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Attorneys of the Philippines Legal News

Welcome to our legal news pages. Here is where we provide updates about what's happening in Philippines legal news, and publish helpful articles and tips for Pinoys researching legal matters.

What Is A Foreign Investments Act?

Foreign investments provide an economic boon, but investing in the Philippines proved to be a challenge because of the laws and processes involved. In 2015 alone, the country's economy has increased by 6.5%, and most of which are due to foreign investments. However, if you are a foreigner venturing into setting up a business in the Philippines, the process is not going to be easy. From endless paperwork to accomplishing BIR registration, the corporate law is, without a doubt, complicated.

Foreign investors and entrepreneurs have to be aware that there are government restrictions involved in foreign equity. This has been specified under Republic Act No. 7042 otherwise known as the Foreign Investments Act of 1991 (FIA). The act has been amended by Republic Act No. 8179. The Act provides a detailed explanation of the limitations on foreign equity.

REPUBLIC ACT NO. 8179 - AN ACT TO FURTHER LIBERALIZE FOREIGN INVESTMENTS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7042, AND FOR OTHER PURPOSES

Sec. 2. Sec. 7 of Republic Act No. 7042 is hereby amended to read as follows:

Sec. 7. Foreign Investments in Domestic Market Enterprises. – Non-Philippine nationals may own up to one hundred percent (100%) of domestic market enterprises unless foreign ownership therein is prohibited or limited by the Constitution and existing law or the Foreign Investment Negative List under Sec. 8 hereof.

Sec. 3. Sec. 8 of the Foreign Investments Act of 1991 is hereby amended to read as follows:

Sec. 8. List of Investment Areas Reserved to Philippine Nationals (Foreign Investment Negative List). – The Foreign Investment Negative List shall have two (2) component lists: A and B:

a) List A shall enumerate the areas of activities reserved to Philippine nationals by mandate of the Constitution and specific laws.

b) List B shall contain the areas of activities and enterprises regulated pursuant to law:

1) which are defense-related activities, requiring prior clearance and authorization from Department of National Defense (DND) to engage in such activity, such as the manufacture, repair, storage and/or distribution of firearms, ammunition, lethal weapons, military ordinances, explosives, pyrotechnics and similar materials, unless such manufacturing on repair activity is specifically authorized, with a substantial export component, to a non-Philippine national by the Secretary of National Defense; or

2) which have implications on public health and morals, such as the manufacture and distribution of dangerous drugs, all forms of gambling, nightclubs, bars, beer houses, dance halls, sauna and steam bathhouses and massage clinics.

Small and medium-sized domestic market enterprises with paid-in equity capital less than the equivalent of Two hundred thousand US dollars (US$200,000.00), are reserved to Philippine nationals: provided, that if (1) they involve advanced technology, or (2) they employ at least fifty (50) direct employees, then a minimum paid-in capital of One hundred thousand US dollars (US$100,000.00) shall be allowed to non-Philippine nationals.

Amendments to List B may be made upon recommendation of the Secretary of National Defense, or the Secretary of Health, or the Secretary of Education, Culture and Sports, indorsed by the NEDA, or upon recommendation motu propio, of NEDA, approved by the President, and promulgated by a Presidential Proclamation.

The Transitory Foreign Investment Negative List established in Section 15 hereof shall be replaced at the end of the transitory period by the first Regular Negative List to be formulated and recommended by NEDA, following the process and criteria, provided in Sections 8 and 9 of this Act. The first Regular Negative Lists shall be published not later than sixty (60) days before the end of the transitory period provided in said section and shall become immediately effective at the end of the transitory period. Subsequent Foreign Investment Negative Lists shall become effective fifteen (15) days after publication in a newspaper of general circulation in the Philippines: provided, however, that each Foreign Investment Negative List shall be prospective in operation and shall in no way affect foreign investment existing on the date of its publication.

Amendments to List B after promulgation and publication of the first Regular Foreign Investment Negative List at the end of the transitory period shall not be made more often than once every two (2) years.

Sec. 4. The Foreign Investments Act is further amended by inserting a new section designated as Sec. 9 to read as follows:

Sec. 9. Investment Rights of Former Natural-born Filipinos. – For purposes of this Act, former natural born citizens of the Philippines shall have the same investment rights of a Philippine citizen in Cooperatives under Republic Act No. 6938. Rural Banks under Republic Act No. 7353, Thrift Banks and Private Development Banks under Republic Act No. 7906, and Financing Companies under Republic Act No. 5980. These rights shall not extend to activities reserved by the Constitution, including (1) the exercise of profession, (2) in defense related activities under Sec. 8 (b) hereof, unless specifically authorized by the Secretary of National Defense, and (3) activities covered by Republic Act No. 1180 (Retail Trade Act), Republic Act No. 5487 (Security Agency Act). Republic Act No. 7076 (Small Scale Mining Act). Republic Act No. 3018, as amended (Rice and Corn Industry Act), and P.D. 449 (Cockpits Operation and Management).

Sec. 5. The Foreign Investments Act is further amended by inserting a new section designated as Section 10 to read as follows:

Sec. 10. Other Rights of Natural Born Citizen Pursuant to the Provisions of Article XII, Sec. 8 of the Constitution. – Any natural born citizen who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land to be used by him for business or other purposes. In the case of married couples, one of them may avail of the privilege herein granted: provided, that if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed.

In case the transferee already owns urban or rural land for business or other purposes, he shall still be entitled to be a transferee of additional urban or rural land for business or other purposes which when added to those already owned by him shall not exceed the maximum areas herein authorized.

A transferee under this Act may acquire not more than two (2) lots which should be situated in different municipalities or cities anywhere in the Philippines: provided, that the total land area thereof shall not exceed five thousand (5,000) hectares in the case of rural land for use by him for business or other purposes. A transferee who has already acquired urban land shall be disqualified from acquiring rural land area and vice versa.

Sec. 6. The National Economic and Development Authority, in consultation with the Board of Investments, the Department of Trade and Industry and Securities and Exchange Commission, shall prepare and issue the necessary primer and other information campaign materials regarding the Foreign Investments Act and the amendments introduced thereto, with copies of said materials furnished all the Philippine embassies, consulates and other diplomatic offices abroad and disseminated to Filipino nationals, former natural-born Filipino citizens, and foreign investors, within sixty days after the effectivity hereof. 

Sec. 7. The NEDA is hereby directed to make the necessary amendments to the implementing rules and regulations of Republic Act No. 7042 in order to reflect the changes embodied in this Act.

Sec. 8. Sections 9 and 10 of Republic Act No. 7042 and all references thereto in said law are hereby repealed or modified accordingly. All other laws, rules and regulations and/or parts thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Sec. 9. If any part or section of this Act is declared unconstitutional for any reason whatsoever, such declarant shall not in any way affect the other parts or sections of this Act.

Sec. 10. This Act shall take effect fifteen (15) days after publication in two (2) newspapers of general circulation in the Philippines.

The Philippine Competition Act

Republic Act No. 10667 or the Philippine Competition Act provides policy of the Philippines for protecting and promoting competitive market. The Act believes that competition is intended to:

-encourage private investments;

-promote entrepreneurial spirit;

-enhance resource productivity; and

-facilitate technology development and transfer.

