the inwardly remitted minimum capital requirement shall be monitored by
the SEC.
Failure to maintain the full amount of the prescribed minimum capital prior
to notification of the SEC and the DTI, shall subject the foreign investor to
penalties or restrictions on any future trading activities/business in the
Philippines.
Foreign retail stores shall secure a certification from the Bangko Sentral ng
Pilipinas (BSP) and the DTI, which will verify or confirm inward remittance
of the minimum required capital investments.
Section 6. Foreign Investors Acquiring Shares of Stock of Local Retailers. -
Foreign investors acquiring shares from existing retail stores whether or not
publicly listed whose net worth is in the excess of the peso equivalent of Two
million five hundred thousand US dollars (US$2,500,000.00) may purchase
only up to a maximum of sixty percent (60%) of the equity thereof within the
first two (2) years from the effectivity of this Act and thereafter, they may
acquire the remaining percentage consistent with the allowable foreign
participation as herein provided.
Section 7. Public Offering of Shares of Stock. All retail trade enterprises
under Categories B and C in which foreign ownership exceeds eighty percent
(80%) of equity shall offer a minimum of thirty percent (30%) of their equity
to the public through any stock exchange in the Philippine within eight (8)
years from their start of operations.
Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be
allowed to engage in retail trade in the Philippine unless all the following
qualifications are met:
(a) A minimum of Two hundred million US dollar
(US$200,000,000.00) net worth in its parent corporation for
Categories B and C, and Fifty million US dollar (US$50,000,000.00)
net worth in its parent corporation for category D;
(b) (5) retailing branches or franchises in operation anywhere around
the word unless such retailer has at least one (1) store capitalized at a
minimum of Twenty-five million US dollars (US$25,000,000.00);
(c) Five (5)-year track record in retailing; and
(d) Only nationals from, or juridical entities formed or incorporated
in Countries which allow the entry of Filipino retailers shall be
allowed to engage in retail trade in the Philippines.
The DTI is hereby authorized to pre-qualify all foreign retailers, subject to
the provisions of this Act, before they are allowed to conduct business in the
Philippine.
The DTI shall keep a record of Qualified foreign retailers who may, upon
compliance with law, establish retail stores in the Philippine. It shall ensure
that parent retail trading company of the foreign investor complies with the
qualifications on capitalization and track record prescribed in this section
The Inter- Agency Committee on Tariff and Related Matters Authority
(NEDA) Board shall formulate and regularly update a list of foreign retailers
of high-end or luxury goods and render an annual report on the same to
Congress.
Section 9. Promotion of Locally Manufactured Products. - For ten (10) year
after the effectivity of this Act, at least thirty percent (30%) of the aggregate
cost of the stock inventory of foreign retailers falling under Categories B and
C and ten percent (10%) for category D shall be made in the Philippines.
Section 10. Prohibited Activities of Qualified Foreign Retailers. Qualified
foreign retailers shall not be allowed to engage in certain retailing activities
outside their accredited stores through the use of mobile or rolling stores or
carts, the use of sales representatives, door-to-door selling, restaurants and
sari-sari stores and such other similar retailing activities: Provided, That a
detailed list of prohibited activities shall hereafter be formulated by the DTI
Section 11. Implementing Agency: Rule and Regulations. The monitoring
and regulation of foreign sole proprietorships, partnerships, associations or
corporations allowed to engage in retail trade shall be the responsibility of
the DTI. This shall include resolution of conflicts.
The DTI, in coordination with the SEC, the NEDA and the BSP, shall
formulate and issue the implementing rules and regulation necessary to
implement this Act within ninety (90) days after its approval.
Section 12. Penalty Clause. - Any person who shall be Found guilty of
Violation of any provision of this Act shall be punished by imprisonment of
not less that six (2) years and one (1) day but not more than eight (8) years,
and a fine of not less than One million pesos (P1,000,000.00) but not more
that Twenty million pesos (P20,000,000.00) In the case of associations,
partnerships or corporations, the penalty shall be imposed upon its partners,
president, directors, manager and other officers responsible for the violation.
