IRR of Republic Act No 7042
IRR of Republic Act No 7042
IRR of Republic Act No 7042
RULE I. DEFINITIONS
a. Act shall refer to Republic Act No. 7042 entitled “An Act to Promote Foreign Investments,
Prescribe the Procedures for Registering Enterprises Doing Business in the Philippines, and
for Other Purposes”, also known as the Foreign Investments Act of 1991, as amended by
Republic Act No. 8179.
For stocks to be deemed owned and held by Philippine citizens or Philippine nationals,
mere legal title is not enough to meet the required Filipino equity. Full beneficial
ownership of the stocks, coupled with appropriate voting rights is essential. Thus, stocks,
the voting rights of which have been assigned or transferred to aliens cannot be considered
held by Philippine citizens or Philippine nationals.
Branch office of a foreign company carries out the business activities of the head office and
derives income from the host country.
Representative or liaison office deals directly with the clients of the parent company but
does not derive income from the host country and is fully subsidized by its head office. It
undertakes activities such as but not limited to information dissemination and promotion
of the company’s products as well as quality control of products.
The purchase of stock options or stock warrants is not an investment until the holder
thereof exercises his option and actually acquires stock from the corporation.
f. Doing business shall include soliciting orders, service contracts, opening offices,
whether liaison offices or branches; appointing representatives or distributors, operating
under full control of the foreign corporation, domiciled in the Philippines or who in any
calendar year stay in the country for a period or periods totaling one hundred eighty (180)
days or more; participating in the management, supervision or control of any domestic
business, firm, entity or corporation in the Philippines; and any other act or acts that imply
a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to
and in progressive prosecution of commercial gain or of the purpose and object of the
business organization. The following acts shall not be deemed “doing business” in the
Philippines:
(4) The publication of a general advertisement through any print or broadcast media;
(5) Maintaining a stock of goods in the Philippines solely for the purpose of having the
same processed by another entity in the Philippines;
(6) Consignment by a foreign entity of equipment with a local company to be used in the
processing of products for export;
(8) Performing services auxiliary to an existing isolated contract of sale which are not on a
continuing basis, such as installing in the Philippines machinery it has manufactured or
exported to the Philippines, servicing the same, training domestic workers to operate it,
and similar incidental services.
h. Exports shall mean the volume or the Philippine port F.O.B. peso value, determined from
invoices, bills of lading, inward letters of credit, loading certificates, and other commercial
documents, of products exported directly by an export enterprise or the value of services
including tourism sold by service-oriented enterprises to non-resident foreigners or the
net selling price of export products sold by an export enterprise to another export
enterprise that subsequently exports the same; Provided, That sales of export products to
another export enterprise shall only be deemed exports when actually exported by the
latter, as evidenced by loading certificates or similar commercial documents; and Provided,
finally, that without actual exportation, the following shall be considered constructively
exported for purposes of the Act: (1) sales of products to bonded manufacturing
warehouses of export enterprises; (2) sales of products to export processing zone
enterprises; (3) sales of products to export enterprises operating bonded trading
warehouses supplying raw materials used in the manufacture of export products; and (4)
sales of products to foreign military bases, diplomatic missions and other agencies and/or
instrumentalities granted tax immunities of locally manufactured, assembled or repacked
products whether paid for in foreign currency or pesos funded from inwardly remitted
foreign currency.
Sales of locally manufactured or assembled goods for household and personal use to
Filipinos abroad and other non-residents of the Philippines as well as returning overseas
Filipinos under the Internal Export Program of the Government and paid for in convertible
foreign currency inwardly remitted through the Philippine banking system shall also be
considered exports.
i. Output shall refer to the export enterprise’s total sales in a taxable year, The term sales
shall refer to value in case of heterogeneous products and volume in case of homogeneous
products.
Heterogeneous products shall refer to products of different kinds and characteristics as well
as to those of the same kind but with various categories using different units of
measurement.
Homogeneous products shall refer to products of the same kind or category using a common
unit of measurement.