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

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

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

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

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

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

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

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

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

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

Sec. 12. Powers and Functions. — The Commission shall have original and primary jurisdiction over the enforcement and implementation of the provisions of this Act, and its implementing rules and regulations. The Commission shall exercise the following powers and functions:

(a) Conduct inquiry, investigate, and hear and decide on cases involving any violation of this Act and other existing competition laws motu proprio or upon receipt of a verified complaint from an interested party or upon referral by the concerned regulatory agency, and institute the appropriate civil or criminal proceedings;

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

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

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

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

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

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

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

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

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

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

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

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

(l) Monitor and analyze the practice of competition in markets that affect the Philippine economy; implement and oversee measures to promote transparency and accountability; and ensure that prohibitions and requirements of competition laws are adhered to;

(m) Conduct, publish, and disseminate studies and reports on anti-competitive conduct and agreements to inform and guide the industry and consumers;

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

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

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

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

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

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

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

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

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

CHAPTER III

PROHIBITED ACTS

Sec. 14. Anti-Competitive Agreements. –

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

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

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

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

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

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

(c) Agreements other than those specified in (a) and (b) of this section which have the object or effect of substantially preventing, restricting or lessening competition shall also be prohibited:Provided, Those which contribute to improving the production or distribution of goods and services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits, may not necessarily be deemed a violation of this Act.

An entity that controls, is controlled by, or is under common control with another entity or entities, have common economic interests, and are not otherwise able to decide or act independently of each other, shall not be considered competitors for purposes of this section.

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

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

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

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

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

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

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

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

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

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

(1) Permissible franchising, licensing, exclusive merchandising or exclusive distributorship agreements such as those which give each party the right to unilaterally terminate the agreement; or

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

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

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

(h) Directly or indirectly imposing unfair purchase or selling price on their competitors, customers, suppliers or consumers, provided that prices that develop in the market as a result of or due to a superior product or process, business acumen or legal rights or laws shall not be considered unfair prices; and

(i) Limiting production, markets or technical development to the prejudice of consumers, provided that limitations that develop in the market as a result of or due to a superior product or process, business acumen or legal rights or laws shall not be a violation of this Act:

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

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

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

Useful Laws For Online Businesses

Aside from brick and mortar stores, many entrepreneurs are now venturing into online businesses for global exposure and wider public reach. Unfortunately, not all online transactions are successful. This is why there are laws, rules and regulations that govern online businesses. These laws protect consumers and business owners to ensure a smooth and problem-free transaction. 

1. Republic Act No. 8792 or Electronic Commerce Act of 2000

This Act aims to facilitate domestic and international dealings, transactions, arrangements agreements, contracts and exchanges and storage of information through the utilization of electronic, optical and similar medium, mode, instrumentality and technology to recognize the authenticity and reliability of electronic documents related to such activities and to promote the universal use of electronic transaction in the government and general public.

2. Executive No. 810, s.2009 Institutionalizing The Certification Scheme For Digital Signatures And Directing The Application Of Digital Signatures In E-Government Services

The Rules on Electronic Evidence issued by the Supreme Court in 2001 in accordance with the provisions of the Electronic Commerce Act, defines digital signature as “an electronic signature consisting of a transformation of an electronic document or an electronic data message using an asymmetric or public cryptosystem such that a person having the initial untransformed electronic document and the signer’s public key can accurately determine: (i) whether the transformation was created using the private key that corresponds to the signer’s public key; and (ii) whether the initial electronic document had been altered after the transformation was made.

3. Executive Order No. 482, s.2005 or Creating The National Single Window Task Force For Cargo Clearance

SEC. 4. Functions of the Steering Committee. The Steering Committee shall be responsible for the following:

a. Setting of policy guidelines for the creation and operation of the NSW and the ASEAN Single Window (ASW) thereafter;

b. Crafting of financial schemes and strategies to finance the activities and projects under the NSW from its inception up to its operations to ensure sustainability; and

c. Ensuring the effective and efficient implementation of the NSW and ASW thereafter.

4. Executive Order No. 334, s. 2004 or Abolishing The Information Technology And Electronic Commerce Council And Transferring Its Budget, Assets, Personnel, Programs And Projects To The Commission on Information And Communications Technology

The Commission on Information and Communications Technology (CICT), created pursuant to Executive Order No. 269 dated 12 January 2004, functions as the primary policy, planning, coordinating, implementing, regulating, and administrative entity for ICT of the Executive Branch of the Government;

It is desirable to centralize all ICT and ICT-related programs and projects, functions and initiatives in one government agency;

The government recognizes that the development of ICT will have a higher chance of success and sustainability if it is private sector-led, market-based and government-enabled; and

There is a need for close coordination between the government and the private sector for the promotion and continued growth and development of ICT in the country.

5. Republic Act No. 9184 or The Government Procurement Reform Act

This 2016 Revised Implementing Rules and Regulations, hereinafter called the IRR, is promulgated pursuant to Section 75 of Republic Act No. (R.A.) 9184, otherwise known as the “Government Procurement Reform Act,” for the purpose of prescribing the necessary rules and regulations for the modernization, standardization, and regulation of the procurement activities of the Government of the Philippines (GoP).

Foreign Corporations: The Law On Doing Business In The Philippines

The Philippine business landscape has dramatically changed, thanks to the increasing number of foreign investors in the country. Even local businesses are now open to the idea of doing business with foreign corporations. It is to be expected that in years to come, there will be an impressive growth of foreign participants in boosting the Philippine economy. So what are implementing rules governing foreign corporations? 

Sec. 129. Law applicable. - Any foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except such only as provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation. (73a)

Sec. 130. Amendments to articles of incorporation or by-laws of foreign corporations. - Whenever the articles of incorporation or by-laws of a foreign corporation authorized to transact business in the Philippines are amended, such foreign corporation shall, within sixty (60) days after the amendment becomes effective, file with the Securities and Exchange Commission, and in the proper cases with the appropriate government agency, a duly authenticated copy of the articles of incorporation or by-laws, as amended, indicating clearly in capital letters or by underscoring the change or changes made, duly certified by the authorized official or officials of the country or state of incorporation. The filing thereof shall not of itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines. (n)

Sec. 131. Amended license. - A foreign corporation authorized to transact business in the Philippines shall obtain an amended license in the event it changes its corporate name, or desires to pursue in the Philippines other or additional purposes, by submitting an application therefor to the Securities and Exchange Commission, favorably endorsed by the appropriate government agency in the proper cases. (n)

Sec. 132. Merger or consolidation involving a foreign corporation licensed in the Philippines. - One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if such is permitted under Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed.