If the offender is not a citizen of the Philippines he shall be deported
immediately after service of sentence. If the Filipino of fender is a public
officer or employee, he shall, in addition to the penalty prescribed herein,
suffer dismissal and permanent disqualification from public office
Section 13. Repealing Clause. Republic Act No. 1180, as amended, is
hereby repealed. Republic Act No. 3018, as amended, and all other laws,
executive orders, rules and regulations or parts thereof inconsistent with this
Act are repealed or modified accordingly.
Section 14. Separability Clause. If any provisions of this Act shall be held
unconstitutional, the other provisions not otherwise affected thereby shall
remain in force and effect.
Section 15. Effectivity. This act shall take effect fifteen (150 days after its
approval and publication in at least two (2) newspapers of general circulation
in the Philippines.

























AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE
CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT.
Section 1. This Act shall be known as the "Truth in Lending Act."
Section 2. Declaration of Policy. It is hereby declared to be the policy of the
State to protect its citizens from a lack of awareness of the true cost of credit
to the user by assuring a full disclosure of such cost with a view of
preventing the uninformed use of credit to the detriment of the national
economy.
Section 3. As used in this Act, the term
(1) "Board" means the Monetary Board of the Central Bank of the
Philippines.
(2) "Credit" means any loan, mortgage, deed of trust, advance, or
discount; any conditional sales contract; any contract to sell, or sale
or contract of sale of property or services, either for present or future
delivery, under which part or all of the price is payable subsequent to
the making of such sale or contract; any rental-purchase contract;
any contract or arrangement for the hire, bailment, or leasing of
property; any option, demand, lien, pledge, or other claim against, or
for the delivery of, property or money; any purchase, or other
acquisition of, or any credit upon the security of, any obligation of
claim arising out of any of the foregoing; and any transaction or
series of transactions having a similar purpose or effect.
(3) "Finance charge" includes interest, fees, service charges,
discounts, and such other charges incident to the extension of credit
as the Board may be regulation prescribe.
(4) "Creditor" means any person engaged in the business of
extending credit (including any person who as a regular business
practice make loans or sells or rents property or services on a time,
credit, or installment basis, either as principal or as agent) who
requires as an incident to the extension of credit, the payment of a
finance charge.
(5) "Person" means any individual, corporation, partnership,
association, or other organized group of persons, or the legal
successor or representative of the foregoing, and includes the
Philippine Government or any agency thereof, or any other
government, or of any of its political subdivisions, or any agency of
the foregoing.
Section 4. Any creditor shall furnish to each person to whom credit is
extended, prior to the consummation of the transaction, a clear statement in
writing setting forth, to the extent applicable and in accordance with rules
and regulations prescribed by the Board, the following information:
(1) the cash price or delivered price of the property or service to be
acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-
in;
(3) the difference between the amounts set forth under clauses (1)
and (2);
(4) the charges, individually itemized, which are paid or to be paid
by such person in connection with the transaction but which are not
incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding unpaid
balance of the obligation.
Section 5. The Board shall prescribe such rules and regulations as may be
necessary or proper in carrying out the provisions of this Act. Any rule or
regulation prescribed hereunder may contain such classifications and
differentiations as in the judgment of the Board are necessary or proper to
effectuate the purposes of this Act or to prevent circumvention or evasion, or
to facilitate the enforcement of this Act, or any rule or regulation issued
thereunder.
Section 6. (a) Any creditor who in connection with any credit transaction
fails to disclose to any person any information in violation of this Act or any
regulation issued thereunder shall be liable to such person in the amount of
P100 or in an amount equal to twice the finance charged required by such
creditor in connection with such transaction, whichever is the greater, except
that such liability shall not exceed P2,000 on any credit transaction. Action to
recover such penalty may be brought by such person within one year from
the date of the occurrence of the violation, in any court of competent
jurisdiction. In any action under this subsection in which any person is
entitled to a recovery, the creditor shall be liable for reasonable attorney's
fees and court costs as determined by the court.