(1) the percentage share of the volume or peso value of goods exported to the total volume
or value of goods sold in any taxable year if the export enterprise is engaged in
manufacturing or processing;
(2) the percentage share of the peso value of services sold to foreigners to total earnings or
receipts from the sale of its services from all sources in any taxable year if the export
enterprise is service-oriented; Value of services sold shall refer to the peso value of all
services rendered by an export enterprise to foreigners that are paid for in foreign
currency and/or pesos funded from inwardly remitted foreign currency as properly
documented by the export enterprise; or
(3) the percentage share of the volume or peso value of goods exported to the total volume
or value of goods purchased domestically in any taxable year if the export enterprise is
engaged in merchandise trading.
k. Domestic market enterprise shall mean an enterprise which produces goods for sale,
renders service, or otherwise engages in any business in the Philippines.
l. Joint venture shall mean two or more entities, whether natural or juridical, one of which
must be a Philippine national, combining their property, money, efforts, skills or knowledge
to carry out a single business enterprise for profit, which is duly registered with the SEC as
a corporation or partnership.
m. Substantial partner shall mean an individual or a firm who owns enough shares to be
entitled to at least one (1) seat on the Board of Directors of a corporation, or in the case of a
partnership, any partner.
n. Dangerous drug as defined under Republic Act 6425 or the Dangerous Drugs Act, as
amended, refers to either:
(1) “Prohibited drug” which includes opium and its active components and derivatives, such
as heroin and morphine; coca leaf and its derivatives, principally cocaine; alpha and beta
eucaine; hallucinogen drugs, such as mescaline, lysergic and diethylamide (LSD) and other
substances producing similar effects; Indian hemp and its derivatives; all preparations
made from any of the foregoing; and other drugs and chemical preparations whether
natural or synthetic, with the physiological effects of a narcotic or hallucinogenic drug; or
(2) “Regulated drug” which includes, unless authorized by the Department of Health (DOH)
and in accordance with the Dangerous Drugs Board, self-inducing sedatives, such as
secobarbital, phenobarbital, pentobarbital, barbital, amobarbital or any other drug which
contains a salt or a derivative of salt of barbituric acid; any salt, isomer, or salt of an isomer,
of amphetamine such as benzedrine or dexedrine, or any drug which produces a
physiological action similar to amphetamine; and hypnotic drugs, such as methaqualone,
nitrazepam or any other compound producing similar physiological effects.
p. Paid-in equity capital shall mean the total investment in a business that has been paid-
in in a corporation or partnership or invested in a single proprietorship, which may be in
cash or in property. It shall also refer to inward remittance or assigned capital in the case of
foreign corporations.
q. Foreign Investment Negative List (FINL) or Negative List shall mean a list of areas of
economic activity whose foreign ownership is limited to a maximum of forty percent (40%)
of the outstanding capital stock in the case of a corporation or capital in the case of
partnership.
r. NEDA Board shall refer to the body constituted as such under Executive Order No. 230
entitled “Reorganizing the National Economic and Development Authority” and in which
reside the powers and functions of the Authority.
s. NEDA shall refer to the NEDA Secretariat, which is the body constituted as such under
Executive Order No. 230 and which serves as the research and technical support arm and
the Secretariat of the NEDA Board.
u. BTRCP shall refer to the Bureau of Trade Regulation and Consumer Protection as
represented by the provincial offices of the Department of Trade and Industry (DTI).
v. BOI shall refer to the Board of Investments.
w. Technology Transfer Board shall refer to the Bureau of Patents. Trademarks and
Technology Transfer (BPTTT).
x. Former natural─born Filipinos shall mean those who have lost Philippine citizenship but
were previously citizens of the Philippines falling in either of the following categories: (a)
from birth without having to perform any act to acquire or perfect their Philippine
citizenship; or (b) by having elected Philippine citizenship upon reaching the age of majority,
if born before January 17, 1973, of Filipino mothers.
y. Transferee of private land shall mean a person to whom the ownership rights of private
land is transferred through either voluntary or involuntary sale, devise or donation.