Whenever a foreign corporation authorized to transact business in the Philippines shall be a party to a merger or consolidation in its home country or state as permitted by the law of its incorporation, such foreign corporation shall, within sixty (60) days after such merger or consolidation becomes effective, file with the Securities and Exchange Commission, and in proper cases with the appropriate government agency, a copy of the articles of merger or consolidation duly authenticated by the proper official or officials of the country or state under the laws of which merger or consolidation was effected: Provided, however, That if the absorbed corporation is the foreign corporation doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of its license in accordance with this Title. (n)

Sec. 133. Doing business without a license. - No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. (69a)

Sec. 134. Revocation of license. - Without prejudice to other grounds provided by special laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the Securities and Exchange Commission upon any of the following grounds:

1. Failure to file its annual report or pay any fees as required by this Code;

2. Failure to appoint and maintain a resident agent in the Philippines as required by this Title;

3. Failure, after change of its resident agent or of his address, to submit to the Securities and Exchange Commission a statement of such change as required by this Title;

4. Failure to submit to the Securities and Exchange Commission an authenticated copy of any amendment to its articles of incorporation or by-laws or of any articles of merger or consolidation within the time prescribed by this Title;

5. A misrepresentation of any material matter in any application, report, affidavit or other document submitted by such corporation pursuant to this Title;

6. Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions;

7. Transacting business in the Philippines outside of the purpose or purposes for which such corporation is authorized under its license;

8. Transacting business in the Philippines as agent of or acting for and in behalf of any foreign corporation or entity not duly licensed to do business in the Philippines; or

9. Any other ground as would render it unfit to transact business in the Philippines. (n)

Philippine Lemon Law: A Law For Defective Products

There are instances when the motor vehicle you purchase does not meet your expectations. With the Philippine Lemon Law, motor vehicles that are deemed defective will be covered. A motor vehicle refers to any four-wheeled road vehicle such as vans, Sports Utility Vehicle (SUVs), sedans, station wagons, Asian Utility Vehicles (AUVs) and more. However, it is also important to note that motorcycles are not covered by the law. 

Although the law protects motor vehicles, only brand new motor vehicles that are purchased in the Philippines are protected by the Lemon Law. Brand-New means it is built or constructed from new parts, it is covered by an express warranty by the manufacturer and never been registered or sold with the Department of Transportation and Communications (DOTC). Here are the details of the Lemon Law:

Section 4. Coverage. – This Act shall cover brand new motor vehicles purchased in the Philippines reported by a consumer to be in nonconformity with the vehicle’s manufacturer or distributor’s standards or specifications within twelve (12) months from the date of .original delivery to the consumer, or up to twenty thousand (20,000) kilometers of operation after such delivery, whichever comes first. The following causes of nonconformity shall be excluded:

(a) Noncompliance by the consumer of the obligations under the warranty;

(b) Modifications not authorized by the manufacturer, distributor, authorized dealer or retailer;

(c) Abuse or neglect of the brand new motor vehicle; and

(d) Damage to the vehicle due to accident or force majeure.

Section 5. Repair Attempts. – At any time within the Lemon Law rights period, and after at least four (4) separate repair attempts by the same manufacturer, distributor, authorized dealer or retailer for the same complaint, and the nonconformity issue remains unresolved, the consumer may invoke his or her rights under this Act.

The repair may include replacement of parts components, or assemblies.

Section 6. Notice of Availment of Lemon Law Rights. – Before availing of any remedy under this Act and subject to compliance with the provisions of Section 5 hereof, the consumer shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of the unresolved complaint, and the consumer’s intention to invoke his or her rights under this Act within the Lemon Law rights period.

The warranty booklet issued by the manufacturer, distributor, authorized dealer or retailer shall clearly state the manner and form of such notice to constitute a valid and legal notice to the manufacturer, distributor, authorized dealer or retailer. It shall also clearly state the responsibility of the consumer under this section.

Section 7. Availment of Lemon Law Rights. – Subsequent to filing the notice of availment referred to in the preceding section, the consumer shall bring the vehicle to the manufacturer, distributor, authorized dealer or retailer from where the vehicle was purchased for a final attempt to address the complaint of the consumer to his or her satisfaction.

It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, upon receipt of the motor vehicle and the notice of nonconformity required under Section 6 hereof, to attend to the complaints of the consumer including, as may be necessary, making the repairs and undertaking such actions to make the vehicle conform to the standards or specifications of the manufacturer, distributor, authorized dealer or retailer for such vehicle.

In case the nonconformity issue remains unresolved despite the manufacturer, distributor, authorized dealer or retailer’s efforts to repair the vehicle, pursuant to the consumer’s availment of his or her Lemon Law rights, the consumer may file a complaint before the DTI as provided for under this Act: Provided, however, That if the vehicle is not returned for repair, based on the same complaint, within thirty (30) calendar days from the date of notice of release of the motor vehicle to the consumer following this repair attempt within the Lemon Law rights period, the repair is deemedsuccessful: Provided, finally, That, in the event that the nonconformity issue still exists or persists after the thirty (30)-day period but still within the Lemon Law rights period, the consumer may be allowed to avail of the same remedies under Sections 5 and 6 hereof.

To compensate for the non-usage of the vehicle while under repair and during the period of availment of the Lemon Law rights, the consumer shall be provided a reasonable daily transportation allowance, an amount which covers the transportation of the consumer from his or her residence to his or her regular workplace or destination and vice versa, equivalent to air-conditioned taxi fare, as evidenced by official receipt, or in such amount to be agreed upon by the parties, or a service vehicle at the option of the manufacturer, distributor, authorized dealer or retailer. Any disagreement on this matter shall be resolved by the DTI. 

Nothing herein shall be construed to limit or impair the rights and remedies of a consumer under any other law. 

Section 8. Remedies for Dispute Resolution. – The DTI shall exercise exclusive and original jurisdiction over disputes arising from the provisions of this Act. All disputes arising from the provisions of this Act shall be settled by the DTI in accordance with the following dispute resolution mechanisms:

(a) Mediation

(1) The principles of negotiation, conciliation and mediation towards amicable settlement between the manufacturer, distributor, authorized dealer or retailer and the consumer shall be strictly observed;

(2) In the course of its dispute resolution efforts, the DTI shall endeavor to independently establish the validity of the consumer’s outstanding complaint. The DTI shall likewise retain the services of other government agencies or qualified independent private entities in the ascertainment of the validity of the consumer’s complaint. Any cost incurred in establishing the validity of the consumer’s complaint shall be bornejointly by the consumer and the manufacturer, distributor, authorized dealer or retailer;

(3) The complaint shall be deemed valid if it is independently established that the motor vehicle does not conform to the standards or specifications set by the manufacturer, distributor, authorized dealer or retailer;

(4) Upon failure of the negotiation or mediation between the manufacturer, distributor, authorized, dealer or retailer and the consumer, the parties shall execute a certificate attesting to such failure; and

(5) At any time during the dispute resolution period, the manufacturer, distributor, authorized dealer or retailer and the consumer shall be encouraged to settle amicably. All disputes that have been submitted for mediation shall be settled not later than ten (10) working days from the date of filing of the complaint with the DTI.

(b) Arbitration

In the event there is a failure to settle the complaint during the mediation proceedings, both parties may voluntarily decide to undertake arbitration proceedings.

(c) Adjudication

(1) In the event that both parties do not undertake arbitration proceedings, at least one of the parties may commence adjudication proceedings, administered by the DTI. The DTI shall rely on the qualified independent findings as to conformity to standards and specifications established herein. In no case shall adjudication proceedings exceed twenty (20) working days;

(2) In case a finding of nonconformity is arrived at, the DTI shall rule in favor of the consumer and direct the manufacturer, distributor, authorized dealer or retailer to grant either of the following remedies to the consumer:

(i) Replace the motor vehicle with a similar or comparable motor vehicle in terms of specifications and values, subject to availability; or

(ii) Accept the return of the motor vehicle and pay the consumer the purchase price plus the collateral charges.

In case the consumer decides to purchase another vehicle with a higher value and specifications from the same manufacturer, distributor, authorized dealer or retailer, the consumer shall pay the difference in cost.