(b) Except as specified in subsection (a) of this section, nothing
contained in this Act or any regulation contained in this Act or any
regulation thereunder shall affect the validity or enforceability of any
contract or transactions.
(c) Any person who willfully violates any provision of this Act or
any regulation issued thereunder shall be fined by not less than P1,00
or more than P5,000 or imprisonment for not less than 6 months, nor
more than one year or both.
(d) No punishment or penalty provided by this Act shall apply to the
Philippine Government or any agency or any political subdivision
thereof.
(e) A final judgment hereafter rendered in any criminal proceeding
under this Act to the effect that a defendant has willfully violated this
Act shall be prima facie evidence against such defendant in an action
or proceeding brought by any other party against such defendant
under this Act as to all matters respecting which said judgment
would be an estoppel as between the parties thereto.
Section 7. This Act shall become effective upon approval.
Approved: June 22, 1963























AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT
SYSTEM IN THE PHILIPPINES, AND FOR OTHER PURPOSES.
Section 1. Title. This act shall be known as the "Foreign Currency Deposit
Act of the Philippines."
Section 2. Authority to deposit foreign currencies. Any person, natural or
juridical, may, in accordance with the provisions of this Act, deposit with
such Philippine banks in good standing, as may, upon application, be
designated by the Central Bank for the purpose, foreign currencies which are
acceptable as part of the international reserve, except those which are
required by the Central Bank to be surrendered in accordance with the
provisions of Republic Act Numbered two hundred sixty-five (Now Rep. Act
No. 7653).
Section 3. Authority of banks to accept foreign currency deposits. The
banks designated by the Central Bank under Section two hereof shall have
the authority:
(1) To accept deposits and to accept foreign currencies in
trust Provided, That numbered accounts for recording and servicing
of said deposits shall be allowed;
(2) To issue certificates to evidence such deposits;
(3) To discount said certificates;
(4) To accept said deposits as collateral for loans subject to such
rules and regulations as may be promulgated by the Central Bank
from time to time; and
(5) To pay interest in foreign currency on such deposits.
Section 4. Foreign currency cover requirements. Except as the Monetary
Board may otherwise prescribe or allow, the depository banks shall maintain
at all times a one hundred percent foreign currency cover for their liabilities,
of which cover at least fifteen percent shall be in the form of foreign
currency deposit with the Central Bank, and the balance in the form of
foreign currency loans or securities, which loans or securities shall be of
short term maturities and readily marketable. Such foreign currency loans
may include loans to domestic enterprises which are export-oriented or
registered with the Board of Investments, subject to the limitations to be
prescribed by the Monetary Board on such loans. Except as the Monetary
Board may otherwise prescribe or allow, the foreign currency cover shall be
in the same currency as that of the corresponding foreign currency deposit
liability. The Central Bank may pay interest on the foreign currency deposit,
and if requested shall exchange the foreign currency notes and coins into
foreign currency instruments drawn on its depository banks. (As amended
by PD No. 1453, June 11, 1978.)
Depository banks which, on account of networth, resources, past
performance, or other pertinent criteria, have been qualified by the Monetary
Board to function under an expanded foreign currency deposit system, shall
be exempt from the requirements in the preceding paragraph of maintaining
fifteen percent (15%) of the cover in the form of foreign currency deposit
with the Central Bank. Subject to prior Central Bank approval when required
by Central Bank regulations, said depository banks may extend foreign
currency loans to any domestic enterprise, without the limitations prescribed
in the preceding paragraph regarding maturity and marketability, and such
loans shall be eligible for purposes of the 100% foreign currency cover
prescribed in the preceding paragraph. (As added by PD No. 1035.)
Section 5. Withdrawability and transferability of deposits. There shall be
no restriction on the withdrawal by the depositor of his deposit or on the
transferability of the same abroad except those arising from the contract
between the depositor and the bank.