Involuntary sales shall include sales on tax delinquency, foreclosures and executions of
judgment.
z. Direct employees shall mean Filipino personnel hired and engaged under the control and
supervision of the applicant investor/employer in the production of goods or performance of
services. Excluded from this definition are personnel hired as casual, seasonal, learner,
apprentice or any employee of subcontractor or those under fixed term employment.
aa. Start of commercial operations shall mean the date when a particular enterprise
actually begins production of the product for commercial purposes or commercial
harvest in the case of agricultural activities. In the case of service oriented activities,
the date when the enterprise begins catering or servicing its clients on a commercial
basis. In the case of export traders and service exporters, the date when the initial
export shipment in commercial quantity has been made or initial performance of
service as borne out by the appropriate supporting documents.
SECTION 1. COVERAGE. The Act covers all investment areas or areas of economic activity
except banking and other financial institutions which are governed and regulated by the
General Banking Act and other laws under the supervision of the CB.
SECTION 1. The Act covers restrictions pertaining to foreign equity participation only. All
other regulations governing foreign investments remain in force.
(2) it is investing in an export enterprise whose products and services do not fall within
Lists A and B (except for defense-related activities, which may be approved pursuant to
Section 8(b)(1) of the Act) of the FINL.
Provided further that, as required by existing laws, the country or state of the applicant
must also allow Filipino citizens and corporations to do business therein.
b. Non-Philippine national qualified to do business per paragraph (a) above, but who will
engage in more than one investment area, one or more of which is in the FINL, may be
registered under the Act. However, said non-Philippine national will not be allowed to
engage in the investment areas which are in the FINL.
c. Existing enterprises, which are non-Philippine nationals at the time of effectivity of the
Act and which intend to increase the percentage of foreign equity participation under the
Act, beyond that previously authorized by SEC, shall be governed by the qualifications in
item (a) above. Thus, existing enterprises shall be allowed to increase the percentage share
of foreign equity participation beyond current equity holdings only if their existing
investment area is not in the FINL. Similarly, existing enterprises engaged in more than one
(1) investment area shall be allowed to increase percentage of foreign equity participation
if none of the investment areas they are engaged in is in the FINL.
Existing foreign corporations shall be allowed to increase capital even if their existing
investment area is in the FINL.
Transfer of ownership from one foreign company to another shall be allowed even if the
enterprise is engaged in an area in the FINL as long as there is no increase in the
percentage share of foreign equity.
a. Filing of Application. Applications for registration shall be filed with the SEC in the case of
foreign corporations and domestic corporations or partnerships which are non-Philippine
nationals. In the case of single proprietorships, applications for Metro Manila shall be filed
with the BTRCP or the DTI-National Capital Region. In the provinces, applications may be
filed with the extension offices of the SEC for corporations/partnerships and the provincial
offices of the DTI for sole proprietorships.
c. Approval. Within fifteen (15) working days from official acceptance of an application, the
SEC or BTRCP shall act on the same. Otherwise, the application shall be considered as
automatically approved if it is not acted upon within said period for a cause not
attributable to the applicant.
(iv) ACR/ICR, SIRV (Special Investors Resident Visa), Visa #13 of the alien subscribers
(ii) Certified Copy of Board Resolution authorizing the establishment of an office in the
Philippines; designating the resident agent to whom summons and other legal processes
may be served in behalf of the foreign corporation; and stipulating that in the absence of
such agent or upon cessation of its business in the Philippines, the SEC shall receive any
summons or legal processes as if the same is made upon the corporation at its home office.
(iii) Financial statements for the immediately preceding year at the time of filing of the
application, certified by an independent Certified Public Accountant of the home country.
(v) Proof of inward remittance such as bank certificate of inward remittance or credit
advices.
For representative offices, the amount remitted initially should be at least US$30,000.
(3) In the case of an existing corporation intending to increase foreign equity participation,
all documents required of the proposed transaction under applicable laws, rules and
regulations shall be submitted.
b. Additional Requirements. As required by the Act, the following shall also be submitted to
SEC:
(1) For enterprises wishing to engage in defense-related activities, clearance from the DND
or PNP.