In both cases of replacement and repurchase, the reasonable allowance for use, as defined in this Act, shall be deducted in determining the value of the nonconforming motor vehicle; and

(3) In case a nonconformity of the motor vehicle is not found by the DTI, it shall rule in favor of the manufacturer, distributor, .authorized dealer or retailer, and direct the consumer to reimburse the manufacturer, distributor, authorized dealer or retailer the costs incurred by the latter in validating the consumer’s complaints.

An appeal may be taken from a final judgment or order of the Adjudication Officer which completely disposes of the case within fifteen (15) days from receipt thereof. The appeal shall be taken by filing a Memorandum of Appeal with the Secretary of the DTI, with Notice of Appeal to the Adjudication Officer, and with a copy duly furnished the adverse party or parties on any of the following grounds:

(i) Grave abuse of discretion;

(ii) The decision/order is in excess of jurisdiction or authority of the Adjudication Officer; and

(iii) The decision/order is not supported by the evidence or there is serious error in the findings of facts.

The Secretary of the DTI shall decide on the appeal within thirty (30) days from receipt thereof. A party seeking further appeal from the decision of the Secretary of the DTI may file a case for certiorari to the Court of Appeals under Section 4, Rule 65 of the Revised Rules of Court.

Is A Contractor Necessary For Building A House?

You might have surely heard about horror stories involving house owners and contractors because of expectations that were not met. There are also cases when owners bypass hiring contractors and builders and they end up getting unsatisfactory results. Building a home, without a doubt is no joke because it involves spending your hard-earned money. While you are eager to build your dream home, there are other people who are going to make promises and just break them in the end. You may have already thought about building your dream house on your own. After all, the Internet can guide you in the right direction on the materials you need to buy and the requirements you need to comply. 

However, if you want to gain greater peace of mind, you need to consider hiring a building contractor. The reason is simple: These companies or individuals know the ins and outs of construction including the processes and products that will be used. For first-time customers, the process will always be filled with apprehension. This is why, it pays to do your homework so you can be sure that there is a trusted person responsible for the documentation, design and even day-to-day management of the construction process. 

The Advantage of Hiring a Contractor:

Contractors have substantial experience to ensure that costly mistakes and pitfalls are avoided in every construction project. For sure, just like anybody else, you cannot afford to lose a large chunk of money because the contractor neglected the project. Contractors' license is at stake. This is the reason they need to adhere to building codes and local ordinances. In the event your house catches fire, they are the ones who will face any complaint. Contractors have tried and tested strategies and methodologies so each construction project is delivered at faster time and lower cost. When you choose a reliable contractor, you will no longer have to take care of supervising the project yourself. 

Things to Consider When Hiring a Contractor:

1. Track Record-always check the contractor's track record so you will know whether or not they have successfully completed projects. Contractors will agree to tour you around projects, which have already been completed. These projects will help you decide whether or not the contractor can be trusted. 

2. Service Cost- the cost of service of most contractors will not be too apart from each other and they will usually provide you a price proposal that is lower than their competitors. Keep in mind that if the rate is too good to be true, it probably is. Make sure the price not too low as you might run the risk of getting your project at an unacceptable state or condition.

8 New Philippine Laws: Part 4 of 8 No Shortchanging Act

Whenever you go to a 'sari-sari' store or a business establishment and the owner or cashier is short of change, they will either give you a candy or tell you that they owe you a few cents. Most buyers do not bother to demand for the exact change. After all, the amount is less than a peso. Although this is a common and acceptable act to people running a business in the Philippines, enacting a bill into a law, which requires establishments to provide exact change will render this practice a violation. 

The law ensures that providing exact change to customers becomes a legal responsibility. Business owners should prepare peso coins to complete the buyer's change. Reasoning that you do not have a few cents to complete the change will no longer be an acceptable excuse. 

In fact, it is much better to provide excess change that give customers less than what you owe them. If you used to consider giving candies as an acceptable option for the lack of loose coins or bills, the law will prohibit this act. Customers are also encouraged to demand for exact change.

Republic Act No. 10909

Sec. 3. Definition of Terms. - For the purpose o this Act, the following terms shall mean:

a)Business establishment - any person, natural or juridical, whether single proprietorship, partnership or corporation, including a government-owned and -controlled corporation or a government entity exercising its proprietary functions, engaged in, or doing business in the Philippines, either in selling goods or providing services;

b) Change - the excess in the payment given by a consumer for goods and services purchased or received from a business establishment;

c) Consumer - a natural person who purchases goods or services in cash;

d) Goods - all types of tangible property that could be bought and sold, and the possession of which could be transferred in whole or in part, temporarily or permanently. 

e) Gross sales - the total invoice value of sales, before deducting for customer discount, allowances and returns;

f) Insufficient change - a change that is less than what is due the consumers;

g) Price - tag any device written, printed, affixed or attached to a good, or displayed in a consumer retail or service establishment for the purpose of indicating the retail price per unit or services;

h) Services - all types of commercial activities which enable the supply, access to, consumption or use of goods, intellectual property or other services; and 

i) Shortchange - the act of giving insufficient or no change to a consumer who purchased a product or service. 

Sec. 6. Penalties. - Any violation of this Act as determined by the DTI under Section 5 hereof shall be punished as follows: for the first offense, a violator shall be fined five hundred pesos (P500.00) or three percent (3%) of the gross sales of the business establishment on the day of the violation, whichever is higher; for the second offense, a violator shall be fined five thousand pesos (P5,000.00) or five percent (5%) of the gross sales whichever is higher; for the third offense, a violator shall be fined fifteen thousand pesos (P15,000.00) or seven percent (7%) of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate of the business establishment shall be suspended for three (3) months; and for the fourth offense, a violator shall be fined twenty-five thousand pesos (P25,000) or ten percent (10%) of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate of the business establishment shall be revoked. 

Philippine Legal Forms: Deed of Absolute Sale

A real estate purchase will not be complete without the deed of absolute sale. This legal form transfers property to one party including property rights. The deed serves as a proof that the transfer occurred. Once you have signed the documents, it means you have fully understood that all rights to the property will be transferred from the seller to the buyer. 

It is also important to note that the deed of absolute sale should have no stipulated conditions attached other than the buyer's payment. 

You need to have an independent surveyor or judge that will determine the property's current market value to prevent over-paying. You will also have to make sure that the document is legally binding and should vividly describe the property that will be transferred. A sample of deed of absolute sale is provided below:

DEED OF ABSOLUTE SALE 

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF ABSOLUTE SALE is made, executed and entered into by:

        (NAME OF SELLER), of legal age, single/married to (Name of spouse if any), Filipino, and with residence and postal address at (Address of Seller), hereinafter referred to as the SELLER

-AND- 

       (NAME OF BUYER), Filipino and with residence and postal address at (Address of Buyer), hereinafter referred to as the BUYER.

WITNESSETH; 

       WHEREAS, the SELLER is the registered owner of a parcel of land with improvements located at (Address of property to be sold) and covered by Transfer Certificate of Title No. (TCT Number) containing a total area of (Land Area of Property in Words) (000) SQUARE METERS, more or less, and more particularly described as follows:

TRANSFER CERTIFICATE OF TITLE NO. 0000

       "(Insert the  technical description of the property on the title) Example: A PARCEL OF LAND (Lot 20 Blk 54 of consolidation subdivision plan (LRC) Pcs-13265, being a portion of the consolidation of Lots 4751-A and 4751-B (LRC) Psd-50533,  Lot 3, Psd-100703, Lot 1, Psd-150980, LRC Rec. Nos. Nos. N-27024, 51768, 89632, N-11782, N-13466, and 21071 situated in the Bo. of San Donisio, Mun of Paranaque,  Prov of Rizal, Is. of Luzon. Bounded on NE., point 4 to 1 by Road Lot 22, on...to the point of beginning; containing an area of (280) square meters more or less..."