Section 6. Tax exemption. All foreign currency deposits made under this
Act, as amended by PD No. 1035, as well as foreign currency deposits
authorized under PD No. 1034, including interest and all other income or
earnings of such deposits, are hereby exempted from any and all taxes
whatsoever irrespective of whether or not these deposits are made by
residents or nonresidents so long as the deposits are eligible or allowed under
aforementioned laws and, in the case of nonresidents, irrespective of whether
or not they are engaged in trade or business in the Philippines. (As amended
by PD No. 1246, prom. Nov. 21, 1977.)
Section 7. Rules and regulations. The Monetary Board of the Central Bank
shall promulgate such rules and regulations as may be necessary to carry out
the provisions of this Act which shall take effect after the publications in
the Official Gazette and in a newspaper of national circulation for at least
once a week for three consecutive weeks. In case the Central Bank
promulgates new rules and regulations decreasing the rights of depositors,
rules and regulations at the time the deposit was made shall govern.
Section 8. Secrecy of foreign currency deposits. All foreign currency
deposits authorized under this Act, as amended by PD No. 1035, as well as
foreign currency deposits authorized under PD No. 1034, are hereby declared
as and considered of an absolutely confidential nature and, except upon the
written permission of the depositor, in no instance shall foreign currency
deposits be examined, inquired or looked into by any person, government
official, bureau or office whether judicial or administrative or legislative, or
any other entity whether public or private; Provided, however, That said
foreign currency deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body, government agency
or any administrative body whatsoever. (As amended by PD No. 1035, and
further amended by PD No. 1246, prom. Nov. 21, 1977.)
Section 9. Deposit insurance coverage. The deposits under this Act shall
be insured under the provisions of Republic Act No. 3591, as amended
(Philippine Deposit Insurance Corporation), as well as its implementing rules
and regulations: Provided, That insurance payment shall be in the same
currency in which the insured deposits are denominated.
Section 10. Penal provisions. Any willful violation of this Act or any
regulation duly promulgated by the Monetary Board pursuant hereto shall
subject the offender upon conviction to an imprisonment of not less than one
year nor more than five years or a fine of not less than five thousand pesos
nor more than twenty-five thousand pesos, or both such fine and
imprisonment at the discretion of the court.
Section 11. Separability clause. The provisions of this Act are hereby
declared to be separable and in the event one or more of such provisions are
held unconstitutional, the validity of other provisions shall not be affected
thereby.
Section 12. Repealing clause. All acts, executive orders, rules and
regulations, or parts thereof, which are inconsistent with any provisions of
this Act are hereby repealed, amended or modified accordingly, without
prejudice, however, to deposits made thereunder.
Section 12-A. Amendatory enactments and regulations. In the event a new
enactment or regulation is issued decreasing the rights hereunder granted,
such new enactment or regulation shall not apply to foreign currency deposits
already made or existing at the time of issuance of such new enactment or
regulation, but such new enactment or regulation shall apply only to foreign
currency deposits made after its issuance. (As added by PD No. 1246, prom.
Nov. 21, 1977.)
Section 13. Effectivity. This Act shall take effect upon its approval.
Approved, April 4, 1974
















REPUBLIC ACT No. 1405
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO,
DEPOSITS WITH ANY BANKING INSTITUTION AND PROVIDING
PENALTY THEREFOR.
Section 1. It is hereby declared to be the policy of the Government to give
encouragement to the people to deposit their money in banking institutions
and to discourage private hoarding so that the same may be properly utilized
by banks in authorized loans to assist in the economic development of the
country.
Section 2.
1
All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in cases where
the money deposited or invested is the subject matter of the litigation.
Section 3. It shall be unlawful for any official or employee of a banking
institution to disclose to any person other than those mentioned in Section
two hereof any information concerning said deposits.
Section 4. All Acts or parts of Acts, Special Charters, Executive Orders,
Rules and Regulations which are inconsistent with the provisions of this Act
are hereby repealed.
Section 5. Any violation of this law will subject offender upon conviction, to
an imprisonment of not more than five years or a fine of not more than
twenty thousand pesos or both, in the discretion of the court.