(2) For small and medium-sized domestic market enterprises with paid-in equity capital
less than the equivalent of US$200,000 but not less than the equivalent of US$100,000, a
certificate from the DOST that the investment involves advanced technology, or a
certificate from the appropriate Department of Labor and Employment (DOLE)
Regional Office that the enterprise has issued an undertaking to employ at least 50
direct employees shall be submitted.
The DOLE, through its Regional Offices, shall validate and monitor compliance by the
investor to the undertaking that it will hire at least 50 direct employees within six (6)
months from the start of commercial operations. Non-satisfaction of the undertaking
shall be reported by the DOLE Regional Office to the SEC, which shall cause the investor
to satisfy the appropriate higher investment requirement, with penalty for failure to
satisfy the undertaking.
(3) For former natural born Filipinos wishing to engage in investment areas allowed to
them under this Act, the following documents are required:
(i.1) Certified by the local civil registrar or the National Statistics Office (NSO); or
(i.2) For those born abroad, certificate of birth from the appropriate government
agency of the country where the birth is recorded showing the father or mother to be a
Filipino at the time of birth or if the citizenship of the parents is not indicated,
additional proof that the parent/s is a Filipino citizen or has not lost his/her Filipino
citizenship at the time of the applicant investor’s birth;
(ii) Those born before 17 January 1973 of Filipino mothers must additionally submit
all of the following: certified true copies of his/her sworn statement of election of
Filipino citizenship, oath of allegiance from the civil registrar where the documents
were filed and/or forwarded, and identification certificate issued by the Bureau of
Immigration;
(iii) In case of loss and/or destruction of the record of birth or non-registration of birth
(iii.2) Copy of birth certificate of mother or father certified by the local civil registrar
or the NSO; and
(iii.3) Affidavit of two (2) disinterested persons attesting to their personal knowledge
that at the time of the applicant’s birth, the child was born of a Filipino mother or
father.
d. SEC Action. Upon fulfillment of all SEC requirements and favorable evaluation by the SEC,
the Certificate of Registration under the Act for domestic corporations and partnerships, or
license to do business in the case of a foreign corporation, shall be issued by the SEC. In
case of disapproval, the SEC shall also inform the applicant in writing of the reasons for the
disapproval of the registration.
a. Existing Requirements. As required by existing laws and regulations, BTRCP Form No. 17
and accompanying documents shall be submitted to BTRCP.
a. During the transitory period, any applicant who has an investment in an existing joint
venture, in which he or his majority shareholder in the existing joint venture is a
substantial partner, shall be registered with the SEC or BTRCP in the same line of business
if the Filipino partners representing the majority of the Filipino equity in the existing joint
venture certify under oath that they are not capable and willing to make the investment
needed for the domestic market activities, which is being proposed to be undertaken by the
applicant.
b. If the Filipino partners are willing and able to make the needed investment, the SEC shall
not register the applicant, in which case, both joint venture partners may agree to
undertake the expansion. Both partners are then required to place the balance of their
agreed upon investment shares within six (6) months from the date of the agreement. The
Filipino partner(s) shall not be compelled to make additional investment for the proposed
expansion of domestic market activities if such will result in a higher Filipino equity share.
If the Filipino partner(s) fails(fail) to infuse said capital within said period, per the report of
the non-Philippine national applicant to the SEC, the SEC or BTRCP shall then allow the
registration of said non-Philippine national applicant as a separate enterprise under the
Act.
Within ten (10) working days from the issuance of the certificate of registration, the SEC or
BTRCP shall transmit to BOI copies of the Certificate of Registration together with the
application from duly accomplished by the export enterprises.
Failure of export enterprises to submit the required reports within the prescribed period of
time or the submission of fraudulent reports shall be a ground for the SEC or BTRCP to
impose appropriate sanctions as provided for under Rule XVIII, Section 1, of these Rules
and Regulations.
Section 2 of Rule VI shall apply for any change of status from domestic to export enterprise.