       WHEREAS, the BUYER has offered to buy and the SELLER has agreed to sell the above mentioned property for the amount of (Amount in words) (P 000,000.00) Philippine Currency;

       NOW THEREFORE, for and in consideration of the sum of (Amount in words) (P 000,000.00) Philippine Currency, hand paid by the vendee to the vendor, the SELLER DO HEREBY SELL, TRANSFER, and CONVEY by way of Absolute Sale unto the said BUYER, his heirs and assigns, the certain parcel of land together with all the improvements found thereon, free from all liens and encumbrances of whatever nature including real estate taxes as of the date of this sale.

 (NAME OF SELLER)                       (NAME OF BUYER)

          Seller                                        Buyer  

WITH MARITAL CONSENT:

________________________             _________________________

 Name of Seller's Spouse                      Name of Buyer's Spouse

  

SIGNED IN THE PRESENCE OF:

 

__________________________               ____________________________

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

_____________________________ )  SS.

 

BEFORE ME, a Notary Public for and in the City of ___________________,  personally appeared:

 

Name                           CTC Number               Date/Place Issued   

 

(Name of Seller)                      10000000             Jan 15, 20__ / Angeles City

(Name of Buyer)                      10000000             Jan 9, 20__ / Manila          

 

Known to me and to me known to be the same persons who executed the foregoing instrument and acknowledged to me that the same are their free act and voluntary deed.

This instrument, consisting of (__) pages, including the page on which this acknowledgment is written, has been signed on the left margin of each and every page thereof by the concerned parties and their witnesses, and sealed with my notarial seal.

WITNESS  MY HAND AND SEAL on this ___day of __________________20__ at_______________.

Notary Public

Doc. No. ........;

Page No. .......;

Book No. .......;

Series of 20__.

Building Permit Required For Constructing A House

For the construction of a house to run smoothly, it is important to follow the requirements according to the National Building Code. This means you need to make sure that proper electrical, technical and structural plans are met to avoid future problems that may deter you from pushing through with the construction process. Once officials find out that you failed to secure a permit prior to building your house, the construction will be stopped until you have secured your permit. 

1. When securing a building permit, you need start with preparing your requirements. You will also need to get a Requirements-Checklist and application forms. These can be secured your municipal's office. Your engineers and architects will fill out the forms. 

2. Once done, you need to submit the papers to the Office of the Building Official. They will instruct you to go to the Assessor's Office. You will need to submit each folder of each set of forms. Once your application is approved, you will be provided with an Order of Payment. The next step is to make a payment of the permit fees. 

3. The fees may vary depending on the size of the construction, the municipality location and even the assessment plan. More often than not, the fees in the provinces are much cheaper than in the cities. 

4. You will also need to have the Official Receipt photocopied and bring a copy to the releasing section of the Office of the Building Official. 

5. You will need to wait for 5 working days to claim your building permit from the Office of the Building Official.   

SECTION 1.02.03: Building permits  

(a) Any person, firm, or corporation, including any department, office, bureau, agency of instrumentality of the government intending to construct, alter, repair, move, convert or demolish any building or structure, or cause the same to be done, shall obtain a building permit from the Building Official for whichever of such work is proposed to be undertaken for the building or structure, before any such work is started. 

(b) Appropriate rules and regulations shall be set by the Secretary concerning: 

(1) Forms for application for building permits; 

(2) Procedures to be observed in securing such permits; 

(3) Procedures to be observed in the issuance, suspension, and revocation of such building permits; and 

(4) Type, nature, and scope of plans and specifications, and other requisite documents, which shall be prepared and designed by a licensed architect or engineer.   

(c) When authorized by the Building Official in accordance with the provisions of this Code, plans and specifications need not be submitted for the following:   

(1) Group A traditional indigenous type of dwelling construction costing not more than three thousand pesos (P3,000.00); and 

(2) Group J Division 1 Occupancy of Type 1 conventional wood frame construction or of the traditional indigenous type of construction costing not more than three thousand pesos (P3,000.00).  

(d) The applicant for a building permit for private buildings or structures after having complied with all the requirements prescribed therefor in accordance with the provisions of this Code, shall be issued a building permit within fifteen (15) days from the date of payment of the permit fee for Groups A and J Occupancies and within thirty (30) days from the date of payment of the permit fee for other Group Occupancies, unless the Building Official or his Deputy authorized to issue the permit shall inform the applicant in writing why the permit should not be issued, and shall indicate thereon the particular provisions of the Code violated by the applicant or the particular requirements not complied with. Within fifteen (15) days from the date of receipt by the applicant of advice from the Building Official or his Deputy authorized to issue the permit why the building permit should not be issued, or why the building permit is suspended or revoked, the applicant may appeal the non-issuance, suspension, or revocation thereof, to the Mayor of the chartered city or municipality, or the Governor of the province where the building or structure for which the permit is being applied for is located. Said appeal shall be decided within fifteen (15) days from receipt thereof, otherwise, the applicant may bring the matter to the proper Court of Justice for final disposition.   

(e) All public buildings shall conform to the provisions of this Code and the Building Official of the city or province where the public building is located shall issue the building permit therefor, stating in writing that such public building conforms to the requirements of the Code. For national public buildings, the Secretary of Public Works and Communications shall issue a certification that such a building conforms to the Code. Public buildings shall be exempt from payment of building permit, inspection, another fees. 

Sellers Violate Consumer Law Due To Deceptive Sales

Sellers use various tactics to lure a prospect into buying their product. However, some sellers are going overboard in convincing a person to commit to buying the product. Deceptive sales violate consumer law. One of the examples of deceptive sales include approaching a prospect and making them believe they have won a prize. The sales clerk will tell you that your name has been randomly selected.

Upon discovering that you have won a prize, it is either you check out what those prizes are or doubts will cloud your thoughts knowing that you have not joined any raffle promo. If you decide to check out your "prizes" you may instantly burst your own bubble knowing that you have fallen prey to deceptive sales. This is because what you thought as the prize you had won was actually a marketing bait. This means that for you to get your prizes, you need to purchase an item from the seller first. There are even instances when the sellers or agents will ask you for your ATM card and its current balance. If this has happened to you, it is a clear violation of consumer law.

Regulation of Sales Acts and Practices

ARTICLE 50.  Prohibition Against Deceptive Sales Acts or Practices. — A deceptive act or practice by a seller or supplier in connection with a consumer transaction violates this Act whether it occurs before, during or after the transaction. An act or practice shall be deemed deceptive whenever the producer, manufacturer, supplier or seller, through concealment, false representation or fraudulent manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service.  

Without limiting the scope of the above paragraph, the act or practice of a seller or supplier is deceptive when it represents that:

a) a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have;

b) a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not;

c) a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;

d) a consumer product or service is available to the consumer for a reason that is different from the fact;

e) a consumer product or service has been supplied in accordance with the previous representation when in fact it is not;

f)  a consumer product or service can be supplied in a quantity greater than the supplier intends;

g) a service, or repair of a consumer product is needed when in fact it is not;

h) a specific price advantage of a consumer product exists when in fact it does not;

i)  the sales act or practice involves or does not involve a warranty, a disclaimer of warranties, particular warranty terms or other rights, remedies or obligations if the indication is false; and

j)  the seller or supplier has a sponsorship, approval, or affiliation he does not have.