Section 6. This Act shall take effect upon its approval.
Approved: September 9, 1955


Footnote
1
This Section and Section 3 were both amended by PD No.
1792 issued January 16, 1981, PD 1792 was expressly repealed by
Sec 135 of R.A. No. 7653, approved June 14, 1993. The original
sections 2 and 3 of R.A. No.1405 are hereby reproduced for
reference, as follows; "Sec 2 All deposits of whatever nature with
banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines,
its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may not be
examined, inquired or looked into by any person, government
official, bureau or office, except upon written per-mission of the
depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials. or
in cases where the money deposited or invested is the subject matter
of the litigation," "Sec. 3. It shall be unlawful for any official or
employee of a banking institution to disclose to any person other
than those mentioned in Section two hereof any information
concerning said deposits."










PRESIDENTIAL DECREE No. 115 January 29, 1973
PROVIDING FOR THE REGULATION OF TRUST RECEIPTS
TRANSACTIONS
WHEREAS, the utilization of trust receipts, as a convenient business device
to assist importers and merchants solve their financing problems, had gained
popular acceptance in international and domestic business practices,
particularly in commercial banking transactions;
WHEREAS, there is no specific law in the Philippines that governs trust
receipt transactions, especially the rights and obligations of the parties
involved therein and the enforcement of the said rights in case of default or
violation of the terms of the trust receipt agreement;
WHEREAS, the recommendations contained in the report on the financial
system which have been accepted, with certain modifications by the
monetary authorities included, among others, the enactment of a law
regulating the trust receipt transactions;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution, as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, as amended, and in order to effect
the desired changes and reforms in the social, economic, and political
structure of our society, do hereby order and decree and make as part of the
law of the land the following:
Section 1. Short Title. This Decree shall be known as the Trust Receipts
Law.
Section 2. Declaration of Policy. It is hereby declared to be the policy of the
state (a) to encourage and promote the use of trust receipts as an additional
and convenient aid to commerce and trade; (b) to provide for the regulation
of trust receipts transactions in order to assure the protection of the rights and
enforcement of obligations of the parties involved therein; and (c) to declare
the misuse and/or misappropriation of goods or proceeds realized from the
sale of goods, documents or instruments released under trust receipts as a
criminal offense punishable under Article Three hundred and fifteen of the
Revised Penal Code.
Section 3. Definition of terms. As used in this Decree, unless the context
otherwise requires, the term
(a) "Document" shall mean written or printed evidence of title to goods.
(b) "Entrustee" shall refer to the person having or taking possession of goods,
documents or instruments under a trust receipt transaction, and any successor
in interest of such person for the purpose or purposes specified in the trust
receipt agreement.
(c) "Entruster" shall refer to the person holding title over the goods,
documents, or instruments subject of a trust receipt transaction, and any
successor in interest of such person.
(d) "Goods" shall include chattels and personal property other than: money,
things in action, or things so affixed to land as to become a part thereof.
(e) "Instrument" means any negotiable instrument as defined in the
Negotiable Instrument Law; any certificate of stock, or bond or debenture for
the payment of money issued by a public or private corporation, or any
certificate of deposit, participation certificate or receipt, any credit or
investment instrument of a sort marketed in the ordinary course of business
or finance, whereby the entrustee, after the issuance of the trust receipt,
appears by virtue of possession and the face of the instrument to be the
owner. "Instrument" shall not include a document as defined in this Decree.
(f) "Purchase" means taking by sale, conditional sale, lease, mortgage, or
pledge, legal or equitable.
(g) "Purchaser" means any person taking by purchase.
(h) "Security Interest" means a property interest in goods, documents or
instruments to secure performance of some obligations of the entrustee or of
some third persons to the entruster and includes title, whether or not
expressed to be absolute, whenever such title is in substance taken or retained
for security only.
(i) "Person" means, as the case may be, an individual, trustee, receiver, or
other fiduciary, partnership, corporation, business trust or other association,
and two more persons having a joint or common interest.