Such application shall be supported by relevant reports as evidence that the applicant
enterprise has exported sixty percent (60%) or more of its output.
The new export enterprise shall be subject to the reportorial requirements and shall be
monitored for its compliance with the export requirement under Sections 3 and 4,
respectively, of Rule VI of these Rules and Regulations.
RULE VIII. THE REGULAR FOREIGN INVESTMENT NEGATIVE
LIST
SECTION 1. DESCRIPTION. The Regular FINL shall have two (2) component lists: A and
B which shall contain areas of economic activities reserved to Philippine nationals. The
description and guidelines governing Lists A and B are provided for in Rules IX and
X hereof, respectively.
SECTION 2. FORMULATION. The NEDA shall be responsible for the formulation of the
Regular FINL, following the process and criteria provided in Section 8 of the Act and
in Rules IX and X hereof.
SECTION 3. APPROVAL. The NEDA shall submit the proposed Regular FINL to the President
for approval and promulgation. The NEDA shall submit the first Regular FINL and
subsequent proposed Regular FINLs to the President at least forty five (45) days before
the scheduled date of publication.
SECTION 4. PUBLICATION. The NEDA shall publish the first Regular Negative List not later
than sixty (60) days before the end of the transitory period. Subsequent Negative Lists
shall be published not later than fifteen (15) days before the end of the effectivity of the
current Negative List.
SECTION 5. EFFECTIVITY. The first Regular Negative List shall become immediately
effective at the end of the transitory period. Subsequent Regular FINLs shall become
effective fifteen (15) days after publication in a newspaper of general circulation in the
Philippines. Except for List A, each Regular FINL shall remain in force for two (2) years
from the date of its effectivity.
SECTION 6. COVERAGE OF OPERATION. Each Regular FINL shall apply only to new foreign
investments and shall not affect existing foreign investments at the time of its publication.
SECTION 1. COVERAGE. List A of the FINL shall consist of the areas of activities reserved to
Philippine nationals were foreign equity participation in any domestic or export enterprise
engaged in any activity listed therein shall be limited to a maximum of forty percent (40%)
as prescribed by the Constitution and other specific laws.
The NEDA shall make an enumeration of said activities reserved to Philippine nationals by
the Constitution and other specific laws.
SECTION 2. AMENDMENTS. Amendments to List A may be made by the NEDA any time to
reflect changes made by law regarding the extent of foreign equity participation in any
specific area of economic activity.
RULE X. GUIDELINES FOR LIST B OF THE REGULAR FOREIGN
INVESTMENT NEGATIVE LIST
a. Activities where foreign ownership is limited pursuant to law such as defense or law
enforcement-related, requiring prior clearance and authorization from the DND or PNP, to
engage in such activity as the manufacture, repair, storage and/or distribution of firearms,
ammunition, armored vests and other bullet proof attires, lethal weapons, military
ordnance, explosives, pyrotechnics and similar materials.
However, the manufacture and repair of said items may be specifically authorized by the
Secretary of National Defense or Chief of the PNP, to non-Philippine nationals, provided a
substantial percentage of output as determined by said agencies is exported.
Compliance with the export requirement shall be monitored by the DND or PNP, as the case
may be.
b. Activities which have negative implications on public health and morals, such as the
manufacture and distribution of dangerous drugs; all forms of gambling; sauna and steam
bathhouses and massage clinics.
c. Small and medium-sized domestic market enterprises with paid-in equity capital of less
than US$200,000, or its equivalent; However, small and medium-sized domestic market
enterprises which involve advanced technology or which issue an undertaking to
employ at least fifty (50) direct employees are allowed a minimum paid-in capital of
US$100,000, or its equivalent.
a. Activities (a) and (b) above shall be determined upon recommendation of the Secretary
of National Defense, Chief of the PNP, Secretaries of Health or Education, Culture and
Sports and endorsed by the NEDA or upon recommendation motu propio of NEDA,
approved and promulgated by the President. List B shall be submitted for Presidential
action together with List A. The NEDA shall inform said agencies of the deadline for the
submission of their recommendations.
b. Enterprises which are covered by Section 1 (c) above are automatically reserved to
Philippine nationals.