Double Sale: Selling The Property To Two Or More Buyers

Purchasing a land is a wise investment if the transaction is smooth and hassle-free. What if your hard-earned money went down the drain upon discovering that the parcel of land you have purchased was also sold to another buyer? It even gets more complicated as you are no longer allowed to transfer the title of the property in your name because the other buyer already did so. What are the legal implications of these circumstances? It is clear that the property was sold to two buyers with different interests, hence there is a double sale. Article 1544 of the Civil Code states that:

If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

In case of double sale the person who will be considered as the owner of the property will be based on the order of priority:

  1. the first person to register the sale in good faith;

  2. the first possessor in good faith;

  3. the buyer who in good faith presents the oldest title.

There can be cases when you are the first possessor of the property, but the other claimant was the first registrant. While it may appear that the other claimant is the rightful owner of the property, you should take a few factors into consideration. As part of the aforementioned conditions, the person who registers the sale in good faith will be deemed as the property owner. In the event that the other claimant purchased the property even when he/she had full knowledge that it was previously sold to another buyer, the first buyer will be entitled to prove that he/she has a better right to own the property.

If the other claimant who has already registered the property proved that he/she is a registrant in good faith, then he/she has a better right to the property according to Article 1544 of the Civil Code. The seller has legal liability, which gives you the authority to file chargers and demand contract rescission with damages.

13th Month Pay:Revised Guidelines And Implementations

The 13th month pay is one of the things employees look forward to as the holiday season approaches. While most employees still need to wait for a few months to get their 13th month pay, it still pays to be aware of how it is calculated. It is no surprise that there are some employees who are still filing disputes because of receiving the wrong amount of 13th month pay or being taxed for the amount considered to be non-taxable. Here is the basic information on 13th month pay you need to obtain.

Amount and payment of 13th Month Pay

(a)  Minimum of the Amount. — The minimum 13th month pay required by law shall not be less than one-twelfth of the total basic salary earned by an employee within a calendar year. For the year 1987, the computation of the 13th month pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to Executive Order 178.

E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for non-agricultural workers shall be integrated into the basic pay of covered employees effective 1 May 1987, and the remaining P8.00 effective 1 October 1987. For establishments with less than 30 employees and paid-up capital of P500,000 or less, the integration of COLAs shall be as follows: P4.50 effective on 1 May 1987; P4.50 on 1 October 1987; and P8.00 effective 1 January 1988. Thus, in the computation of the 13th month pay for 1987, the COLAs integrated into the basic pay shall be included as of the date of their integration.

Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said COLA as part of the of the basic pay for the purpose of computing the 13th month pay shall be reckoned from the date of actual integration.

The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

(b)  Time of Payment. — The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of the regular school year and the other half on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining agent of the employees.

5.  13th Month Pay for Certain Types of Employees.

(a)  Employees Paid by Results. — Employees who are paid on piece work basis are by law entitled to the 13th month pay.

Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission.

(b)  Those with Multiple Employers. — Government employees working part time in a private enterprise, including private educational institutions, as well as employees working in two or more private firms, whether on full or part time basis, are entitled to the required 13th month pay from all their private employers regardless of their total earnings from each or all their employers.

(c)  Private School Teachers. — Private school teachers, including faculty members of universities and colleges, are entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year.

6.  13th Month Pay of Resigned or Separated Employee.

An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he earned during that period.

The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship.

7.  Non-inclusion in Regular Wage.

The mandated 13th month pay need not be credited as part of regular wage of employees for purposes of determining overtime and premium pays, fringe benefits insurance fund, Social Security, Medicare and private retirement plans.

8.  Prohibitions against reduction or elimination of benefits.
Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance.

Dos And Don'ts For Landlords And Tenants

The key to the success of renting out your property is ensuring that you keep your tenants happy. However, this rule does not only apply to landlords as tenants also have their own responsibilities. More often than not, tenants and landlords end up dealing with complaints and problems because there was no complete closure of the responsibilities each party needs to fulfill.

Dos (Landlords)

-Screen your tenants
It is not enough that your tenants have the ability to pay the rent because there are also other factors that you need to take into consideration. Incurring damages to your property is often inevitable. This is where comparing good apples to bad apples come into play. Make sure you pick the best tenant by putting them through a series of interviews as part of the screening process.

-Ensure tenant's safety
It is your responsibility as a landlord to ensure that your property is a livable and safe place. Make sure you check anything for repairs. If there are fixtures in need of attention, consider having a maintenance schedule. Electrical and gas equipment must be regularly checked by trusted technicians.

-Respect tenants' privacy
Tenants should enjoy their privacy even when they are renting your property. If you need to inspect the property, be sure to schedule your visits. You can freak your tenants out if you show up in the wee hours of the morning for inspection. Tenants surely appreciate if landlords value their privacy.

-Prepare a contract
Verbal agreements may appear to be the easiest way to bind a tenant into a commitment. However, if problems arise, both parties will be in a no-win situation. Even if the occupant is a friend or an acquaintance, it still pays to prepare a lease contract that is notarized as much as possible. Both parties will be protected when there is a written contract.

Don'ts (Landlords)

-Overcharge
Renting out your place is such a big step to make, but this should not be used as an excuse for overcharging tenants. Be sure to learn about the rental market so you will know the reasonable price range. You will have difficulties finding a lessee if you attempt to overcharge. The rate must be reasonable for both parties.

-Forget about the rent due date
Non-paying tenants have always been the bane of every landlord's existence. This is why you need to encourage them to pay their rent on time. You need to be stern but respectful at the same time. While it can be frustrating to deal with tenants who always fail to make timely payments, you should avoid nagging them.

-Ignore problems with the property
If a landlord is employed full-time, it is easy to slack off in maintenance. It is necessary that you check your property from time to time to know if it needs improvement. If your tenants are making timely payments, they also deserve to live in a safe and problem-free place.

Dos (Tenants)

-Inspect the property

There might be some instances that you prefer to do your transactions online and searching for a property or place to rent is no exception. While the place may look nice in the picture, nothing beats inspecting the property in person to know whether or not you are getting a good deal.

-Read and sign a contract
A written contract protects you from any disputes due to not fulfilling the agreements that the landlord has promised. If you have a contract both parties will know if the conditions have been performed. Never sign a contract without reading the terms and conditions thoroughly. Ask questions if there is something in the contract you need to clarify.

-Pay on time
Rent payment is used for maintenance or paying the utility bills. Delayed payments may also result in a series of inconveniences ranging from lack of electricity, water supply, interrupted internet connectivity and many others.

Don'ts (Tenants)

-Damage the property
As a tenant, it is your responsibility to take care of the landlord's property you rented. In the event of property damage, you should make it a point to shoulder the cost for repair or maintenance.

-Violate lease contract agreement
Once you have signed the contract, it is an indicator that you have agreed to its terms and conditions. If you violate any of the agreements, the landlord has the right to evict you. Make sure you follow rules including making timely payments.