(j) "Trust Receipt" shall refer to the written or printed document signed by
the entrustee in favor of the entruster containing terms and conditions
substantially complying with the provisions of this Decree. No further
formality of execution or authentication shall be necessary to the validity of a
trust receipt.
(k) "Value" means any consideration sufficient to support a simple contract.
Section 4. What constitutes a trust receipt transaction. A trust receipt
transaction, within the meaning of this Decree, is any transaction by and
between a person referred to in this Decree as the entruster, and another
person referred to in this Decree as entrustee, whereby the entruster, who
owns or holds absolute title or security interests over certain specified goods,
documents or instruments, releases the same to the possession of the
entrustee upon the latter's execution and delivery to the entruster of a signed
document called a "trust receipt" wherein the entrustee binds himself to hold
the designated goods, documents or instruments in trust for the entruster and
to sell or otherwise dispose of the goods, documents or instruments with the
obligation to turn over to the entruster the proceeds thereof to the extent of
the amount owing to the entruster or as appears in the trust receipt or the
goods, documents or instruments themselves if they are unsold or not
otherwise disposed of, in accordance with the terms and conditions specified
in the trust receipt, or for other purposes substantially equivalent to any of
the following:
1. In the case of goods or documents, (a) to sell the goods or procure
their sale; or (b) to manufacture or process the goods with the
purpose of ultimate sale: Provided, That, in the case of goods
delivered under trust receipt for the purpose of manufacturing or
processing before its ultimate sale, the entruster shall retain its title
over the goods whether in its original or processed form until the
entrustee has complied fully with his obligation under the trust
receipt; or (c) to load, unload, ship or tranship or otherwise deal with
them in a manner preliminary or necessary to their sale; or
2. In the case of instruments,
a) to sell or procure their sale or exchange; or
b) to deliver them to a principal; or
c) to effect the consummation of some transactions involving
delivery to a depository or register; or
d) to effect their presentation, collection or renewal
The sale of goods, documents or instruments by a person in the
business of selling goods, documents or instruments for profit who,
at the outset of the transaction, has, as against the buyer, general
property rights in such goods, documents or instruments, or who
sells the same to the buyer on credit, retaining title or other interest
as security for the payment of the purchase price, does not constitute
a trust receipt transaction and is outside the purview and coverage of
this Decree.
Section 5. Form of trust receipts; contents. A trust receipt need not be in any
particular form, but every such receipt must substantially contain (a) a
description of the goods, documents or instruments subject of the trust
receipt; (2) the total invoice value of the goods and the amount of the draft to
be paid by the entrustee; (3) an undertaking or a commitment of the entrustee
(a) to hold in trust for the entruster the goods, documents or instruments
therein described; (b) to dispose of them in the manner provided for in the
trust receipt; and (c) to turn over the proceeds of the sale of the goods,
documents or instruments to the entruster to the extent of the amount owing
to the entruster or as appears in the trust receipt or to return the goods,
documents or instruments in the event of their non-sale within the period
specified therein.
The trust receipt may contain other terms and conditions agreed upon by the
parties in addition to those hereinabove enumerated provided that such terms
and conditions shall not be contrary to the provisions of this Decree, any
existing laws, public policy or morals, public order or good customs.
Section 6. Currency in which a trust receipt may be denominated. A trust
receipt may be denominated in the Philippine currency or any foreign
currency acceptable and eligible as part of international reserves of the
Philippines, the provisions of existing law, executive orders, rules and
regulations to the contrary notwithstanding: Provided, however, That in the
case of trust receipts denominated in foreign currency, payment shall be
made in its equivalent in Philippine currency computed at the prevailing
exchange rate on the date the proceeds of sale of the goods, documents or
instruments held in trust by the entrustee are turned over to the entruster or
on such other date as may be stipulated in the trust receipt or other
agreements executed between the entruster and the entrustee.