SECTION 3. AMENDMENTS. Amendments to List B shall be made only after two years, upon
the recommendation of the Secretary of National Defense, Chief of the PNP, Secretaries of
Health and Education, Culture and Sports, endorsed by the NEDA, or upon
recommendation motu propio of NEDA, approved and promulgated by the President. List B
shall be submitted for Presidential action together with List A.
RULE XI. INVESTMENT RIGHTS OF FORMER NATURAL BORN
FILIPINOS
SECTION 1. Former natural born citizens of the Philippines shall have the same
investment rights of a Philippine citizen in Cooperatives under RA 6938, Rural Banks
under RA 7353, Thrift Banks and Private Development Banks under RA 7906,
Financing Companies under RA 5980, and activities listed under List B including
defense─related activities, if specifically authorized by the Secretary of National
Defense.
SECTION 1. Any natural born citizen who has lost his Philippine citizenship and 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 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.
SECTION 2. In case where both spouses are qualified under the law, one of them may
avail of the said privilege. However, if both shall avail of the privilege, the total area
acquired shall not exceed the maximum allowed.
SECTION 3. 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 allowed.
SECTION 4. A transferee may acquire not more than two (2) lots which should be
situated in different municipalities or cities anywhere in the Philippines. The total land
area acquired shall not exceed 5,000 square meters in the case of urban land or three
(3) 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 and vice versa. However, if the transferee has disposed of his urban land, he
may still acquire rural land and vice versa, provided that the same shall be used for
business or other purposes.
SECTION 5. Land acquired under this Act shall be primarily, directly and actually used
by the transferee in the performance or conduct of his business or commercial
activities in the broad areas of agriculture, industry and services, including the lease of
land, but excluding the buying and selling thereof. A transferee shall use his land to
engage in activities that are not included in the Negative List or in those areas wherein
investment rights have been granted to him under this Act.
The provisions of BP 185 (An Act to Implement Section 15 of Article XIV of the
Constitution and for Other Purposes Pertaining to the Ownership of Private Lands for
Residential Purposes by Former Natural Born Filipinos) and its implementing rules
and regulations shall be adopted, where applicable, in the implementation of this Act
through a circular to be issued by the Laud Registration Authority.
The Register of Deeds shall also ensure that the limits prescribed by law are observed.
SECTION 1. Prior to the effectivity of these Implementing Rules and Regulations, the
provisions of Book II of EO 226 and its implementing rules and regulations shall govern the
registration of foreign investments without incentives.
SECTION 2. There shall be a transitory period of thirty-six (36) months after issuance of
these Implementing Rules and Regulations to implement this Act.
SECTION 3. During the transitory period, the Transitory FINL described in Rule XIV, Section
1 hereof shall take effect.
a. List A
All investment areas in which foreign ownership is limited by mandate of the Constitution
and specific laws.
b. List B
However, the manufacture or repair of these items may be specifically authorized by the
Secretary of National Defense or the Chief of the PNP to non-Philippine nationals, provided
a substantial percentage of output, as determined by the said agencies, is exported.
The extent of foreign equity ownership allowed shall be specified in the said
authority/clearance.
Compliance with the export requirement shall be monitored by the DND or PNP, as the case
may be.
(2) Manufacture and distribution of dangerous drugs; all forms of gambling; sauna and
steam bath houses, massage clinics and other like activities regulated by law because of
risks they may pose to public health and morals.
(3) Small and medium-sized domestic market enterprises with paid-in equity capital of less
than the equivalent of US$500,000, unless they involve advanced technology as determined
by the DOST; and
(4) Export enterprises which utilize raw materials from depleting natural resources, and
with paid-in equity capital of less than the equivalent of US$500,000.
c. List C
(1) Import and wholesale activities not integrated with the production or manufacture of
goods.
Import and wholesale activities which are considered to be not integrated with production
or manufacture of goods are those carried out separately from or independently of any
production activity.