Landlords And Tenants: Know Your Rights

Disagreements between tenants and landlords are very common in the Philippines. This is why both parties are encouraged to negotiate rent before signing a contract.  While the Rental Reform Act of 2002, which has already expired in 2004 protects the rights of landlords, the law also provides heaps of information to tenants to prevent conflicts especially in terms of payment. While the landlord and tenant can negotiate any deposit they want, it is still necessary for both parties to fulfill the agreements or obligations on the contract. A tenant who enters into a lease contract is usually required to deposit worth 2 to 3 months’ rent. After the end of the tenancy, the deposit is returned one month, but the repairs and unpaid bills will be deducted.

Generally, landlords require one month’s advance rental and two months’ deposit. The deposit is often referred to as security deposit because it will be used for paying the rent for the last month of the occupancy. In most cases, landlords are the ones who will shoulder unpaid bills and repairs.

Duration of Contract and Eviction

If the tenant is still occupying the property 15 days after the lease contract has expired, and no notice has been given by either the landlord or the tenant, it is an implication that the contract has been renewed. Lease contracts can either be oral or written. The landlord has the right to eject a tenant due to the following reasons:

•    Subleasing the unit without the landlord’s written consent;
•    Non-payment of rent for three months;
•    Landlord needs property for personal use;
•    Landlord needs to make necessary repairs, but may notify ejected tenant if still interested in renting the same unit.

The lease agreement can be terminated by the tenant at any time and may also withhold rent payments if the landlord has not made any necessary repairs. A notice of 15 days will be given to the tenants if the unit is condemned for demolition. A case must be filed in court for tenant eviction and within 10 days, the landlord can apply for a permit to reclaim the property. Within 30 days, the court makes a decision and order the Court Sheriff to assist the landlord in claiming the property.

If there are problems regarding tenancy agreement, barangay tribunals are the ones who mediate in such problems. However, unresolved landlord-tenant problems are taken to court, but this can be a long and expensive process. A landlord often applies pressure by influencing the police in evicting a tenant.

Buyers, Beware Of These Real Estate Scams

It is every hardworking Filipino’s dream to own a home. However, there are instances when their hard-earned money goes to waste because of falling victim to real estate scams. While buyers are hoping to provide a decent shelter that their families can roost in, there are people who are after their money. The good news is, buyers can still avoid these scams. Here are some of the common real estate scams that buyers need to avoid.

1.    Double Sale

Double sale of property refers to selling one property to two different people. This scam happens when the first buyer has not registered and transferred the title to their name. The owner will take advantage of the situation by reselling the property. As a result, both buyers will hold the same title under their own names.

2.    Insufficient Disclosure

Real estate agents or developers intentionally provide incomplete information to the prospective buyer. With this scam, the developer may appear to have an attractive offer but due to the insufficient information, prospects will think twice in committing to buying the property.  However, there are buyers who still fall prey to this scam and suffer from hidden charges, title complications and unsatisfactory structural facts.

3.    Fake Agents

Real estate agent posers will use the Internet to trick buyers into believing that they are selling affordable properties. More often than not, fake agents will create a website where listings are copied from a legitimate site. They will provide believable information to prospects and once buyers agree to paying the initial deposit, these fake agents will mysteriously disappear.

4.    Property Title Fraud

Everybody wants to get a great value for money and an agent that offers an affordable property will surely be appealing to prospects. Unfortunately, these affordable properties are non-existent. Once the security deposit is given to the fake agents, buyers will get fake property title in return.

How to avoid real estate scams?

•    Be sure that the developer or agent has a license to sell. This can be verified through Housing and Land Use Regulatory Board.

•    Ask the agent to visit the project site and the materials used to build the property.

•    Never attempt to sign blank Contract to Sell forms.

•    If still in doubt, consult a trusted lawyer to help you with accomplishing paperwork and signing any contract.

•    Purchase a property from a reputable developer with solid history of delivering properties in a timely manner and without compromising on quality.

•    For developers financing through Pag-Ibig Fund, buyers can verify if the property has been mortgaged with the Fund.

•    The buyer can also verify authenticity of the land title with the Register of Deeds.

•    It is safe to enter into a contract if the project already has a License to Sell.

•    Engage services of a licensed broker especially for pre selling projects.

•    Ask for official receipts when dealing with the owner or developer.

How To Prevent Falling Prey To Lending Schemes?

When you are faced with financial difficulties and you have already exhausted all of your financial resources, the next step you are going to take is to turn to lending companies. When it comes to taking out a loan, the process can be long, tedious and stressful. You do not get the money right off the bat as you have to secure essential documents. Once you have complied with the requirements, you have to wait for the final verdict and the effort will pay off if your loan application has been approved. However, you need to start from scratch if your loan application has been declined. While it is not easy to get the approval of legitimate lending company, resorting to loan sharks (5-6) that leave you with no choice but to agree to excessive interest rates is not going to be a good option either.

Although micro financing has already extended a “helping hand” to people who are in need of instant cash, the thought of shouldering 20% interest is way too much. Due to the fact that not all businesses or small entrepreneurs earn reasonable income, a huge chunk of their money is intended for paying the loan’s interest. Even if the borrowers have the right to file charges due to unconscionable interest rates, they still decide to accept the situation.  One of the requirements for getting an approval for your bank loan applications is by building your credibility. It might seem like a simple step but it will not be difficult for banks to approve your loan application if you have the ability to pay them. What better way to start building your credibility than opening your own savings account.

It also pays off to be keen on selecting the lending company you should put your trust in. Just because you need extra spending money does not necessarily mean you should continue to tread upon an unfamiliar territory without arming yourself with information. You can drown yourself in a cesspool of debt if you just allow yourself to be tricked into believing that these financial trolls are indeed your “savior” in times of need. As for lending companies, RA 9474 or Lending Company Regulation Act of 2007 provides information on the minimum requirements and standards they need to comply with.

“SEC. 6. Citizenship Requirements. - Upon the effectivity of this Act, at least a majority of the voting capital stock shall be owned by citizens of the Philippines.

The percentage of foreign-owned voting stock in any lending company existing prior to the effectivity of this Act, if such percentage is in excess of forty-nine percent (49%) of the voting stock, shall not be increased but may be reduced and, once reduced, shall not be increased thereafter beyond forty-nine percent (49%) of the voting stock of the lending company. The percentage of foreign-owned voting stocks in any lending company shall be determined by the citizenship of the individual stockholders. In the case of corporations owning shares in a lending company, the citizenship of the individual owners of voting stock in such corporations shall be the basis in the computation of the percentage.

No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos.

SEC. 7. Amount and Charges on Loans. - A lending company may grant loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor: Provided, That the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the "Truth in Lending Act" and Republic Act 7394, otherwise known as the "Consumer Act of the Philippines": Provided, further, That the Monetary Board, in consultation with the SEC and the industry, may prescribe such interest rate as may be warranted by prevailing economic and social conditions.

SEC. 8. Maintenance of Books of Accounts and Records. - Every lending company shall maintain books of accounts and records as may be required by the SEC and prescribed by the Bureau of Internal Revenue and other government agencies. In case a lending company engages in other businesses, it shall maintain separate books of accounts for these businesses.

The Manual of Accounts prescribed by the BSP for lending investors shall continue to be adopted by lending companies for uniform recording and reporting of their operations, until a new Manual of Accounts shall have been prescribed by the SEC.

It shall issue the appropriate instruments and documents to the parties concerned to evidence its lending and borrowing transactions.”