Section 7. Rights of the entruster. The entruster shall be entitled to the
proceeds from the sale of the goods, documents or instruments released
under a trust receipt to the entrustee to the extent of the amount owing to the
entruster or as appears in the trust receipt, or to the return of the goods,
documents or instruments in case of non-sale, and to the enforcement of all
other rights conferred on him in the trust receipt provided such are not
contrary to the provisions of this Decree.
The entruster may cancel the trust and take possession of the goods,
documents or instruments subject of the trust or of the proceeds realized
therefrom at any time upon default or failure of the entrustee to comply with
any of the terms and conditions of the trust receipt or any other agreement
between the entruster and the entrustee, and the entruster in possession of the
goods, documents or instruments may, on or after default, give notice to the
entrustee of the intention to sell, and may, not less than five days after
serving or sending of such notice, sell the goods, documents or instruments at
public or private sale, and the entruster may, at a public sale, become a
purchaser. The proceeds of any such sale, whether public or private, shall be
applied (a) to the payment of the expenses thereof; (b) to the payment of the
expenses of re-taking, keeping and storing the goods, documents or
instruments; (c) to the satisfaction of the entrustee's indebtedness to the
entruster. The entrustee shall receive any surplus but shall be liable to the
entruster for any deficiency. Notice of sale shall be deemed sufficiently given
if in writing, and either personally served on the entrustee or sent by post-
paid ordinary mail to the entrustee's last known business address.
Section 8. Entruster not responsible on sale by entrustee. The entruster
holding a security interest shall not, merely by virtue of such interest or
having given the entrustee liberty of sale or other disposition of the goods,
documents or instruments under the terms of the trust receipt transaction be
responsible as principal or as vendor under any sale or contract to sell made
by the entrustee.
Section 9. Obligations of the entrustee. The entrustee shall (1) hold the
goods, documents or instruments in trust for the entruster and shall dispose of
them strictly in accordance with the terms and conditions of the trust receipt;
(2) receive the proceeds in trust for the entruster and turn over the same to
the entruster to the extent of the amount owing to the entruster or as appears
on the trust receipt; (3) insure the goods for their total value against loss from
fire, theft, pilferage or other casualties; (4) keep said goods or proceeds
thereof whether in money or whatever form, separate and capable of
identification as property of the entruster; (5) return the goods, documents or
instruments in the event of non-sale or upon demand of the entruster; and (6)
observe all other terms and conditions of the trust receipt not contrary to the
provisions of this Decree.
Section 10. Liability of entrustee for loss. The risk of loss shall be borne by
the entrustee. Loss of goods, documents or instruments which are the subject
of a trust receipt, pending their disposition, irrespective of whether or not it
was due to the fault or negligence of the entrustee, shall not extinguish his
obligation to the entruster for the value thereof.
Section 11. Rights of purchaser for value and in good faith. Any purchaser
of goods from an entrustee with right to sell, or of documents or instruments
through their customary form of transfer, who buys the goods, documents, or
instruments for value and in good faith from the entrustee, acquires said
goods, documents or instruments free from the entruster's security interest.
Section 12. Validity of entruster's security interest as against creditors. The
entruster's security interest in goods, documents, or instruments pursuant to
the written terms of a trust receipt shall be valid as against all creditors of the
entrustee for the duration of the trust receipt agreement.
Section 13. Penalty clause. The failure of an entrustee to turn over the
proceeds of the sale of the goods, documents or instruments covered by a
trust receipt to the extent of the amount owing to the entruster or as appears
in the trust receipt or to return said goods, documents or instruments if they
were not sold or disposed of in accordance with the terms of the trust receipt
shall constitute the crime of estafa, punishable under the provisions of Article
Three hundred and fifteen, paragraph one (b) of Act Numbered Three
thousand eight hundred and fifteen, as amended, otherwise known as the
Revised Penal Code. If the violation or offense is committed by a
corporation, partnership, association or other juridical entities, the penalty
provided for in this Decree shall be imposed upon the directors, officers,
employees or other officials or persons therein responsible for the offense,
without prejudice to the civil liabilities arising from the criminal offense.
Section 14. Cases not covered by this Decree. Cases not provided for in this
Decree shall be governed by the applicable provisions of existing laws.