(3) Enterprises owned in the majority by non-Philippine nations which, as of the date of
effectivity of the Act, have subsisting and operatively in force technology transfer and/or
brand name licensing agreements with Philippine nationals for the assembly, processing or
manufacture of goods for the domestic market: Provided, That, the said licensing
agreements are duly registered with the BPTTT and/or the CB as of the date of effectivity of
the Act.
(i) Licensing agreements involving the right to use industrial property rights, such as
patents or trademarks/ service marks;
(ii) Know-how agreements for the grant of a license to use know-how; and
(iii) Franchise agreements involving the use of the franchisor’s system.
Expired license agreements with notification or application for renewal with BPTTT as of
the date of effectivity of the Act are deemed operatively in force.
If the licensing agreement expires and/or is rendered inoperative during the transitory
period, the foreign licensor and/or its affiliates may invest in the same line of business
covered by the agreement.
a. NEDA, in consultation with relevant agencies, shall enumerate, as appropriate, the areas
of investment covered in this Transitory FINL.
b. The Transitory FINL shall be published in full at the same time as, or prior to, the
publication of these Implementing Rules and Regulations to implement the Act.
Those whose activities have been previously authorized under Book II of EO 226, Book II of
PD 1789 and RA 5455, and whose activities are not in the Transitory FINL or in subsequent
Negative Lists may opt to be governed by the provisions of the Act. Said enterprises shall be
considered automatically registered with the SEC upon surrender of their certificates of
authority to the BOI. The SEC shall issue a new certificate of authority upon advise of the
BOI.
SECTION 2. Existing enterprises with more than forty percent (40%) foreign equity which
have availed of incentives under any of the investment incentives laws implemented by the
BOI may opt to be governed by the Act. In such cases, said enterprises shall be required to
surrender their certificates of registration, which shall be deemed as an express waiver of
their privilege to apply for and avail of incentives under the incentives law under which
they were previously registered. Subject to BOI rules and regulations, said enterprises may
be required to refund all capital equipment incentives availed of.
RULE XVI. CONSISTENT GOVERNMENT ACTION
The DENR shall provide the SEC with a list of environmentally critical activities/projects
and areas. Necessary clearances may be secured after registration with the SEC.
FINE
Partnership/Corporation
1st violation P100,000.00
2nd violation P150,000.00
fine in an amount not exceeding ½ of 1% of tota
3rd violation
capital but not more than P5 million
c. For non-submission of the required reports within twelve (12) months after the taxable
year, cancellation of the certificate of registration granted under the Act.
d. For failure of any duly-registered export enterprise to comply, without justifiable reason,
with the SEC or BTRCP order to increase its export to at least sixty percent (60%) of total
sales ─
FINE
Partnership/Corporation
1st violation P100,000.00
2nd violation P150,000.00
fine in an amount not exceeding ½ of 1% of tota
3rd violation
capital but not more than P5 million
SECTION 3. HEARING OF VIOLATIONS OF THE ACT. The SEC or BTRCP shall adopt their
respective rules and regulations for the purpose of conducting hearings and investigations
involving violations of the provisions of the Act and these Implementing Rules and
Regulations.
SECTION 4. OTHER GROUNDS FOR CANCELLATION. The following are other grounds for
the cancellation of the certificate of registration granted under the Act:
SECTION 5. OTHER VIOLATIONS. Any other violations of the Act and these Implementing
Rules and Regulations shall be penalized in accordance with Section 14 of the Act.
SECTION 1. These amended Implementing Rules and Regulations shall take effect fifteen
(15) days after publication in a newspaper of general circulation in the Philippines.
Notes:
1. R. A. 7042 was assigned into law 13 June 1991 and became effective on 30 June 1991. Its
IRR took effect on November 1991.
2. R. A. 8179 was signed into law on 28 March 1996 and became effective on 15 April 1996. Its
IRR took effect on 30 July 1996.
Footnote: 1Text in bold and Italic reflect change under R.A. 8179.