The Legal Impact Of Notarized Documents

People enter into an agreement for various reasons such as buying, selling or rendering services. Contracts contain relevant agreements which both parties should perform. However, there are instances when one of the contracting parties ends up dealing with legal disputes because of one essential element that has been taken for granted: notarization.  Does notarization bear any weight on the contract? While merely signing a contract binds a person into an agreement, a contract that bears the signature of contracting parties may not suffice in spite the presence of consent elements. 

The importance of notarization

Notarization has a legal impact on the contract as it converts a private document to a public instrument. Agreements on the contract are enforceable once the document is notarized because it is a strong proof of the document’s authenticity. However, basic requirements must also be observed in notarizing documents. The document is also rendered admissible in court as tangible evidence once it is notarized. Notarization also prevents fraud among legal documents and contracts. The documents that often require notarization are Power of Attorney, medical documents, sworn statements, affidavits, deeds, wills and trusts.

It is stated under Section 1 of Public Act No. 2103, known as the Notarial Law that, ““An instrument or document shall be considered authentic if the acknowledgment is made before a notary public or an officer duly authorized by law of the country to take acknowledgments of instruments or documents in the place where the act is done. The notary public or the officer taking the acknowledgment shall certify that the person acknowledging the instrument or document is known to him and that he is the same person who executed it, and acknowledged that the same is his free act and deed. The certificate shall be made under his official seal, if he is by law required to keep a seal, and if not, his certificate shall so state.”

The process

1.    The unsigned document must be brought to the notary public. It is important to note that the document must not be signed in advance as the notary public will not entertain signed documents without their presence. Proper identification must be secured to ensure that notary public can verify your identity.  Proofs of identity include TIN, NBI Clearance and SSS ID.

2.    Upon verifying your identity, the notary public will also check your documents. There are instances when notary publics prepare document for you to sign. This step is usually required in the case of affidavits.

3.    Once identification and document are clear, you will be asked to sign the document. You will also be observed if you are signing under duress or if another person is forcing you to sign the document against your will.

4.    You should also have one credible witness who is personally known to either the individual signing the document or the notary public.

5.    The transaction will be recorded on the notary’s journal. The record will show the date, place and other essential details of the transaction.

6.    If the requirements and process have been fulfilled, the notary will stamp the document with an official public seal or stamp to prove that your document is notarized. The payment for notarization will vary from location to location.

Two Essential Laws To Know Before Purchasing A Land In The Philippines

When it comes to purchasing a piece of land in the Philippines, a buyer needs to arm himself with sufficient knowledge, which includes knowing the essential laws. There are two laws that a buyer must keep in mind to ensure smooth and stress-free transaction.

The Subdivision and Condominium Buyer’s Protective Decree or Presidential Decree No. 957:

“17: Registration
All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the office of the Register of Deeds of the province or city where the property is situated.

18: Mortgages
No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority . Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan.

The buyer may, at his option, pay his installment for the lot or unit directly to the mortgage who shall apply the payments to the corresponding mortgages indebtedness secured by the particular lot or unit being paid for with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof.

19: Advertisements
Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circular or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public.

The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree.

24: non-forfeiture of payments
No installment payment made by a buyer in a new or existing subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer and clearance from the Board desists from further payment due to the failure of the owner or developer to develop the project according to the approved plans and within the time limit for complying with the same.

Such buyer may at his option be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.”

The Realty Installment Buyer Act or Republic Act 6552:

“Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.”

Unremitted SSS Contributions: Are Employers Liable?

Is there a penalty for employers who fail to remit employees’ SSS contributions? By strengthening Republic Act 8282, there will be stiffer penalties for delinquent employers. Problems with SSS contributions have created a negative effect on SSS pensioners and P1200 per month cannot support the pensioners’ daily needs. According to Neri Colmenares, the uncollected contributions should be used in increasing the pension of most SSS members, which include OFWs. There are thousands of cases where employers do not remit SSS contributions. While it reflects on the employee’s payslip, the anomaly remains unexplained and undiscovered until the employee resigns.

Section 28 of RA 8282 states that non-remittance of worker’s SSS contributions shall be punishable by:

“a fine of not less than Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonment for not less than six (6) years and one (1) day nor more than twelve (12) years, or both, at the discretion of the court: Provided, That where the violation consists in failure or refusal to register employees or himself, in case of the covered self-employed or to deduct contributions from the employees’ compensation and remit the same to the SSS, the penalty shall be a fine of not less Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and one (1) day nor more than twelve (12) years.

"(f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable for the penalties provided in this Act for the offense.

"(g) Any employee of the SSS who receives or keeps funds or property belonging, payable or deliverable to the SSS and who shall appropriate the same, or shall take or misappropriate, or shall consent, or through abandonment or negligence, shall permit any other person to take such property or funds, wholly or partially, or shall otherwise be guilty of misappropriation of such funds or property, shall suffer the penalties provided in Article Two hundred seventeen of the Revised Penal Code.

"(h) Any employer who, after deducting the monthly contributions or loan amortizations from his employee’s compensation, fails to remit the said deduction to the SSS within thirty (30) days from the date they became due, shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties provided in Article Three hundred fifteen of the Revised Penal Code.

"(i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate cases under the Revised Penal Code: Provided, That such criminal action may be filed by the SSS in the city or municipality where the SSS office is located, if the violation was committed within its territorial jurisdiction or in Metro Manila, at the option of the SSS.”

The Law On Wage Increase

With prime commodities going nowhere but up, wage increase has been in demand. However, the increase in the wage involves a process to determine how much the employee is going to receive. This is where the Wage Order comes in.  The Regional Board is going to gather pertinent facts following certain criteria and standards. With these facts, the board shall determine whether or not a Wage Order will be issued. The Wage Order fixes the wage in the region. The Wage Order covers private employees but not government employees. It should commence after 15 days from the completion of at least one newspaper publication. This is under Art. 123, Labor Code, which was amended by Republic Act RA 6727 or also referred to as the Wage Rationalization Act. 

When does wage increase take effect?

Only one wage increase is allowed every year hence, a wage order will only be issued once a year. If a wage increase is requested within the 12-month period, it shall not be entertained. However, there is an exception to the rule, following the supervening condition. For instance, if there is a drastic increase in the prices of basic goods and services or petroleum products, the wage increase within the 12-month period may be considered. The Regional Wage Boards will determine supervening condition’s existence and will be confirmed by the National Wages and Productivity Council (NWPC). The Regional Wage Boards is responsible for determining and fixing minimum wage rates applicable in their provinces, regions or industries. 

A Wage Order cannot be issued without a public hearing or consultation being conducted. Employees and employers’ provincial, city, groups and municipal officials will be given notices as well. 

The Criteria For Fixing The Minimum Wage

There are relevant factors that must be considered before the increase in the wage takes effect:

• Standards of living improvements;

• The increase in the cost of living;

• Living wages demands;

• Adjustment on wage based on the consumer price index;

• The needs of workers and their families;

• Effects on family income and employment generation;

• The wage levels;

• The demand for inducing industries to invest in the countryside; and

• The income’s equitable distribution.

Both the employer and the employee must observe the minimum wage that was provided in the Wage Order. The employer is prohibited to pay an amount that is lower than amount stipulated in the Wage Order and the employee cannot demand an amount higher than the amount fixed in the Wage order. In some cases, freedom to bargain is allowed in particular enterprises and firms.  



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